Core Competencies of the PepsiCo - Case Study Example

CEO Project Core competencies PepsiCo has world’s largest portfolio of food and beverage brands. The company has 18 different product lines each of them earns $1 billion annual retail sales. PepsiCo is one of the world’s largest beverage and food companies. Core competencies of the company are contributing significantly towards world’s economy, environment and society. The company is having worldwide goodwill and it is truly a global brand. The company is having a very famous and effective distribution system which has made the company very dominant player in food and beverage industry. Products of the company are very hard to substitute by other products. The company follows direct store delivery system it is a very significant core competency for the company. The company has managed its competition very well with Coca Cola. VRIO analysis It is an analysis which includes Value, Rarity, Imitation, and Organization into it. Value Rarity Imitation Organization Customer service Y Y Y Y Pricing differentiation N N N N Products Y N Y Y Product Innovation Y Y Y Y Reputation Y Y Y Y Value: PepsiCo has great value in terms of their customer services. Products of the company are having great value. The company has great value for product innovation. The company is globally reputed. Pricing differentiation of the company is not that much valuable. Rarity: PepsiCo is having exemplary customer service. It has maintained good level of product innovation. Reputation is also very rare. Apart from Coca Cola no other company is having that much of reputation. Products of the company and pricing differentiation is not that much rare. Imitation: PepsiCo cannot be imitated in terms of Customer service, Products, Product Innovation and Reputation. Pricing differentiation is very often imitated by Coca Cola. Organization: The organization is clearly having almost all aspects like quality customer service, good quality products, and super product innovation. Reputation is also very high for the organization. Pricing differentiation is area which is lacking. Business model The company is having huge advantages at its structural and operational level. It is an important part of the company’s business model. The company is having very well defined organization structure. The company operates in a vast, simple and sophisticated way. Its operational advantages are bench marks for different companies around the world. The company was facing serious problems from its competitor Coca Cola. People around the world are shifting towards juice, water and health drinks. Demand of carbonated drinks has gone down a little bit. But the company has successfully adjusted the uncertain time which is also an integral part of the company’s business model. The company has made timely strategic investments for earning future growth. PepsiCo acquired two bottle makers PepsiAmericas and Pepsi Bottling Group. Value chain (Source: Alvesson, 56). As per the picture the company is having five steps for managing their value chain. The company receives all in bound logistics from its vendors. Here raw materials are purchased in future contract to avoid any financial uncertainties. In the next step of value chain the company produces different products from all those raw materials and all those products are packed and bottled in this step. Products are being stored and maintained in ware houses. Then products are ready for sales. It can be sold with the help of whole sellers, retailers and products can be sold with the help of automatic vending machines also. Sales and promotional activities go simultaneously with selling of products. Post sales services and online order booking is also a part of PepsiCo’s value chain. Corporate structure The company is having four different business units. 1) PepsiCo Americas Beverages in short PAB. 2) PepsiCo Europe. 3) PepsiCo Americas Foods in short PAF. 4) PepsiCo Asia, Middle East & Africa is known as AMEA. The company is having very well designed corporate structure. Corporate structure is created in such a way that it is covering the whole world. The corporate structure of the company is very simple and effective in nature. Corporate structure of the company is very suitable for its huge product lines and large markets around the world. Corporate culture The company has very unique corporate culture. The company follows shared principals for its all stakeholders. The company is having very supportive and participative atmosphere. PepsiCo believes in empowering human being. The company gives equal importance to its products and its workforces. Corporate culture of the company is very straight forward. Employees of the company are very honest and are very straight forward. Company’s corporate culture does respect judgment of every individual. Calculated risks are also very much welcome in the organization. Employee creativity and innovation is also an integral part of the organization (Drejer, 78-86). The company always believes in togetherness. Hunger for success and energy for growth is deep rooted into the corporate culture of the organization. Corporate resource A company is as good as its resources are. Every company must have sound corporate resources to sustain in the highly competitive market. Different corporate resources of PepsiCo are discussed below. Marketing The company is having very unique marketing strategy. The company is having a very prominent logo for its marketing. The company uses different marketing techniques. It uses celebrity endorsements, it uses T.V. promotions. The company often sponsors different global tournaments. PepsiCo believes in localization for their marketing. The company often comes up with different new ideas which are very suitable for local markets. The company spends huge money for marketing their products around the world. Marketing is a great strength and resource for the company. The company often comes up with its new marketing strategies during any global event. Currently FIFA world cup is coming so the company has come up with new advertisement (Bachmeier, 123-124). Finance The company is having sound financial conditions. The company has achieved their financial targets in last year. The company is having huge market capitalization in terms of number of shares. The company has given increased annual dividend for the last 42 years to its share holders. The company recently recorded 5% percent growth in their snack sales. The company is having good financial back up. It is eyeing to invest $5.5 billion in India. EPS of the PepsiCo is 4.43. Gross profit margin is 54.47% for the quarter ended in March 2014. PepsiCo’s ROE increased in 2013which was 27.76%. Company’s ROA also increased in 2013. It was 8.70%. All these facts are clearly showing that company is having good financial resources. Research & development The company is having very robust Research & development systems. Research & development is very important for the success and growth of the company. Strong research and development systems are making it very easy for the organization to come up with more and more enjoyable beverages and food products. The organization is having unparallel technical abilities and solutions making the company more and more modern and attractive in nature. The organization has introduced world’s best scientists for their research and development purposes. It is also using some of the most modern techniques for their research and developments. The organization is spending huge amount of money for this purpose. Operations and logistics PepsiCo gives lot of importance to its operations and logistics. This is an age old feature of the organization. Each and every day the organization distributes its different products across the world. The entire operations and logistics system of the company has been designed very professionally. The company has got award winning logistics management system. The company has divided its distribution models according to different situations. Different distribution models are Direct Store Delivery, Vending & Food Service and Distribution from warehouses. The company is having great logistics management system which is increasing the ROI of the company almost 30%. It gives the company a huge competitive advantage in global markets (Kress, 67-71). Human resource It is one of the most important corporate resources for PepsiCo. The company gives very significant importance to its employee. It provides great orientation programs and training for its work force. PepsiCo has very clear human resource policy of developing each and every individuals related with the organization. The organization is having almost 274,000 employees around the world. Employees in the organization are very much committed, dedicated and focused towards their work. The organization is having a great strength of educated human resources. Human resource is an open secret behind the success and growth of the organization. Company’s HR policies are also very supportive for its employee (Glenn, 90-102). Information system The company is having very modern information systems. The company is having a very modern website. With the help of that the company easily can share different information with its customers around the world. It also helps customers to know and customers can ask different questions regarding the organization with the help of the website. The company has launched its Social Vending System. This system will enable customers around the world to get a Pepsi with a finger touch. It is a totally automated machine can reduce lots of time for customers. Apart from that the organization is having fully online order booking system and customer service system. It is also a great corporate resource for the organization. Work Cited Alvesson, Mats. Understanding Organizational Culture (Google eBook). London: SAGE. 2012. Print. Bachmeier, Kristina. Analysis of Marketing Strategies Used by PepsiCo Based on Ansoffs Theory. London: GRIN Verlag. 2013. Print. Drejer, Anders. Strategic Management and Core Competencies: Theory and Application. New York: Greenwood Publishing Group. 2002. Print. Glenn, Martin. The Best Job in the World - The PepsiCo Walkers crisp Marketing Case Study. New York: Compton House Publishing Ltd. 2013. Print. Kress, Moshe. Operational Logistics: The Art and Science of Sustaining Military Operations. Berlin: Springer. 2002. Read More