Pepsi Strategic Management Project

Report
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INTRODUCTION

INCLUDES!
 Brief History
 Organizational Hierarchy
 location of factory
 Number of total employees
 Nature of business
 Type of ownership
 Key players

Brief History of Pepsi Co

One of America’s favorite soft drinks, Pepsi-Cola, didn’t make it to the
Taste test stage … several times.  The ability of the product to survive
several bankruptcies, numerous management changes, and major
internal squabbles made it an even stronger player in the bid for
consumer taste acceptance.
Our story begins with the birth of Caleb D. Bradham in 1867.  Bradham
was born in Chinquapin, North Carolina in 1867.  Chinquapin is a rural
community about forty miles south of New Bern, North Carolina. New
Bern is a seaport town which was first settled in 1710 by Swiss and
German emigrants.
Caleb Bradham attended the University of North Carolina and the
University of Maryland Medical School.  While at the University of
Maryland, he worked part-time in a local drug store.  When his fathers’
business failed in 1891, Caleb dropped out of medical school and decided
to open a drug store of his own in New Bern.  This drug store was the
first home of Pepsi-Cola, and it was located at Middle and Pollock
 Streets in New Bern.
Caleb formulated the Taste that Beats the Others cold in his new drug
store, and in 1893, he began selling “Brad’s Drink”, which among other
claims, was to be a cure for dyspepsia.
In 1898, Caleb Bradham bought the name “Pep Cola” for $100 from a
company in Newark, New Jersey that had gone broke. He then changed
the name of his new drink from “Brad’s Cola to Pepsi-cola, and
persuaded a neighbor who was an artist to create the first Pepsi-Cola
logo.
Bradham applied to the state of North Caroli na and to the U.S. Patent
Office for a trademark on the name Pepsi-cola in 1902.  He also issued
ninety-seven shares of stock for his new company, and was ready to
supply Pepsi to an eagerly awaiting world.
From the back room of his pharmacy, Caleb mixed and sold over 8,000
gallons of syrup his first year.  Having an appreciation and
understanding of the value of advertising, he invested $1,900 of his early
profits in promotion of his new drink.
By 1903, Bradham had outgrown the back room of his drug store, and
moved his young company to temporary rented quarters for almost a
year before finally settling into its permanent home, known as Bishops
factory, in New Bern.  At that time, he also added bottling lines to his
growing syrup manufacturing business.
Caleb had established fifteen additional bottling plants by 1906 to attract
the early Pepsi Generations.
Pepsi Cola in Pakistan
Pepsi-Cola is one of the best soft drink in the world. The company has
operated continuously for over 40 years offering a range of quality products
Pepsi, Diet Pepsi, Miranda, 7UP, Diet 7UP, Mountain Dew.
Analysts believe Pakistan to be an enormously growing potential market
as per capita consumption there is as low as 14 bottles per year.
Pepsi is very popular in Pakistan and it holds about 70% in the soft-drink
market. Pepsi Cola International, a remarkable name in the cola industry is
running its business in Pakistan through different distributors
These distributors are!
1. Riaz Bottler Lahore
2. Pakistan Beverage Karachi
3. Punjab Beverage Faisalabad
4. Naubahar Bottler Gujranwala
5. Haidri Beverages Islamabad
6. Northern Bottlers Peshawar
7. Sakhar Beverages
Organizational Structure:

Nature of Business:
Pepsi is a FMCGS (Fast Moving Consuming Goods) produced in bulks.
Pepsi is consumed regularly that’s why Plants work continuously 24 hours.
Type of Ownership:
Ownership of Pepsi is franchise in Pakistan, because Mother Company of
Pepsi is located in USA. In Pakistan Pepsi is working as a franchiser. There
are seven franchisers who operate Pepsi Co in different cities of Pakistan
include
1. Riaz Bottler Lahore
2. Pakistan Beverage Karachi
3. Punjab Beverage Faisalabad
4. Naubahar Bottler Gujranwala
5. Haidri Beverages Islamabad
6. Northern Bottlers Peshawar
7. Sakhar Beverages
Key Players of Pepsi:

Pepsi international is working in

Pakistan with just 18 employees of its own which are controlling and
 facilitating its bottlers. The key player who is controlling the entire system
of Pepsi Beverages in Pakistan is the Regional Head. Under the supervision
of Regional Head there is a Country Head who is facilitating the other main
Four Designations:
 Franchise Directors
 Marketing Director
 Operations Director
 Chief Finance Officer
Regional Head:
Regional head is responsible for all the activities which are taking place in
Pakistan under any other head of department. Regional Head directly
reports to the head office located in America.
Country Manager:
Country Manager is controlling the other four department heads. He looks
after and supports them in implementing the Pepsi International strategies,
policies and rules. At the end he is responsible to report the Regional Head
Franchise Director:
To look after and to give the moral and practical support Franchise Director
uses two other Designations which are Franchise Manager and the other
one is Sales Development Manager. Any query from any of the bottler can
be solved through these two designations.
Marketing Director:
Brand Manager of colas, Brand Manager of Flavors & Brand Manager
Aquafina work to support the Marketing Director. This department is
responsible to promote and advertise the products in the country. No
promotion and advertisements can be done by the bottler itself.
Operation Director:
All the activities which take place under the administration of operation
head are supervised supported and controlled by the Operation Director
with his two other subordinates i.e. Operational mangers.
Chief Finance Officer:
All the activities like cost evaluation, budgeting, financial analysis and
controlling the taxing system etc are performed under this department with
the support of Planning manager, Controller and Business Analysis
Manager. Chief Finance Officer is directly reports to the Country Head.
Mission/Goals/Objectives
INCLUDES!
 Vision
 Mission
 Objectives
 Our Values
Vision:
To be the premier convenient food and beverages company with brands
that are known and respected in every corner of the world.
Mission:
We aspire to make PepsiCo the world’s premier consumer Products
Company, focused on convenient foods and beverages. We seek to produce
healthy financial rewards for investors as we provide opportunities for
growth and enrichment to our employees, our business partners and the
communities in which we operate. And in everything we do, we strive to
act with honesty, openness, fairness and integrity.
Objective:
The major objective of the company is to produce and supply highest
quality products, which confirms to both the national and international
quality stands. The company is committed to provide maximum level of
customer satisfaction.
Our Values:
 Passion For Growth:
We seek to bestow healthy financial rewards to investors as we provide
opportunities for growth and enrichment to our employees, our business
partners and the communities in which we operate.
 Uncompromising Principles And Pride In Doing Things The
Right Way:
We strive for honesty, accuracy, fairness and integrity in everything we do.
The fact lies in sustainable growth achieved with trust.
 Laser Focus On Results:
This company needs people with an insatiable appetite for accomplishment
and results.
 Collaboration Is Critical:
If we are going to win over the long haul, we have to win as a team.
 Inclusion Is More Than A Fairness Issue; It’s A Core
Business Imperative:
Our ability to operate effectively in a global marketplace is driven by our
inclusive mindset and practices
 Innovation Driven Growth:
 Fresh perspectives and creative solutions that add value will fuel our
upward trajectory.
 Operational Excellence:
 Nothing can replace a deep understanding of business principles and a
commitment to implementation.
Strategic External Audit
INCLUDES!
 STEPLE Analysis
 Porter’s 5 forces Model
 BCG
 SWOT Analysis
 EFE Matrix
 CPM
 Space Matrix
 IFE Matrix
STEPLE ANALYSIS:
 Social Analysis:
Pepsi is highly committed to welfare of humanity and social wellbeing and
contributes to its cause by donating handsome amounts to key
organizations like;
 LUMS 10 million
 Shaukat Khanum memorial Hospital 10 million to patient diagnoses
for free of cost
 Care Foundation 5 million.
 And other NGOs
 Pepsi donated a large sum for earthquake victims relief in October 8,
2005, Pepsi contribute U.S $2 million (Rupees 120 million) to assist
victims of earthquake in Pakistan.
Technological Analysis:
 Fast production line.
 Less input required from humans
 Automated Plant produces 110 bottles washing to filling in 1 min.
 Main Plant location (which mixes the concentrate with water and
send it to its franchise in seal pack drums)
 110% standardized fulfillment
Economical Analysis:
 As the main ingredient (concentrate) required making the beverage is
imported from main office in America, frequent changes in the Dollar price
can affect the company economically.
 As the company is bound to the agreement with government, its
keeping the price of Pepsi (250ml) at Rs 12, while according to the high cost
of production, price should be 16 Rs.
  Political Analysis:

