By: Ashley Cleary, Sylvia LaBrie, Andrea Baril, Marie-Michele Lachance PepsiCo By: Ashley Cleary, Sylvia LaBrie, Andrea Baril, Marie-Michele Lachance

Overview Company Overview History of Pepsi Growth 2009 Events and Issues Existing Mission and Vision statement New Mission and Vision Statement SWOT Analysis External Assessment CPM EFE Positioning Map Internal Assessment Organizational Chart Income Statement Balance Sheet Financial ratios IFE Matrix Strategy Formulation SWOT Matrix Grand Strategy Matrix BCG Space Matrix Data Space Matrix IE Matrix Matrix Analysis QSPM Matrix Strategic Plan Strategy Objectives Recommendations Assumptions Implementation EPS/EBIT Projected Financials Evaluation Balanced Scorecard Key Future Ratios

History In 1965: PepsiCo, Inc. is founded by Donald M. Kendall, President and CEO of Pepsi-Cola and Herman W. Lay, Chairman and CEO of Frito-Lay, through the merger: 1. Pepsi-Cola In 1898: Caleb Bradham, a New Bern, North Carolina, pharmacist, created "Brad's Drink," a carbonated soft drink he created to serve his drugstore's fountain customers. 2. Frito Company   3. H. W. Lay Company The Major products of the companies are: Pepsi-Cola Company Fritos brand corn chips, Lay's brand potato chips, Cheetos brand cheese flavored snacks, Ruffles brand potato chips, Rold Gold brand pretzels. Mountain Dew

Growth 1966: Doritos is introduced Pepsi enters Japan and Eastern Europe. 1970: PepsiCo moves from New York City to new world headquarters in Purchase, N.Y Pepsi is the first company to respond to consumer preference with lightweight, recyclable, plastic bottles. 1977: PepsiCo acquires Pizza Hut, Inc 1978: Taco Bell 1980: PepsiCo Food Service International (PFSI) is formed to focus on overseas development of restaurants.

Growth Cont.  1982: Pepsi Free and Diet Pepsi Free, the first major brand caffeine-free colas, are introduced. Inauguration of the first Pepsi-Cola operation in China.   1985: PepsiCo is now the largest company in the beverage industry. The company has revenues of more than $7.5 billion, more than 137,000 employees. Pepsi-Cola products are available in nearly 150 countries and territories around the world. Snack food operations are in 10 international markets. 1986: PepsiCo purchases 7Up International, the third largest franchise soft drink operation outside the United States. 1993: Pepsi-Cola introduces Aquafina bottled water into test market. 1996: Pepsi-Cola launches Pepsi World at www.pepsiworld.com

Global Pepsi products are in almost 200 countries throughout the world There are 22 different brand lines that account for at least $1 billion per year per brand

2009 Celebrated 75 years in Canada Was on the “Best Food for Women” list in Women’s Health magazine Began a partnership with the NFL Won U.S. EPA SmartWay Environmental Excellence award Became official beverage of Norwegian Cruise Lines

Mission Statement Our mission is to be the world's premier consumer products company focused on convenient foods and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity.

Vision Statement PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today." Our vision is put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company.

Proposed Mission Our mission is to be the world's premier consumer products company focused on convenient foods and beverages through stores as well as our website. (1,2.3,4) We seek to produce financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. (5,8,9) And in everything we do, we strive for honesty, fairness and integrity. (6,7) Customer Products or Services Markets Technology Concern for survival, profitability, and growth Philosophy Self-Concept Concern for public image Concern for employees

Proposed Vision PepsiCo, in association with smaller brands, offers a wide variety of products from beverages to snacks at low cost.

