Case Study Description of PepsiCo's Bid for Quaker Oats (B)
Second in a series on PepsiCo's bid for Quaker Oats. Describes the negotiations between PepsiCo and Quaker including due diligence process, first bid and counteroffer. Quaker's counteroffer included a collar on equity consideration, and thus the case offers an opportunity to discuss and value these contractual devices.
Swot Analysis of "PepsiCo's Bid for Quaker Oats (B)" written by Carliss Y. Baldwin, Leonid Soudakov includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Quaker Counteroffer facing as an external strategic factors. Some of the topics covered in PepsiCo's Bid for Quaker Oats (B) case study are - Strategic Management Strategies, Financial analysis, Mergers & acquisitions, Negotiations and Finance & Accounting.
Some of the macro environment factors that can be used to understand the PepsiCo's Bid for Quaker Oats (B) casestudy better are - – wage bills are increasing, cloud computing is disrupting traditional business models, increasing household debt because of falling income levels, digital marketing is dominated by two big players Facebook and Google, challanges to central banks by blockchain based private currencies, competitive advantages are harder to sustain because of technology dispersion, technology disruption,
there is increasing trade war between United States & China, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of PepsiCo's Bid for Quaker Oats (B)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in PepsiCo's Bid for Quaker Oats (B) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Quaker Counteroffer, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Quaker Counteroffer 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's Bid for Quaker Oats (B) can be done for the following purposes –
1. Strategic planning using facts provided in PepsiCo's Bid for Quaker Oats (B) case study
2. Improving business portfolio management of Quaker Counteroffer
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 Quaker Counteroffer
Strengths PepsiCo's Bid for Quaker Oats (B) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Quaker Counteroffer in PepsiCo's Bid for Quaker Oats (B) Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Quaker Counteroffer 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.
Learning organization
- Quaker Counteroffer 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 Quaker Counteroffer is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in PepsiCo's Bid for Quaker Oats (B) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Quaker Counteroffer 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's Bid for Quaker Oats (B) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Quaker Counteroffer has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Quaker Counteroffer to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Diverse revenue streams
– Quaker Counteroffer is present in almost all the verticals within the industry. This has provided firm in PepsiCo's Bid for Quaker Oats (B) 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.
Innovation driven organization
– Quaker Counteroffer is one of the most innovative firm in sector. Manager in PepsiCo's Bid for Quaker Oats (B) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Analytics focus
– Quaker Counteroffer 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 Carliss Y. Baldwin, Leonid Soudakov can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Successful track record of launching new products
– Quaker Counteroffer has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Quaker Counteroffer 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.
Low bargaining power of suppliers
– Suppliers of Quaker Counteroffer in the sector have low bargaining power. PepsiCo's Bid for Quaker Oats (B) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Quaker Counteroffer to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Quaker Counteroffer digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Quaker Counteroffer 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.
High switching costs
– The high switching costs that Quaker Counteroffer 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.
Effective Research and Development (R&D)
– Quaker Counteroffer 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's Bid for Quaker Oats (B) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Weaknesses PepsiCo's Bid for Quaker Oats (B) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of PepsiCo's Bid for Quaker Oats (B) are -
Low market penetration in new markets
– Outside its home market of Quaker Counteroffer, firm in the HBR case study PepsiCo's Bid for Quaker Oats (B) needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study PepsiCo's Bid for Quaker Oats (B), in the dynamic environment Quaker Counteroffer has struggled to respond to the nimble upstart competition. Quaker Counteroffer has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Workers concerns about automation
– As automation is fast increasing in the segment, Quaker Counteroffer needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Aligning sales with marketing
– It come across in the case study PepsiCo's Bid for Quaker Oats (B) 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's Bid for Quaker Oats (B) can leverage the sales team experience to cultivate customer relationships as Quaker Counteroffer is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study PepsiCo's Bid for Quaker Oats (B), it seems that company is thinking about the frontier risks that can impact Finance & Accounting strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study PepsiCo's Bid for Quaker Oats (B), it seems that the employees of Quaker Counteroffer 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.
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 Quaker Counteroffer supply chain. Even after few cautionary changes mentioned in the HBR case study - PepsiCo's Bid for Quaker Oats (B), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Quaker Counteroffer vulnerable to further global disruptions in South East Asia.
High cash cycle compare to competitors
Quaker Counteroffer 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.
Increasing silos among functional specialists
– The organizational structure of Quaker Counteroffer is dominated by functional specialists. It is not different from other players in the Finance & Accounting segment. Quaker Counteroffer needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Quaker Counteroffer to focus more on services rather than just following the product oriented approach.
Skills based hiring
– The stress on hiring functional specialists at Quaker Counteroffer 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.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study PepsiCo's Bid for Quaker Oats (B), is just above the industry average. Quaker Counteroffer 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's Bid for Quaker Oats (B) | 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's Bid for Quaker Oats (B) are -
Learning at scale
– Online learning technologies has now opened space for Quaker Counteroffer 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.
Leveraging digital technologies
– Quaker Counteroffer 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Quaker Counteroffer 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.
Using analytics as competitive advantage
– Quaker Counteroffer 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's Bid for Quaker Oats (B) - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Quaker Counteroffer to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Quaker Counteroffer can use these opportunities to build new business models that can help the communities that Quaker Counteroffer operates in. Secondly it can use opportunities from government spending in Finance & Accounting sector.
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. Quaker Counteroffer 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. Quaker Counteroffer 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.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Quaker Counteroffer 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's Bid for Quaker Oats (B), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Quaker Counteroffer 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.
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 Quaker Counteroffer 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.
Creating value in data economy
– The success of analytics program of Quaker Counteroffer has opened avenues for new revenue streams for the organization in the industry. This can help Quaker Counteroffer to build a more holistic ecosystem as suggested in the PepsiCo's Bid for Quaker Oats (B) case study. Quaker Counteroffer can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Quaker Counteroffer 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 Quaker Counteroffer to hire the very best people irrespective of their geographical location.
Better consumer reach
– The expansion of the 5G network will help Quaker Counteroffer to increase its market reach. Quaker Counteroffer 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
– Quaker Counteroffer can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. PepsiCo's Bid for Quaker Oats (B) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Threats PepsiCo's Bid for Quaker Oats (B) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study PepsiCo's Bid for Quaker Oats (B) are -
High dependence on third party suppliers
– Quaker Counteroffer 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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Quaker Counteroffer with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing wage structure of Quaker Counteroffer
– 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 Quaker Counteroffer.
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's Bid for Quaker Oats (B), Quaker Counteroffer may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Stagnating economy with rate increase
– Quaker Counteroffer 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.
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.
Regulatory challenges
– Quaker Counteroffer 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.
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. Quaker Counteroffer can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Quaker Counteroffer 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's Bid for Quaker Oats (B) .
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 Quaker Counteroffer.
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 Quaker Counteroffer in the Finance & Accounting sector and impact the bottomline of the organization.
Shortening product life cycle
– it is one of the major threat that Quaker Counteroffer is facing in Finance & Accounting sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Environmental challenges
– Quaker Counteroffer 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. Quaker Counteroffer can take advantage of this fund but it will also bring new competitors in the Finance & Accounting industry.
Weighted SWOT Analysis of PepsiCo's Bid for Quaker Oats (B) 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's Bid for Quaker Oats (B) 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's Bid for Quaker Oats (B) 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's Bid for Quaker Oats (B) 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's Bid for Quaker Oats (B) 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 Quaker Counteroffer needs to make to build a sustainable competitive advantage.
