PepsiCo Mission, Vision, and Purpose - Case Study Example

Case Study: PepsiCo Inc. Name University Introduction There are a variety of companies that deal with foods and beverages. However, PepsiCo Inc. (NYSE: PEP) has gained international recognition since it was formed through a merger between Pepsi-Cola Company and Frito-Lay Incorporated. Since it is an American Multinational enterprise dealing with food, snacks, and beverages, its main interests entail the fabrication, marketing, and distribution of beverages, as well as grain-based snack foods among other products. The company has its headquarters located in Purchase, New York (Jurevicius, 2016).Following its IPO, the company has undergone global expansion from its primary product, Pepsi to a broad range of both beverage and food brands. One of the largest brands is Tropicana and Gatorade. While Tropicana was acquired in 1998, Gatorade was as a result of a merger in between PepsiCo and Quarter Oaks, which led to the addition of Gatorade in the corporate’s product portfolio. As at the financial year ending onJanuary 22, 2012, the company generated retail sales that amounted to more than a billion U.S. dollars for each product in the portfolio (PepsiCo’s Annual Report 2014, 2015). Mission, Vision, and Purpose PepsiCo, as stipulated in the company’s website, believes that the society and business can thrive together. The company is guided by the assertion “performance with purpose,” realized by delivering top-tier results in a sustainable and respectable manner (PepsiCo, n.d). Its mission is providing consumers internationally with affordable, delicious, convenient and complimentary beverages and foods to its consumers, which range from wholesome breakfast, healthy daytime snacks, and evening beverage treats (Lombardo, 2015). As the company states, it is committed to investing in its people, the community, and the company for long-term and sustainable growth. Its vision is to deliver performance with purpose, which entails conveying a top-tier financial performance in the long term by not compromising sustainability in its strategies, which in turn leaves a positive societal imprint on the environment, from how the company makes its products to conservation of natural resources, and fostering environmental responsibility (Lombardo, 2015). Its guiding principles entail caring for customers and consumers on a global scale, selling products the company can be proud of, speaking candor and the truth, winning by diversification and inclusion, balancing the short-term objectives with long-term goals, as well as respecting others and succeeding together (PepsiCo, n.d). These aspects ensure that the company enjoys a competitive advantage, thereby enabling it to have high profits and revenues. Products and Segments According to the 2014 Annual Report, the logistical operations distributes the products to 200 countries. According to the PepsiCo’s 2014 Annual Report, the company is organized into six divisions, which are: Frito-Lay North America (FLNA), Latin America Foods (LAF), Quaker Foods North America (QFNA), PepsiCo Europe, PepsiCo Americas Beverages (PAB), and PepsiCo Asia, Middle East, and Africa (AMEA). The LAF segment entails all Latin American food and snack businesses while the PAB segment incorporates all Latin American and North American beverage businesses. On the other hand, PepsiCo Europe entails all snack, beverage, and food businesses in South Africa and Europe, and lastly, AMEA segment mainly includes snack, food, and beverage businesses in AMEA, excluding South Africa, which falls in the Europe division. One of the major strategies that the company capitalizes on, as per the Indra Nooyi, the chairman and Chief Executive Officer (CEO), is to “grow the core and add more” (Watrous, 2016). FLNA through the conjunction with third parties, or in independence is involved in manufacturing, marketing, distributing, and selling branded snack foods. Snack foods that the segment deals with include Doritos tortilla chips, Ruffles potato chips, Lay’s potato chips, branded dips, Cheetos cheese-flavored snacks, Santitas tortilla chips, as well as the Fritos corn chips (PepsiCo’s Annual Report, 