Environmental Scan - Research Paper Example

Environmental Scan All business performance and success depends on how well they manage the internal and external environment. Internal environment are the factors within the firm that affects business performance while external environment are the factors outside the business i.e. factors that the business cannot control but impacts on its operations. Pepsi and Coke have the obligation therefore of scanning both internal and external environments to realize success. The external environment of both Pepsi and coke influence greatly their performance.

External environment that affects the two companies are economic, social, political, demographic, technological and environmental factors. The changes in economic cycles affect the sales of the two firms in the beverage and snacks industry e.g. fluctuating interest rates, exchange rates fluctuations and income levels (PepsiCo, 2010). Reduction in the income level will reduce the two company’s level of sales. The social factor like the cultural beliefs and practices determines the level of sales in the global arena.

There are some regions across the globe where the consumption of snacks are discouraged hence reduce sales level. Demographic factors like youth population, family sizes further influence sales. Since the two firms operate globally, the political changes that determine the legislations, taxation and regulations affect the firms equally. The adoption of enhanced technology that reduces operational costs and efficiency will make the external environment (Coca-Cola, n.d). The internal environment that includes financial strengths, employee enthusiasms, organization culture, and innovation remain core to the businesses.

PepsiCo core competitive advantage is the diversified portfolio of products and brands, high innovation and differentiation of products and ability to enter into new markets successfully. The healthier food makes customers purchase their goods. The company strategy is to rethink and implement new efficient ways of production and best practices that would enhance customer satisfaction (PepsiCo, 2010). On the other hand coke competitive advantage include market leadership, business partnerships, multi-segmentation, strong brand portfolio, collaborative customer relationships, sustainable development and managerial expertise among others.

These make core a leader in the snack industry. Coke strategy is the maximizing growth and profitability to create shareholders value through transforming commercial models, multi-segmentation, product innovation, and expansion of brands (Coca-Cola, n.d). PepsiCo strategic indicators are the returns to shareholders, customer satisfaction, and growth in the market share. Coke measures effectiveness through sales value, market share and preference level of their soft drinks. PepsiCo guideline is effective because it aims at creating customer and shareholders’ value as well as promoting innovation.

Coke strategy looks at the firm’s profitability and market leadership hence making its measurement effective. Environmental scanning enables organizations develop strategies that ensure competitiveness and sustainability in performance. ReferencesPepsiCo (2010). PepsiCo 2010 Annual Report. Retrieved from http://www.pepsico.com/Download/PepsiCo_Annual_Report_2010_Full_Annual_Report .pdf"Coca-Cola - Investors - Financial Information - Annual and Other Reports." Coca-Cola: The Coca-Cola Company. N.p., n.d. Web. 23 Apr. 2012. .