External Assessment

Opportunities 1. Opening in market for less costly products 2. Growth opportunities in developed countries as well as international nonestablished countries 3. Pepsi recently reacquired ownership of its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) 4. Compete in more than one industry (non-alcoholic beverage industry, the salty or savory snack food industry, and the breakfast food industry) 5. Growth in the carbonated drink market is the largest in Asia and Europe 6. The world's demand is experiencing a growth with the sports drinks, bottled water, and energy drinks

Threats 1. Fierce competition from Coca-Cola, which owns the largest piece of the market share 2. The downturn in economy, which lead customers to shift away from bottles of water to tap water. 3. Because of the recession, customers are finding cheaper alternatives to the national brands. 4. Customers are getting more conscious and concerned about their eating habits and general health. 5. Campaign against plastic containers has impacted the sale of bottled beverages 6. Highly dependent on supplies of clean water, to prevent contamination

CPM

EFE Opening in market for less costly products Key External Factors Weights Rating Weighted Score   0.0 to 1.0 1 to 4 Opening in market for less costly products 0.05 2 0.1 Growth opportunities in developed countries as well as international unestablished countries 0.08 3 0.24 Pepsi recently reacquired ownership of its two largest bottlers, Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) 1 Compete in more than one industry (non-alcoholic beverage industry, the salty or savory snack food industry, and the breakfast food industry) 0.13 4 0.52 Growth in the carbonated drink market is the largest in Asia and Europe 0.09 0.27 The world's demand is experiencing a growth with the sports drinks, bottled water, and energy drinks. Threats Fierce competition from Coca-Cola, which owns the largest piece of the market share 0.12 0.48 The downturn in economy, which lead customers to shift away from bottles of water to tap water. Because of the recession, customers are finding cheaper alternatives to the national brands. 0.3 Customers are getting more conscious and concerned about their eating habits and general health. 0.36 Campaign against plastic containers has impacted the sale of bottled beverages Highly dependent on supplies of clean water, to prevent contamination 0.06 Totals 3.16

Dr. Pepper Snapple Group Positioning Map High Prices Limited Products Diverse Products Dr. Pepper Snapple Group Coca Cola Pepsi Co. Low Prices

Market Share

Revenue Distribution

Stock Price History

Internal Assessment

Strengths 1. Strong brand equity 2. Well-known worldwide 3. Innovating company 4. Ethical, socially responsible, and sustainable company 5. Strong advertising company with more than 40 slogans and songs 6. PepsiCo as the largest part of the market share after Coca-Cola 7. PepsiCo owns a wide variety of smaller brands which able them to offer a large product range from beverages to snacks

Weaknesses 1.PepsiCo production is really expansive because of the need to constantly develop new products to meet the changing customers demands 2. PepsiCo is experiencing a lack of focus towards Pepsi sodas 3. PepsiCo is experiencing product recalls 4. PepsiCo has a low employment productivity and a weak distribution 5. PepsiCo depends too much on the US market 6. PepsiCo is far behind Coca-Cola in the international market

IFE

Income Statement

Balance Sheet

Financial Ratios

Financial Trends Adapted from www.moneycentral.msn.com

Organizational Chart

Revenues and Profits

Strategy Formulation

SWOT Matrix

Grand Strategy Matrix

BCG Division Revenue % Revenue Profit Profit % Market Share Market Growth Frito-Lay North America $ 13,224.00 31% $ 3,258.00 38% 1 5.42% Quaker Foods North America $ 1,884.00 4% $ 628.00 7% -0.95% Latin America Foods $ 5,703.00 13% $ 904.00 10% -3.26% PepsiCo Americas Beverages $ 10,116.00 23% $ 2,172.00 25% 0.8 -7.51% Europe $ 6,727.00 16% $ 932.00 11% 0.4 -2.38% Asia, Middle East & Africa $ 5,578.00 $ 716.00 8% 0.3 8.97% Total $ 43,232.00 100% $ 8,610.00

BCG Cont.

SPACE Matrix

SPACE Graph 6 5 4 3 2 1 2 3 4 5 6 1 2 3 4 5 6

IE Matrix

Matrix Analysis

QSPM

QSPM Cont.

