Case Study Description of Pepsi-Cola U.S. Beverages (A)
Responding to changes in Pepsi-Cola's competitive environment, Roger Enrico, president and CEO of PepsiCo Worldwide Beverages, formed a task force to investigate a possible reorganization of Pepsi's domestic soft drink business. The task force recommends reorganizing along geographic lines. The group has put forth two options: 1) full decentralization or 2) a matrix organization. Students are asked to analyze the options and make their own proposals for carrying out a reorganization. They are also asked to consider other options to deal with Pepsi's problems that don't center on reorganization.
Authors :: Andrall E. Pearson, Parke Boneysteele, Dave Nurme
Swot Analysis of "Pepsi-Cola U.S. Beverages (A)" written by Andrall E. Pearson, Parke Boneysteele, Dave Nurme includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Reorganization Pepsi's facing as an external strategic factors. Some of the topics covered in Pepsi-Cola U.S. Beverages (A) case study are - Strategic Management Strategies, and Organizational Development.
Some of the macro environment factors that can be used to understand the Pepsi-Cola U.S. Beverages (A) casestudy better are - – increasing inequality as vast percentage of new income is going to the top 1%, increasing household debt because of falling income levels, banking and financial system is disrupted by Bitcoin and other crypto currencies, cloud computing is disrupting traditional business models, there is increasing trade war between United States & China, increasing energy prices, talent flight as more people leaving formal jobs,
challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, etc
Introduction to SWOT Analysis of Pepsi-Cola U.S. Beverages (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Pepsi-Cola U.S. Beverages (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Reorganization Pepsi's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Reorganization Pepsi's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Pepsi-Cola U.S. Beverages (A) can be done for the following purposes –
1. Strategic planning using facts provided in Pepsi-Cola U.S. Beverages (A) case study
2. Improving business portfolio management of Reorganization Pepsi's
3. Assessing feasibility of the new initiative in Organizational Development field.
4. Making a Organizational Development topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Reorganization Pepsi's
Strengths Pepsi-Cola U.S. Beverages (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Reorganization Pepsi's in Pepsi-Cola U.S. Beverages (A) Harvard Business Review case study are -
Low bargaining power of suppliers
– Suppliers of Reorganization Pepsi's in the sector have low bargaining power. Pepsi-Cola U.S. Beverages (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Reorganization Pepsi's to manage not only supply disruptions but also source products at highly competitive prices.
Highly skilled collaborators
– Reorganization Pepsi's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Pepsi-Cola U.S. Beverages (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Operational resilience
– The operational resilience strategy in the Pepsi-Cola U.S. Beverages (A) Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Sustainable margins compare to other players in Organizational Development industry
– Pepsi-Cola U.S. Beverages (A) firm has clearly differentiated products in the market place. This has enabled Reorganization Pepsi's to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Reorganization Pepsi's to invest into research and development (R&D) and innovation.
High brand equity
– Reorganization Pepsi's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Reorganization Pepsi's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
High switching costs
– The high switching costs that Reorganization Pepsi's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Cross disciplinary teams
– Horizontal connected teams at the Reorganization Pepsi's are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Analytics focus
– Reorganization Pepsi's is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Andrall E. Pearson, Parke Boneysteele, Dave Nurme can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Reorganization Pepsi's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Reorganization Pepsi's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Superior customer experience
– The customer experience strategy of Reorganization Pepsi's in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Ability to recruit top talent
– Reorganization Pepsi's is one of the leading recruiters in the industry. Managers in the Pepsi-Cola U.S. Beverages (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Reorganization Pepsi's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Pepsi-Cola U.S. Beverages (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses Pepsi-Cola U.S. Beverages (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Pepsi-Cola U.S. Beverages (A) are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Pepsi-Cola U.S. Beverages (A) HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Reorganization Pepsi's has relatively successful track record of launching new products.