 Riaz bottler is one of the franchise owners with remarkable political

influence in his territory and at times he try to be abstinent from the
company regulations and policies; this directly affects the company in
terms of market share, profits and others.
 Government policies changes relating beverages industry due to
instability in political factors
Legislation Analysis:
 If the government changes the prices of Beverage industry, then
company pass on 30%- 40%of the changed prices to the consumer.
Environmental Analysis:

 If the International Standards change rapidly then it can affect the

company internally and externally because the Pepsi is always ready to have
updated fulfillment of international standards.
 Company claims that prod uces no Wastage, but any negligence can
badly affect the environment.
 Use wastage in recycle process (glass bottles
 Non recyclable plastic bottles are a source of environmental pollution.
PORTER’S 5 FORCES MODEL:
Bargaining power of customers:
Bargaining power of customer is low because of fixed pricing of beverages
of Pepsi cola in market. Company settled down the prices according to the
government polices so customer can’t bargain on it. If the company
increases or decreases the prices of their products the customers have to
purchase on that prices without any bargain.
Bargaining power of supplier:
There are two situations in bargaining power of suppliers, company having
two major suppliers and their bargaining power of both suppliers are
different like: Their main supplier of concentrate is US and the bargaining
power in this case is higher because the Pepsi Company has to purchas e
the concentrate on the price offered by the supplier.
In other case bargaining power of supplier is low the company get the
plastic and glass bottles for filling from GHANI glass and the company get
the material from the supplier on that price on which the company wants to
purchase.
Rivalry among competing firms:
Rivalry among the competing firms is high because their main competitor
is Coca-Cola. When the coca cola launch or introduce new products the
Pepsi use the defender and reactor strategies  for strong competition.
 Threat of new entrants:
Potential entry of new competitor is easy but threat from new entrant is low
because no one can reached on the competition of Pepsi cola as well as
company have strong market share that is 72% ,strong brand name, strong
distribution an huge setup in Pakistan and no one can easily achieve this.
Threat of substitute products:
Pepsi has many substitute products that create the high threat for company
like juices, flavored milk and energy drinks in the market. Now a day’s
people are switching on non carbonated drinks and that is the big threat for
Pepsi cola.

BCG Matrix
 Pepsi lies in stars (maturity) due to high market share that is 72% in
Pakistan and high industry growth rate. With the passage of time they are
capturing more market share by enhancing their product line.
 They are in stars because of one main reason that is PepsiCo is
financially strong. Their brand name is well known all over the world and
have the strong positive brand image in the mind of customer.
 Pepsi is convenient product where ever you go you can find each
brand of Pepsi cola.
 The main advantage of Pepsi cola for lying in star is that they are
targeting every type of customer and these customers are increasing market
share for Pepsi cola.
Pepsi SWOT Analysis
Strength:
 Pepsi itself is a strong brand name which is strength for the company.
 Pepsi has a broader product line and exceptional reputation.
 Strong distribution system all over Pakistan.
 Product is very convenient for all type of customers
 Record revenues and increasing market share.
 Financially very strong.
 Existing customer loyalty is high with Pepsi.
Weakness:
 Company is unable to control the distribution
 TQM ( Total Quality Management) is not properly implemented in
production of pepsi.
 Opportunity:
 Non-carbonated drinks are the fastest-growing part of the industry,
so they must launch more such products. Pepsi co must also enter into juice
and non carbonated drinks industry.
 Install vending machines in different public places to promote
product and brand name.
 There are increasing trend towards healthy food
 Penetrating marketing would motivate considerable sales growth
 Contract with cellular companies as a payment mode to use vending
machine in a fast and efficient manner.
 Threats:
 Coca-Cola is the main direct competitor of Pepsi. It had always been a
big threat for the company.
 Local brands are also the threat for Pepsi.
 Illegal in house production of beverages using Pepsi brand.
 Rapidly changing life style and taste, which may divert people from
carbonated drink to non carbonated drinks.
 Instability and fluctuation in the prices of dollar regularly.
 Movement against Pepsi by the extremists e.g. “Be Pakistani and Buy
Pakistani”
 Security condition of the country is not satisfactory.
 Increasing tax and inflation rates.
 Changes in government policies and regulations regarding beverages
industry.
EFE Matrix:

Weigh
Sr. No  Key External Factors  Weight  Rating
Score

Opportunities:
1. Food division should expand. 0.06 3 .18

Non-carbonated drinks are the fastest

2. 0.05 4 .20
growing part of the  industry

There are increasing trend towards

3. 0.06 3 .18
healthy food

Contract with cellular companies as a

4. payment mode to use vending machine in 0.05 4 .20
a fast and efficient manner

5. To introduced juices and energy drinks 0.06 3 .18

Penetrating marketing would motivate

6. 0.06 2 .12
considerable sales growth

7. Install vending machines 0.05 4 .20

They can come in dairy industry, because

8. there is much room available in this 0.05 2 .10
industry

Threats:

9. Local brand beverages 0.06 2 .12

10. Effect due to dollar price 0.08 3 .24

11. Main competitors are COKE and RC 0.07 3 .21

12. Increasing price due to economy 0.06 3 .18

13. Changing trend about soft drinks 0.06 4 .24

14. Increase in inflation, tax rate. 0.05 3 .15

 15. Security issues 0.05 4 .20

Movement of local brands against PEPSI

16. 0.05 4 .20
like “Be Pakistani, Buy Pakistani”

17. Change in Government polices 0.04 3 .12

Size of company will demand a varied

marketing programs social, cultural,
18. 0.05 2 .10
economic, political and governmental
constraints

Health consciousness regarding soft

19. 0.05 3 .15
drinks

Total 1.00 3.27

Competitive profile matrix for Pepsi co (CPM)

Critical
Weighted Weighted
Success Weight Rating Rating Rating
Score Score
Factor

Market share 0.12 4 0.48 3 0.36 1

Inventory
0.07 3 0.21 2 0.14 2
system

Financial
0.10 4 0.40 4 0.40 2
position

Product
0.10 3 0.30 3 0.30 2
quality

Consumer
0.09 3 0.27 4 0.36 2
loyalty
 Sales
0.08 4 0.32 3 0.24 3
distribution

Global
0.06 3 0.18 4 0.24 2
expansion

Organization
0.04 4 0.16 4 0.16 2
structure

Production
0.07 3 0.21 3 0.21 3
capacity

Advertisement 0.07 3 0.21 4 0.28 1

Availability 0.08 4 0.32 2 0.16 3

Price
0.07 4 0.28 4 0.28 3
competitive

Management
0.05 3 0.15 3 0.15 2
experience

Total 1.00   3.49   3.28  

 Rating Description

4 Major strength

3 Minor strength

2 Minor weakness

1 Major weakness
STRATEGIC POSITIONING AND ACTION EVALUATION
(SPACE) MATRIX:
The SPACE matrix is providing us an idea about organization’s position in
the market. Pepsi co is competing fairly well in stable and highly
competitive industry. It has four quadrants namely: Financial Strength,
Environmental Stability, Competitive Advantage and Industry Strength.
 Internal strategic position:

Financial strength                    Ratings

Return on investment 4.0

Liquidity 4.0

Yearly increase in sales revenue 5.0

Net profit ratio is increased by 14% 6.0

Total 19

Competitive advantage Ratings

Strong Market share in Pakistan -1.0

The quality of product is up to standard -2.0

Convenience to the customers -2.0

Pepsi can be the addiction to the people -2.0

Do care about health conscious people -3.0

Control over suppliers and distribution -2.0

Pepsi has the strong brand name -1.0

Total -13
External strategic position:

Environmental stability Ratings

 Technological changes -2.0

Rate of inflation -3.0

Demand variability -3.0

Barriers to entry into market -2.0

Competitive pressure -1.0

Ease of exit from market -5.0

Total -16

Industry strength Ratings

Pepsi has high industry growth rate and more potential

5.0
for growing.

