PepsiCo: A View from the Corporate Office SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of PepsiCo: A View from the Corporate Office
Describes the three business segments of PepsiCo (beverages, snack foods, and restaurants). It then explores the competitive environment within each segment and the response of PepsiCo's businesses. It seeks to show how PepsiCo CEO, D. Wayne Calloway, in a very "hands-off" and decentralized manner, achieves high growth rates in each segment through a process of "continual transformation." Calloway strives to hold together a fast-growing and rapidly changing business through shared values (instead of implementing tighter controls and increasing supervision).
Authors :: Lynda M. Applegate, Leonard A. Schlesinger, Dena Votroubek
Swot Analysis of "PepsiCo: A View from the Corporate Office" written by Lynda M. Applegate, Leonard A. Schlesinger, Dena Votroubek includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Pepsico Calloway facing as an external strategic factors. Some of the topics covered in PepsiCo: A View from the Corporate Office case study are - Strategic Management Strategies, Competitive strategy, Leadership, Managing people, Organizational structure, Social responsibility and Strategy & Execution.
Some of the macro environment factors that can be used to understand the PepsiCo: A View from the Corporate Office casestudy better are - – increasing commodity prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing energy prices, digital marketing is dominated by two big players Facebook and Google, technology disruption, geopolitical disruptions, challanges to central banks by blockchain based private currencies,
increasing transportation and logistics costs, cloud computing is disrupting traditional business models, etc
Introduction to SWOT Analysis of PepsiCo: A View from the Corporate Office
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PepsiCo: A View from the Corporate Office case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Pepsico Calloway, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Pepsico Calloway 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: A View from the Corporate Office can be done for the following purposes –
1. Strategic planning using facts provided in PepsiCo: A View from the Corporate Office case study
2. Improving business portfolio management of Pepsico Calloway
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Pepsico Calloway
Strengths PepsiCo: A View from the Corporate Office | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Pepsico Calloway in PepsiCo: A View from the Corporate Office Harvard Business Review case study are -
Effective Research and Development (R&D)
– Pepsico Calloway 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: A View from the Corporate Office - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Operational resilience
– The operational resilience strategy in the PepsiCo: A View from the Corporate Office 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.
Successful track record of launching new products
– Pepsico Calloway has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Pepsico Calloway 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.
Sustainable margins compare to other players in Strategy & Execution industry
– PepsiCo: A View from the Corporate Office firm has clearly differentiated products in the market place. This has enabled Pepsico Calloway to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Pepsico Calloway to invest into research and development (R&D) and innovation.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Pepsico Calloway digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Pepsico Calloway 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
– Pepsico Calloway is one of the most innovative firm in sector. Manager in PepsiCo: A View from the Corporate Office Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Superior customer experience
– The customer experience strategy of Pepsico Calloway in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Cross disciplinary teams
– Horizontal connected teams at the Pepsico Calloway 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
– Pepsico Calloway 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 Lynda M. Applegate, Leonard A. Schlesinger, Dena Votroubek 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.
Highly skilled collaborators
– Pepsico Calloway 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: A View from the Corporate Office HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Pepsico Calloway 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 Calloway is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PepsiCo: A View from the Corporate Office Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
High brand equity
– Pepsico Calloway has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Pepsico Calloway to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses PepsiCo: A View from the Corporate Office | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PepsiCo: A View from the Corporate Office are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study PepsiCo: A View from the Corporate Office, it seems that the employees of Pepsico Calloway 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.
Interest costs
– Compare to the competition, Pepsico Calloway 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 decision making process
– As mentioned earlier in the report, Pepsico Calloway 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 Calloway 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.
Increasing silos among functional specialists
– The organizational structure of Pepsico Calloway is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Pepsico Calloway needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Pepsico Calloway to focus more on services rather than just following the product oriented approach.
Workers concerns about automation
– As automation is fast increasing in the segment, Pepsico Calloway 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.
Skills based hiring
– The stress on hiring functional specialists at Pepsico Calloway 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.
Products dominated business model
– Even though Pepsico Calloway 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 - PepsiCo: A View from the Corporate Office should strive to include more intangible value offerings along with its core products and services.
Slow to strategic competitive environment developments
– As PepsiCo: A View from the Corporate Office HBR case study mentions - Pepsico Calloway 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 cash cycle compare to competitors
Pepsico Calloway 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.
Capital Spending Reduction
– Even during the low interest decade, Pepsico Calloway has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PepsiCo: A View from the Corporate Office, is just above the industry average. Pepsico Calloway 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.
Opportunities PepsiCo: A View from the Corporate Office | 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: A View from the Corporate Office are -
Developing new processes and practices
– Pepsico Calloway can develop new processes and procedures in Strategy & Execution 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Pepsico Calloway can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Buying journey improvements
– Pepsico Calloway can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PepsiCo: A View from the Corporate Office 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.
Better consumer reach
– The expansion of the 5G network will help Pepsico Calloway to increase its market reach. Pepsico Calloway 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.
Creating value in data economy
– The success of analytics program of Pepsico Calloway has opened avenues for new revenue streams for the organization in the industry. This can help Pepsico Calloway to build a more holistic ecosystem as suggested in the PepsiCo: A View from the Corporate Office case study. Pepsico Calloway can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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 Calloway 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Pepsico Calloway 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: A View from the Corporate Office, 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
– Pepsico Calloway 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: A View from the Corporate Office - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Pepsico Calloway to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Pepsico Calloway can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Low interest rates
– Even though inflation is raising its head in most developed economies, Pepsico Calloway 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Pepsico Calloway 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 Pepsico Calloway to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Pepsico Calloway in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Loyalty marketing
– Pepsico Calloway 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.
Threats PepsiCo: A View from the Corporate Office External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PepsiCo: A View from the Corporate Office are -
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Pepsico Calloway can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
High dependence on third party suppliers
– Pepsico Calloway 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.
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 Pepsico Calloway.
Shortening product life cycle
– it is one of the major threat that Pepsico Calloway is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Pepsico Calloway 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 Calloway can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
Increasing wage structure of Pepsico Calloway
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Pepsico Calloway.
Stagnating economy with rate increase
– Pepsico Calloway 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.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Pepsico Calloway 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: A View from the Corporate Office .
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Pepsico Calloway with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Pepsico Calloway business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Pepsico Calloway 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.
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: A View from the Corporate Office, Pepsico Calloway may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Weighted SWOT Analysis of PepsiCo: A View from the Corporate Office 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: A View from the Corporate Office 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: A View from the Corporate Office 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: A View from the Corporate Office 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: A View from the Corporate Office 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 Calloway needs to make to build a sustainable competitive advantage.
