SWOT Analysis of PepsiCo - Report Sample

Introduction

SWOT analysis is a deliberate business tool used by the business manager to formulate and determine what the project needs to pursue. It involves identifying the company's weaknesses, strengths, threats, and opportunities.

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Strengths

PepsiCo has a varied range of products as its number of brands are above 100 worldwide. Having more brands have made it second to Nestle as it takes the lead in the food, snack, and beverage industries (Zhang, 2019). The company made 1 billion USD from 22 of its 100 different brands. Its brands' most common include Pepsi, Lipton, Lays, Quaker, 7UP, and Tropicana. PepsiCo's brand portfolio has made it the only company with much versatility worldwide, even though its brands are classified under the food industry. Such a brand diversity provides alternatives to the customers hence making PepsiCo dominate in the market.

PepsiCo brands have turned to be recognized globally as it has owned most of the popular snacks, food, and beverage brands. The company's net worth has been pushed to billions of dollars as its brands are millions and other billions of dollars' worth. The company pushes its products into the marks by endorsing its brands. PepsiCo is world widely known as it is mostly affiliated to sporting events and music concerts. Most of the famed teams are sponsored by the products of the Pepsi Company. This makes it easier for the company to market its products to younger customers, who will be its primary target market.

PepsiCo has a reliable source of raw materials, which ensures that its operations are not negatively affected by the supply chain's bottlenecks. PepsiCo has ensured that among its departments, it has a customer relation section, which has enabled it to satisfy both the current and the potential customers with profitable brands. PepsiCo has built a strong distribution network over the past years to ensure that their products reach their target customers regardless of their geographical location. PepsiCo has improved its supply chain and perfected its operations as it has integrated technology companies, which has helped it work more efficiently and effectively and, therefore, make it more reliable.

PepsiCo's Weaknesses

Like any other company, PepsiCo has several weaknesses, which include:

Inefficient financial planning- as per the current asset ratio, the company can have room for improvement in using its cash. The net contribution and profitability ratio percentage are currently below the average of the industry. It is lagging in investing in developments and research- this has made the company's chief competitors take the lead. PepsiCo's organizational structure can only suit the present business model making it hard to expand the adjacent products' segments. PepsiCo's daily inventory is higher than its competitors, which makes it use more capital while investing in its networks.

The high rate of attrition in labor: PepsiCo spends more money developing and training its employees than its competitors. This is because it has a higher attrition rate. PepsiCo is being criticized negatively by its customers about its products. In 2019's annual report, the company wails that its customers were knocking their products. PepsiCo has majored in carbonate drinks that target only the youths.

Poor forecasting for the product's demand can make the company lose many opportunities compared to its competitors. This makes it hard for PepsiCo to make steady profits throughout and gives its competitors an opportunity notch. PepsiCo products may not be distributed on time to local stores and restaurants. This forces the customers to shift to other company brands that are delivered on time.

PepsiCo's Opportunities

PepsiCo can diversify its product portfolio beyond the current beverages and food. It can venture into new fields like sportswear, among others. PepsiCo has the opportunity of exploiting the use of online shopping as most customers have skewed to doing the shopping online. This will help the company to grow by selling their products via online channels.

Businesses that foster strong partnerships and alliances become a success. PepsiCo can outspread its partnership with Starbucks to yoke all the partnership profits in the coffee outlets. PepsiCo can use its resources to improve its market development and research, making it have a positive drift over its competitors. PepsiCo has an opportunity to expand its operations in South-America, Africa, and Asia as the regions are improving their economic situations and snowballing.

PepsiCo can bring into market snacks and drinks of new flavors, helping it have a broad customer base. Acquire new energy drinks- PepsiCo can acquire other beverage brands like Rockstar Energy, which can compete with its chief competitors. They are opening new markets due to agreements with the government. Government free trade agreements have given PepsiCo a golden opportunity of venturing into new markets.

PepsiCo's Threats

PepsiCo's profitability is threatened by other beverage companies like Droppers, Coca-Cola, Unilever, and Nestle. (PepsiCo 2018 annual Report) This competition jeopardizes land-term business sustainability as PepsiCo is forced to spend much on promotions, advertisements, and giving discounts to sustain the customers. PepsiCo can incur heavy losses as its products are mainly beverage and most customers tend to drop down such expenses due to financial hardships.

The adoption of emerging technology determines the success or failure of any business (Quan, 2020. Its competitors can overcome PepsiCo if they can embrace emerging technology more effectively than them. Change in economics and demographics can affect the market negatively. If the older consumers become more than the younger consumers, PepsiCo profitability can be threatened as their primary market target is the youths.

Conclusion

Thus, instability and trade uncertainty hinders effective market operations. Escalation of trade tensions can cause isolationism, trade wars, and protectionism in PepsiCo's overseas market, which threatens the company's profitability.

References

Batool, A., Hashim, S., & Tariq, h. financial leverage and its impact on investment: a case study of PepsiCo, Inc.

Quan, J. (2020, November). The Trend of PepsiCo by Comparing PepsiCo's Financial Reports from 2018 to 2019 Based on Harvard Analytical Framework. In 2020 5th International Conference on Modern Management and Education Technology (MMET 2020) (pp. 162-166). Atlantis Press.

Wu, M. B. (2017). Investment Thesis for PepsiCo, Inc. (NYSE: PEP).

Zhang, Z. (2019). Risk Analysis of Two Leader Drink Company: PepsiCo and Coca-Cola. Asian Business Research, 4(3), 42.