Case Study Description of PepsiCo: QTG Emerging Channel Investment
This case examines the opportunity for the Quaker-Tropicana-Gatorade (QTG) division of PepsiCo to invest in either or both of two small but fast-growing retail channels: the Dollar Channel and the Natural Foods Channel. The case provides an overview of PepsiCo's business strategy, focusing on Health & Wellness and Diversity. The case also provides a wide range of information, including demographic projections and details of the characteristics of each channel. Students are challenged to take a broad, general management view in developing recommendations.
Swot Analysis of "PepsiCo: QTG Emerging Channel Investment" written by Timothy M. Laseter includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Qtg Channel facing as an external strategic factors. Some of the topics covered in PepsiCo: QTG Emerging Channel Investment case study are - Strategic Management Strategies, Health and Organizational Development.
Some of the macro environment factors that can be used to understand the PepsiCo: QTG Emerging Channel Investment casestudy better are - – wage bills are increasing, increasing commodity prices, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing energy prices, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing transportation and logistics costs, challanges to central banks by blockchain based private currencies, etc
Introduction to SWOT Analysis of PepsiCo: QTG Emerging Channel Investment
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PepsiCo: QTG Emerging Channel Investment case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Qtg Channel, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Qtg Channel 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 PepsiCo: QTG Emerging Channel Investment can be done for the following purposes –
1. Strategic planning using facts provided in PepsiCo: QTG Emerging Channel Investment case study
2. Improving business portfolio management of Qtg Channel
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 Qtg Channel
Strengths PepsiCo: QTG Emerging Channel Investment | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Qtg Channel in PepsiCo: QTG Emerging Channel Investment Harvard Business Review case study are -
Highly skilled collaborators
– Qtg Channel 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 PepsiCo: QTG Emerging Channel Investment HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Training and development
– Qtg Channel has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in PepsiCo: QTG Emerging Channel Investment Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Ability to recruit top talent
– Qtg Channel is one of the leading recruiters in the industry. Managers in the PepsiCo: QTG Emerging Channel Investment are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Digital Transformation in Organizational Development segment
- digital transformation varies from industry to industry. For Qtg Channel digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Qtg Channel has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Innovation driven organization
– Qtg Channel is one of the most innovative firm in sector. Manager in PepsiCo: QTG Emerging Channel Investment Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Organizational Development industry
– PepsiCo: QTG Emerging Channel Investment firm has clearly differentiated products in the market place. This has enabled Qtg Channel to fetch slight price premium compare to the competitors in the Organizational Development industry. The sustainable margins have also helped Qtg Channel to invest into research and development (R&D) and innovation.
Low bargaining power of suppliers
– Suppliers of Qtg Channel in the sector have low bargaining power. PepsiCo: QTG Emerging Channel Investment has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Qtg Channel to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Qtg Channel 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 Timothy M. Laseter 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.
Effective Research and Development (R&D)
– Qtg Channel 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 PepsiCo: QTG Emerging Channel Investment - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Qtg Channel is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Qtg Channel is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PepsiCo: QTG Emerging Channel Investment Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Diverse revenue streams
– Qtg Channel is present in almost all the verticals within the industry. This has provided firm in PepsiCo: QTG Emerging Channel Investment case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Successful track record of launching new products
– Qtg Channel has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Qtg Channel 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.
Weaknesses PepsiCo: QTG Emerging Channel Investment | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PepsiCo: QTG Emerging Channel Investment are -
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study PepsiCo: QTG Emerging Channel Investment, in the dynamic environment Qtg Channel has struggled to respond to the nimble upstart competition. Qtg Channel has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Qtg Channel supply chain. Even after few cautionary changes mentioned in the HBR case study - PepsiCo: QTG Emerging Channel Investment, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Qtg Channel vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Qtg Channel has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring
– The stress on hiring functional specialists at Qtg Channel has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As PepsiCo: QTG Emerging Channel Investment HBR case study mentions - Qtg Channel 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Qtg Channel 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study PepsiCo: QTG Emerging Channel Investment, it seems that the employees of Qtg Channel don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PepsiCo: QTG Emerging Channel Investment, is just above the industry average. Qtg Channel needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Low market penetration in new markets
– Outside its home market of Qtg Channel, firm in the HBR case study PepsiCo: QTG Emerging Channel Investment needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Increasing silos among functional specialists
– The organizational structure of Qtg Channel is dominated by functional specialists. It is not different from other players in the Organizational Development segment. Qtg Channel needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Qtg Channel to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Qtg Channel 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 PepsiCo: QTG Emerging Channel Investment | 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 PepsiCo: QTG Emerging Channel Investment are -
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Qtg Channel can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Qtg Channel to increase its market reach. Qtg Channel will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Buying journey improvements
– Qtg Channel can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PepsiCo: QTG Emerging Channel Investment 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Organizational Development industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Qtg Channel can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Qtg Channel can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Qtg Channel in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Organizational Development segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Qtg Channel 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 PepsiCo: QTG Emerging Channel Investment - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Qtg Channel to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Organizational Development industry, but it has also influenced the consumer preferences. Qtg Channel can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Qtg Channel can use these opportunities to build new business models that can help the communities that Qtg Channel operates in. Secondly it can use opportunities from government spending in Organizational Development sector.
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 Qtg Channel 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.
Loyalty marketing
– Qtg Channel 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Qtg Channel 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 Qtg Channel to hire the very best people irrespective of their geographical location.
Creating value in data economy
– The success of analytics program of Qtg Channel has opened avenues for new revenue streams for the organization in the industry. This can help Qtg Channel to build a more holistic ecosystem as suggested in the PepsiCo: QTG Emerging Channel Investment case study. Qtg Channel can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Manufacturing automation
– Qtg Channel 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.
Threats PepsiCo: QTG Emerging Channel Investment External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PepsiCo: QTG Emerging Channel Investment are -
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. Qtg Channel needs to understand the core reasons impacting the Organizational Development industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Qtg Channel in the Organizational Development sector and impact the bottomline of the organization.
Technology acceleration in Forth Industrial Revolution
– Qtg Channel has witnessed rapid integration of technology during Covid-19 in the Organizational Development industry. As one of the leading players in the industry, Qtg Channel 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.
Stagnating economy with rate increase
– Qtg Channel 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.
Regulatory challenges
– Qtg Channel needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Organizational Development industry regulations.
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. Qtg Channel can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Qtg Channel with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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 Qtg Channel.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Consumer confidence and its impact on Qtg Channel 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.
Environmental challenges
– Qtg Channel 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. Qtg Channel can take advantage of this fund but it will also bring new competitors in the Organizational Development industry.
High dependence on third party suppliers
– Qtg Channel high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Qtg Channel 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 PepsiCo: QTG Emerging Channel Investment .
Weighted SWOT Analysis of PepsiCo: QTG Emerging Channel Investment 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 PepsiCo: QTG Emerging Channel Investment 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 PepsiCo: QTG Emerging Channel Investment 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 PepsiCo: QTG Emerging Channel Investment 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 PepsiCo: QTG Emerging Channel Investment 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 Qtg Channel needs to make to build a sustainable competitive advantage.
