美国论文代写 Analysis of PepsiCos Strategic Changes to Profitability
In the 2007 the Coca cola stock was trading at $61.37 , but as of in 2008 the stock price fell down rapidly to about $45.27 which is a significant drop from the previous year. A contributing factors could be various reasons such as the consumers tastes is that they could be preferring bottled flavoured drinking water, healthier beverages or the big one the economic crisis in the 2008 -2009 which all could be the factors for the drop in the prices of the stock during the year 2008
Please refer to Appendix B here we examine that the stock price of PepsiCo in the past three years have been its valuation is rapidly approaching to $75.90 in the 2007 a generous appreciation in the value .This is because of the product diversification strategy implemented by PepsiCo. PepsiCo has been benefited greatly from its mergers with Frito lays and Quaker oats. This acquisition is the main reason for the high revenues and strong overall financial numbers PepsiCo stock is expected to move even more higher and therefore this stock would be highly recommended. Please refer the Appendix B for the three years comparison of Pepsi and coke 2007 to 2009.
Evaluation of financial markets
Global Economic Recession
Pepsi is selling its product all over the world and it would be a safe investment for the investors if they are buying the stocks of this company , buts due to the ecomonic crisis people should think twice before investing in this company since there was a decrease in the prices of the shares in the 2008
In fact I think it is the best time during the recession to buy the stocks of Pepsibecause any investor would like to buy stock at a low price as they will know that the price would rise soon in the coming years. Also as we say buy low sell high, this same concept can be implied here.
During the recession Pepsi sees lift in the foreign sales, despite the economic quagmire the company sees an increase in the sales in United states by 2 % and world wide by 3%. In India the sale were up by 31 % by the march 2009. Keeping a positive outlook
Commodity Cost Fluctuations
The variations in the prices of the raw materials would directly and indirectly affect the production cost which in turn would affect the profitability of Pepsi. Here Pepsi itself would be directly purchasing the raw materials which are used to make the concretes and syrupsvaration in the prices of these would affect the cost of production of as well as the profit margins
Here also the change in the production cost of the bottler’s can also impact the Pepsi profitability in and indirect way though. If the raw material becomes more that is necessary for bottling then, the bottler’s would be forced to increase the prices to compensate.
Dollar Affects International Performance
The factor for the decrease in the profit and revenue was the affect in the dollar performance. Although the company was based in north America more that 76% of its revenues was derived from outside north America. Because of this the company is very sensitive to the strength in Dollar price. As the prices of the other currencies weaken relative to dollar, goods that are sold outside the US are worth back in the US, lowering earning. Thus, if the dollar strengthens (as it did in the second half of 2008 and 2009), it has a negative effect on Pepsi earnings.
Marketing analysis :
Ansoff’s Matrix – Planning for Growth
This industry growth is driven the growth in population as well as the amount of advertising done and the innovation taken in this industry, pepsi used the price discrimination strategies to maximize the value of consumer demand. Here Pepsi had different pricing done in different location based on the customer’s location and purchasing power. Restaurants have different pricing for fountain drinks, super markets have different price obviously such segmentation helps situational-based pricing differences: the most price insensitive consumers seem to be restaurant customers who need a drink to go with their meal. Also, single-drink buyers at gas stations are more likely to be impulse buyers and therefore have less price sensitivity than weekend family shoppers at supermarkets who purchase 12-packs for home consumption
Pepsi is enhancing its penetration in the market by targeting the restaurant and the convinces stores If Pepsi bundles snacks with soft drinks as part of its pricing strategy aimed at fast food restaurants and stores it may be able to increase sales and obtain better shelf space from retailers. This may prove a very important tactic in trying to re-claim share in the fountain drink segment.
