Pepsico Case Study


Born in the Carolinas in 1898, Pepsi-Cola has a long and rich history. The drink is theinvention of Caleb Bradham left!, a pharmacist and dr"gstore o#ner in $e# Bern, $orth Carolina.The s"mmer of 1898, as "s"al, #as hot and h"mid in $e# Bern, $orthCarolina. %o a yo"ng pharmacist named Caleb Bradham begane&perimenting #ith combinations of spices, '"ices, and syr"ps trying tocreate a refreshing ne# drink to serve his c"stomers. (e s"cceeded beyond all e&pectations beca"se he invented the beverage kno#n aro"ndthe #orld as Pepsi-Cola.Caleb Bradham kne# that to keep people ret"rning to his pharmacy, he #o"ld have to t"rn it intoa gathering place. (e did so by concocting his o#n special beverage, a soft drink. (is creation, a"ni)"e mi&t"re of kola n"t e&tract, vanilla and rare oils, became so pop"lar his c"stomers namedit *Brad+s rink.* Caleb decided to rename it *Pepsi-Cola,* and advertised his ne# soft drink.People responded, and sales of Pepsi-Cola started to gro#, convincing him that he sho"ld form acompany to market the ne# beverage.n 19/, he la"nched the Pepsi-Cola Company in the back room of his pharmacy, and applied tothe 0.%. Patent ffice for a trademark. 2t first, he mi&ed the syr"p himself and sold ite&cl"sively thro"gh soda fo"ntains. B"t soon Caleb recogni3ed that a greater opport"nity e&istedto bottle Pepsi so that people co"ld drink it any#here.The b"siness began to gro#, and on 4"ne 15, 196, *Pepsi-Cola* #as officially registered #iththe 0.%. Patent ffice. That year, Caleb sold 7,958 gallons of syr"p, "sing the theme line*&hilarating, nvigorating, 2ids igestion.* (e also began a#arding franchises to bottle Pepsito independent investors, #hose n"mber gre# from '"st t#o in 19, in the cities of Charlotteand "rham, $orth Carolina, to 1 the follo#ing year, and : by 197. By the end of 191, there#ere Pepsi-Cola franchises in /: states.Pepsi-Cola+s first bottling line res"lted from some less-than-sophisticated engineering in the back room of Caleb+s pharmacy. B"ilding a strong franchise system #as one of Caleb+s greatestachievements. ;ocal Pepsi-Cola bottlers, entreprene"rial in spirit and dedicated to the prod"ct+ss"ccess, provided a st"rdy fo"ndation. They #ere the cornerstone of the Pepsi-Cola enterprise.By 197, the ne# company #as selling more than 1, gallons of syr"p per year.<ro#th #as phenomenal, and in 199 Caleb erected a head)"arters so spectac"lar that the to#nof $e# Bern pict"red it on a postcard. =amo"s racing car driver Barney ldfield endorsed Pepsiin ne#spaper ads as *2 b"lly drink...refreshing, invigorating, a fine bracer before a race.*

PepsiCo’s current position as the second biggest firm in the global food and beverage market is based on the company’s ability to wield its strengths to continue growing. The company grows despite an increasing level of market saturation. This SWOT analysis shows that PepsiCo is positioned to grow and reach the top position in the global food and beverage industry. The SWOT analysis framework identifies the strengths and opportunities that the firm can tap to address its weaknesses and business threats. As a global company, PepsiCo must address the issues shown in this SWOT analysis to minimize barriers to its global performance.

PepsiCo’s SWOT analysis presents major challenges in the areas of competition, changing consumer behaviors, and product development.

PepsiCo’s Strengths (Internal Strategic Factors)

PepsiCo’s continued global growth and prominence reflects the company’s strengths. This aspect of the SWOT analysis framework outlines internal strategic factors that enable firms to fulfill their business goals. The following are the most significant strengths of PepsiCo:

  1. Strong brand image
  2. Broad product mix
  3. Extensive global production network
  4. Extensive global distribution network

As a successful global company, PepsiCo has one of the strongest brands in the market. This strength enables the firm to attract consumers to its new products. In addition, the broad product mix represents PepsiCo’s increasing ability to reach various markets and segments, such as through Frito-Lay products, Quaker products, and Pepsi products. PepsiCo’s extensive global production and distribution networks are strengths that support the company’s international growth and expansion strategies. In this aspect of the SWOT analysis, PepsiCo’s strengths are sufficient to support its global growth strategy.

PepsiCo’s Weaknesses (Internal Strategic Factors)

PepsiCo suffers from a number of weaknesses that act as barriers to international growth. The internal strategic factors that limit organizational development are considered in this aspect of the SWOT analysis framework. The following are PepsiCo’s main weaknesses:

  1. Low penetration outside the Americas
  2. Limited business portfolio
  3. Weak marketing to health-conscious consumers

PepsiCo derives about 70% of its revenues from markets in North America and South America. This weakness indicates that the company has not yet maximized potential revenues outside the Americas. In addition, PepsiCo operates primarily in the food and beverage industry. This is a weakness because it maximizes the company’s vulnerability to risks in the food-and-beverage market. Also, PepsiCo fails to effectively market many of its products to health-conscious consumers. This aspect of the SWOT analysis highlights weaknesses that PepsiCo must address through changes in its growth strategy.

Opportunities for PepsiCo (External Strategic Factors)

PepsiCo has opportunities for continued global growth. In this aspect of the SWOT analysis framework, external strategic factors that provide options for business improvement are identified. PepsiCo’s opportunities are as follows:

  1. Business diversification
  2. Market penetration in developing countries
  3. Global alliances with complementary businesses

PepsiCo has the opportunity to diversify its businesses, such as by acquiring a complementary firm that is not in the food and beverage industry. Another opportunity is for PepsiCo to increase its penetration in developing countries to generate more revenues from markets outside the Americas. In addition, PepsiCo can create alliances with complementary business to increase its market presence. Based on this aspect of the SWOT analysis, PepsiCo has significant opportunities to strengthen its business resilience.

Threats Facing PepsiCo (External Strategic Factors)

The food and beverage industry experiences a variety of threats. External strategic factors that could reduce business performance are considered in this aspect of the SWOT analysis framework. In PepsiCo’s case, the following are the most significant threats:

  1. Aggressive competition
  2. Healthy lifestyles trend
  3. Environmentalism

Aggressive competition is a major threat against the company. The influence of the Coca-Cola Company is especially significant against PepsiCo. In addition, the healthy lifestyles trend is a threat against PepsiCo’s products, many of which are seen as unhealthful because of their sugar, salt, or fat content. Also, environmentalism threatens the company in how consumers negatively respond to product waste and lifecycle issues. This aspect of the SWOT analysis indicates that PepsiCo must reform its strategies to overcome the threats to business.

PepsiCo’s SWOT Analysis – Recommendations

PepsiCo can use its strengths to effectively respond to the issues identified in this SWOT analysis, especially those considered as threats. The realistic actions that PepsiCo could take to improve its competitiveness and international growth are as follows:

  1. Diversify businesses to minimize market risk exposure
  2. Further penetrate developing markets to grow revenues
  3. Improve product healthfulness to attract more consumers
  4. Enhance recycling efforts to address environmentalism
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Case Study & Case Analysis, Food and Beverage Industry, PepsiCo, SWOT Analysis

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