PepsiCo: The Launch of Organic Gatorade SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of PepsiCo: The Launch of Organic Gatorade
In the summer of 2016, PepsiCo Beverages Canada faced a choice: whether to launch its new product, organic Gatorade, in Canada. Only a few months previously, PepsiCo North America Beverages' chief executive officer had announced a company-wide initiative that was designed to offer consumers a greater variety of healthier products. Would such a product ultimately make PepsiCo more competitive in the Canadian market in light of recent trends that emphasized healthy options? Did Canadian consumers want organic Gatorade? PepsiCo also had to keep in mind its long-standing competition with The Coca-Cola Company, and decide how that would affect its strategic choices.
Swot Analysis of "PepsiCo: The Launch of Organic Gatorade" written by Neil Bendle, Robert George includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pepsico Gatorade facing as an external strategic factors. Some of the topics covered in PepsiCo: The Launch of Organic Gatorade case study are - Strategic Management Strategies, Health, Marketing and Sales & Marketing.
Some of the macro environment factors that can be used to understand the PepsiCo: The Launch of Organic Gatorade casestudy better are - – customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, geopolitical disruptions, wage bills are increasing, challanges to central banks by blockchain based private currencies, central banks are concerned over increasing inflation, increasing government debt because of Covid-19 spendings,
increasing energy prices, increasing household debt because of falling income levels, etc
Introduction to SWOT Analysis of PepsiCo: The Launch of Organic Gatorade
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PepsiCo: The Launch of Organic Gatorade case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pepsico Gatorade, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pepsico Gatorade 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: The Launch of Organic Gatorade can be done for the following purposes –
1. Strategic planning using facts provided in PepsiCo: The Launch of Organic Gatorade case study
2. Improving business portfolio management of Pepsico Gatorade
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pepsico Gatorade
Strengths PepsiCo: The Launch of Organic Gatorade | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pepsico Gatorade in PepsiCo: The Launch of Organic Gatorade Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the PepsiCo: The Launch of Organic Gatorade 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.
Superior customer experience
– The customer experience strategy of Pepsico Gatorade in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Sustainable margins compare to other players in Sales & Marketing industry
– PepsiCo: The Launch of Organic Gatorade firm has clearly differentiated products in the market place. This has enabled Pepsico Gatorade to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Pepsico Gatorade to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Pepsico Gatorade 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.
Diverse revenue streams
– Pepsico Gatorade is present in almost all the verticals within the industry. This has provided firm in PepsiCo: The Launch of Organic Gatorade 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.
Cross disciplinary teams
– Horizontal connected teams at the Pepsico Gatorade 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.
Training and development
– Pepsico Gatorade has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in PepsiCo: The Launch of Organic Gatorade 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.
Innovation driven organization
– Pepsico Gatorade is one of the most innovative firm in sector. Manager in PepsiCo: The Launch of Organic Gatorade Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Learning organization
- Pepsico Gatorade 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 Pepsico Gatorade is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PepsiCo: The Launch of Organic Gatorade Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Pepsico Gatorade has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pepsico Gatorade to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Effective Research and Development (R&D)
– Pepsico Gatorade 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: The Launch of Organic Gatorade - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Analytics focus
– Pepsico Gatorade 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 Neil Bendle, Robert George 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.
Weaknesses PepsiCo: The Launch of Organic Gatorade | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PepsiCo: The Launch of Organic Gatorade are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Pepsico Gatorade is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study PepsiCo: The Launch of Organic Gatorade can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Aligning sales with marketing
– It come across in the case study PepsiCo: The Launch of Organic Gatorade 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 PepsiCo: The Launch of Organic Gatorade can leverage the sales team experience to cultivate customer relationships as Pepsico Gatorade is planning to shift buying processes online.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PepsiCo: The Launch of Organic Gatorade, is just above the industry average. Pepsico Gatorade 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.