Strategic Plan

Strategy Market development is a strategy that PepsiCo should apply by expanding in countries that not already established Use forward integration to acquire smaller companies in foreign markets to increase their market share Product development and related diversification should also be considered while trying to produce and distribute healthier products

Recommendations In the next 3 years, PepsiCo should acquire 3 brands per year in an international marketplace One of these 3 brands per year must be healthy Increase production and distribution of carbonated drinks in Asian and European countries PepsiCo will expand into Africa to make use of the international market they are not part of

Objectives Spend $15 million on a healthier more eco-friendly beverage brand in an already established country Spend $15 million on a healthier more eco-friendly snack brand in an already established country Spend $10 million to acquire a smaller brand in Africa Increase our revenues by 5% in 2010 Start our own environmental cause fund with $1 million

Assumptions Spend $40 million to acquire new brands Spend $1 million to start an environmental cause group Revenue increase of 5% Decrease short-term and long-term debt by using some of our cash and cash equivalents as well as retained earnings

Implementation

Projected Income Statement

Projected Balance Sheet

Evaluation

Balanced Scorecard

Future Ratios

Fun Facts

Pepsi/Coke Rivalry http://www.buzzfeed.com/pepsi/the-10-most-iconic-pepsi-commercials-of-all-time-1q6t

Questions?

Sources "2010 Will be Changing for PepsiCo." Medill Reports Chicago. N.p., n.d. Web. 20 Apr. 2012. <news.medill.northwestern.edu/chicago/news.aspx?id=157896 >. "Coke vs Pepsi." Coke vs Pepsi. N.p., n.d. Web. 25 Apr. 2012. <http://cokevspepsi.net/>. " Google Image Result for http://41minds.files.wordpress.com/2011/04/bcggrowthsharematrix.png."Google. N.p., n.d. Web. 22 Apr. 2012. <http://www.google.com/imgres?hl=en&sa=X&rlz=1C1LENN_enUS472US472&biw=1366&bih=677&tbm=isch&prmd=imvnsa&tbnid=VtCOuMODso-oZM:&imgrefurl=http://41minds.com/tag/bcg-matrix/&docid=JDNK6PE50NlOOM&imgur "Key financial ratios: Financial results - MSN Money ." Money: Personal finance, investing news & advice - MSN Money. N.p., n.d. Web. 25 Apr. 2012. <http://investing.money.msn.com/investments/key-ratios?symbol=PEP&page=TenYearSummary>. "PEP: Summary for Pepsico, Inc. Common Stock- Yahoo! Finance." Yahoo! Finance - Business Finance, Stock Market, Quotes, News. N.p., n.d. Web. 25 Apr. 2012. <http://finance.yahoo.com/q?s=PEP>. "Pepsi History." Sirpepsi. N.p., n.d. Web. 25 Apr. 2012. <http://www.sirpepsi.com/pepsi11.htm>. "PepsiCo 2009 annual report." PepsiCo. N.p., n.d. Web. 19 Apr. 2012. <www.pepsico.com/Download/PEPSICO_AR.pdf>. "PepsiCo Brands | PepsiCo.com." PepsiCo Home | PepsiCo.com. N.p., n.d. Web. 24 Apr. 2012. <http://www.pepsico.com/Brands.html>. "PepsiCo Investors | PepsiCo.com." PepsiCo Home | PepsiCo.com. N.p., n.d. Web. 25 Apr. 2012. <http://www.pepsico.com/Investors.html>. "PepsiCo MORE | PepsiCo.com." PepsiCo Home | PepsiCo.com. N.p., n.d. Web. 25 Apr. 2012. <http://www.pepsico.com/Global-Sites/More.html>. Reppo, Ilya, and Michelle Yan. "PepsiCo Valuation." Leeds-faculty Colorado. N.p., n.d. Web. 14 Apr. 2012. <leeds-faculty.colorado.edu/madigan/4820/Presentations%202010/PepsiCo%20Report.pdf>. segment. "PepsiCo Valuation." Google. N.p., n.d. Web. 23 Apr. 2012. <http://webcache.googleusercontent.com/search?q=cache:egHCTRx43AYJ:leeds-faculty.colorado.edu/madigan/4820/Presentations%25202010/PepsiCo%2520Report.pdf+PepsiCo+net+revenue+comparative+2007-2009&hl=en&gl=us> Steve. " Global Cola: 10 Pepsi-Cola Flavors You Can’t Get Here | WebUrbanist ." WebUrbanist | From Urban Art & 3D Graffiti to Abandoned Cities . N.p., n.d. Web. 25 Apr. 2012. <http://weburbanist.com/2010/05/02/global-cola-10-pepsi-cola-flavors-you-cant-get-here/>.