SWOT analysis refers to the close study of the internal and external factors that affect different operations within an entity. This analysis highlights an entity’s progress by revealing factors that boost or hinder the entity’s progression. Thus, the analysis helps the strategic management team make informed decisions on implementing different business strategies. In this case, the SWOT analysis of Pepsi Company would explore different factors that affect the company either positively or negatively.
PepsiCo is a multinational food, snack, and beverage corporation based in America. With operations in more than 200 countries worldwide, Pepsi Company managed to draw large profit margins with net revenue of $70 billion in 2020. Pepsi continues to top the chart as one of the leading brands in the food industry. This article explores the SWOT analysis of Pepsi Company, intending to highlight the success factors of Pepsi Company.
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Table of Contents
What is the SWOT analysis of Pepsi Company?
The SWOT analysis of Pepsi Company explores the internal strategic factors (Strengths and Weaknesses) and external strategic factors (Opportunities and Threats) that affect the business operations at Pepsi. With this analysis, the business can figure out business models and activities that can help maximize profits and those that can help minimize losses. Therefore, we can deduce that the SWOT analysis of Pepsi Company reveals how Pepsi utilizes its competitive advantages to dominate the snack and beverage industry and become the second-largest food company. This article provides an extensive SWOT analysis of Pepsi Company.
What are the Strengths of Pepsi Company?
In the SWOT analysis of Pepsi Company, the strengths highlight organizational characteristics (internal strategic factors) that improve the company’s overall effectiveness within the food and beverage industry. In addition, the strengths reveal the most prevalent strategies that have significantly contributed to the success of Pepsi Company. These strengths can be likened to Pepsi competitive advantages. Pepsi’s strengths include the following:
- Strong brand image
- Customer loyalty
- Global Presence with strong supply chain and distribution network
- Strong Product mix
- Numerous tie-ups
PepsiCo Strengths Explained
PepsiCo has built a strong brand image that has helped the company maintain constant pressure on other competitors within the same industry. As a result, Pepsi is currently recognized as one of the strongest brands in the market today. The strength in the brand image has an overall effect of attracting customers to new products. Additionally, Pepsi strongly engages in heavy marketing and advertising to strengthen the brand image and create brand awareness.
The SWOT analysis of Pepsi Company reveals that the firm has managed to gather a huge loyal customer base. Pepsi’s soft drinks in the beverage category have an iconic taste that maintains customers who do not wish to shift to other brands. As a result, Pepsi has emerged as a strong brand in the bottled water and juices category. Frito-Lay is recognized as one of the top-selling brands with brands like Lay’s, Doritos, Uncle Chips, Funyuns, Walkers, Cheetos, and Tostitos. These brands have managed to be in 6 slots in the top ten global snack brands.
Over the years of business operations, Pepsi has built and maintained a robust supply chain and distribution network. It is currently running operations in over 200+ countries across the world. With the strength of the supply chain management and distribution network, Pepsi products have been made available even in the world’s most remote areas.
Pepsi company also brags of a strong product mix with ownership of a wide variety of product brands. Compared to its competitor Coca-Cola, Pepsi Company has a more diversified product portfolio by merging with Frito-Lay and ownership of Tostitos, Quaker Oats, and other food brands. Moreover, Pepsi keeps up with several tie-ups involved with music concerts and sports events, which maintains the company in the limelight, increasing brand recall. In addition, the firm has managed to create sponsorships for major sports teams, thereby managing to attract and maintain the youthful target audience.
What are the Weaknesses of Pepsi Company?
In the SWOT analysis of Pepsi Company, the weaknesses reveal factors that hinder the entity from performing at its optimum level. Pepsi weaknesses highlight areas that need improvement so that the company can remain competitive within the industry. In the SWOT analysis of Pepsi Company, the weaknesses of the company include the following:
- High reliance on carbonated drinks
- Weak product portfolio on healthy foods and beverages
- Low penetration outside America
- Failed products
Pepsi Weaknesses Explained
Among the major weaknesses of Pepsi company is the strong reliance on carbonated drinks. This reliance places the company at risk since more consumers have started to shy away from beverages with artificial sweeteners or high sugar levels. These factors have led to stunted growth of business operations of Pepsi within the beverage industry. As a result, Pepsi would need to devise an immediate course correction to rectify the shift in customer preference.
