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Pepsico Is A World Leader Business Essay

Paper Type: Free Essay Subject: Business
Wordcount: 4465 words Published: 1st Jan 2015

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Introduction to business:

PepsiCo was established in 1965 by the merger of Pepsi-Cola and Frito- Lays. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001. The company consists of Frito-Lay North America, PepsiCo Beverages North America,

PepsiCo International and Quaker Foods North America. PepsiCo brands are available in nearly 200 countries and territories and generate sales at the retail level of approximately $92 billion.

PepsiCo’s mission is to be the world’s leader consumer Products Company focused on convenient foods and beverages. It seeks to produce healthy financial rewards to investors as they provide opportunities for growth and enrichment to employees, business partners and the communities in which they operate. In everything they do, they strive to act with honesty, fairness and integrity and to obey the laws and regulations of the countries where they do business.

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Pepsi-Cola is a carbonated beverage that is produced and manufactured by PepsiCo. It is sold in stores, restaurants and from vending machines. The drink was first made in the 1890s by pharmacist Caleb Brad ham in New Bern, North Carolina. The brand was trademarked on June 16, 1903.

There have been many Pepsi variants produced over the years since 1903 including :

The Diet Pepsi

The Crystal Pepsi

The Pepsi Twist

The Pepsi Max

The Pepsi Samba

The Pepsi Gold

The Pepsi Raw

The Pepsi Retro in Mexico

The Pepsi One

The Pepsi Holiday Spice

The Pepsi Jazz

The Pepsi X (available in Finland and Brazil)

The Pepsi Next (available in Japan and South Korea)

The Pepsi Ice Cucumber in Japan.

Pepsi cola is located in an Industry that is dominator by two Competitors Coca Cola and of course themselves. Even though Pepsi and Coke essentially go after all customers who purchase soft drink beverage Coca Cola targets it product at the head of household.

According to the beverage digest the customer base for soft drinks is whopping 95% of

regular user in United States. This represents the large number if potential customers for Pepsi Cola.

The Pepsi’s advertising the campaigns are referring to the markets that marketers refer to as Generation X. The Generation X consumer is sketch to be between the ages of 18 to 29. All of them have high expectations in life and very active. They accept a way of life of living for today and not worry approximately long term objective. They also have a focus on the 12 to 18 year old market

History of business:

PepsiCo, Inc. is one of the world’s top consumer product companies with many of the world’s most important and important trademarks. Its Pepsi-Cola Company division is the second largest soft drink business in the world, with a 21 percent share of the carbonated soft drink market worldwide and 29 percent in the United States. Three of its brands Pepsi-Cola, Mountain Dew, and Diet Pepsi & mdashe among the top ten soft drinks in the United States market, The Frito-Lay Company division is by far the world leader in salty snacks, holding a 40 percent market share and an even more staggering 56 percent share of the United States market. In the United States, Frito-Lay is nine times the size of its nearest competitor and sells nine of the top ten snack chip brands in the supermarket channel, including Lay’s, Doritos, Tostitos, Ruffles, Fritos, and Chee-tos. Frito-Lay generates more than 60 percent of PepsiCo’s net sales and more than two-thirds of the parent company’s operating profits. The company’s third division, Tropicana Products, Inc., is the world leader in juice sales and holds a share 41 percent of the U.S. chilled orange juice market. On a worldwide basis, PepsiCo’s product portfolio includes 16 brands that generate more than $500 million in sales each year, ten of which generate more than $1 billion annually. Overall, PepsiCo garners approximately 35 % of its retail sales outside the United States, with Pepsi-Cola brands marketed in approximately 160 countries, Frito-Lay in more than 40, and Tropicana in approximately 50. As 2001 starts, PepsiCo was on the verge of adding to its food and drink empire the brands of the Quaker Oats Company, which include Gatorade sports drink, Quaker oatmeal and Cap’n Crunch, Life, and other ready-to-eat cereals.

When Caleb D. Bradham concocted a new cola drink in the 1890s, his friends’ enthusiastic response agreed him that he had make a commercially buyable product. For 20 years, ‘Doc’ Bradham prospered from his Pepsi-Cola sales. Eventually, he was faced with a dilemma; the crucial decision he made turned out to be the wrong one and he was forced to sell. But his successors fared no better and it was not until the end of the 1930s that Pepsi-Cola again became profitable. Seventy years later, PepsiCo, Inc. was a mammoth multinational supplier of soft drinks, juices, and snack food. PepsiCo’s advance to that level was almost entirely the result of its management style and the phenomenal success of its television advertising.

