Pamantasan ng Lungsod ng Maynila

(University of the City of Manila)

Graduate School of Management
Master in Business Administration

Case Analysis

PepsiCo and the

Fast – Food Industry

GMB 618: Management Consultancy

06 August 2011
Viewpoint

Wayne Calloway, Chief Executive Officer of PepsiCo Corporation

Time Context

1993 

I. Problem Statement

How can PepsiCo, Inc. be more competitive consumer Products Company in the world?

II. Statement of the Objective

To develop the existing marketing strategy that will respond to the emerging trends in
the industry.

III. Areas of Consideration

Strengths

1. From 1991 to 1992, sales had increased 14 percent, earnings were up 21

percent, and per share dividends had increased 20percent.

2. PepsiCo’s three major business units-soft drinks, snack foods, and quick-service

restaurants had turned in sales increases of 10 percent, 17 percent and 16
percent, respectively.

3. Since 1987, PepsiCo’s sales had increased at a 16.8 percent compound rate

annually, and income from continuing operations had grown at an 18 percent
rate.

4. PepsiCo was an international company operating in three industries – soft drinks,

snack foods, and restaurants.

5. Pepsi – Cola Company became a North Carolina corporation.

Weaknesses

1. Domestic soft-drink sales gains had been marginal and that the cola segment
was saturated.

2. Even though cola sales amounted to $34 billion in 1992, growth had been only
1.5 percent far lower than the 5 to 7 percent annual growth rates experienced in
the 1980’s, despite changes in packaging, logo
types, and advertising campaigns by both Coke and Pepsi.
 3. The market for diet soft drinks, for years a growth segment, in1992 showed its
first annual decline in share of total soft drink sales from 29.8 percent in 1991 to
29.4 percent, and overall

4. Consumption of soft drinks rose only marginally, from 47.8gallons to 48.0 gallons

per capita.

5. In the United States, Coca-Cola maintained its 40.7 percent share of the soft
drink market while PepsiCo slipped from 31.5 percent to 31.3 percent

6. In Europe, the first mover advantages claimed by Pepsi in the former Warsaw
Pact Nations quickly evaporated after Coca-Cola
launched its 18 month, $400 million “Operation Jumpstart “campaign in Central
Europe’s post socialist countries.

7. Health concerns had generally affected the sales of both snack foods and fast
food dining and had strong implications for PepsiCo’s Frito-Lay, Pizza Hut, and
Taco Bell and Kentucky Fried Chicken divisions.

8. Pepsi Cola’s profitable operations ensued until heavy losses on sugar inventories,
caused in bankruptcy in 1922.

9. Pepsi Cola’s Virginia operation lost money for the next five years and then was
only marginally profitable until it bankrupted in June, 1931.

Opportunities

1. Expand the global reach of PepsiCo’s present products and businesses

2. Add new businesses to the company’s portfolio and redefine its areas of strategic
interest.

Threats

1. Customers lost of trust and interest due to Bankruptcy happened in the business

2. Increasing number of competitors in the industry

IV. Alternative Courses of Action

ACA 1: To form a team in the organization that will revisit and monitor the performance
Of the company
ACA 2: To develop a marketing plan of the company.
ACA 3: To strengthen advertising and promotional activities of the company.
V. Analysis
ACA ADVANTAGES DISADVANTAGES

1. To form a -Awareness of the people, who -The team’s accountability will

team in the will be part of the team, in the lead to too much pressure
organization industry. because of the best results
that will revisit -Minimal cost since people expected from them.
and monitor the within is involved.
performance of
the company
It will increase brand It involves participation of the
2 To develop a throughout the market thus help entire department in the
marketing plan increase its market share. This company and might be time
of the company. might position them as the top consuming. Budget will also
choice for the consumer have to be considered.
products and fast-food
restaurants.
3.To strengthen Will increase brand awareness Costly.
advertising and and attract new customers.
promotional
activities of the
company

Decision Matrix

Criteria ACA1 ACA2 ACA3

New Technologies 2 1 3

Emergence of a new segment 3 2 1

Market Growth 3 2 1

Result Oriented 3 2 1

TOTAL 11 7 6

* Scale of 1 to 3(Scale: 1 – fair; 2 – acceptable; 3 – highly acceptable)

VI. Conclusion
Based on the decision matrix, ACA 1 :To form a team in the organization that will revisit
and monitor the performance of the company is the recommended course of action in
order to address the problem.

VII. Plan of Action

The following are the series of action to be taken to implement the chosen ACA.