Products dominated business model
– Even though Reorganization Pepsi's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Pepsi-Cola U.S. Beverages (A) should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As Pepsi-Cola U.S. Beverages (A) HBR case study mentions - Reorganization Pepsi's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
High operating costs
– Compare to the competitors, firm in the HBR case study Pepsi-Cola U.S. Beverages (A) has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Reorganization Pepsi's 's lucrative customers.
Interest costs
– Compare to the competition, Reorganization Pepsi's has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Reorganization Pepsi's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Pepsi-Cola U.S. Beverages (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Andrall E. Pearson, Parke Boneysteele, Dave Nurme suggests that, Reorganization Pepsi's is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Workers concerns about automation
– As automation is fast increasing in the segment, Reorganization Pepsi's needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Aligning sales with marketing
– It come across in the case study Pepsi-Cola U.S. Beverages (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Pepsi-Cola U.S. Beverages (A) can leverage the sales team experience to cultivate customer relationships as Reorganization Pepsi's is planning to shift buying processes online.
Lack of clear differentiation of Reorganization Pepsi's products
– To increase the profitability and margins on the products, Reorganization Pepsi's needs to provide more differentiated products than what it is currently offering in the marketplace.
Need for greater diversity
– Reorganization Pepsi's has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Pepsi-Cola U.S. Beverages (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Pepsi-Cola U.S. Beverages (A) are -
Creating value in data economy
– The success of analytics program of Reorganization Pepsi's has opened avenues for new revenue streams for the organization in the industry. This can help Reorganization Pepsi's to build a more holistic ecosystem as suggested in the Pepsi-Cola U.S. Beverages (A) case study. Reorganization Pepsi's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Reorganization Pepsi's to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Reorganization Pepsi's to hire the very best people irrespective of their geographical location.
Loyalty marketing
– Reorganization Pepsi's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Manufacturing automation
– Reorganization Pepsi's can use the latest technology developments to improve its manufacturing and designing process in Organizational Development segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Reorganization Pepsi's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Reorganization Pepsi's to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Reorganization Pepsi's in the consumer business. Now Reorganization Pepsi's can target international markets with far fewer capital restrictions requirements than the existing system.
Building a culture of innovation
– managers at Reorganization Pepsi's can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Organizational Development segment.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Reorganization Pepsi's can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Pepsi-Cola U.S. Beverages (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Using analytics as competitive advantage
– Reorganization Pepsi's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Pepsi-Cola U.S. Beverages (A) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Reorganization Pepsi's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Reorganization Pepsi's can develop new processes and procedures in Organizational Development industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Reorganization Pepsi's can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Buying journey improvements
– Reorganization Pepsi's can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Pepsi-Cola U.S. Beverages (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats Pepsi-Cola U.S. Beverages (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Pepsi-Cola U.S. Beverages (A) are -
Technology acceleration in Forth Industrial Revolution
– Reorganization Pepsi's has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Reorganization Pepsi's needs to keep up with the evolution of technology in the Organizational Development sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Reorganization Pepsi's demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Easy access to finance
– Easy access to finance in Organizational Development field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Reorganization Pepsi's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Stagnating economy with rate increase
– Reorganization Pepsi's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Shortening product life cycle
– it is one of the major threat that Reorganization Pepsi's is facing in Organizational Development sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Reorganization Pepsi's.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Reorganization Pepsi's in the Organizational Development industry. The Organizational Development industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Reorganization Pepsi's will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Environmental challenges
– Reorganization Pepsi's needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Reorganization Pepsi's can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Reorganization Pepsi's needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Reorganization Pepsi's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Reorganization Pepsi's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Pepsi-Cola U.S. Beverages (A) .
Weighted SWOT Analysis of Pepsi-Cola U.S. Beverages (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Pepsi-Cola U.S. Beverages (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Pepsi-Cola U.S. Beverages (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Pepsi-Cola U.S. Beverages (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Pepsi-Cola U.S. Beverages (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Reorganization Pepsi's needs to make to build a sustainable competitive advantage.