Business starts and grows up:

Doc Bradham, like immeasurable other entrepreneurs across the United States, was trying to create a cola drink same in taste to Coca-Cola, which by 1895 was selling well in every state of the union. On August 28, 1898, at his pharmacy in New Bern, North Carolina, Bradham gave the name Pepsi-Cola to his most famous flavored soda. Formerly known as Brad’s Drink, the new cola beverage was syrup of sugar, vanilla, oils, cola nuts, and other flavorings diluted in carbonated water. The enterprising pharmacist followed Coca-Cola’s method of selling the concentrate to soda fountains; he mixed the syrup in his drugstore, and then shipped it in barrels to the contracted fountain operators who added the soda water. He also bottled and sold the drink himself.

In 1902 Doc Bradham closed his drugstore to give over his concentration to the thriving new business. The next year, he patented the Pepsi-Cola trademark, ran his first advertisement in a local paper, and moved the bottling and syrup-making operations to a custom-built factory. Almost 20,000 gallons of Pepsi-Cola syrup were produced in 1904.

Again following the thriving methods of the Coca-Cola Company, Bradham begins starts to make a network of bottling franchises. Entrepreneurs apprehensive to enter the more and more famous soft drink business set themselves up as bottlers and contracted with Bradham to buy his syrup and sell nothing but Pepsi. With small cash outlay, Pepsi-Cola reached a much wider market. Bradham’s first two bottling franchises, both in North Carolina, begins working in 1905 by 1907, Pepsi-Cola had signed agreements with 40 bottlers; over the next three years, the number grew to 250 and yearly production of the syrup exceeded one million gallons.

Bradham not at all improved. Later than several fruitless attempts to reorganize, only two of the bottling plants remained open. In a last ditch attempt he enlisted the help of Roy C. Megargel, a Wall Street investment banker. A Very few people, however, were agreeable to invest in the business and it went ruined in 1923. The assets were sold and Megargel buyed the company trademark, giving him the rights to the Pepsi-Cola formula. Doc Bradham went back to his drug dispensary and died 11 years later.

Megargel reorganized the company as the National Pepsi-Cola Company in 1928, but three years after of continuous losses he had to declare bankruptcy. That same year 1931, Megargel met Charles G. Guth, who was a somewhat autocratic businessman who had recently taken over as president of Loft Inc., a New York-based candy and fountain store concern. Guth had fallen out with Coca-Cola for refusing the company a wholesaler markdown and he was on the lookout for a new soft drink. He has signed an agreement with Megargel to resurrect the Pepsi-Cola company, and get hold of 80 percent of the new shares, apparently for himself. Then having modified the syrup formula he disregarded Loft’s contract with Coca-Cola and introduced Pepsi-Cola, whose name was often shortened to Pepsi.

Loft’s customers were wary of the brand switch and in the first year of Pepsi sales the company’s soft drink turnover was down by a third. By the end of 1933 Guth bought out Megargel and hold 91 % of the insolvent company. Resistance to Pepsi in the Loft stores tailed off in 1934, and Guth agreed to further improve sales by offering 12-ounce bottles of Pepsi for a nickel the same price as six ounces of Coke. The Depression-weary people of Baltimore where the 12 ounce bottles were first commence were ready for a bargain and Pepsi-Cola sales increased dramatically.

Guth soon took steps to make internationalize Pepsi-Cola for making the Pepsi-Cola Company of Canada in 1934 and in the subsequent year forming Compania Pepsi-Cola de Cuba. He also moved the entire American operation to Long Island City, New York, and set up national protective boundaries for the bottling franchises. In 1936, Pepsi-Cola Ltd of London begins business.

Mack creates a board of directors with real voting powers to ensure that no one person would be able to exercise the control as Guth had done. From the start, Mack’s aim was to promote Pepsi to the hilt so that it might replace Coca-Cola as the world’s best-selling soft drink. The advertising agency Mack engage worked wonders. In 1939, a Pepsi radio jingle the first one to be aired nationally trapped the public’s attention: Pepsi-Cola hits the spot. Twelve full ounces, that’s a lot. Twice as much for a nickel, too Pepsi-Cola is the drink for you.’ The jingle, sung to the tune of the old British hunting song ‘D’Ye Ken John Peel,’ became an advertising hallmark; as a result no one was more impressed, or concerned, than the executives at Coca-Cola.

In 1940, with foreign expansion continuing strongly, Loft Inc. plans to merge with its Pepsi-Cola subsidiary. The new firm, started in 1941, used the name as the Pepsi-Cola Company since it was so well-known. Pepsi’s stock was listed on the New York Stock Exchange for the first time.

