FPX_5006_Ass 4 : 1 st Draft # Strategy Implementation # MBA

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Contents ORGANIZATION’S INTERNAL AND EXTERNAL ENVIRONMENT 1 Executive Summary 3 Value chain Analysis (Internal Business Environment) 3 Pestle analysis (External environment) 4 Pepsi Company 4 Five Forces Analysis 5 Threat of New Entrants 5 Bargaining Power of Suppliers 5 Bargaining power of Buyers 5 Threats of Substitutes 5 Rivalry among Existing Competitors 5 Recommendations 5 References 7

This paper describes the internal and external environments of the Pepsi Company. Herein, a value chain analysis, PESTLE analysis, and five forces analysis are carried out.

This refers to the chain of value-added activities. Herein, products are subjected through a series of activities in the chain while at the same time gaining value at each of the stages passed through. Value chain analysis is employed by small business owners to perform a strategic cost analysis. Through the value chain analysis, a business can estimate labor costs in the market. It identifies and reveals existing links of the variety of activities and processes performed by a business to develop, manufacture, sell, and conduct a distribution of their services and products. The primary purpose of value chain analysis is to identify processes and activities to create value for your clients.

The value chain analysis is essential for business owners since it helps identify costs that can be reduced, through comparison of one's value chain to that of the competitor, areas of chain where competitors are better than you can be identified for improvements. Nonetheless, the value of the chain can be affected by a business strategy that is employed. Business owners need to recognize that their value chain will always be different from that of the competitors.

In performing Value chain analysis, one will need to include all direct activities like logistics and outgoing shipping, operation, and manufacturing, incoming shipping, purchase of suppliers and materials, sales, customer service, and marketing. Once this is done, one will include indirect activities like safety, legal, accounting, new service and product research, environmental, finance and accounting and system support. The last element to be considered is the profit margin of any organization. The course of action in value chain analysis in a business is the consideration of upstream clients and the downstream end-use of the services and products. End-user help in specifying who will get the business where one needs to understand what is valued as well as what is valued most by your clients. For Pepsi, the following table summarizes the findings of the value chain analysis;

Pestle analysis is essential in the identification of the factors that may bring in the modification in a business market. It's used majorly in making marketing plans effectively. While conducting a pestle analysis, a company will consider factors such as P- Political, E-Economical, S-Sociological, T- technological, L- Legal, E- environmental. These six factors help in determining the suitability of a market and provides for a platform to make a decision about expanding or limiting the market scope. Political entails government interventions that may affect the business and economy. Politics also entails the personal interest of the employees, which all influence organization functions. Economic, on the other hand, refers to the analysis of both the internal and external environment of the economy.

When assessing an integral environment, an organization's project viability is to be considered. Such as embargoes, interstate taxes, and interest rates should be focused. Economic growth like working hours, minimum wage, economic growth, and inflation is to be analyzed. Sociological factors show the events that influence a community or market. It entails analysis of the norms, population, and norms, among others. Technological factors entail performing an analysis, which aids with the use of the relevant technologies based on market demands. Legal factors entail an analysis of the laws that are affecting the organization. Herein, the policies and laws of business are maintained. Lastly is that business owners need to very conscious about their environment in which they operate. Such as temperature, calamities, monsoons needs to be considered. (Gerwin, Koch, 2016). 

The advantage of the Pestle analysis is that it is cost-effective as they are nor exposing incurred to execute it. Through it, business owners are able to use to analyze their market and product plans hence becoming more alert. Generally, pestle analysis helps in the identification of the opportunities and available threats for an organization (Kaplinsky, 2000). 

