SUSTAINABILITY AND STRATEGIC AUDIT

(Activity)

1. Give the variables of environmental scanning which are presented in the given case study.

The NATURALENVIRONMENT is the variable of environmental scanning that is present

in the given situation since PepsiCo defines their 2025 goals on their website, and they
are focused on three (3) major aspects: goods, market, and people. They intend to lower
the amount of added sugar in their products, as well as the amount of saturated fat and
sodium, and to improve the amount of positive nutrition that their customers will receive
from purchasing their products. Furthermore, through recyclable product packaging,
PepsiCo contributes to a beneficial water effect, decreased carbon emissions, and
sustainability. Furthermore, the corporation promotes diversity and working careers as
part of its initiative to increase respect for human rights, which will boost corporate
prosperity. Their strategic decision-making procedures have an impact on their natural-
environmental operations.

2. What do you think is the most appropriate industry analysis tool which should employed
by PepsiCo to assess their performance? Perform an industry analysis for PepsiCo based
on the present context, using your recommended method or tool.

The most appropriate industry analysis tool that should be employed by PepsiCo to assess their

performance is the SWOT ANALYSIS.

STRENGTHS

A massive portfolio

PepsiCo maintains a consistent portfolio of over 100 different brands. The corporation is the
undisputed leader in the snack, food, and beverage industries. PepsiCo is only second to Nestle
in terms of earnings. It has attained this degree of growth as a result of the several brands under
their belt.
Brand recognition

PepsiCo has become a worldwide recognizable brand since it owns some of the most popular
food, beverage, and snack brands. Each brand has a monetary value ranging from millions to
billions of dollars. And they are owned by PepsiCo, boosting the company's net worth into the
billions.

Endorsements and sponsorships.

PepsiCo also promotes their products through brand endorsements. The company is closely
associated with music concerts and sporting activities. Pepsi products are currently sponsored by
major sports clubs. This facilitates PepsiCo's ability to reach younger audiences, who also happen
to be PepsiCo's target market.

WEAKNESSES

Coca-Cola rivalry

PepsiCo has always competed with Coca-Cola products. In many cases, they are the only ones
who compete. It leaves little room for other businesses to enter. Because the majority of other
companies lack the cash, resources.

The Health Crowd

PepsiCo is having issues with the medical community. Many of the items available are heavy in
sugar and calories. Soda beverages have been linked to rising obesity rates and related health
concerns such as type 2 diabetes. Even though PepsiCo has produced more health-conscious
options, such as diet Pepsi and Pepsi zero, the business continues to promote harmful food
formulas to the public.

Poor sponsorship ideas

PepsiCo also provides sponsorships. However, if they are sponsored by the wrong celebrity, the
consequences could land the company in hot water. Consumers are loud on social media,
especially when they disagree with or dislike a celebrity. If PepsiCo products are linked to a
celebrity controversy, their brand image may suffer as well.
OPPORTUNITIES

Health product diversity.

PepsiCo doesn’t offer the healthiest products. That doesn’t mean they can’t, though.

Move into other industries.

They should, however, attempt to transition out of this field and into others. Brands thrive on
diversity. It's an opportunity for PepsiCo to make inroads into businesses where its competitors
haven't yet. PepsiCo has the resources, clients, and expertise to make it happen.

Lack of drink flavors.

PepsiCo does not place a high value on the flavors of their beverages. That's to be expected from
Pepsi. The original flavor is legendary. And they've made variations on this flavor, such as Pepsi
Wild Cherry and Pepsi Blue. However, these are only minor tweaks to the original flavor, not a
major remake. It could be advantageous for the company to introduce flavors such as Mango and
Strawberry.

THREATS

Nestle as a competitor.

PepsiCo's key competitors are clearly their greatest weakness. Nestle and Coca-Cola are two
examples. These two companies have the purchasing power and brand recognition to compete
with PepsiCo. Nestle is the most prominent competitor, having outperformed PepsiCo's earnings
in 2017. But it's not just direct companies that PepsiCo should be aware about.

Not enough health alternatives

PepsiCo is struggling to compete with the health business. Several PepsiCo brands, as previously
noted, are relatively dangerous. They're heavy in either calories or sugar, or both. People
increasingly choose something sweet that contains fewer calories than a drink. In fact, PepsiCo
just reported a drop in soft drink sales. It is projected to fall more in the next years.

A bad economy

PepsiCo will always be concerned about the economy and the prospect of a recession. When the
economy suffers, people are more likely to preserve their money for essential expenditures.
Unfortunately for PepsiCo, the majority of their products are classified as not required. And,
because PepsiCo has not diversified beyond the beverage and food businesses, there is little
they can do in this circumstance.

3. Perform a value chain analysis of PepsiCo. You may conduct additional research to
support your analysis.

VALUE CHAIN ANALYSIS OF PEPSICO (Primary Activities)

Inbound logistics:
Pepsi has a global supply chain and sources raw materials from a variety of countries.
The corporation sources raw materials from thousands of vendors throughout the world,
particularly agricultural raw materials. The organization has a solid supply chain and
distribution network in place. The company's integrated logistics function is critical to the
proper operation of inbound logistics and the seamless movement of raw materials into
the system. In recent years, the corporation has invested heavily in its existing fleet to
make it more efficient, contemporary, and environmentally friendly. To cut shipping and
logistics costs, the corporation has developed warehouses in strategic locations
throughout the world and near its suppliers

Operations:
The company has divided its global operations into six areas or geographical divisions
which include.

