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Clmentine BABONNEAU Alice BEZIRARD Lna BITTON Carole GUIMBART Maxime HUBIN
EXTERNAL ANALYSIS
-MARKET TRENDS -PESTEL -OPPORTUNITIES & THREATS -PORTERS 5 FORCES -KEY SUCCESS FACTORS
Consumer desire to escape from the norm and taste snacks from a wider, often global palate
Political
Protectionism in emerging markets High growth potential of emerging markets Butstrong competition to enter Healthier lifestyles promote different patterns of consumption and represent new product opportunities Butless interest in sodas with high sugar content Strong R&D departments to develop new products
Economic Social
Technological
Ecological
Legal
Consumer lifestyle:
Better for you Good for you opportunities Changing lifestyles of consumers Taste preferences from country to country: adaptation to the local tastes
International Expansion Emerging markets: developing countries China, India, Russia, Mexico, Brazil Developed countries: growing markets in healthy snacks outside US : new consumers needs and expectations: reduce saturated fats, cholesterols, trans fats, simple carbohydrates China and Brazil would be the 2 largest international markets for snacks Potential growth of markets:
Increasing consumption of water bottles in US Increasing consumption of savory snacks like Cheetos cheese (expectation: +27% by 2013) Broadening the products: Avoid the dependence on US markets by going abroad
Awareness for healthy, sugar and salt free meals Decline in Carbonated Drink Sales
Potential Negative Impact of Government Regulations Legal barriers to enter new markets : protectionism Legislation involving environmental, health, and safety may force a reorganization in the industry Intense Competition Fast-food industry: fierce price competition and low profit margins High rivalry between powerful global companies (The Coca-Cola Company, Nestl, Danone, Kraft Foods...). Risk of influence on pricing pricing, advertising, sales promotion initiatives Potential Disruption Due to Labor Unrest In 2008 a strike in India shut down production for nearly an entire month
-Low power of new entrants Few multinational groups own the largest part of the market share Possible entrants for niche markets or local markets ++ Very high bargaining power (retailers) -Power of brand recognition as an argument to attract the final customer who is loyal -Depends on the size of the retailer
+/Medium bargaining power -Dependence on raw materials -Buta lot of suppliers available
+ High -All kind of food depending on the taste -Pay attention to healthy and wellness categories
++ Very high rivalry -High diversification from each competitor -Few strong groups control the market
Share
information and be transparent regarding the stakeholders Be able to forecast the trends at a local and global level Adapt to customer lifestyle and needs Product innovation and diversification Be visible everywhere Good control over the manufacturing process to achieve economies of scale
INTERNAL ANALYSIS
PepsiCos organizational structure & Net Revenues for each Business Segment (in $ millions) in 2007:
$11,586
Frito-Lay North America
$15,798
Quaker Foods North America
$10,230
PepsiCo Beverages North America
$1,860
Pepsi International
Market Research R&D: Product Innovation Efficient Information System International expansion Strategic acquisitions
PepsiCo constantly improved its knowledge on the consumer behaviour by identifying trends such as healthier products: New brand value: PepsiCos better-for-you & good-for-you products
Launch of less saturated fat and less salted products answering to the trends found it by Consumer Insight dept Introduction of Lays traditional flavour with 50% less saturated fat
Close relationships with suppliers & customers under the Power of One program that allow PepsiCo to have direct information from both retailers & customers
PepsiCo has succeed in creating an international exposure especially with Beverages & Salty snacks (increase of 22% in 2007)
Brand equity
Differentation
Product diversity
Competitive Advantages
Wide range of products Efficient identification of trends Proactive instead of Reactive International Exposure High profit margins Total control on the several steps of the supply chains (allow them to control & reduce the production and delivery costs)
Relatively unsuccessful in increasing the worldwide awareness of Quaker Foods Wide In 2006, only 6 countries represented 75% of Quaker Foods International sales out of US Difficulties to find a synergy between their restaurants & beverages they sold
Total Net revenues of PepsiCo Inc. from 1998 to 2007: increased by approximately 77%
Price in the stock exchange was about $33 in 1999 & about $64 in 2008 (+ 120%)
GOOD FINANCIAL HEALTH WHICH ALLOWS THEM TO SELF FINANCE THEIR GLOBAL EXPANSION
-MAIN STRATEGIC CHOICES -ACTUAL STRATEGY -PEPSICO DIVERSIFICATION -PEPSICO CHALLENGES -PEPSICO DIFFICULTIES
Product differentiation to respond to health concerns (use of healthier oils, natural salty snacks) Research on new flavors and new recipes: in order to attract more customers With International acquisitions, PepsiCo offers a different kind of food and beverages
A GREAT SUCCESS
China and Brazil would be the two largest international markets for snack
To increase the market share in developing countries and continue the strong development in emerging countries
To innovate in order to improve the quality of their products while keeping going through the large diversification
Stock
Price: in 2008 PepsiCo Drops his stock price in order to improve overall profitability brand: under distributed in international market only one brand in growing market, its not enough! margin are not maximized
Quaker
Gatorade:
Operating
Weight
Attractiveness Rating 7 8 5 6
Market size and projected growth Intensity of competition Strategic fits and resource fits with other industries in portfolio Resource requirement
0.10 0.05
0.15 0.05 1.00
4 2
3 4
0.4 0.1
0.45 0.20
5.9
According to the rating scale, a result of 5.9 industry attractiveness rating is a bit more than the average (all SBUs has been taken together).
We
We
high
Frito lays AMERICA
Question marks
Stars
Beverages AMERICA Quaker AMERICA
Quaker Int
Low
Cash cows 1
Choice number 1:
Choice number 2:
International acquisitions
Choice number 3:
Forecast new trends: Improve the healthy products or make ecological packaging for egs
Adapt
Key to expand into international market Taste are different in function of each country Follow the customer s taste in order to attract them, in Mexico : spicy food, in Europe: healthy food with less saturated fat
International
Reinforce their presence on new markets = Internationalization Increase the relationship with local companies in order implement easier New target: emerging countries
Forecast
Criteria
COST CONTROL RISK TIME INTERNATIONALIZATION BRAND EQUITY FOLLOW CUSTOMERS NEW NEEDS
Weight
Alternative 1
Alternative 2
Alternative 3
4 6 3 5 9 8 5 5,55/10
1 7 2 2 10 9 4 4,65/10
5 8 4 3 5 10 9 6,2/10
TOTAL
According to our analysis, the best choice for the company would be:
To try to forecast customers trends and to anticipate by providing new products through innovation How to do it ?