PEPSICO Industry Analysis
PEPSICO industry analysis is one of the ways the company applies in determining its ability to remain sustainable and profitable in the industry. The analysis helps in the identification of the firm’s competitiveness through evaluating weaknesses and any advantages that it may have over other competitors in the industry. PEPSICO is a leading global food and beverage company with a diverse portfolio of 22 brands. With several branches across the world, PEPSICO operates in 200 countries.
Overview of PEPSICO Industry Analysis
PEPSICO was formed in 1965 from the merger of Pepsi-Cola and Frito-Lay. Today, it has becomes one of the key players in the food and beverage industry, a position it enjoys because of several factors. However, this does not mean that it does not face challenges in the market. In fact, there is stiff competition in the industry that the company has had to deal with over the years.
The following PEPSICO industry analysis will discuss some of the key elements of the firm’s competitiveness.
Porter’s 5 Forces Analysis
Evaluating the impact of Porter’s 5 forces is one of the ways of conducting an industry analysis of PEPSICO. The collective strength displayed by these forces have a greater bearing on the company’s profitability.
- Threat of new entrants; Currently, PEPSICO is not facing any threats on new entrants into the market considering the high costs of investments, low switching costs and the moderate customer loyalty it enjoys in the industry.
- Competitive rivalry: The existence of other strong food and beverage companies like CocaCola have made the market to be very competitive. The stiff competition is pegged onto product innovations, and marketing strategies imposed by several companies in the sector.
- Bargaining power of suppliers: The companies that supply raw materials and other services have a weaker bargaining power because of the high overall supply, moderate size of individual suppliers and low forward integration of suppliers.
- Bargaining power of buyers: The variety of food and beverage products gives customers a greater power since they can easily switch at low costs.
- Threat of substitutes: Apart from PEPSICO’s products, there are several other substitutes that customers can go for at even lower prices and better quality. This creates significant threat to the company.
The above Porter’s 5 forces analysis indicates that the threats of substitutes, bargaining power of buyers and competitive rivalry are some of the key areas the company should focus on. However, it should emphasize on eco-friendliness, health concerns, aggressive marketing and product innovation.
Industry Attractiveness and success factors
This is also another area that should be evaluated when conducting an industry analysis of PEPSICO. The company has a wide portfolio consisting 22 food and beverage brands, including, Pepsi, Mountain Dew, Naked Juice, Sierra Mist, Aquafina among others. This has enabled it to appeal to a greater percentage of consumers in the global market. In 2014, each of these brands generated more than $1 billion in retail sales, an indication that the company is doing quite well in the industry.
The company has also invested in product differentiation, which is expressed in its distinctive branding. PEPSICO has categorized its brands into Global brands, Good-for-you brands, Fun-for-you brands and Better-for-you brands.
PEPSICO also has a properly developed global distribution channel, consisting six key divisions; North America Beverages, Frito-Lay North America, Quaker Foods North America, Latin America, Europe Sub-Saharan Africa and Asia, Middle East & North Africa. Through these channels, the company is able to reach out to a global audience with its products independently and also in conjunction with third parties.
Apart from its mission and values, PEPSICO also has a strong belief in human sustainability, performance with purpose, environmental sustainability, talent sustainability, global citizenship and partnerships. These ideals are incorporated in the company’s operations at various levels and also in diverse ways.
Conclusion on PEPSICO Industry Analysis
Based on the PEPSICO industry analysis discussed in this article, it is clear that the company still commands a significant market share. However, there is stiff competition that keeps building up in the industry as a result of new technologies in product development and marketing. Some of the key areas that the company should also focus on include product quality and pricing, taking into account the increasing health and environmental awareness among consumers.
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