Pepsi: Soft Drinks Pepsi Is

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. External Analysis Every business is prone to risks. One such risk is that the business may be driven out of market due to competition.

Michael Porter identified five forces that influence competition in a given industry. Any business seeking to have a competitive edge over the rival firm can use these five forces to sustain their desired level of profitability (QuickMBA, 2010). The five forces Pepsi can use to its advantage are explained as follows. Supplier power; Pepsi major rival in beverage is the Coca-Cola Company, whereas in food and private label snacks are the General Mills and Kraft.

A low concentration of market share is always held by many rival firms making the competitive landscape more intense. Threat of substitutes; Substitutes refer to other products in other industries. Pepsi deals with beverage industry and food industry for example. The private label food products that are low priced compared to those of Pepsi which is highly priced, is leading to price wars as customers opt for cheaper products.

Buyer power; The purchasing power of buyer increases when suppliers are many and few buyers of a product and is low when buyers are many with few suppliers'. It's important for Pepsi the behavior of their customers in order to lay effective strategies. Supplier power; Suppliers' if powerful can exert an influence on the producing industry. As a producing industry, Pepsi can use this platform to establish a buyer-supplier relationship and capture some of the industry profits. This is possible through merger with other suppliers' in the same industry.

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.