In other words 1948 was an important year. Pepsi moved its corporate headquarters across the East River to midtown Manhattan, and for the first time the drink was sold in cans. The canning decision to starts right for Pepsi-Cola and other soft drink companies upset the franchised bottlers, who had invested heavily in equipment and other machinery. However another decision at Pepsi-Cola & mdashø ignore the burgeoning vending machine market because of the necessarily large capital outlay & mdash′oved to be a costly mistake. The company had to learn the hard way that as canned drinks gained a larger share of the market vending machine sales would become gradually more important.

In the late-1970s and the mid-1990s, PepsiCo expanded by acquisition of businesses outside of its core focus of packaged food and beverage brands; however it exited these non-core business lines largely in 1997, selling some, and spinning off others into a new company and was named as Tricon Global Restaurants, which later became known as Yum! Brands, Inc… PepsiCo also previously owned several other brands that it later sold, in order to allow it to return focus to its primary snack food and beverage lines, according to investment analysts reporting on the divestments in 1997.

PepsiCo Brands include: Pizza Hut, Taco Bell, KFC, Hot ‘n Now, East Side Mario’s, D’Angelo Sandwich Shops, Chevys Fresh Mex, California Pizza Kitchen, Stolichnaya (by licensed agreement), Wilson Sporting Goods and North American Van Lines.

The divestments concluding in 2007 were followed by multiple large-scale acquisitions, as PepsiCo starts to expand its operations beyond soft drinks and snack foods into other lines of foods and beverages. PepsiCo buyed the orange juice company Tropicana Products in 1998, and combined with Quaker Oats Company in 2001, by adding with it the Gatorade sports drink line and other Quaker Oats brands such as Chewy Granola Bars and Aunt Jemima, along with others.

PepsiCo made a $7 billion offer to acquire the two largest bottlers of its products in North America in August 2009: Pepsi Bottling Group and PepsiAmericas. In 2010 this acquisition was completed, resulting in the formation of a new wholly owned subsidiary of PepsiCo, Pepsi Beverages Company. Also in later 2010, the company made its largest international acquisition when it buyed a majority stake in Wimm-Bill-Dann Foods – a Russian food company which produces milk, yogurt, fruit juices and dairy products.

Current position:

PepsiCo is the second largest food and beverage company in the world. The company manufactures then markets and sells a variety of salty, sweet and grain-based snacks, carbonated and non-carbonated beverages PepsiCo seeks to get growth and long-term worth in its operational activities by creating competitive advantages by new product innovation. In the year 2006, PepsiCo acquired Izze Beverage Company Naked Juice and StacysPita Chip Company in the United States, Star Foods in Poland, and Bluebird Foodsin New Zealand. It has extended its presence in the non carbonated drinks as well as snacks. The company’s volume grew by 5.5% in 2006 compared with 2005. For the year 2011, the company plans to expand its market share by further acquisition and joint ventures.



Outstanding Reputation.

Broader Product line-creates synergy beyond the board.

Large charge less bank note flow- New Acquisition

Great brands, able distribution, avant-garde capabilities

Global market baton in bite foods & non-carbonated beverages.

PepsiCo sells three articles by the aforementioned administration channel.

Huge Advertising Budget.

Able Marketing Intelligence.

Research & Development.

Diverse and global awareness.

Make same drinks – cheaper.


Difficult to affect Vision and Direction for Large Global Company.

Non Uniform Company name for some PepsiCo products.

PepsiCo Lags baton Coca-cola in the all-embracing market – Highly Elastic Demand.

Big Health Issues for Pepsi Drink – Fat and Sugar.

Falling Behind in All-embracing Markets, namely Russia, Venezuela, and South America.

Health Issue in the Indian market with baptizes – independent pesticides.

Large size may lead to conflicting interests

Possible conflicts due to so many people, possible trouble staying focused

Lose control and quality standards


Expanding Food Division in the all-embracing market.

Investment into added non carbonated articles in the US market and regional.

Avant-garde Customized articles technology

Concentration on advantageous another articles as per the barter needs.

Huge market in the healthy products and growing market for unique foods for ethnic groups.

Distinctive name, product and packaging in with regards to its markets.

Internet promotion such as banner ads and keywords can increase their sales, and more computerized manufacturing and ordering processes can increase their efficiency.


Bottled Baptize Market Faces Competition.

Comply with All-embracing & Domestic Standards.

Environmental affair PET Bottles

Continuously increases in the amount of awkward oil and raw materials- affects the amount of accomplished products

Terrorism-Anti-American Advocates.

Computer breakdowns, viruses and hackers can reduce efficiency and effectiveness, and must constantly update products or other competitors will be more advanced.

