Of Pepsico-2009 - Case Study Example

The two key threats facing Pepsico may be seen as the considerable level of competition from key players in the market such as Coca-Cola and Kraft who both have large resources and capabilities to compete. In addition, the continuing economic downturn may be seen as a key threat to the company. Pepsico’s key weakness may be seen as one related to the company’s cost management system. While the company is financially strong, it has struggled to maintain costs proportionate to sales growth.

Market Focus – In the first instance Pepsico should continue and accelerate a policy of expanding its core product range into new markets were there is considerable potential for sales growth. Such markets include China, the Middle East and Africa. Product Portfolio Analysis – It has become clear that there has been a large change in demand on the behalf of consumers in the US and Europe with declining sales in traditional carbonated drinks and rise in demand for healthier options. As such, in these geographic areas Pepsico should focus energies into developing and marketing a range of alternatives to the tradito9nal carbonated drink and develop a clear healthy brand.

Cost Reductions – While the company is considerably profitable and has a strong balance sheet, costs have been rising disproportionately to sales growth. As such, Pepsico should embark on planed cost efficiency drive to help being expenses back into line with sales growth and maintain profit margins. The rational for undertaking the recommended action plan is based upon the consideration of a number of key factors. Changes to the product mix in the US and Europe are designed to take account of changes in consumer demands for healthier products.

On the other hand, key opportunities exist for large scale expansion in markets such as China where there is