The company is financially dominated in the industry. 6.0

Technological know-how 4.0

High profitability ratio 5.0

Total 20
 Conclusion:

Directional Vector Coordinates X-axis Directional Vector Coordinates Y

CA Average is = -13/7 = -1.86 FS Average is = 19/4 = 4.75

IS Average is = 20/4 = 5.0 ES Average is = -16/6 = -2.67

-1.86 + (+5.0) = 3.14 -2.67 + (+4.75)= 2.08

This matrix concludes that the Pepsi has financially strong that has
achieved major competitive advantages in a growing and stable industry.

Internal Evaluation Factor

        Weigh
Sr. No Key Internal Factors Weight Rating Score

Strengths:

Pepsi itself is a strong brand name which is

1. 0.10 4 .40
strength for the company.

Pepsi has a broader product line and

2. 0.09 3 .27
exceptional reputation.

Strong distribution system all over

3. 0.10 4 .40
Pakistan.

Product is very convenient for all type of

4. 0.20 4 .80
customers

Record revenues and increasing market

5. 0.09 3 .27
share.
 6. Financially very strong. 0.09 3 .27

Existing customer loyalty is high with

7. 0.03 2 .06
Pepsi.

Weakness:

Company is unable to control some

9. 0.10 2 .20
distributors.

TQM (Total Quality Management) is not

10. properly implemented in production of 0.20 2 .40
Pepsi.

Total 1.00 3.07

Core Competencies Analysis & KSF
Key Success factor:
Following are the key success factors of Pepsi cola that are playing
important role in the success of Pepsi cola in Pakistan.
Strong marketing:
Pepsi cola have strong marketing campaign in Pakistan. They are doing
360’ marketing campaign for the awareness of their each product. They
have different promotional campaigns for different products. They are also
using brand ambassadors in their advertisement that creates positive image
and strong loyalty with the product.
Strong committed employees:
Pepsi cola have committed employees who gave them the best output and
loyal with the company and this is because of motivation from the
company. One of the main reasons of the loyalty with the company is
incentives and benefits given by the Pepsi cola to its employees for their
betterment. And due to these benefi ts the employee can’t switch to any
other company. Empowerment is also the main reason for commitment
with the company.
Decentralized in decision making:
Decision making system in Pepsi cola is decentralized the decisions are
made on top level management but management also involved the middle
line and front line management as well in their decision.
Financially strong:
 Pepsi cola is financially strong company they have the potential for more
growth and they can enhance their product line.
Dominant market share:
Pepsi cola have 72% dominant market share in the Pakistan as compare to
its direct competitors like coca cola. And still the company is working for
capturing the more market share.
Target market:
This is also one of the reasons in the success of the Pepsi cola. Pepsi cola is
doing mass marketing in the Pakistan they are hitting all types of customers
and filling the demand of every type of customer.
Strategies Undertaken
INCLUDES!
 Corporate level Strategies
 Business level Strategies
 Functional level Strategies
Corporate Level Strategies:

As a world leading company PEPSI is applying Growth and Stability

Strategy
Grand
Growth strategy:
When we look at the history of the Pepsi in Pakistan it was started in 1962
as a wholesaler depot in the tertiary of Karachi and then with the success in
1975 it started its business as a FOBO (franchise Owned Bottling
Operation) as the time passed they have increased the franchise to 7 which
are now defined territories. Till 1962 to date company have increased the
sale and giving the tough time to its international competitor Coke with all
its brands under one Umbrella.
 Stability:
Pepsi is continuously working on the stability because they are all the time
in need of having very tough competition from its competitor like coke, and
 other local brands. Some time to overcome this problem company increases
the percentage ratio of its suppliers, and some time to its retail store
keepers. In the season of Summer Company want its franchise to produce
on the full capacity @ 24/7 which leads them to maintain their market
share.
Business Portfolio
Strategic Business Unit:
 Pepsi
 Pepsi Max
 Mountain dew
 7up
 7up free
 Marinda
Business level Strategies

BUSINESS LEVEL
STRATEGY:
In business level strategy we discuss how a single firm or business unit
competes in only one market and is essentially a self contained. The fair
most common approaches to business level strategy are:
1. Adaption Model:

The basic purpose of this strategy is to match the business strategies with
basic environmental conditions.
 Prospector:
Work or act on a corporate strategies. Company always works as a
prospector to take preventive actions. Company scans the environment and
after the analysis of the competitors and situation they plan things. Pepsi
cola using the prospector approach because of “Aqua Fina” launched b6
months before of its exact launched time because that time coke was going
to introduce  “Kinely”.thats is why Pepsi took the proactive action and
introduced the “Aqua Fina” before the “Kinely” to capture the market
before the competitor.
 Analyzer:

Having the knowledge of market share & Competitors Pepsi has planned to
launch Tropicana. Because company analyzed that there is very much room
available in these types of products. After evaluating the overall market
then Pepsi has decided to introduce Tropicana.
 Defender:
 Pepsi some time also act as a defender because to retain the loyal customer
and to sustain the market share Pepsi use the defender strategy according
to the situation. Company use product development/enhance existing
product line and also some marketing techniques to be use to defend the
company’s products.
 Reactor:
Reactor strategy always be pushed by or to give the full support to the
defender strategy, reactor strategy is basically is the implementation of the
defender strategy. e.g. in Ramadan when coke decrease the price of 1.5 Liter
coke from 50-45 then immediately Pepsi acted as a reactor and also
decrease the price of 1.5 Liter Pepsi from 50-45.
 
2. Porter’s Competitive Strategies:
The three generic strategies are:

o Differentiation
o Cost Leadership.
o Focus
 
 Differentiation:
Some time Pepsi have to work on differentiation as they have launch the
product as a different taste with its competitor like coke (which is strong in
taste) so the Pepsi work as a slightly sweetener taste which is more likely to
be used by the all age groups.
 Cost Leadership:

As the company earns more and more profit from different territories same
as it is company some time has to bear the losses for some times in order to
be the part of Market, and to maintain the goodwill in the eyes of it
customers. Company is bound to the agreement with government, it’s
keeping the price of Pepsi (250ml) at Rs 12, while according to the high cost
of production, and price should be 16 Rs.
 Focus:
 Pepsi is targeting many different geographical areas inside and outside
cities to retain its customers and to capture more; this is the reason Pepsi
use to launch different products under one umbrella.
3. Product Life Cycle:
The course of product sales and profits over its lifetime, it involves five
distinct stages product development, introduction growth maturity and
decline.
When Pepsi entered the market they had just invested i n market in the
1st two stages of product life cycle and earned nothing. Then in the stage of
growth when early adopters buy the products, Pepsi was in No profit No
loss situation but now Pepsi is on maturity stage of product life Cycle and is
earning a lot of profit.
Pepsi never entered the decline stage.