1) Frito-Lay North America (FLNA) – PepsiCo’s branded food and snack businesses in
the United States
and Canada.
2) North America Beverages (NAB) – PepsiCo’s beverage businesses in the United States
and Canada
3) Quaker Foods North America (QFNA)- PepsiCo’s cereal, rice, pasta and other branded
food businesses in the United States and Canada.
4)Asia, Middle East, and North Africa (AMENA) – PepsiCo’s beverage, food and snack
businesses in Asia, Middle East, and North Africa.
5) Europe Sub-Saharan Africa (ESSA) – PepsiCo’s beverage, food and snack businesses
in Europe and Sub-Saharan Africa.
6) Latin America – PepsiCo’s beverage, food and snack businesses in Latin America.

Outbound logistics:
Outbound logistics refers to the movement of commodities from within an organization, or
more simply, a company's distribution and sales network. Outbound logistics is a vital link
in the value chain of companies and plays a significant role in ensuring operational
performance and business success. Through its multichannel distribution network, Pepsi
has maintained a strong international presence. The company sells its products to clients
through a variety of sales and distribution methods. Pepsi generally distributes its products
through direct-store-delivery, customer warehouse, and distributor networks. However,
the type of channel utilized is determined by the needs of the customers, the features of
the product, and local trade practices.

Customer’s warehouse
Some Pepsi products are delivered to client warehouses from manufacturing sites and
warehouses. This channel mostly distributes less fragile and consumable products with
lower turnover.

Direct Store Delivery

PepsiCo operates direct store delivery systems in collaboration with its bottling and
distributors. Direct store delivery systems transport beverages, meals, and snacks to retail
stores, where they are merchandised by PepsiCo staff or the company's independent
bottlers. PepsiCo can merchandise its products with greater visibility and appeal thanks
to the Direct store delivery system, which is profitable for the corporation. This technique
is best suited for the distribution of frequently restocked products.
 Marketing
Pepsi's marketing is great, and it is one of the key emphasis areas in its value chain, as
the company operates in a highly competitive industry where marketing is critical to
maintaining demand and sales. Coca-Cola is Pepsi's main competitor, and the firm invests
much in advertising and promotions each year to maintain its competitive position. Aside
from digital avenues of marketing, such as social media, the corporation uses outdoor
promotions to sell its products and engage customers. Video marketing has also played
an important role in increasing the global appeal of Pepsi brands and goods.

Products and Services

Pepsi provides a variety of beverages, snacks, and food products. Pepsi's product portfolio
includes beverages, low-calorie beverages, and a large variety of nutritious snacks and
food products. A diverse product selection has also aided the organization in achieving
faster growth in terms of overall sales and revenue.

VALUE CHAIN OF PEPSICO (SUPPORT ACTIVITIES)

Technology

Pepsi makes extensive use of technology to improve the efficiency of its global operations. Aside
from that, it has increased its investment in digital technology and sustainability in order to improve
the efficiency of its supply chain, manufacturing, marketing, sales, and distribution network. The
organization also employs technology for employee training, inventory management, and client
relationship development.

Human Resource Management

HR management is one of the company's primary strategic emphasis areas. Employees are a
source of competitive advantage in the market, so in addition to acquiring great individuals, the
company must prioritize their training, retention, and continual growth. PepsiCo and its
consolidated businesses employed roughly 267,000 people worldwide as of December 29, 2018,
including around 114,000 in the United States (Annual report, 2018).
Infrastructure

Pepsi has split its business operations into geographical segments. However, the company also
controls its global business operations on a functional basis, and global business management is
handled by numerous divisions and functions. This has aided the corporation in terms of efficient
management and a leadership approach that promises greater success and organizational
efficiency.

Procurement

The organization places a specific emphasis on supplier management, supplier relationships, and
supply chain sustainability. Aside from product quality, PepsiCo's procurement team oversees
other aspects of the supply chain, such as the Code of Conduct, supplier audits, and training.
This assures that the company has a steady supply of high-quality raw materials for its
manufacturing processes, as well as an ethical supply chain. The procurement team also regularly
assesses supplier performance with the use of supplier scorecards to enhance and achieve
higher efficiency and productivity throughout the company's supply chain network.

4. From the (4) major types of benchmarking, Identify and describe the type of benchmarking
method used by PepsiCo.

Internal
The ability of the organization to get its product closer to the consumer is one of the key
components that define the company's success. The company was able to accomplish
this through a huge distribution infrastructure. The company operates bottling plants in
several parts of the world, allowing it to produce its products close to the consumers. The
corporation developed strong relationships with small and large retailers who offer
PepsiCo products to a large number of customers. By forming this type of collaboration
with shops, the company has been able to grow its marketplace.
 Competitive
The ability of PepsiCo to respond fast to market opportunities and threats is another
advantage. The organization can easily adjust to market developments. The corporate
structure is neither too small, as with most of its competitors, nor too big, as with its primary
competitor Coca-Cola.

5. Propose ways on how PepsiCo can gain competitive advantage, and achieve higher
profits, thus higher shareholder value using the steps in benchmarking process.

Internal
Cover a larger share of the market share of the aging population. Pepsi is a firm focusing
on a younger market, looking to replicate Coca-global Cola's success in terms of brand
loyalty with generations born after 1980; yet the Baby Boomer generation remains a
significant market that they may break into.
Competitive
PepsiCo should grow into areas and market categories where they are not currently
present, such as Asia, India, and South America, in order to enhance its global market
share and overall income.
Functional
PepsiCo should position itself at the forefront of the health trend in the marketplace by
raising funds for Research & development activities to investigate potential new product
concepts. Significant funding should be increased.
Generic
PepsiCo should improve their employee relations to create employees all over the world
that will promote the product both during their workday and in their personal life in order
to create a great product marketing.

Source:
https://www.pepsico.com/