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Pepsico

PEPSI

Growth, Balance, and a World of Fun

Strategic Management Audit Conducted By:

Ahmad Almajed
Kimberley Hanson
Rehan Nana
Ross Ollom
Marika Pappas

Provided To:

Professor Peter Geoffrey Bowen, PhD

May 16, 2007

TABLE OF CONTENTS

EXECUTIVE SUMMARY 3
CURRENT SITUATION 4
CORPORATE GOVERNANCE 9
EXTERNAL ENVIRONMENT 10
INTERNAL ENVIRONMENT 15
ANALYSIS OF STRATEGIC FACTORS 18
STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY 22
IMPLEMENTATION 23
EVALUATION AND CONTROL 25
BIBLIOGRAPHY 26

Executive Summary

Created in 1965 through the merger of Pepsi-Cola and Frito-Lay, PepsiCo is one of the strongest beverage and convenient food companies in the world. Originally started in 1898, Pepsi Cola became the first branded soft drink in the world. Its brand is available in over 200 countries around the world and generated sales in excess of $92 billion last year. Headquartered in Purchase, New York, PepsiCo is the number two beverage company in the world behind the Coca-Cola Company.
Financially, 2006 was a year of progress with an overall growth of 5.5%, revenue of nearly 36 billion USD and a return on investment of 26%. These numbers are all well above the industry average, with their main competitor still being the Coca-Cola Company. PepsiCo has continued their brand image by appealing to Generation Y and becoming synonymous with music, entertainment and sports. In addition to their financial success, PepsiCo is also dedicated to ethics and social responsibility in the community. They have invested heavily in recycling programs and in developing nations in Africa. PepsiCo even has a sustainability mission that states “PepsiCo’s responsibility is to continually improve all aspects of the world in which we operate- environmental, social, economic- creating a better tomorrow than today.”
They believe that they have the competitive, sustainable advantage in the industry because of three things: big brands, proven innovation and...