Pepsi Company is one of the largest companies in the world that deals with selling of beverages. In the global beverage market, PepsiCo accounts for over 35% of shares. This implies that the managers at PepsiCo need to have a perfecting of the interstate demands so that they can stay in line with PESTLE situations. According to a report by Interbrands, 2019, the company is a big brand globally and is ranked 23rd place among the leading brands internationally. PepsiCo advertisements feature world celebrities like Michael Jackson, David Beckham, among others. The advantage the company has is a wide market scope since they have branches in many parts of the globe. PepsiCo Pestle analysis may be represented as shown,

Political: Since they mainly deal with non-alcoholic beverages, which is regulated by the FDA, they are bound to maintaining compliance with the laws set out by the FDA. Such as civil wars and inflation in some countries may cause declines in sales.

Economical: Due to the recent economic downturn, which has affected the economy, organizations are forced to modify their sales and marketing strategies. With the decrease in profits, internal downsizing is anticipated. Economic condition therefore greatly affects a bossiness without considering the industry of operation

Social: PepsiCo is greatly affected by social factors. Because it is a non-alcoholic beverage Manufacturing Company, it has to maintain strict adherence to laws in many parts of the country they operate in. The company also has to try to communicate its image effectively as an internal brand with the aim of connecting the world together. Pepsi has to comply with the religious festivals in a different part of the world to better understand their market so as to improve its market scope.

Technological: PepsiCo is utilizing new technologies, especially in production and marketing. One technology that PepsiCo is utilizing is the use of social media to increase its engagement with its customers. The company also has taken a key lead of the developments that occurs with keeping in view how technology is used by the modern day youths. To improve brand engagement and recall, they have used technology to reach the youths.

Legal: several legal implications exist in many countries that relate to the beverage industry. PepsiCo is compliant to all these rules and ensures that their products are fit for consumption.

Environmental: refers to environmental factors that affect PepsiCo, thereby influencing its profit and trade negatively. Environmental factors affect agribusiness directly. (pepsico.com, 2020)

There are startups who are always looking for entrance into the beverage market. Through innovative strategies, the startups are in a position to challenge Pepsi and other existing players in the market (Lumbanraja et al., 2019). However, the barriers of entry into the market are significantly high in the beverage industry. As such, new entrants would find it significantly difficult to enter the market. Therefore, the risk of new entrants to Pepsi remains significantly low.

The suppliers of key materials needed for the production of the beverages by Pepsi maintain a significant bargaining power (Lumbanraja et al., 2019). However, Pepsi buys their supplies at competitive prices and has the potential to switch to cheaper options in case the suppliers ask for unreasonable prices for the materials.

The bargaining power of buyers is also significantly low. Since Pepsi have established itself as a major player in the beverage industry, it has a higher control of prices for its commodities. Buyers have low influence on the prices set for the commodities (Lumbanraja et al., 2019).

The threat of substitutes is very significant for Pepsi. Such beverages as Coca Cola remain highly competitive and pose a major threat to Pepsi.

Pepsi faces stiff competition from Coca-Cola and Cadbury Schweppes. Therefore, the strategies of the competitors are more likely to inform Pepsi strategies. As well, the strategies of Pepsi could also influence the strategies of its competitors.

From the above analysis, the following recommendations are offered. First, improved social media marketing is necessary to maintain and increase the Pepsi’s market share. Competitors are positioning themselves as viable alternatives for Pepsi products, which could potentially erode the company’s market share. As such, it is necessary to ramp up marketing efforts, especially among the youth in social media sites to counter the influence of competitors. This would also help counter any increased power from customers (Soloman, 2015). Second, improved innovation is critical. To effectively remain competitive in the current competitive market, technological innovation is necessary (Camillo et al., 2014). Innovation would not only help produce high quality products but also enhance efficiency. Lastly, further product research needs to be carried out to enhance the available products or come up with new ones altogether.

Camillo, A. A., Holt, S. A., & Marques, J. A. (January 01, 2014). Strategic Transcultural Marketing Management and Global Competitiveness.

Kaplinsky, R. (2000). Spreading the gains from globalisation: What can be learned from value chain analysis?. Brighton: Inst. of Development Studies.