Market Development: Good marketing strategy and competitive positioning is vital for any business to become successful. Creating a new market development strategy is even more important for a business to remain successful Market development is one of the crucial stages that company has to go through as because outcome of this process can actually bring huge success or failure to a company. Pepsi has to be careful on this stage of development, if not the company will face increased cost, lose on sales, and finally lose of market share. The main objectives of Pepsi product development process should be:
To provide a good competition
To consciously satisfy the customers
To expand in the new markets
In the overseas market Pepsi has done ruthless advertising for the sole purpose of market development,
However, Pepsi’s rival coca cola have engaged in a slew of television advertisements, which publicly ridicule the other’s product and image. For the market development the venue where the products are sold also places an important role Pepsi now splits its location into small venues like fast food chains, dine-in restaurants and special stores, larger venues include (movie theaters, amusement parks, festivals, and sporting arenas. Pepsi now has joint venture ownership into fast food chains with its purchase of Taco Bell, Pizza Hut and Kentucky Fried Chicken. The final area for the market development included in the area of manufacturing and distribution opportunities include bottling plants and trucking lines, which seems to be great.
Materials: Materials required for the production , Pepsi has good set of distributors and the proper set of equipments used for production. Materils used by the company are of high quality and standards . This would provide an add advantage to the product in case of development.
Quality assurance: Pepsi has to understood that if its product is not performing up to the standards it would be rejected. Obviously there would be alternative products like coca cola or any other colas with better quantity and performances, as a result Pepsi has good assurance over quality so that they would not lose its market share .
Key Components: It is on the product platform that product variation can be added or deleted to satisfy local differences in the overseas markets , these platforms contains essential technology – and all its design and functional features . This may require additional capital investment, but this is made to adapt the product to its cultural variation. This is spoken in terms of physical product. By product alternation in design, functional features, flavors colors and other aspects can be adapting the product cultural variations.
Packaging Component: The packaging component includes feature, packaging, labeling trade marks brand names and all other aspects of the product packaging. For pepsi care must be taken to taken to assure that cooperate trade marks and other parts of packing components do not have unacceptable symbolic meanings.
Internal knowledge of market
Awareness of possible counter trade deals
A cheaper way to develop products is to improve the current ones so that they can stand out among your competitors.
Diversification: Pepsi focused on varietal differentiation since 1999 by introducing a string of niche products, although product innovation has been quickly copied by Coke. To increase volume in order to counter flat cola sales, Pepsi introduced Sierra Mist in 2002-2003 to take the place of 7-Up and go head-to-head with Sprite. Pepsi has also tried to boost volume by introducing products that appeal to specific target market segments that it currently is not reaching. Pepsi has introduced Code Red and Live Wire, extensions of Mountain Dew, Pepsi One, and Pepsi Blue. Finally, Pepsi is countering declining sales of carbonated drinks through the marketing and distribution of Starbucks ready to drink products, and the acquisition of SOBE and Gatorade. Coke has followed with the introductions of Vanilla Coke, Sprite Remix, and the
acquisition of Planet Java, Odwalla, and Mad River Traders. Although these niche products
might successfully keep out a third competitor through spatial preemption, most of these
product introductions are not expected to generate over 1% of the total soda sales.
In terms of investment I find that investing into the stocks of PepsiCo is a wise one. The company as we see is into food product industry , which they have acquired . This would
Serve as a backbone just in case of any economic Crisis. The profits, EPS , revenue, ROE,ROI P/E ratio dividend yield when taken both the companies into consideration we can figure out that PepsiCo is outfacing coca cola in many of these aspects.
While is conducted a research I found out that there is a wide market for non carbonated beverages’ such as coffee and tea, I Suggest that Pepsi should make a move into these products which would serve as a medium for an increase in their revenue and investments.
The company must use more advanced technology in their production process as this will improve the production through out the nation and will be able to meet the demands
Pepsi should have a close relationship with the consumer, they must promote advertisement conduct marketing events and many other CRM policy as this would indirectly improve the revenue and profits.
Depending upon the economic situation the company should price its products if not this would have a major impacts on the profits
Pepsi should try to make its products healthier like little bit sweet cola drinks and reduce the amount of calories in that drink ,they should be able to produce the product according to the local demands
The company should produce 150 ml cola drinks as because some people would like to consume this in a little amount.
美国论文代写 Analysis of PepsiCos Strategic Changes to Profitability