Pepsi also has a weak product portfolio on healthy foods and beverages. With the recent increased demand for healthy foods and drinks, Pepsi is slowly introducing healthy products in the product line. Pepsi Company has introduced healthy beverages such as Tropicana and Gatorade, which are sub-brands of Pepsi. Pepsi also adapted Quaker Oats with a target of improving healthy snack options for the customers. However, Pepsi still has a long way to go in creating more healthy options for customers.
Pepsi Company also has a weakness in its penetration strategy. As of 2021, the company derives 70% of its revenue from America. This shows that the company is yet to maximize other potential revenues beyond America. This weakness also illustrates how the company is vulnerable to risks in the food and beverage market. Moreover, the failed products, i.e., Crystal Pepsi, traced from Pepsi Company, have been likened to the company’s weaknesses. Therefore, Pepsi has to devise strategies to counteract the weaknesses to maximize profits and minimize losses.
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What are the Opportunities of Pepsi Company?
In the SWOT analysis of Pepsi Company, the opportunities refer to factors utilized by the firm to grow its market share, brand recognition, and sales. The opportunities of Pepsi Company form a basis for making strategies that will shape the future of the company’s business operations. Among the opportunities that Pepsi Co can take advantage of include:
- Providing healthier options
- Corporate Social Responsibility
- Diversification in flavours
- Creating more partnerships
Pepsi Opportunities Explained
The greatest opportunity for Pepsi Co is the strong demand for healthier foods and beverages. Recent studies reveal that consumers are becoming more aware of their dietary consumption needs and turning to healthier food options. As a result, there has been an exponential growth in the demand for healthier food options. As a result, Pepsi Company can take advantage of this opportunity and grab a maximum market share.
Pepsi can also take up more CSR activities to curb the negative remarks that affect the organization’s brand image and consequently benefit the local people. Moreover, to maximize its market share further, Pepsi should strategize on creating more flavours that would attract a larger market. For instance, the firm can utilize Paper boat’s business model in creating several flavours for their consumers.
An increase in partnerships with non-competing brands can increase Pepsi’s market share. Just like Coca-Cola has formed a strong partnership with Domino’s, Pepsi can increase partnerships for more brand awareness.
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What are the Threats of Pepsi Company?
In the SWOT analysis of Pepsi Company, the threats refer to the potential harm caused by external factors. Given this fact, Pepsi’s threats give the company a far-sighted view on problems that might occur in the future due to a progression of the threats. Therefore, to increase the profit margins at Pepsi, it is important to have conducted an in-depth analysis of the threats presented by the SWOT analysis of Pepsi Company. Threats faced by Pepsi Company include the following:
- Heavy competition from global and local players
- Reduced demand/consumer need for carbonated drinks
- Environmentalism
Pepsi Threats Explained
The most prevalent threat to Pepsi Company is heavy competition arising from major food and beverage industry companies. For instance, the aggressive competition from the Coca-Cola company has been having a significant impact on PepsiCo business operations. In addition to this, the growing trends of healthy lifestyles could potentially affect business operations in the company. As a result, most of the company’s products are viewed as unhealthy due to the high fat, sugar or salt content. Also, environmentalism also stands as a threat to PepsiCo due to consumer negativity on product waste and lifecycle issues. This aspect in the SWOT analysis of Pepsi Company indicates that the company must reform its business strategies to overcome the imposing threats.
Competitors of Pepsi
As a food and beverage manufacturer specializing in soft drinks, PepsiCo’s main competitor is the Coca-Cola Company. Other competitors include Coca Cola Enterprises, Dr Pepper Snapple Group and Reeds.
What is the USP for Pepsi?
The Unique Selling Proposition for PepsiCo is that the company is one of the most popular worldwide brands in the food and beverage industry that target the youth.
Conclusion
Conclusively, Pepsi Company has grown and maintained its position as one of the leading brands in the world of soft drinks and food industry. Even with aggressive competition from top brands such as Coca-Cola, Pepsi claims a top position in the food and beverage industry. This has been made possible by the extensive product portfolio and an effective supply chain.
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