FUNCTIONAL LEVEL STRATEGIES:

This strategy focus on how the organization will approach its basic
functional activates like in:
 Marketing
 Financial
 Production
 R&D
 HR

Functional Area Major Concerns

Marketing –          Product mix

–          Market position
–          Distribution channels
–          Sales promotions
 –          Pricing issues
–          Public policy

–          Debt polices

–          Dividend polices
Finance
–          Asset management
–          Capitalization structure

–          Productivity improvement

–          Production planning
Production
–          Plant location
–          Government regulation

–          Product development

Research & Development –          Technological forecasting
–           Patents and licenses

–          Personnel policies

–          Labor relations
Human Resource
–          Executive department
–          Government regulation
 

Management Strategies
INCLUDES!
 HRM
 Administration
 Decision making (Centralize & Decentralized)
 TQM
 Motivation and incentive techniques
HRM:

 The function of the Pepsi cola to recruit the best creative talent for
best outcome.
 Recruiting and hiring procedures in Pepsi cola are transparent.
Company has proper methods for recruiting a person and it is visible to
everyone.
 Pepsi cola hires employees on the basis of merit, education and skills
not on the favoritism and on approaches.
 There is proper HR department where HR managers hire the
employees on specific criteria. Personal and penal interviews are conducted
for hiring.
 HR managers in Pepsi cola also do the performance assessment of the
individuals. Through this HR managers fill the gap that can create problem.
And if employees need the training with the passage of time they organize
different workshops for them.
Administration:
 Administration department of Pepsi cola have the link with all
department in the company. It handles all the problem face by the
departments.
 It has the good relationship with the vendor.
 Administration of Pepsi cola also handles the petty cash (daily
expenses), like expenses on the visiting of guests etc.
 Disbursement of salary is also the responsibility of the administration
department of Pepsi cola.
 Administration also creates the harmony between all the
departments.
 Office furniture, stationary and any technical problem is also handled
by the administration department of Pepsi cola.
Decision Making (Centralized vs. Decentralized):

 All the decisions taken by the top level management but management
also involve the managers of all departments and employee of the company.
The procedure of decision making in Pepsi cola is decentralized. Everybody
knows about the mission and everybody gets involve in the every decision
regarding the company’s affairs. That creates the motivation and
empowerment in the employees and through this company gets effective
and efficient results.
 Company’s all revenues and profits are also visible to everyone in
company. As well as all the strategies made on the top level management
also known by the employees and everyone take part in decision making
that helps a lot in innovation.
TQM:
 Pepsi cola’s quality policy is “Make, sell and deliver beverages to the
consumer as it was designed, in order to derive preference.”
 Pepsi cola claims that this is one of the safest drinks you drink.
 The “One Quality Worldwide” assurance seal appears on the entire
range of Pepsi’s beverages.
 In manufacturing the quality controls procedures are fixed.
 Pepsi cola used science based standards in manufacturing process.
In Pakistan RBL (Riaz bottler private limited) Naubahar, Riaz Bottler
Lahore, Pakistan Beverage Karachi, Punjab Beverage Faisalabad, Haidri
Beverages Islamabad, Northern Bottlers Peshawar, Sakhar Beverages
bottling are largest manufacturer and distributors of Pepsi cola soft drinks
in Pakistan and man ages total quality by focusing on following points:
 Provide the skills, knowledge and expertise to deliver the quality of
services that their customer expects and which their reputation depends.
 also focus on consumer perception quality
 Bench-marking
 Continuous improvement in the quality of incoming material and
packaging
 Upgrade technological capabilities by the acquisition of latest tools
and technology to drive quality approved by PIC(Pepsi International Cola)
 By empowering people
 Follow the ISO standards
 They produce 110 bottles in 1 minute (washing to filling).all the
franchisee are following this standard for filling bottles.
 They have the fixed standard for composition of the sugar containing
of soft drink
Water: 86-90%
 Water accounts for the bulk of all beverages including colas. In other
word the water used in PepsiCo soft drinks must be as safe as possible for
human consumption.
Sugar: 10-13%

 At Pepsi sugar is bought from approved sugar mills after a supplier

qualification process. After sugar is received in the beverages plant it is
subject to further betterment to reduce the impurities, color etc to achieve
Pepsi’s global specification.
Carbon di oxide: 0.3-0.7%
 The CO2 in each bottle of Pepsi sur passes that recognized for medical
application. Once the CO2 reaches the bottling plant, it undergoes further
purification. At the end each batch carries certificates of analysis and
compliance.
Motivation and Incentives techniques:
 Pepsi cola more focus on retain their existing employees because
company thinks that employees are resource to be used effectively and
efficiently for more productivity.
 Pepsi cola give the target achievers awards to their employee to
motivate them and to get the more productive and innovation in work.
 They also have the employee of the year reward for motivation.
 Company gives the bonuses as incentives to the employee. Other than
this company gives the medical incentives not only to the employee but also
to his family.

Market Analysis
INCLUDES!
 Segments and target market
 4 P’s
 Market share
 USP’s
 Competitive analysis
 Main marketing strategies and market positioning
Target Market of Pepsi Beverages
Pepsi beverages have different products in the form of carbonated drinks,
and each product has different target market. According to Pepsi beverages,
they hit different market groups by different product such as Pepsi and 7up
is for families, Miranda is for teenagers, Mountain dew is for aggressive
people on the other hand Pepsi max & 7up free are for diet alert and health
conscious people. They promote their products according to the target
market through different types of advertising campaigns and have special
marketing strategies for each product.
Market of PEPSI:
 Children:
Pepsi is heavily consumed and extensively enjoyed by children. They often
make their parents buy them Pepsi as a compulsion.
 Youth students:
Many students and adolescence regard Pepsi as a youthful drink and have
fun consuming it.  Youth make major target group of Pepsi, so all their
advertisement campaigns especially focus upon the young and spotlight on
youthful entertaining Pepsi filled moments.
 Professional and technical:
Highly educated Professionals and technical experts consider Pepsi as a
high quality mouth watering drink and have a major share in target market.
 Families:
Pepsi has become an integral part of table laid down for family lunch and
dinner, everybody at home from young to elderly love to augment their
meals with exciting taste of Pepsi.
Segmentation of PEPSI Company
 Geographic:

World region or country Asia

Country region Pakistan

City or metro size More than 100,00,000

Climate Urban , Suburban, rural

 Demographic:

Age Above 6 years

Gender Male , female

Family size 1-2,3-4, 5+

Young, Single, married, married with

Family life style
children older, under 18 , and others

Income Under 10,000 and above

Professional and technical, managers,

Occupation
officers, retired, students, unemployed

Grade school or less, some high school,

Education
above

Religion Any

Race Asian, black , white

Nationality Pakistani
 Psycho-graphic:

Lower lowers, upper lowers, working cl

Social Class middle class, upper middle, lower uppe
upper upper

Life style Achievers, strivers,

Compulsive, gregarious, authoritarian,

Personality
ambitious
Behavioral:

Occasions Regular occasion, special occasion

Benefits Quality, economy, convenience

Non user, potential user, first time user

User status
regular user

User Rates Light user, medium user, heavy user

Loyalty Status Strong , absolute

Unaware, aware, informed, interested,

Readiness stage
desirous, intending to buy

Attitude toward product Enthusiastic, positive, hostile

 
Market segmentation of Other Pepsi Brands
And if we have to specifically pinpoint target consumers of Pepsi then we
are required to do segmentation.
Pepsi and 7up
Geographic:

Country Pakistan

Country Region Punjab, Sindh, Baluchistan, NWFP

 Density Urban, rural, suburban

Hot and dry (Summer, Winter, Autum,

Climate
Spring)

Cities All cities in Pakistan

 Demographic:

Age 7-35

Income Rs.6,000 plus

Family life-cycle Young, children, older

Psycho-graphic:

Upper lower, lower middle, middle mid

Social Class
upper Middle, lower upper upper

Lifestyles Believers, survivors

Personality Aggressive
Behavioral:

Occasions Regular and special

Benefits Quality, economy,  convenience, speed

User Status Regular Users

Loyalty status Strong

Attitude toward product Positive, enthusiastic

Readiness stage Aware, Interested

 Usage rate Heavy users
Pepsi Max and 7up Free
Geographic:

Country Pakistan

Country Region Punjab, Sindh, Baluchistan, NWFP

Density Urban, rural, suburban

Climate Hot and dry (Summer,Winter,Autum,Spring

Cities All cities in Pakistan

 Demographic:

Age 25 plus

Income Rs.6,000+

Family life-cycle Older, health conscious

Psycho-graphic:

Social Class  upper Middle, lower upper, upper upp

Lifestyles Strivers

Personality Aggressive
Behavioral:

Occasions Regular and special

Benefits Quality, economy, convenience, speed

User Status Ex-user, first time user, potential user

 Loyalty status Medium

Attitude toward product Positive

Interested, desirous, informed, intendi

Readiness stage
buy

Usage rate Medium users

 
Mountain Dew
Geographic:

Country Pakistan

Country Region Punjab, Sindh, Baluchistan, NWFP

Density Urban, rural, suburban

Hot and dry Hot and dry

Climate
(Summer,Winter,Autum,Spring)

Cities All cities in Pakistan

 Demographic:

Age 13-30

Income Rs.6,000+

Family life-cycle Teenagers, Young

Psycho-graphic:

Social Class upper Middle, lower upper, upper uppe

Lifestyles Achievers
 Personality Ambitious
Behavioral:

Occasions Regular and special

Benefits Quality, economy, convenience, speed

User Status Ex-user, first time user, potential user

Loyalty status Medium

Attitude toward product Enthusiastic

Readiness stage Desirous, aware

Usage rate Medium users

 
Marinda
Geographic:

Country Pakistan

Country Region Punjab, Sindh, Baluchistan, NWFP

Density Urban, rural, suburban

Hot and dry Hot and dry

Climate
(Summer,Winter,Autum,Spring)

Cities All cities in Pakistan

Demographic:

Age 7-30

Income Rs.6,000+
 Family life-cycle Children
Psycho-graphic:

Upper lower, lower middle, middle mid

Social Class
upper Middle, lower upper upper class

Lifestyles Survivors, Achievers

Personality Compulsive, gregarious

Behavioral:

Occasions Regular and special

Benefits Quality, economy, convenience, speed

User Status Regular user

Loyalty status Medium

Attitude toward product Positive

Readiness stage Aware

Usage rate Medium users

 
Marinda Apple
Geographic:

Country Pakistan

Country Region Punjab, Sindh, Baluchistan, NWFP

Density Urban, suburban

Climate Hot and dry Hot and dry

 (Summer,Winter,Autum,Spring)

Cities Most of the cities in Pakistan

Demographic:

Age 7-30

Income Rs.6,000+

Family life-cycle Children

 Psycho-graphic:

Upper lower, lower middle, middle mid

Social Class
upper Middle, lower upper upper

Lifestyles Survivors

Personality Aggressive
Behavioral:

Occasions Special

Benefits Quality, economy, speed

User Status Ex-user, first time user, potential user

Loyalty status Low

Attitude toward product Enthusiastic, hostile, indifferent

Readiness stage Informed

Usage rate Light users

Pepsi Twist
 Geographic:
 Country Pakistan

Country Region Punjab, NWFP

Density Urban, suburban

Climate Hot and dry

Cities Most of the cities in Pakistan

 Demographic:

Age 7-35

Income Rs.10,000+

Family life-cycle Young

Psycho-graphic:

Social Class Middle Class to upper class

Lifestyles Strivers

Personality Aggressive
Behavioral:

Occasions Special and regular

Benefits Quality, economy, speed

User Status Ex-user, first time user, potential user

Loyalty status Low

Attitude toward product  Indifferent

 Readiness stage Informed

Usage rate Light users

Product Mix of Pepsi (4 Ps)
Product:
Pepsi beverages Pakistan has product range that is as follow!
 Pepsi
 Pepsi Max
 Mountain dew
 7up
 7up free
 Marinda
 Marinda Apple
 Pepsi is a quality product and it’s more focus on customer
requirement like they have provided different Pepsi products e.g. Pepsi max
and 7up for health conscious people.
 Mountain dew for young and innovative generation.
 Marinda for teenagers.
 The company so much focusing on features of the product they
change the style and cover according to the new product and with time to
time for the attractiveness of customer.
 They have different bottle and packaging style of Pepsi, Max, Marinda
etc
 They are also using the brand ambassador’s picture on the bottle for
the attractiveness.
 The style of every bottle they are making easy to carry for customer.
Price:
The products mentioned in product head are sold in market in different
sizes and prices that are as follows!
 250ml
 500ml
 300ml
 1.5 liter
 2 liter
According to our survey company is using competitor based pricing. Main
competitor is Coca-Cola. Both companies have similar pricing in beverages.
They based on each other in setting the prices.
Place:
 Pepsi products are very convenient and available easily in the
consumer’s range. In Pakistan where ever you go you can easily find Pepsi
from different stores.
 For Pepsi key account are different wholesalers, restaurants and
hotels like pizza hut and KFC and also Metro, Macro which serve as a place
for key sale. These are known as national key accounts and are very
important in term of competition.
Distribution channel of Pepsi is!

Promotion:
 Pepsi is doing heavy marketing to create the best image in the mind of
customer about Pepsi.
 They arrange and sponsor different concerts and occasions like they
sponsor the crickets etc.
 The Pepsi is also doing outdoor advertising through billboards like
recently Pepsi have launched Pepsi max and promoting through billboard
that is in liberty near Husain Chowk.
 In their advertisement they are creating positive image through brand
ambassadors Anny and Adnan semi
 They are also doing radio advertisement the same advertisement on
TV.
 Pepsi promoting itself through its website.
 Company launched every product with different marketing
campaigns according to the product.
 
 Market Share of Pepsi in PAKISTAN

Pepsi 72%

Coca cola 23%

Other 5%

Pepsi Unique Selling Points (UPS)

Strong brand name:
 As the “PEPSI” itself is a strong brand name. Whenever the
customers feel thirst he/she always think about the PEPSI not even the
beverage, Which makes the Pepsi brand name as a  stronger brand name
this is the reason that Pepsi gets the advantage of Word of mouth
advertisement as well which ultimately raise the sales of Pepsi.
Quality:
 When we talk about the quality of Pepsi as a company they are very
much concern about product quality. To make sure that the product is up to
Standards Company have many checks in different departments. As they
have special department of QA which always verify the quality standards.
 First when the product reaches (US -> SINGAPURE -> production
plant) to the production plant in a carbonated form in sealed packs drums
which use to be given to the Franchisers. In the production department
only foreigners are allowed to work. The company responsibility shifts to
the franchisee which makes sure the quality of the product. Company has
appointed one QA person with the franchise and on the other hand
company often sends their representatives to the production of the
franchise to overcome the hurdles in meeting the quality standards.
Economy:
 The price which makes the product to be accessible to the final
customer. Now days it is better to have soft drink which is available in the
 shape of packed bottles and cans. People prefer to have economical product
to be taken as a drink that is the reason Pepsi taking the advantage of
Unique Selling Point.
Convenience:
Pepsi is available to everywhere, any store or any food restaurant this is the
thing which make the product convenience to the customer which is a Ups
point as well for the company.
 Do care of Health conscious people (Max):
As the Pepsi is always found of having more and more customers in hand
that’s why company has launches the Pepsi Max (without sugar) to fulfill
the demand and retain the health conscious people .which is again a unique
selling point for Pepsi.
Taste:
The taste of the product is attractive to all, like any child, young, married or
old every one like the taste of Pepsi which we can say it fits to all.
Addiction:
One more and huge unique selling point can be the addiction of the people
that they need the Pepsi with mostly their all the meals, especially children.
They are found of having Pepsi with them all the time.
Competitive analysis
Direct Competitors:
 Primary Competitors:
1. Coca Cola
2. RC Cola
The primary competitors of Pepsi are coco cola and RC cola. These
competitors are very strong and powerful in the market due to their huge
market shares and customer satisfactions. And there is a big challenge for
Pepsi to take over the direct competitors.
 Secondary Competitor:
1. Amrat cola
2. Shendy cola
Indirect competitors:
 Juices
 energy drinks
 Tea and coffee
 Mineral water
Pepsi Marketing Strategies:
PepsiCo has developed the national marketing, promotion and advertising
programs that support its many brands and brand image; oversees the
quality of the products; develops new products and packaging, and
coordinates selling efforts.

