Sample Business Studies Paper on PepsiCo Strategic Management

The rapid shifts in the business environment require commitment within an organization
to design a strategic plan to drive significant changes in the competitive relationships. Notably,
the consequential investment creates a significant capability to exploit future growth
opportunities within a market where strategic competition is initiated. Specifically, the response
of a given business entity regarding another one's introduction of new products ultimately
defines the impact of such a market. Therefore, such interaction between rivals is vital as it
enhances the potential of all actors to achieve maximum profits.
Market Entry
Market entry plays a significant role in strategic management and planning, as it
heightens competition among organizations and further bridges the profit margins. According to
Baye and Prince (2017), the influence of interrelated market forces determines the growth and
sustainability of profits. Traditionally, the prosperity of business organizations is pegged on their
capacity to accomplish the set goals by exploiting the opportunities available. Reflecting on
various strategic constructs, economists argue that the evolutionary analogy in strategic business
management significantly impacts the business's paradigm (de Vasconcelos Gomes et al., 2018).
For instance, when Coca-Cola introduced Sprite in the market, PepsiCo would make an
aggregate profit of 100 million US dollars less due to the lack of a competing product. Therefore,
this postulation implies that PepsiCo advancing its production to a competitive product would
galvanize the profit margins by splitting the market share.
Power of Input Suppliers
Industrial profits are dependent on the latitude of the supply chain commands. Studies
show that organizations exploit their supply chain powers to manipulate real earnings
management (Lanier et al., 2019). This phenomenon means that the industry profits are lower

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when suppliers get the power to negotiate favorable terms for their inputs. For instance, suppose
PepsiCo introduces a competing lemon-lime soft drink, the supply chain would prefer which
entity provides better returns; consequently, both the firms would control the market profits
based on their capabilities. Drawing from the industrial-organizational theory, developing a
strategic fit within the industry's forces would significantly change the firm's ability to interact
with external environments, adapt, and gain momentum (Vancouver, 2020). Therefore, PepsiCo
should introduce the lemon-lime soft drink to realign its competitive advantages in the industry.
Power of Buyers
The purchasing power is instrumental to most consumer markets. Research establishes
that most market consumers in various regions are highly susceptible to trying new products,
especially in the carbonated soft drink manufacturing sector (Haji, 2018). This assertion creates
an ample opportunity for PepsiCo firm to utilize the market potentials in multiple market
segments. On a similar note, economists argue that the contingency approach aids organizations
in meeting their financial obligations as it focuses on developing a specific strategy and
beneficial fit within its confines (Naidu et al., 2021). This assumption is instrumental in value co-
creation and building a strong competitive edge, so PepsiCo stands to bridge the profit margin
from 100 to 48 million US dollars. Besides, based on the buyer fragmentation in the sector,
introducing a substitute product would guarantee consumers the purchasing power due to the
ability to bargain for favorable prices. Altogether, these factors would act in favor of PepsiCo
upon introducing a new soft drink.
Industry Rivalry
The nature and intensity of competition among firms operating in a similar industry
dictate the sustainability of industry profits. According to Štofová and Kopčáková (2020), the

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timeliness of a given company to respond to the changing market environment enhances its
chances to secure a stable position against its rivals. To illustrate, PepsiCo would continuously
lose approximately 100 million US dollars in favor of Coca-Cola due to the lack of a competing
product in the market. With the large profit margins, Coca-Cola would heighten its productive
scales to the point of absorbing PepsiCo if the void is not bridged. On another perspective, the
theory of competitive advantage asserts that a company must take a defensive or offensive action
to defend its strategic position in the market (Bel, 2018). Therefore, given that all the market
forces would guarantee PepsiCo a competitive framework, it is viable to introduce a new product
to establish its profitability scales.
Substitutes and Complements
Principally, the price and value of complementary products and services play a vital role
in the level and sustainability of the industry profits. Scholars argue that the availability of
surrogate products significantly erodes an industry’s profitability as it introduces price wars
(Baye & Prince, 2017). Additionally, it directly influences consumer behaviors as it donates
them the power to negotiate and buy based on convenience. Based on the Balanced Scorecard
theory, introducing a new soft drink would propel PepsiCo to achieve its vision and uplift its
brand to greater heights (Quesado et al., 2018). Therefore, this strategy functions as one of the
best alternatives to boost the organization's productivity.
Conclusion

More broadly, the interaction of these interrelated market forces is significant in
determining the level, growth, and sustainability of profits in an industry. Based on the analysis,
these factors are instrumental for PepsiCo's ultimate productivity. Therefore, the organization
should adopt a new product to achieve maximum profit margins.

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References

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Baye, M. R., & Prince, J. T. (2017). Managerial economics and business strategy.
ISBN 9781259290619
Bel, R. (2018). A property rights theory of competitive advantage. Strategic Management
Journal, 39(6). https://doi.org/10.1002/smj.2707
de Vasconcelos Gomes, L. A., Facin, A. L. F., Salerno, M. S., & Ikenami, R. K. (2018).
Unpacking the innovation ecosystem construct Evolution, gaps, and trends.
Technological Forecasting and Social Change, 136.
https://doi.org/10.1016/j.techfore.2016.11.009
Haji, A. (2018). Exploring Consumers’ Attitude and Behavior toward Carbonated Soft Drinks:
In the case of Coca-Cola and Pepsi Cola (Doctoral dissertation, St. Mary's University).
http://hdl.handle.net/123456789/4083
Lanier Jr, D., Wempe, W. F., & Swink, M. (2019). Supply chain power and real earnings
management: stock market perceptions, financial performance effects, and implications
for suppliers. Journal of Supply Chain Management, 55(1).
https://doi.org/10.1111/jscm.12186
Naidu, S., Singh, G., & Narayan, J. (2021). Revisiting the contingency theory: dissection of
entrepreneurial orientation elements in retail franchisee performance. International
Journal of Emerging Markets. https://doi.org/10.1108/IJOEM-03-2021-0467
Quesado, P. R., Aibar Guzmán, B., & Lima Rodrigues, L. (2018). Advantages and contributions
in the balanced scorecard implementation. Intangible capital, 14(1).
http://dx.doi.org/10.3926/ic.1110
Štofová, L., & Kopčáková, J. (2020). The Competition Strategy between Coca-Cola vs. Pepsi
Company. Calitatea, 21(179).

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https://www.proquest.com/openview/0848fff31763e682817625ea0fcd3393/1?pq-
origsite=gscholar&cbl=1046413
Vancouver, J. B. (2020). Perceptions of control theory in industrial-organizational psychology:
disturbances and counter-disturbances. In The Interdisciplinary Handbook of Perceptual
Control Theory (pp. 463-501). Academic Press.