Pest Analysis on PepsiCo plc


International market has now become a place of significant activity for PepsiCo. Mexico, Saudi Arabia, china and Eastern Europe are the main markets.

  • PepsiCo has 40% global market share functioning in over 150 countries
  • At each level of PepsiCo, huge care is taken to make sure that in everything they do, highest standards are being met.
  • Local bottlers of PepsiCo determine which product to sell in their area depending on consumer demand in their area and some other market factors.
  • PepsiCo has a large market share to defy with coca cola. They have a very good balance of promotion to their target audience through football stars like David Bekham, Obafemi Martins and so on. They are also gaining football market from coke.
  • During manufacturing and bottling process, PepsiCo ensures strict quality controls must be followed to meet great standards of quality that are expected from consumers.
  • PepsiCo promotes its product in the hypermarket by giving discount like buy 2 get 1 free. They also organise competitions with attractive prizes which attract the eye of the customers.

 

PEST ANALYSIS

Pest analysis study the changes caused by political, environmental, social and technological factors.

Political Analysis for PepsiCo

In the FDA (united state food and drug) non alcoholic beverages fell in the food group. In terms of regulation, the government shows responsibility in the process of manufacturing all these products. For example, if they do meet a standard law, there are possible fines lay down by government on companies.

The following are the factors that could make PepsiCo company`s actual result to be changed from the expected result discussed in their original company`s forward report.

  • Changes in regulations and laws: This comprise changes in accounting standards, taxation requests which are (new tax laws, tax rate changes and revised tax law interpretations) in addition to ecological laws in foreign and domestic jurisdictions. This is going to affect our product selling price.
  • Political Conditions: This is mainly in our international markets, which include civil unrest, change in government and restriction on the possession to transfer capital across borders. For example the civil unrest in Gaza is going to affect our market in the Middle East.
  • Ability to enter developing markets: This mainly depends on both political and economic situation and how fine they are capable of forming strategic business alliances and make essential infrastructure enhancements. This might be difficult in some countries because of some strict laws set by their government e.g. existence of monopolies, employing 95% of the citizen and so on. This is going is affect our international market penetrating to developing countries.
  • Changes in the non-alcoholic industry environment: These consist of competitive product, without limitation and pricing pressures and their capacity to achieve or keep share of sales in the global market because of other competitors. The government affect all these changes by setting rules like barriers to entry i.e. making it difficult for new company to come up, price fixing, this is going to affect our share value in the global market because our product are not sold at our desirable price.

Economic Analysis for PepsiCo

  • Global Recession: Few years ago, the united state economy was very good and almost every part of it was rising and was going fine. Though, lot things have change. Economists often describe recession as a negative GDP growth or two consecutive quarters of contraction. Recently, the government officially confirmed that united state has been experiencing recession for the past few months. However, the forceful action by Federal Reserve and congress has helped the economy in going back to sustained positive growth in the next few months. The Federal Reserve is trying their best to help the economy recover.
  • Interest Rate: Interest rate has been cut down ten times recently. The rate has now fall between 40 years low of 3%. Reducing the interest rates will definitely stimulate customer demand in the economy. Companies will have the opportunity to enlarge and increase by collecting loans as an outcome of low interest rates on borrowings. PepsiCo can easily loan money to invest in new products because the interest rates are now reduced. The loan collected can also be used on research of new products. As researching for new product would cost less, PepsiCo will sell its product at a cheaper price and people will spend because they will get Pepsi product at a cheap rate.
  • Fear for inflation: The United States is on the course to achieve its economic levels back. Recently, consumers are now continuing their normal way of life i.e. going shopping, eating out at eatery and so on. Thou many are still careful with their money because they still have the believed that lower inflation is still coming. Consumer will recover their full confidence shortly and will have impact in our sales figures.

According to the “Standard and Poor`s Industry surveys”, non-alcoholic beverage industry has high sales in most countries outside the united state. For major soft drink companies, there has really been improvement in the economic in major international markets. Such as Brazil, Japan etc. These markets will keep on playing a major role in the steady and success growth for most non-alcoholic beverage industry.

Social Analysis for PepsiCo

A lot of United States citizens are now practicing healthier way of life. The impact of this on the non alcoholic beverage industry is that many people are now changing to pure water and diet cola with zero sugar compare to coke, beer and other alcoholic beverages. The necessity for pure water and products that are healthier are now very important in the standard day to day life.

Most consumers between the ages of 40-55 are gradually more worried with nourishment. As many are growing older, they are more worried in increasing their prolonged existence. This will keep having impact on the non alcoholic beverage industry by rise in demand for healthier beverages.

 

Technology Analysis for PepsiCo

The following are some of the factors that affect the company’s actual result to differ from the result expected.

  • The usefulness of company marketing, advertising and promotional programs. The recent development in technology of TV and internet e.g. the latest use of HD graphics. They make product look more attractive especially if the HD is used on the television. This help in convincing the customers and selling the products.
  • The introduction of vending machines, plastic bottles and cans have helped to increase sales for PepsiCo. This is mainly because they can easily be carried and disposed after use. The introduction of vending machine has also helped to increase sales because it will save labour cost.
  • As technology is growing everyday and getting more advance, there has been overture of new machineries which will enable PepsiCo product to increase tremendously than it was years before.
  • PepsiCo has over 10 factories in the United States which use most state of the art of drink technology to make sure top product quality and very fast delivery. The biggest factory is in New York opened in 1990. This factory has a machine with the latest technology which can manufacture cans of PepsiCo drinks faster than bullets from a machine gun.

STRATEGIES PEPSICO MAY WISH TO EMBARK ON

  • Competitive advantage: This is a situation when a firm sustain profits that exceed the average for its industry. The aim of most business strategy is to attain a sustainable competitive advantage. Competitive advantage occurs when a firm is capable to produce the same benefits as competitors but at a lower cost or deliver benefits that surpass their of rivals’ products. Therefore a competitive advantage helps the firm to build a greater value for its customers and more profits. Competitive advantage can also be refer to as positional advantage, because it describe the position of the firm in the industry as a leader either in cost or differentiation

Introducing this strategy to Pepsi cola is going to help in gaining competitive advantage over main rivals coca cola. We can sell our product at a lower price with more quality so consumers will buy our product more instead of coca cola.

  • New product development: Pepsi cola research and development team have been working so hard to know the kind of product the consumers will like to see in market and to buy. Therefore the introduction of new products will help to be more recognise in the market. Through this, we can put our rivals in great pressure. For example, the new product could be zero sugar Pepsi mirinda, which is going to be sugar free. Currently, no one in the industry has a product like this. Most health organisation like WHO (world health organisation) can easily recommend this product for consumers because is it risk free. No added sugar.

Source: Essay UK - http://www.essay.uk.com/coursework/pest-analysis-on-pepsico-plc.php



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