The Issues Of PepsiCo International Strategy

The Issues Of PepsiCo International StrategyCoca-Cola, the major competitor of Pepsi has been exiled from the desert kingdom. Beca drill of this, Pepsi expanded into Arab Countries has an 80% sh ar of the $1 billion Saudi soft- revel market. Saudi Arabia is the third largest foreign market of Pepsi, after Mexico and Canada. In 1993, about 7% of Pepsi-Cola Internationals sales came from Saudi Arabia. The environment in Saudi Arabia bes the area very favorable to soft-drink sales because alcohol is banned climate is very hot and dry.Mode of ExpansionPepsi uses franchise system for international expansion.Sources of Competitive improvementPepsiCo has rivalrous advantage in terms of worldwide distribution the confederation is able to produce all its products in the country where they are consumed. Pepsi has a competitive advantage over Coke because of its brand image good word of mouth. Pepsi promotes itself as the number one choice of the Next Generation.Government PoliciesCur rently a 50 percent turn out in Pepsi prices in Saudi has angered clients and provoked the kingdoms government to call on more than 30 soft drink companies to hold off on further price hikes. Pepsi increased the price of a can to 1.50 riyals $0.40 from 1 riyal.it. Saudi Consumer Protection Association investigated the sudden unwarranted price hike, the Saudi Gazette reported that official permission should be granted to soft drink firms before they are allowed to increase prices and price rise should not be more than 10 percent.PEST depth psychologyPolitical InfluencesMany PepsiCo products are subject to distinguishable federal laws due to their manufacturing, distribution use, much(prenominal) as the Food, Drug and Cosmetic Act, the Occupational Safety and closelyness Act ad the Americans with Disabilities. The international ventures are subject to the Government stability and business linees are subjected to different taxation policies in each consumer country.Economic Infl uencesPepsiCo relies on trucks to move products so fuel is an important subject fuel prices matters. The economic impact of foreign counterchange rates movements on them is complex because such changes are often linked to variability in real growth, inflation, interest rates, governmental actions, etc. PepsiCo is also subjected to spic-and-span(prenominal) economical factors like money supply, energy availability, cost and business cycles.Socio-Cultural InfluencesPepsi is subject to the lifestyle changes, so it bases her advertising campaigns in people with special(a) lifestyle. For that PepsiCo has to pay special attention on lifestyle changes. It has to be very careful with the possible problems with the governments and those which could rise from PepsiCo act with the people of KSA.Technological InfluencesPepsiCo is exposed to new manufacturing techniques, for its three business units, snack food, juices and soft drinks. It has to pay attention while adopting flexible advanc ed distribution techniques.PORTER 5 FORCES Analysis1. Threat of New Entrants The menace of new entrants in the industry is small yet substantial. This is because there are already four players in the market early(a) then Pepsi itself.2. Threat of Substitute ProductsCurrently, the threat of new viable competitors in the carbonated soft drink industry is not very substantial. Possible substitutes that continuously put pressure on Pepsi entangle tea, coffee, juices, milk, and hot chocolate.3. Bargaining Power of SuppliersThe bargaining power of the suppliers tends to be low according to the recent analysis. PepsiCo needs to manage its relationships carefully with the bottling units in order to make changes in its way to market the local retailers.4. Bargaining Power of BuyersHere the concern is how to increase market share and retain its current customer because customer always try to optimize benefit. The buying power of consumers also poses a key threat in the industry. Moreover c onsumers can simply switch to other beverages with little cost or importance.5. Rivalry Among CompetitorsPepsi has 48.9% share of market it is situated in an environment that is ever changing and dynamic because coca cola is holding 30.9% share Cadbury Schweppes 8%. The local brands are also in the market to compete Pepsi. These brands are Mecca cola holding 0.5% market share and 0.6% Zamzam cola.SWOT Analysis1.Internal Attributes(Strengths Weaknesses)Pepsi is inferior in its bound drink division. The ownership in fast food restaurants has always been problematic for pepsi. Coca Cola has been in the top locations for fountain beverages because of their ownership in Taco Bell, Pizza Hut, KFC, and many others.2.External Attributes(Opportunities Threats)In addition to its large consumer base, Saudi Arabia has some of the regions biggest athletic clubs, most passionate sports fans, and has a growing population of athletes and active people. When PepsiCo started its own Pepsi Bott ling Company, it allowed them to cut costs, reduce overhead, and coordinate their distribution to create a better synergy.Critical Issues or BarriersPepsi can serve the 90% market but problem is the bottling of the drink.War crisis between Palestine and Israel is bringing hate against Pepsi that why USA is not interest in resolving the electric outletAs Pepsi is US product and these days US and foreign products are campaigned not to be used to show rage against non-Muslim acts.Due to recent cover prices increase, there is international factor of inflation and on the other hand Pepsi is cheaper in KSA compared to other countries, so Pepsi is facing problem to maintain the profits.Since employers in KSA are required to give their employees time to pray toward Mecca five times per day, as set forth in the Koran, break times caused additional operating cost.Health and stomach diseases due to over use.Obesity problem which is becoming common in Saudis.Rumors of Haram ingredients.The to ugh competition is carried out finished packaging as well as price.RecommendationsPepsi is being forced to re-examine their strategic models, based on carbonated soft drinks and move to new beverage categories. Heavy investmentment in crazy innovations may be suggested in order to transfer resources from other brands. Pepsi spends 15% of overall budget on advertising and marketing to be no.1 in the consumer sight. Pepsi should use all media vehicles to attract consumers.ConclusionConsumers want to buy soft drinks delivered at convenient locations with the right package. Pepsi have to make sure that the market keeps growing annually, and that company products are available everywhere. Pepsi has won the International Quality Award and Bottlers of the year Award, so the company feels quite optimistic. Although difficult challenges lay ahead, yet to exploit opportunities through the implementation of an effective and comprehensive marketing plan 2009.Appendix