Slow to strategic competitive environment developments
– As PepsiCo: The Launch of Organic Gatorade HBR case study mentions - Pepsico Gatorade 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.
Interest costs
– Compare to the competition, Pepsico Gatorade 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.
High operating costs
– Compare to the competitors, firm in the HBR case study PepsiCo: The Launch of Organic Gatorade 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 Pepsico Gatorade 's lucrative customers.
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 Pepsico Gatorade supply chain. Even after few cautionary changes mentioned in the HBR case study - PepsiCo: The Launch of Organic Gatorade, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Pepsico Gatorade vulnerable to further global disruptions in South East Asia.
Slow decision making process
– As mentioned earlier in the report, Pepsico Gatorade has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Pepsico Gatorade even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Need for greater diversity
– Pepsico Gatorade 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.
Skills based hiring
– The stress on hiring functional specialists at Pepsico Gatorade 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study PepsiCo: The Launch of Organic Gatorade, in the dynamic environment Pepsico Gatorade has struggled to respond to the nimble upstart competition. Pepsico Gatorade has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Opportunities PepsiCo: The Launch of Organic Gatorade | 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: The Launch of Organic Gatorade are -
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Pepsico Gatorade 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. Pepsico Gatorade 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.
Manufacturing automation
– Pepsico Gatorade can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing 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.
Better consumer reach
– The expansion of the 5G network will help Pepsico Gatorade to increase its market reach. Pepsico Gatorade 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Pepsico Gatorade is facing challenges because of the dominance of functional experts in the organization. PepsiCo: The Launch of Organic Gatorade case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pepsico Gatorade in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pepsico Gatorade 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, PepsiCo: The Launch of Organic Gatorade, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Creating value in data economy
– The success of analytics program of Pepsico Gatorade has opened avenues for new revenue streams for the organization in the industry. This can help Pepsico Gatorade to build a more holistic ecosystem as suggested in the PepsiCo: The Launch of Organic Gatorade case study. Pepsico Gatorade can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Sales & Marketing industry, but it has also influenced the consumer preferences. Pepsico Gatorade can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Pepsico Gatorade 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 Pepsico Gatorade 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.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Pepsico Gatorade can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pepsico Gatorade can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Pepsico Gatorade can use these opportunities to build new business models that can help the communities that Pepsico Gatorade operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Threats PepsiCo: The Launch of Organic Gatorade External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PepsiCo: The Launch of Organic Gatorade 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. Pepsico Gatorade needs to understand the core reasons impacting the Sales & Marketing 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 Pepsico Gatorade in the Sales & Marketing sector and impact the bottomline of the organization.
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.
Regulatory challenges
– Pepsico Gatorade 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 Sales & Marketing industry regulations.
Technology acceleration in Forth Industrial Revolution
– Pepsico Gatorade has witnessed rapid integration of technology during Covid-19 in the Sales & Marketing industry. As one of the leading players in the industry, Pepsico Gatorade needs to keep up with the evolution of technology in the Sales & Marketing 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.
High dependence on third party suppliers
– Pepsico Gatorade 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.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pepsico Gatorade 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 Pepsico Gatorade with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Shortening product life cycle
– it is one of the major threat that Pepsico Gatorade is facing in Sales & Marketing sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Pepsico Gatorade 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study PepsiCo: The Launch of Organic Gatorade, Pepsico Gatorade may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Environmental challenges
– Pepsico Gatorade 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. Pepsico Gatorade can take advantage of this fund but it will also bring new competitors in the Sales & Marketing industry.
Consumer confidence and its impact on Pepsico Gatorade 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.
Weighted SWOT Analysis of PepsiCo: The Launch of Organic Gatorade 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: The Launch of Organic Gatorade 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: The Launch of Organic Gatorade 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: The Launch of Organic Gatorade 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: The Launch of Organic Gatorade 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 Pepsico Gatorade needs to make to build a sustainable competitive advantage.
