Cash Flow Productivity at PepsiCo: Communicating Value to Retailers SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
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Case Study SWOT Analysis Solution
Case Study Description of Cash Flow Productivity at PepsiCo: Communicating Value to Retailers
PepsiCo developed a new metric that better measured the value added by Pepsi products than did gross margin, the traditional metric used by retailers to determine shelf space and promotional activity. The new metric, cash flow productivity, captured the value of Pepsi's Direct-Store-Distribution (DSD) service and the strong attraction of its nationally advertised brands. Pepsi managers believed that their full service distribution service saved customers money and their strong brands generated more traffic and sales, but that most retailers, looking only at gross margins, missed this added value. Pepsi managers struggled to craft a strategy that would convince retailers to adopt cash flow productivity as a metric for making merchandising decisions in their stores.
Swot Analysis of "Cash Flow Productivity at PepsiCo: Communicating Value to Retailers" written by F. Asis Martinez-Jerez, Lisa Brem includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Metric Pepsi facing as an external strategic factors. Some of the topics covered in Cash Flow Productivity at PepsiCo: Communicating Value to Retailers case study are - Strategic Management Strategies, Branding, Costs, Performance measurement and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Cash Flow Productivity at PepsiCo: Communicating Value to Retailers casestudy better are - – central banks are concerned over increasing inflation, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy, increasing energy prices, increasing commodity prices, challanges to central banks by blockchain based private currencies, technology disruption,
cloud computing is disrupting traditional business models, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Cash Flow Productivity at PepsiCo: Communicating Value to Retailers
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cash Flow Productivity at PepsiCo: Communicating Value to Retailers case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Metric Pepsi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Metric Pepsi 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers can be done for the following purposes –
1. Strategic planning using facts provided in Cash Flow Productivity at PepsiCo: Communicating Value to Retailers case study
2. Improving business portfolio management of Metric Pepsi
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Metric Pepsi
Strengths Cash Flow Productivity at PepsiCo: Communicating Value to Retailers | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Metric Pepsi in Cash Flow Productivity at PepsiCo: Communicating Value to Retailers Harvard Business Review case study are -
Successful track record of launching new products
– Metric Pepsi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Metric Pepsi 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 Finance & Accounting industry
– Cash Flow Productivity at PepsiCo: Communicating Value to Retailers firm has clearly differentiated products in the market place. This has enabled Metric Pepsi to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Metric Pepsi to invest into research and development (R&D) and innovation.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Metric Pepsi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Metric Pepsi 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.
Effective Research and Development (R&D)
– Metric Pepsi 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Ability to recruit top talent
– Metric Pepsi is one of the leading recruiters in the industry. Managers in the Cash Flow Productivity at PepsiCo: Communicating Value to Retailers are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Metric Pepsi
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Metric Pepsi does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Metric Pepsi is one of the most innovative firm in sector. Manager in Cash Flow Productivity at PepsiCo: Communicating Value to Retailers Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Metric Pepsi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Metric Pepsi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Strong track record of project management
– Metric Pepsi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Metric Pepsi 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 Metric Pepsi is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Cash Flow Productivity at PepsiCo: Communicating Value to Retailers Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Operational resilience
– The operational resilience strategy in the Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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.
High switching costs
– The high switching costs that Metric Pepsi 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.
Weaknesses Cash Flow Productivity at PepsiCo: Communicating Value to Retailers | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cash Flow Productivity at PepsiCo: Communicating Value to Retailers are -
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cash Flow Productivity at PepsiCo: Communicating Value to Retailers, it seems that the employees of Metric Pepsi 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, Metric Pepsi 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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 Metric Pepsi 's lucrative customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Cash Flow Productivity at PepsiCo: Communicating Value to Retailers, is just above the industry average. Metric Pepsi 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers HBR case study mentions - Metric Pepsi 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.
Capital Spending Reduction
– Even during the low interest decade, Metric Pepsi 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.
High bargaining power of channel partners
– Because of the regulatory requirements, F. Asis Martinez-Jerez, Lisa Brem suggests that, Metric Pepsi 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.
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 Metric Pepsi supply chain. Even after few cautionary changes mentioned in the HBR case study - Cash Flow Productivity at PepsiCo: Communicating Value to Retailers, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Metric Pepsi vulnerable to further global disruptions in South East Asia.
Low market penetration in new markets
– Outside its home market of Metric Pepsi, firm in the HBR case study Cash Flow Productivity at PepsiCo: Communicating Value to Retailers needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Metric Pepsi 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. Metric Pepsi 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.
Products dominated business model
– Even though Metric Pepsi 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 - Cash Flow Productivity at PepsiCo: Communicating Value to Retailers should strive to include more intangible value offerings along with its core products and services.
Opportunities Cash Flow Productivity at PepsiCo: Communicating Value to Retailers | 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers are -
Better consumer reach
– The expansion of the 5G network will help Metric Pepsi to increase its market reach. Metric Pepsi 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Metric Pepsi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Metric Pepsi 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Metric Pepsi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Loyalty marketing
– Metric Pepsi 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 Metric Pepsi 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 Metric Pepsi to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Metric Pepsi 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Finance & Accounting industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Metric Pepsi 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. Metric Pepsi 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.
Creating value in data economy
– The success of analytics program of Metric Pepsi has opened avenues for new revenue streams for the organization in the industry. This can help Metric Pepsi to build a more holistic ecosystem as suggested in the Cash Flow Productivity at PepsiCo: Communicating Value to Retailers case study. Metric Pepsi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Leveraging digital technologies
– Metric Pepsi can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Manufacturing automation
– Metric Pepsi can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Metric Pepsi can use these opportunities to build new business models that can help the communities that Metric Pepsi operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
Building a culture of innovation
– managers at Metric Pepsi 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 Finance & Accounting segment.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Metric Pepsi in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Threats Cash Flow Productivity at PepsiCo: Communicating Value to Retailers External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cash Flow Productivity at PepsiCo: Communicating Value to Retailers are -
Stagnating economy with rate increase
– Metric Pepsi 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
– Metric Pepsi 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 Finance & Accounting industry regulations.
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. Metric Pepsi needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Shortening product life cycle
– it is one of the major threat that Metric Pepsi is facing in Finance & Accounting 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 Metric Pepsi.
Technology acceleration in Forth Industrial Revolution
– Metric Pepsi has witnessed rapid integration of technology during Covid-19 in the Finance & Accounting industry. As one of the leading players in the industry, Metric Pepsi needs to keep up with the evolution of technology in the Finance & Accounting 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.
Increasing wage structure of Metric Pepsi
– 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 Metric Pepsi.
Easy access to finance
– Easy access to finance in Finance & Accounting field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Metric Pepsi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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 Metric Pepsi business can come under increasing regulations regarding data privacy, data security, etc.
High dependence on third party suppliers
– Metric Pepsi 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.
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.
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 Metric Pepsi in the Finance & Accounting 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.
Weighted SWOT Analysis of Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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 Cash Flow Productivity at PepsiCo: Communicating Value to Retailers 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 Metric Pepsi needs to make to build a sustainable competitive advantage.