May 27, 2013
Strategic Initiative One of many current initiatives in consideration at the PepsiCo organization is a push toward healthier choices concerning snack time. The firm continues to expand its line of products to include healthy choices at breakfast time as well. PepsiCo’s ambition to provide healthier choices coincides with the United States Government’s efforts to offset obesity; aiming specifically at the nation’s youth. To further this effort, PepsiCo engages in an annual conference and expo co-sponsored by the American Dietetic Association (ADA). These conferences allow PepsiCo to gain important feedback of top nutritionists and dieticians from different geographical areas and perspectives. To determine the impact this initiative will have on the firm is the subject of this review. The relationship this strategic plan has with the firm’s financial progress is of particular interest. The effects this initiative will have on costs and sales, along with the risks the company may encounter are also important topics here.
Strategic Planning Initiative In 2012, PepsiCo undertook a number of significant initiatives, which included increasing its investments in its iconic global brand, launching new products like Pepsi Next and a productivity program (PepsiCo Inc., 2012). In 2013 and beyond, PepsiCo’s strategic initiative is to position itself for long-term advantage and growth while remaining profitable (PepsiCo Inc., 2012). According to PepsiCo Inc. (2012), “We migrate our portfolio toward attractive high-growth space” (p. 5). With investments in major expansions across multiple markets, PepsiCo’s aims to increase its presence in the nutrition space. The company’s focus is on growth in the nutrition business by developing variants of its existing nutritional brands such as Quaker Oats, Tropicana, Gatorade, and Naked. PepsiCo recognizes the shift to healthy choices by consumers because of important factors like the average age of the general population and concerns about the health effects of ingredients such as sugar, sodium, and additives. Additional concerns include negative publicity, economic downturn, tax increases, and litigations against snack and beverage companies. PepsiCo is strategically positioned to meet growing demands for tasty and convenient nutrition by building its portfolio in fruits, grains, vegetables, dairy, and sports nutrition. As a multinational food and beverage company that carries global brands, PepsiCo has taken steps to ensure responsible advertising practices. The company joined the International Food and Beverage Alliance that includes multinational food and beverage manufacturers. The goal is to adopt a global commitment of advertising to children and only for products that meet certain nutritional criteria (PepsiCo Inc., 2012).
High growth opportunities in these emerging and developing market is attractive. As more women enter the workforce, demand for convenient healthy foods and beverage continues to rise. PepsiCo’s strategic partnership with Tingyi in China makes it a part of the leading beverage system (PepsiCo Inc., 2012). The company has a partnership with Almarai, Saudi Arabia’s largest food producer, and Tata in India; to serve the value customer.
PepsiCo’s financial plan includes initiatives to decrease costs. At the same time, the firm wishes to find ways that increase sales on its many popular brands and the new ones it creates. Not an easy task to accomplish but it looks as if the company may just pull it off.
Cost Reduction With the expansion into the “better for you” and the “good for you” markets, PepsiCo notices a decrease in spending by 19% (PepsiCo Inc., 2012, p. 40). The firm realizes many opportunities while keeping costs down. To assist in this plan, acquisition of other companies in these market categories ensures that PepsiCo can implements a common supply chain through