PepsiCo's marketing and information systems integration challenges

Pepsi: Soft Drinks

Pepsi is a global icon that not only deals in beverage market but also deals with food products. The company includes the PepsiCo Americas Foods (PAF), PepsiCo Americas Beverages (PAB) and PepsiCo International. Pepsi-Cola have several divisions acquired over the years such as Frito-Lay, Tropicana, Quaker Oats Company and Gatorade. It has computer systems in more than 700 offices worldwide. In 2002 its share of gross profit fell to 54% as compared to 58% margin in 1998. This drop could have been triggered by several problems the company continues to struggle with and streamline (Prenhall, 2010).

Its acquisitions and mergers have exposed the company to encounter challenging issues while undertaking its global strategies. Some of these issues include; marketing and system integration issues.

PepsiCo marketing system has loopholes probably due its large size and lack of a unified business unit. For example the stores managers are reluctant to spare some of their time listening to sales pitches. With the increasing global marketplace competition, Pepsi lost its pace to Coke due to added pressure on pricing of its products which saw Pepsi sales drop by 3% in the first quarter of 2003. With stiff competition knocking at the door, coupled with limited shelf space, Pepsi must find ways of marketing and promoting the products it already have other than coming up with new products.

With the new awakening of technology, large business enterprises like Pepsi can't operate efficiently without the power of technology. Pepsi information system infrastructure faces several setbacks in that all its business divisions from the point of production to the ultimate consumer, lack an integrated system. The divisions use different databases, different human resources system, different financial applications, different distribution software, and different hardware.

Recommendations

To improve the marketing system, PepsiCo ought to eliminate different sales and marketing teams of all the business units and integrate it into one system with one goal other than each unit having its own marketing system and distribution goals in order to make all those units act together as a single company.

The IT infrastructure by individual business units has resulted into high technological initial investment costs and maintenance expenses. Having a centralized computer centre would not only help Pepsi save money but would also help the company to channel the resources in other areas.

Implementation

In marketing, the distribution logistics and selling operations should be run as single business unit, monitored closely by IT specialists and management in order to deliver the products at a much lesser costs. Pepsi should also create a single supply chain platform for finished and unfinished products. This would ensure the company reduces its operation costs while it maximizes on the benefits of efficient systems.

In information technology (IT) field, Pepsi management should act fast and integrate the computer systems all across the division with involvement of division managers so that decisions made centrally are not in any way altered by line managers'. In addition the computing tasks should all be standardized.

The threat of new entrants and entry barriers

The ease with which other firms can enter and exit a particular market the higher the rivalry. Soft drinks industry requires huge capital investments and entrant in this market is low. Thus, Pepsi can maximize its profits through steady price levels.

Internal Analysis

PepsiCo has wide financial base obtained mostly from its sales, infrastructures such as control systems, materials supplies and equipments. Intangible resources include; the company culture, training and technologies that add value to operations of Pepsi.

To gain much value from the use of the above resources, the managers have to cooperate in designing of market tools and synchronize all the operations to minimize the cost and maximize on the gains. In addition, Pepsi should lay emphasis on the use of technology to support its value creating activities (NetMBA, 2010).

Other value chain activities at Pepsi are; inbound logistics such the receipt and storage of raw materials and distribution of the same; operations which include, all production processes of finished products and services; the outbound logistics which comprises storage and distribution of finished products; marketing and sales which deals with creation of sales and satisfaction of customer needs, and lastly is the service activity which deals with the support of customer after sale is made (NetMBA, 2010).

Developing an effective value chain activity is a major step toward gaining a competitive advantage while maximizing the shareholders value or wealth. According to prenhall, (2010) Pepsi has embarked on the use of Business Process Transformation (BPT), an initiative geared towards integration of key business processes such as finance, consumer insight, purchasing and supply chain as well as customer service. Furthermore, technological development will aid PepsiCo to minimize its haulback costs while improving the delivery system and reduction of inventory handling costs. This would enable Pepsi to price the products consumers will be willing to pay just above the cost of activities in the value chain.

Once this is done, Pepsi will develop strong core competencies in cost reduction that will eventually improve its sales performance. The cost-benefit analysis will help the firm to allocate such costs in value chain activities through interrelationship of business units.