2014). These products are vended to retailers and distributors. Additionally, as the 2014 Annual Report points out, FLNA joint ventured with Strauss Group in making, distributing, and selling refrigerated Saba dips and spreads. Its net revenue for the 2014 financial year was USD 14.5 billion, which was approximated 22% of PepsiCo’s net revenue. On the other hand, Quaker Foods North America also participates in the fabrication, marketing, distribution, and franchising dairy, rice, cereals, and past in conjunction with third parties or independently. This segment’s productsare Quaker Chewy granola bars, Quaker grits, Life cereal, and Aunt Jemima mixes and syrups. QFNA net revenue totaled USD 2.6 billion for the 2014 financial year, which is approximated at 4% of the total revenue (PepsiCo’s Annual Report, 2014). LAF also is involved in the making, distribution, and selling of snack foods such as Ruffles, Lay’s, Emperador, Elma Chips, Doritos, and Marias Gamesa among other foods, either in independence or in conjunction with third parties. 2014’s revenue for LAF was estimated USD 7.8 billion, which around 12% of the net revenue. PAB in conjunction with other third party businesses ensures that its products are marketed, distributed and sold. The products include Gatorade, Mountain Dew, Diet Pepsi, Pepsi, Aquafina, 7UP, and Tropicana Pure Premium (PepsiCo’s Annual Report, 2014). Through joint ventures with other corporations, including Unilever and Starbucks, PAB also makes, markets, and sells ready-to-drink coffee and tea-based beverages. It is also involved in manufacturing and distributing Dr. Pepper Snapple Group’s brands, such as Schweppes, Crush, and Dr. Pepper. Its net revenue for 2014 was USD 21.2 billion, an estimate of 32% of the company’s net revenue (PepsiCo’s Annual Report, 2014). PepsiCo Europe along with other third party companies is involved in fabrication, marketing, and distribution, and selling snack food products, fountain syrups, finished goods, and beverage products. Snack food products include Doritos, Lay’s Ruffles, Cheetos, as well as Quaker-branded cereals. Other beverage concentrates and fountain syrups include Tropicana, Diet Pepsi, Pepsi, Pepsi Max, and 7UP. Dairy products in this segment include Agusha and Chudo (PepsiCo’s Annual Report, 2014). The revenues in 2014 as per the annual report were USD 13.3 billion, which was approximated as 20% of the total revenue. Lastly, the AMEA segment makes, markets, distributes and sells snacks such as Lays Chipsy, Kurkure, Crunchy, and Cheetos either in independence or through third party entities. Quaker-branded cereals included in the product portfolio. The net revenue for this division was USD 6.7 billion as at the 2014 financial year, estimated to be 10% of the organization’s net revenue (PepsiCo’s Annual Report, 2014). Strategy and Market Since the company has division in Europe, America, South America, Asia Pacific, and Africa, it can be considered a multinational, and thus, its market is not limited to a single region, rather, globally. Has capitalized in market trends to ensure its profitability and guarantee an increased revenue. For instance, the company has capitalized on the growth of middle class, as well as the inadvertent growth of women in the workforce. This growth was characterized by the increase of disposable income, and as the consumers shifted their spending on higher-quality products and trusted brands, the company was not left behind. Rather, the organization, on a global basis, capitalized on making the products better, and did excellent target positioning(PepsiCo’s Annual Report, 2014). For instance, Pepsi Diet is meant for women. In addition, to improve customer’s convenience, the company streamlined its logistical operations so that the products could go from packaging to consumption in a matter of seconds. The company also leveraged on the international retail environment, which as the annual report asserts, has changed dramatically in the last few decades to become more efficient, organized, and support international trade through the increased sophistication and consolidation of retailers in every market. For instance, when Pepsi-Cola and Frito-Lay