As we know that making a

strategy in large firms is not only the job of top executives, all the large
organization or firms involves the everyone, same as it is the following
strategies are the basic strategies which a company can apply to its
 Backward Integration:
Pepsi as a company is using the backward strategy in order to get the basic
ingredient of its beverages (concentrate) from its main head office of
America. This concentrate is send to its production locations.
Market Penetration:
Pepsi is spending million of rupees to advertise the product even it use to be
the reminder to the public because almost everyone knows the brand name
and its product.
 Market development:
All the Companies use to be in found of having new geographic areas. In
order to have market development company acquire the small companies
and to provide its product to everywhere they have the third part
services(PTN) to make sure the availability.
Product Development:
To cater and to retain the loyal customers company have offered many
other products in different sizes.
 Related Diversification:
Pepsi have its related diversification in the Water with the name of
Aquafina. This product has its own brand image and the target market as
well.
  Unrelated Diversification:
Under the unrelated diversification head Pepsi have launched the different
product like Lays (available in different flavor and packing) and the other is
Kurkuray (available in different flavor and packing)
Financial Strategies
INCLUDES!
 Statements. (cash flow, income statement, balance sheet)
 Costs / expenditures (Main)
 Profits
 Revenues
 Ratios (Liquidity, EPS, Turnover Ratio, ROI)
Consolidated Statement of Cash Flows
PepsiCo, Inc. and Subsidiaries
Fiscal years ended December 29, 2007
(In (100) 2007
Operating Activities:
Net
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .  … $ 5,658
Depreciation and
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
1426
Stock-based compensation
expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       260
Excess tax benefits from share-based payment arrangements . . . . . . . . . . . . .
. . . . . . . . . . . . .  (208)
Cash payments for merger-related costs and restructuring charges . . . . . . . .
..............—
Pension and retiree medical plan
contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (310)
Pension and retiree medical plan expenses . . . . . . . . . . . . . . .  . . . . . . . . . . . . .
. . . . . . . . . . . .       535
Bottling equity income, net of
dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   (441)
Deferred income taxes and other tax charges and
credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   118
Change in accounts and notes
receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (405)
Change in inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . .  . . . . .      (204)
Change in prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .    (16)
Change in accounts payable and other current liabilities . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .  . .500
Change in income taxes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .      128
Other,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .          107
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . .    6,934
Investing Activities
Capital
spending . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . .       (2430)
Sales of property, plant and
equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     47
Proceeds from (Investment in) finance
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     27
Acquisitions and investments in non controlled
affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    (1320)
Cash proceeds             …………………………… . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . .      315
Divestitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . .           —
Short-term investments, by original maturity
More than three months — purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .      (83)
More than three months —
maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      113
Three months or less,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      
(415)
Net Cash Used for Investing
Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      (3744)
Financing Activities:
Proceeds from issuances of long-term
debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2168
Payments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . .      (579)
Short-term borrowings, by original maturity
More than three months —
proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      83
More than three months — payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .         (133)
Three months or less,
net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . .  
(345)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . .        (2204)
Share repurchases —
common. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
(4300)
Share repurchases —
preferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    
(12)
Proceeds from exercises of stock
options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . .       1108
Excess tax benefits from share-based payment arrangements . . . . . . . . . . . . .
. . . . . . . . . . . . . .       208
Net Cash Used for Financing
Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        (4006)
Effect of exchange rate changes on cash and cash
equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . .       75
Net (Decrease)/Increase in Cash and Cash
Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       (741)
Cash and Cash Equivalents, Beginning of Year . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .       1651
Cash and Cash Equivalents, End of Year . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .        $ 910
Consolidated Statement of Income
PepsiCo, Inc. and Subsidiaries
Fiscal years ended December 29, 2007
(In (100) except per share amounts) 2007
Net
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
39,474
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
18,038
Selling, general and administrative expenses. . . . . . . . . . . . . . . . . . . . . . . . .
14,208
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
58
Operating
Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,170
Bottling equity income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
560
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(224)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  .
125
Income before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
.. 7,631
Provision for Income
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1,973
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
. 5,658
Net Income per Common Share
Basic . . . . . . . . . . . . . . . . . . . . .  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 3.48
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   $
3.41

Consolidated Balance Sheet

 PepsiCo, Inc. and Subsidiaries
 December 29, 2007
 
In (100) except per share amount

Amount Liabilities and Amoun

Assets
$ shareholder’s equity $

Current Assets $ 910 Current liabilities $  –

Cash and cash 1, 571 Short term obligations 7, 602
equipments 4, 389 Account payable and other 151
Short term investments 2, 290 current liabilities 7, 753
Accounts and notes 991 Income taxes payable 4, 203
receivable, net 10, 151 Total current liabilities 4, 792
Inventories 11, 228   646
Prepaid expenses and 796 Long term debt 17, 394
other current assets 5, 169 obligations 41
Total current assets 1, 248   (132)
  6, 417 Other liabilities 30
Property, plant and 4, 354   450
equipment, net 1, 682 Deferred income taxes 28184
    (952)
Amortizable Total liabilities 27, 712
intangible assets, net   (10, 387
Goodwill Comments and contingencies 17, 325
Other non am Preferred stock, no par
amortizable intangible value
assets Repurchased preferred
Non amortizable stock
intangible assets  
  Common shareholder
Investment in non equity
controlled Affiliates Common stock, par
  value(authorized 3600
Other assets shares, issued 1782)
Capital in excess of par value
Retained earnings
Accumulated other
comprehensive losses
Less: repurchased common
 stock, at cost (177 and 144
shares, respectively)
Total common
shareholders’ equity

Total liabilities and

Total assets $ 34, 628 $ 34, 6
shareholder’s equity
Costs / Expenditures:
Distribution Costs:
Distribution costs, including the costs of shipping and handling activities,
are reported as selling, general and administrative expenses. Shipping and
handling expenses were $5.1 billion in 2007.
Sales Incentives and Other Marketplace Spending:
We offer sales incentives and discounts through various programs to our
customers and consumers. Sales incentives and discounts are accounted for
as a reduction of revenue and totaled $11.3 billion in 2007
Software Costs:
We capitalize certain computer software and software development costs
incurred in connection with developing or obtaining computer software for
internal use when both the preliminary project stage is completed and it is
probable that the software will be used as intended. Capitalized software
costs include only (I) external direct costs of materials and services utilized
in developing or obtaining computer software, (ii) compensation and
related benefits for employees who are directly associated with the software
project and (iii) interest costs incurred while developing internal-use
computer software. Capitalized software costs are included in property,
plant and equipment on our balance sheet and amortized on a straight-line
basis when placed into service over the estimated useful lives of the
software, which approximate five to seven years. Net capitalized software
and development costs were $652 million at December 29, 2007
Research and Development:
We engage in a variety of research and development activities. These
activities principally involve the development of new products,
improvement in the quality of existing products, improvement and
modernization of production processes, and the development and
implementation of new technologies to enhance the quality and value of
both current and proposed product lines. Consumer research is excluded
from research and development costs and included in other marketing
costs. Research and development costs were $364 million in 2007, and are
reported as selling, general and administrative expenses.
2007 Restructuring and Impairment Charge:
In 2007, we incurred a charge of $102 million ($70 million after-tax or
$0.04 per share)

 
Liquidity ratios:
Current ratio

Current Assets/ Current Liabilities     = 10, 151/7, 753 = 1.30

 Quick ratio  

Current Assets – Inventory / Current Liabilities= 10,151 – 2,290 / 7,753 = 1.02

  Earnings per share:

Net Income / Number Of Shares Of Common Stock Outstanding

= 5,658 / 1659 = 3.41
 
Turnover ratios:
 Inventory Turnover

Sales / Average Inventory = 39,474 / 2,290 = 17.24

 Fixed Assets Turnover

Sales / Fixed Assets = 39,474 / 24,477 = 1.61

Account Receivable Turnover

Annual Credit Sales / Account Receivable = 39,474/4,389 = 8.99

Total Assets Turnover

Sales /Total Assets = 39,474 / 34,628 = 1.13

Return on Investment:

Net profit =
Capital employed = 5658/26875 = 0.21
Capital employed= Total assets – current liabilities
= 34628 – 7753 = =26875

Other Strategies
INCLUDES!
 Procurement
 production
Procurement Strategies:
To truly understand the needs of our consumers, customers and to succeed
in the marketplace, PepsiCo must reflect that diversity in our supplier base
and in everything we do. An integral part of our mission is a commitment to
purchase from a supplier base representative of our employees, consumers,
retail customers and communities.
 As part of our Responsible & Sustainable Sourcing strategy at PepsiCo, we
are committed to working in partnership with our suppliers to follow a
specific code of conduct in the areas of employee labor conditions, health &
safety, environmental management and business integrity.  We have
updated our policies to simplify communications about PepsiCo’s values
and how they extend to our supply chain partners.
Below, our updated Supplier Code of Conduct is provided.  We are issuing
this uniform PepsiCo-wide supplier code of conduct as a single document to
provide explicit communication of expectations in these important areas to
our suppliers and their chain of suppliers.  While the vast majority of our
suppliers are already working to these or similar standards, and may well
have Supplier standards that reach back into their own supply chain, we
intend to work closely with our suppliers to insure they fully comply with
our code of conduct listed below.
Business Conduct Standards:
PepsiCo expects its suppliers to conduct business responsibly, with
integrity, honesty and transparency and adhere to the following standards:
 Comply with all applicable laws and regulations of the countries of
operation
 Compete fairly for our business, without paying bribes, kickbacks or
giving anything of value to secure an improper advantage
 Encourage a diverse workforce and provide a workplace free from
discrimination, harassment or any other form of abuse
 Treat employees fairly and honestly, including with respect to wages,
working hours and benefits
 Respect human rights and prohibit all forms of forced or compulsory
labor
 Ensure that child labor is not used in any operations
 Respect employees’ right to freedom of association, consistent with
local laws
 Provide safe and humane working conditions for all employees
 Carry out operations with care for the environment and comply with
all applicable environmental laws and regulations
 Keep financial books and records in accordance with all applicable
legal, regulatory and fiscal requirements and accepted accounting practices
 Deliver products and services meeting applicable quality and safety
standards
 Support compliance with this Code by establishing appropriate
management processes and cooperating with reasonable assessment
processes requested by PepsiCo
 Observe PepsiCo’s policies regarding gifts and entertainment and
conflicts of interest when dealing with PepsiCo employees
Production Strategies:
Production is like a back bone in any manufacturing organization. In PEPSI
the main production materials are!
 Sugar
 Concentrates
 Water
 Ammonia etc
 Co2
All the raw material which is used in the production process is approved by
the Pepsi cola international. These materials should be according to the
standards of the PCI. If in any case the material does not match with the
standar ds PEPSI has a right to return it to the supplier. In this case the
entire cost of the material is beared by the supplier. This strong check on
the material is because of maintaining the high quality in the products
which is the credentials of the Pepsi cola products.
Capacities of Plants:
Currently the company is operating with five (05) plants. Out of these five
(05) plants, three plants are dedicated for the production of only 250 ML
RB bottles. While plant # 01 produces 1500 ML (PET) & 1000 ML (Glass)
bottles. Plant # 02 produces 1000 ML (PET), 250ML (NR) and 1500ML
(PET) bottles. Capacities of each plant are as follows:
See Appendices
The company has introduced its own mineral water which is called
“Aquafina” in two packages of 600ML & 1500ML and company is planning
to install a plant for juices.
 Quality control:
Quality control is the basic organizational objective of PEPSI. Quality check
is made from zero level to final products. For this purpose samples are
taken from the production to check the quality. This sampling is done after
each an hour or half an hour. These samples are tested according to the PCI
standards
Production staff:
Employees are directly involved in the production process. Whereas the
helpers are the indirect employees Moreover direct supervisor and helpers
are also there. Indirect employees are about 350 in number, who are not
directly involved in the production process but they are essential part of the
production department.
Laboratory:
 In order to maintain the high quality the plant has a well equipped lab.
Laboratory is sufficient to measure the standards and to test syrup of
different flavors. The well equipped lab enables the smooth flow of
production process.
Product line :
The major brand of PEPSI is Pepsi 250 ml, having highest market share
which is 47% as compared to other brands. The other brands produced by
the organization are!
 Pepsi
 Pepsi diet
 Marinda
 Teem
 7up
 7up diet
 Mountain dew
Production of new brand:
If PEPSI wants to produce a new brand they have to get permission from
PCI. This permission is the requirement for the production of a new brand
of Pepsi cola international. PEPSI currently installed its new caning plant.
This plant is also established after the permission of PCI because PEPSI
meets the standards of PCI. As concentrate of each brand is separate and
these concentrates are provided by the PCI so that they have to rely on PCI
for getting the concentrate of new brand.
Water Treatment:
Water is very important ingredient regarding the beverages industry. The
bottles are filled with concentrate and treated water and their specific ratio
is mixed up and filled into the bottles.
Raw water i.e the water that we take from the earth, is treated in beverages
industry and then is used for bottles filling.
Water Treatment Process:
The most practical water treating system for most bottling operations is a
complete coagulation plant. The conventional system consists of raw water
entering the reaction tank, where it is mixed with:
 Hydrated lime (Calcium Hydroxide, for alkalinity reduction
 Ferrous Sulphate (other coagulant), for coagulation and flock
formation.
 Hydrochloride (or other chlorine source), for oxidation
 Calcium chloride (or other calcium source), only if needed for sodium
alkalinity reduction.
Process of Empty Bottles Filling:
 Empty bottles that are received from market (Market Empty) are first
provided at the plants. These are put on the plant conniver. First of its
inspection process starts in which dirty bottles, breakage, straws and other
particles like wrappers are separated. Then the process of empty bottles
washing starts after this.
Purpose of Washing of Bottles:
 The bottle washer cleans and sanitizes returnable bottles that have
been brought back to the bottler
 Bottles received from market are dirty and full dust and other things.
Washing process makes them clean.
 Ensures product integrity
 NR glass and plastic (PET) packages must be rinsed with clean,
sanitary water
 Unclean bottles can result in off-tastes and off-odors
 Caustic carryover reduces flavor from the beverage and neutralizes
acid
Coding Pattern on Bottles:
BOTTLE CODE EXAMPLE: – L6295C3ISA0429
L6                    :- YEAR
295                  :- PRODUCTION DAY
C                      : – FRANCHISE CODE
3                      :- PLANT NO.
ISA                  : – CHEMIST NAME (INITIAL)
04:29               :- PRODUCTION TIME
Above type of coding is pasted on each bottle produced. Then the final
product moves towards packing machine through conveyor. Here the
bottles are put into the shells (Crates) and the crates are then put on the
pallets from conniver.  Finally these pallets are carried by lifter and put in
the filled stock.
Reports:
Production department maintains following reports;
 Invoicing of raw material
 quality report
 syrup
 production report
 

Control Procedures
INCLUDES!
 Marketing control
 Production control
 Quality control
 HR Control
 Finance control
Marketing control:
 Measuring and monitoring the marketing planning process:
 There is no planning without control. Marketing control is the process of
monitoring the proposed plans as they proceed and adjusting where
necessary. If an objective states where you want to be and the plan sets out
a road map to your destination, then control tells you if you are on the right
route or if you have arrived at your destination.