Not entirely patentable, constant reliability by competitors.

Strong Competition.

Potential Health Issues Free Trade.

PEST analysis:

A PEST analysis is one of them that are merely a framework that make categories environmental influences as political, economic, social and technological forces.


PepsiCo products are subject to various laws especially federal laws.

Land acquisition for new factories.

Govt. focusing on stricter water pollution norms.

Raw Material prices, a great worry.


New opportunities in other countries.

Fuel price changes.

Availability of labor.

Have a global economic perspective.


Replenishing of water.

Partnership with farmers.

Solid waste management program.

Impact on youngsters.


Operates in almost all the countries.

Introduction of new cans and plastic bottles.

Newer and attractive Designs.

State-of-the-Art plants.

Strategic analysis:

Pepsi-Cola drinks were invented in 1898 and grew up by following the Coca- Cola marketing, product, and distribution strategies. Like Coca-Cola it also advertised as heavily as finances permitted, and was distributed and divided by soda fountains and franchised bottlers.

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Evaluating Pepsi’s marketing strategies it became clear that Pepsi has made several right choices. With the existence of Coke, Pepsi can never put down claim to true originality. It is not the new thing so; Pepsi took advantage of their late entrance into the market by more lessening their product prices. Before entering in to the international market, it first familiarized its customers with its product systematically in its home base. By the time Pepsi was ready to enter in to the international market and it had a good grasp of what its target audience really is. 

Pepsi’s marketing strategies, from past to present included:

Enhancing their distribution system

Knowing the environment of the foreign market and finding the things their target buyers had in common

Adding new innovations and products while improving the old products

Imaginative advertising

Use of advanced technology

Assertive promotions

Trendy and socially-aware campaigns

Alliances with major corporations and expands into other industries such as restaurants.

Even Pepsi’s rival, Coca-Cola, had a hand in Pepsi’s success. When Coke creates a marketing move, even their customers can’t help but hold their breath, waiting for Pepsi’s response. So as a result Coca-Cola’s massive fame has also rubbed off on its rival.  It even isolated these two beverage companies from the other soft drink brands.


The Pepsi-Cola is currently a strong worldwide leader company in the food and beverage industry. Overthrow its growth, it has stayed true to its mission and objectives, while becoming a share force within the United States as well as in other countries. Known buy out the world for quality products and customer care, Pepsi Co should make no major strategic changesto its plan. However, like in any business situation there are areas that Pepsi Co canimprove upon.

Some of the recommendations are as follows:

Continue to expand with their “Human Sustainability”. The healthy eating

market is a demographic that will continue to grow in the future, and will

provide generous profits for Pepsi if Pepsi Co is able to obtain a large market share. Expand more into social benefits, especially for those in developing nations. Pepsi’s main competitor Coca Cola has implemented a water purification

Program for African Villages, which provides an important need and at the same time introducing their brand name where it was before unknown. If Pepsi followed this same ideology with food products and water purification it too would significantly increase brand recognition

Capture more of the aging population’s market share. Pepsi is a company focused on a younger market hoping to repeat the worldwide success of Coca Cola in regards to brand loyalty with the generations born after 1980

however; there is still a large market with the Baby boomer demographic that

they could break into.

A minor yet still important change that needs to be made is to their website.


Overall PepsiCo is a successful company with substantial revenue, and a large

footprint in the market place. PepsiCo should continue to expand their growth and take advantage of potential opportunities by continuing to improve and increase on areas at the corporate top level, in the markets that they currently are in, and in new markets and market segments that they wish to expand into.

PepsiCo should improve their employee relations in order to create employees allover the world that will promote the product both during their work day life and in their personal life in order to create “word of mouth marketing”.

PepsiCo should look to cut some of their expenses as they currently have $10 billion more in revenue than the competition, but they have a same Net Income of $5.5 billion.

PepsiCo needs to continue to expand their market share in the markets where they currently have a strong presence in order to maintain their market share and their footprint in the marketplace.

PepsiCo should become more proactive in the health food/product marketplace rather than being reactive to the market trends. They need to improve their responsiveness and efficiency and future projections to market trends and changes that can therefore allude to different product segments and target markets.


PepsiCo should make market surveys of their target market segments in order to analyze the existing brand awareness in the marketplace for every two quarters and then analyze the overall change and trend on the calendar year.

PepsiCo should cut their expenses by a set percentage every quarter in order to increase their Net Income each quarter and year. This would increase the bottom line and benefit the stock holders. It would be advised to reduce costs by 10% as an original amount, and then potentially increase the percentage after a few trial quarters.


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