Pepsi’s Strategy to Survive

Corporate Strategy

In the article, Pepsi’s diversification strategy in 2014. I recognize that the corporate strategy of Pepsi is changing according to the market situation, business cash flow, the objective set by the board of directors and so on. All these factors may affect its corporate strategy. At the beginning of the foundation of this company, it exists several principles. And as per these principles, this company redesigns its strategy to suit the new situations. And at the same time, it tries to surpass the previous aims and reach higher peaks. Firstly, the company increases its market shares by merging and acquiring other companies. Secondly, it seeks for partnership in the whole world to sell goods. This helps Pepsi possess a market share at a global level. Thirdly, in order to increase more market shares, it invests in more potential markets. Last but not the least, this company pays attention to the innovation, and it has a valuable corporate culture. All these contribute to the increase of its market shares and the development of its performance.

Long-Term Attractiveness of the Industries

First of all, the merger of the two companies –Pepsi and Frito-Lay brand really propels the mix of drink industry and snacks. Nowadays, Pepsi possesses a market share in the salty snacks, a still common field. Besides that, Pepsi plays a significant role in producing beverages, such as Pepsi Cola. This helps it a lot in the competitive market. Pepsi Company adopts different kinds of approaches to improve its development. Last but not the least, this company utilizes a conception called the power of one. This company once displayed the goods both from the Pepsi Company and Frito-Lay Company.

The Competitive Strength

One of the greatest advantages is that this company is good at using different kinds of strategies according to the different regions and different perspectives. In some specific portions, this company creates new formats and convenient packages to attract customers’ eyes. And also, they would like to study in new flavors of beverages. Although the process of those activities is complex, time-consuming and also needs to invest in an enormous amount of money. Pepsi still insists on innovation. By doing this, it attracts a significant number of customers from all over the world. Its distribution system is wholesome. It not only rely on the direct supply from the big outlet stores but also by means of broker-warehouses and vending distribution networks.

Portfolio Strategic Fit & Value Chain

The portfolio of Pepsi fits well with the strategic goal of this company. According to the different field and production area, this company adjusts its strategy to fit. In order to do that, it figures out an optimized value chain strategy. Pepsi’s match-ups help a lot for this company, and by realizing these match-ups, the company acquires a practical situation in the market. By cooperating with the company-Frito Lay, its skills transfer, cost sharing, and brand sharing all get progressed. The cooperation between the two companies in the fields such as beverages, snacks really propel Pepsi possess higher market shares.

Revenue and Cash Flow

First of all, due to acquisitions and the goal set by the company to receive high returns from the market, Pepsi achieves success in the revenue and cash flow. Besides that, the operational excellence is one of the most impressive financial performance of this company. From 2004 to 2013, it shows a steady increase in the revenue of from $29,261 to $66,415. One of the most important to factor to judge the cash flow is cash dividends. It is clearly seen from the data that the cash flow also increases from $0.85 to $2.24 per share. The branch office in the Northern American is the most profitable one, and Pepsi depends on this branch. But the office in the Latin American is also promising. It also makes great contributions to the balanced financial performance of Pepsi.

Recommendations to Financial and Corporate Performance

Above all the analysis, I would like to make some suggestions to the future performance of Pepsi on the financial and corporate performance of this company. As we all know, the joint efforts of the two companies---Pepsi and Frito Lay propels the development of Pepsi. As I have mentioned above, these two companies one put both of their products on the different shelves to attract customers’ eyes. I hold the view that this action can continue to use in the future. Besides that, Pepsi needs to pay attention to the Quaker Oats positioning to turn the current situation of this field from weak to strong. By doing that, the company could witnesses increasing financial shares and promising market performance.

In terms of using of free cash flow, I would insist on investing it into more prevailing markets and fields such as clothes industry and famous shoes brand. At the same time, Pepsi can earn more profits in cooperating with more famous brands such as Nike, Adidas to gain more popularity. At the same time, it will be possible to increase the distribution of the company’s products to increase in sales (Holbeche 12).

Competitive Strength Point

By making the efforts I have mentioned above, the shareholders could be able to see a dramatic increase in their cash per share. The satisfaction of the shareholders, on the contrary, will also benefit the development of the company. This is a mutual benefit and win-win result. For the Pepsi Company, it can experience a long time development and then be competitive in the market and acquire more market shares.