Control involves measurement, evaluation,

and monitoring. Resources are scarce and costly so it is important to
control marketing plans. Control involves setting standards. The marketing
manager will than compare actual progress against the standards.
Corrective action (if any) is then taken. If corrective action is taken, an
investigation will also need to be undertaken to establish precisely why the
difference occurred. Pepsi have used the new- product strategy to realize
their ambitions to both defend their current market position, and reinstate
their position as a product innovator.
Production control:
The Production Supervisor contributes to The Pepsi Bottling Group’s
success by directing the production team to meet customer needs and
achieve standards related to cost, line efficiencies, waste, safety and
productivity. This individual must set production performance standards
and align the organization to achieve standards. Major Tasks, Key
Responsibilities and Key Accountabilities Applies knowledge of processes,
equipment and system capability to set challenging individual and facility
standards Develops Annual Operating Plan for Production Achieve
performance standards with regards to safety, line utilization and quality
Tracks key performance indicators/costs, anticipating and correcting
trends.
Human resource control:
The business success is about taking right people to the right place on right
time. So what is the problem? Actually, if you need to manage not one, but
five employees or better five groups of employees, then you face the
problem of measuring and control. It’s hard to tell whether one group is
performing better or not, it becoming hard to compare one employee’s
success against other one; it’s hard to see the unique features of people. So
what the solution is?
There are two approaches Pepsi suggests to take into account when
thinking about human resources (HR) at company. First, Pepsi think in
terms of process, second in terms of how do employees affect the whole
business. : hire, education, management, retire. All the stages must be
processes carefully, as they could fully change your business. For instance,
if you will have the best system to hire stuff, but it will be working slowly,
then you will fail. If your education system will allow training everyone, but
will not allow checking the actual performance generated by training
processed, then you will fail. If your best people will retire, then you will
lose.
So, that’s why it’s really important to measure and control all processes
involved into employee’s relationship. People, who you work with, should
understand what your goals are and how they will help to achieve these
goals. This is the key idea of manage and control in employees management
processes.
Another approach is focusing on how someone’s job affects the company.
It’s obvious that even if someone works in Sales then he or she will affect
not only the financial part of the business by generating sales, but also all
other parts.
For instance, sales person will be involved in entire company processes,
such as education and knowledge sharing. This person will also work
directly with customers, so he or she might not just sale, but get a valuable
feedback from end users of your product. These people will also help your
company to grow not just in terms of sales, but in terms of better business
processes and business efficiency.
Finance control
The management of a firm’s cost and expenses in relation to budgeted
amounts.
The section is broken down into 3 sub-sections
 Cash Flow:
Cash flow is the balance of all the money that flows into and out of your
company account each day.
Regardless of whether or not you are trading and making sales/profits, you
will need cash, and thus it is important that you manage the liquid finance
you do have, and that you plan for cash flow in the future.
There are two principal factors that will affect your cash flow.
 Inflow:
Revenue created by Cash sales.
Capital Finance – bank loans and overdrafts, equity finance etc.
 Outflow:
Expenditure including Salaries and wages
Capital expenditure such as stock, raw materials and property costs
Pitfalls:
PEPSI CO has made sure that all transactions are documented and full
record-keeping system is in place and ensures that sufficient cash flow is
available to meet Taxation payments.
Taxation:
Pepsi is very clear about Taxation position from the onset (take professional
advice) and also clear about requirements for VAT (Value added tax)
registration. Pepsi is contributed heavily in taxes.
Quality control:
Quality control is a process employed to ensure a certain level of quality in
a product or service. It may include whatever actions a business deems
necessary to provide for the control and verification of certain
characteristics of a product or service. The basic goal of quality control is to
ensure that the products, services, or processes provided meet specific
requirements and are dependable, satisfactory, and fiscally sound.
Essentially, quality control involves the examination of a product, service,
or process for certain minimum levels of quality. The goal of a quality
control team is to identify products or services that do not meet a
company’s specified standards of quality.
Quality control is the basic organizational objective of PEPSI. Quality check
is made from zero level to final products. For this purpose samples are
taken from the production to check the quality. This sampling is done after
each an hour or half an hour. These samples are tested according to the
Pepsi cola International standards.
Laboratory:
In order to maintain the high quality the plant has a well equipped lab.
Laboratory is sufficient to measure the standards and to test syrup of
 different flavors. The well equipped lab enables the smooth flow of
production process.

Problem Section
INCLUDES!
 Main problem according to the management
 Main problem according to our analysis
Major problems According to the management for Pepsi
 Distributors are the main problem for the company; because some
distributors have political influence that is why they do not act on the
policies and procedures convey by the company.
Major problems of Pepsi According to our analysis
 Company is unable to maximize its profit because of the high
production cost
 Company is unable to hamper the distributors according to the legal
contract.
 TQM procedures are not properly implementing in the production
process.
 HRM related issues like biasness in hiring LUMS students
 In house productions of duplicate pepsi products couldn’t stop by the
company.

Strategic Alternatives
INCLUDES!
 solution to solve the problem
Solution to solve the problems
 The management should act aggressively to control the production
cost. Check & balance system must be improve regarding production.
 Trained and energetic staff must be hired to implement the TQM
procedure properly in production. So that the quality can be improve.
 Company is under pressure by some distributors because of their
political influence. Company should develop some plans to control the
distributors.
 HRM department gives extra priority to LUMS students while hiring
the employees. This biasness must be eliminated by giving equal
opportunity to all university graduates.

5 Years Plan
 Five Years plan for Pepsi:
(2010):
 Redefine Vision and Mission for Pakistan only
 To define Proper Goals, Objectives and Customer Promises.
 Make the company’s Employees well aware and informed of company
policies and objectives through different seminars and orientation sessions.
 Plan to get registered with Pakistan Stock Exchange.
 To fulfill the requirements for registration.
 To launch aggressive marketing campaigns.
(2011)- (2012):
 Go for Product Development & Related Diversification
 Pepsi to Pepsi in different flavors
 Launch Energy Drinks, Flavored Milk or Juices
(2013):
 To increase its spending for promotional activities to enhance their
market share
 Unrelated Diversification
 Production capacity must be enhanced to meet the future
demands.
 To open Pepsi outlets(where only Pepsi Products will be made
available)
 Fast Food Restaurants ( under another Brand Name)
(2014):
 Take the feedback and review of the last 3 years performance
regarding planning
 Co-Branding or Strategic Alliances with different brands.
 Pepsi must focus on TALENT MANAGEMENT to hire and retain the
best talent.

Conclusion & Recommendations

Conclusion:
After a brief analysis of Pepsi By using different tools and techniques we
have come to know that Pepsi international is very organized and successful
in the world in terms of strategies and their implementation plans. Pepsi
international has a vast range of products as compared to Pepsi Pakistan.
Pepsi has enough resources and finance to enhance the product line
aggressively in Pakistan as well. But in-stable economic, political and
security conditions is Pakistan are a big hurdle in making bigger
investments in Pakistan.
 To overcome these problems government of Pakistan should take some
initiatives to boost up the industrial sector.
Another internal factor which is an obstacle to enhancement of the business
is high operating cost of production which makes company bound to
minimize its profit margin.
Recommendations:
 Train local employees instead of foreigners to work in production
Department
 Update TQM Standards for betterment of Continuous Processes
 Improve Packing Process to Maintain the quality in different
Packing(250ml and cans)
 Stop In-house Production
 Implementation of Rules within the Territory of All the Franchises
 Install vending machines in different public places to promote
product and brand name.
 Mobile Vans must be introduced to attract the consumers towards
Pepsi brands
References
 Ghulam Ahmad Rana
 Imran Sarver (Area Sales Manager of Pepsi)
 MR Atif (production Manager of Pepsi ,Gujranwala)
 Internet (Pepsi international, Pepsi India)
 Shaheen Raza (Regional Sales Manager Of Geo TV)
 Riaz Bottlers (PVT) LTD
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1 COMMENT

AHMED GORSE August 4, 2018 - 9:14 pm

Thank you and god bless for sharing with this document, well done its a wonderful
study.
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