merged, it brought two high-velocity categories into one entity thereby allowing PepsiCo to match retailer’s growing scale and adopt a direct store delivery (DDS) selling system that has emerged to become an excellent service system for both large and small retailers (PepsiCo’s Annual Report, 2014). By doing so, the company emerged to be the number one beverage and snack Food Company in many countries, including USA, Russia, India, U.K, Saudi Arabia, Canada, Turkey, Mexico, and India. In addition, the company has developed focus on consumer health and wellness due to the acceleration of concern in these aspects by numerous consumers. For this reason, it has capitalized on this trend by researching and developing Fun-For-You products which are trans-fat free with low salt, sugar, and fat levels. Also, most Quaker-branded foods are coined “Good-For-You.” The nutrition products as the 2014 Annual Report asserted, accounted for 20% of the company’s net revenue. In the market, the Coca-Cola Company has been the major competitor, particularly in the beverage market, but this has not hindered the company to become highly profitable because in December 2005, PepsiCo exceeded Coca-Cola’s market value for the first time in since it began (PepsiCo’s 2009 Annual Report, 2010). Also, it has held a higher market share in countries like the US in the carbonated drinks market category. Even in 2014, PepsiCo had a higher market share in the US compared to Coca-Cola. However, PepsiCo is quite different from Coca-Cola primarily because it has diversified its business to incorporate snack, foods, and beverages into its portfolio, but as for Coca-Cola, it is only involved with drinks. For this reason, PepsiCo’s revenues no longer come from carbonated drinks, rather, foods, snacks, and beverages. For instance, revenues come from non-carbonated drinks such as Tropicana and Gatorade. As pointed out earlier, the strategy employed by the company is growing the core and adding more products in the product portfolio. Therefore, it can be derived that the main strategy that the company capitalizes on is diversification. According to Johnson et al. (2014), diversification entails the incorporation of new products that are very different from the original one. Considering PepsiCo, it started with Pepsi-Cola, a soft drink, but through the various mergers and acquisitions, it assumed new product lines, dealing with food, snacks, and beverages. Along with the adoption of health-sensitive products, the company has had tremendous growth, thereby competing favorably with the competitors, such as Coca-Cola. References PepsiCo’s 2009 Annual Report, 2011, 2009 PepsiCo, Inc. SEC Form 10-K, Businessweek. February 23, 2010. Retrieved December 12, 2010. Jurevicius, O., 2016), PepsiCo SWOT analysis 2016 | Strategic Management Insight. [Online] Strategicmanagementinsight.com. Available at: https://www.strategicmanagementinsight.com/swot-analyses/pepsico-swot-analysis.html [Accessed 16 Mar. 2016]. Johnson, G. Whittington, R. Scholes, K. Angwin, D. and Regnér, P., 2014, Exploring Strategy: Text & Cases 10th Ed., Pearson Education, Harlow. Lombardo, J., 2015, PepsiCo’s Vision Statement & Mission Statement Analysis - Panmore Institute. [Online] Panmore Institute. Available at: http://panmore.com/pepsico-vision-statement-mission-statement-analysis [Accessed 16 Mar. 2016]. PepsiCo, n.d., Our Mission and Values. [Online] Pepsico.com. Available at: http://www.pepsico.com/Purpose/Our-Mission-and-Values [Accessed 16 Mar. 2016]. PepsiCo’s 2014 Annual Report, 2015, Annual Report: 2014, PepsiCo. [Online], Available at http://www.pepsico.com/docs/album/default-document-library/pepsico-2014-annual-report_final.pdf?sfvrsn=0 [Accessed 16 Mar. 2016]. PepsiCo’s 2009 Annual Report, 2010, Annual Report: 2009, PepsiCo, [Online] http://www.pepsico.com/docs/album/annual-reports/2009_PEPSICO_AR.pdf [Accessed 16 Mar. 2016]. Watrous, M., 2016, Inside PepsiCo's snacks strategy. [online] Foodbusinessnews.net. Available at: http://www.foodbusinessnews.net/articles/news_home/Financial-Performance/2016/02/Inside_PepsiCos_snacks_strateg.aspx?ID=%7B5D9F7198-218A-4354-B713-1AF0E6C24844%7D&cck=1 [Accessed 16 Mar. 2016]. Read More