Business Management Environmental Analysis

Question: Discuss about the Business Management Environmental Analysis. Answer: Introduction Description of the company and relevant information PepsiCo is known as worlds second largest soft drink company and the worlds largest potato chips selling brand. This report is based on analysis of PepsiCo Inc marketing strategies in order to achieve significant place. The report imbibes all practical efforts undertaken by PepsiCo in order to achieve relevant market growth. PepsiCo was formed due to the joint efforts of the Pepsi-Cola Company, Frito-Lay Inc. in the year 1965 to become PepsiCo Inc. Pepsi is known across the world as flagship product and signature drink of PepsiCo Inc.'s. Tropicana was acquired by the company in the year 1998 and it merged with The Quaker Oats Company in 2001. PepsiCo international is available across the globe in 200 countries and territories generating revenue of nearly $ 92 billion. The mission of PepsiCo is to become worlds leader in consumer product and to focus on becoming a convenient food and beverage. It wants to become market leader by acquiring a significant share through producing health d rinks (Pepsico, 2017). The motive of PepsiCo is to produce healthy profits for the investors and to create ample of market opportunities for attaining growth and enrichment (West, Ford Ibrahim, 2015). There motive is to act with honesty, fairness and integrity while obeying the law and regulations of the countries they are working in. The company is known to manufacture and known to sell variety of salty and sweet grain based products, carbonated and non-carbonated drinks and other beverages. The company has attained long term sustainable growth through its operational activities by creating a competitive advantage through innovation (Rothaermel, 2015). The company is planning to acquire a huge market share by expanding business functions; it grew at the rate of 5.5 percent in year 2006. PESTEL analysis Pestle analysis is an effective model used to analyze the macro environmental situation in a country. It is used by major country to understand the local situation. Business can only grow if the company is already aware about the situation in the country it is working. PepsiCo is a multinational organization with its function in more than 200 countries. It is necessary for a marketer to analyze the marketing situation in order to attain desired outcomes. Political The products manufactured by PepsiCo are subject to the various local laws. The law governs food and safety at different place. The law play significant role in determining future of PepsiCo hence it is essential to focus on the political features of a particular country in order to grow. Land acquisition is one of the factors affecting the land acquisition for a new industry. Te government of the country is focused on making stricter policies while keeping a check over the pollution. It is necessary for a company to comply with the various environmental laws in order to grow. The raw material price is a matter of great worry for the company. The price of raw material keeps fluctuating which has caused a problem for the organization. Economic There are ample of growing opportunities in the other countries. Globalization has lead to integration of worlds economy. It is essential to notice that every company needs to take advantage from the global economic conditions There is a change in the fuel prices that has caused fluctuation in the price of product. Fuel prices are subject to the macro environmental factors (Hoffman, Corbett, Joglekar Wells, 2014). The availability of labor is subject to the market condition. In a developing country the labor are easily available whereas in a developed country it is difficult to get cheap labors. It is necessary for a company like PepsiCo to consider the global economic perspective while expanding business in other countries. Social PepsiCo uses lot of water and it causes harm to environment in many ways. It is necessary for a company like PepsiCo to consider the social factors while considering the environment as well. It should focus on replenishment of water. It is suggested that the company should form an alliance with the local farmers which will causes a significant growth. The company should focus on solid waste water management program which will help in attaining social security. The company has a huge amount of impact on the public hence it is necessary to set a positive mark on the mind of the youth. This will help them I attaining a significant market place under a diversified business environment. Technological The company operates in almost all the countries. Currently PepsiCo is operating in 200 Countries selling different kind of food and beverages. They have already introduced a new can and plastic bottles in a short tenure. There RD department is constantly working by setting desired goals. They are developing attractive and newer designs. Environmental Environment is necessary given more preference in case of serving environmental issues. It is necessary to follow the local and international rules and guidelines as issued by the authority. Legal In order to avoid the legal obligation it is necessary to keep a check over the legal framework. PepsiCo Has to take care of the legal obligation attached with the country they are working in. Porter five forces model The porter five forces model is an important tool that is used for understanding the power of the business. It is a powerful tool used by companies in order to understand both the strength and weakness. Moreover the tool helps in analyzing the completive position it is considering (Banks, Vera, Pathak Ballard, 2016). Five forces analysis help in assuming the five more important aspect of the company in order to determine the competitive power of the organization (Tanwar, 2013). The various powers involved in the Porters five forces model is as follows: Supplier Power This help in analyzing the suppliers power to increase the price related to the commodity. This particular factor is affected by various factors which directly depend upon the uniqueness of the product and services. The fewer supplier choices available in market the more powerful supplier are a t (Gopaldas, 2015). Buyer power The price of the product is bought down which is affected by number of factors like buyers power. It depends on the strength of every individual buyer and their choice in relation with the product. The factors affecting the cost of product depend upon customers choice. In case of few powerful buyers the seller has to work according to them. Competitive Rivalry There are number of factors affecting the buoying power of the customer. It is necessary to keep in account the capability of the competitor. This will help in equally attracting new services and products otherwise suppliers and buyers will switch to some other product. Selling a product which has monopoly in the market will help in attaining significant strength (Lawton, Doh Rajwani, 2014). Threat of substitution There are constant threat from the substitute products available in t he market. The customer can switch to some other product in case if the product doesnt satisfy the consumer. People might switch to another product either by doing it manually or through outsourcing (Aggarwal Sharma, 2015). Threat of new entry The power of buyer is affected by a new entry. It is due to the ability of new competitor that can affect overall market conditions. The competitors can quickly enter into the market if there are fewer economies of scale, little protection for key technology. A person at a strong position than he can control the market position (Felin Powell, 2016). Porter five forces analysis in context of PepsiCo It is due to the global nature of the business that PepsiCo might face various external factors in its industry. Competitive rivalry or competition (strong force) The coca cola is one of the fastest growing soft drink companies that can pose threat to the revenue of PepsiCo. Most of the firms in the food and beverages sectors are aggressive and follows an innovative marketing approach. PepsiCo is currently competing with international and local organizations. This component showcases that PepsiCo is facing a high level of competition from its rival s (David, David David, 2014). Bargaining power of buyers or customers (strong force) Customers are there top priority as per their mission statement. The consumers can easily shift to some new product as there are many companies providing similar products. The level of substitutes is very high causing a high level of bargaining power with the company... it is necessary for them to keep low prices in order to compete against others (Hill, Jones Schilling, 2014). Bargaining power of suppliers (weak force) It is recommended that PepsiCo should try to establish profitable relationship with the suppliers. The high overall power of PepsiCo option in acquiring raw material will help in reducing the bargaining power of the suppliers. Threat of substitutes or substitution (strong force) There are many companies in the market selling similar products. Hence it is necessary to examine the industry well in advance as this will help in giving satisfactory results. The consumers can easily shift to other products if they are not satisfied with it. The external factors are posing a great threat on PepsiCo where there are many chances that an individual can switch to some other product ((Luo, 2016). Threat of new entrants or new entry (moderate force) PepsiCo should remain strong no matter there is possibility of new firms entering into the market. There is a moderate threat from the new firms as consumer can easily shift from one company to another. However there are loyal consumers who want Pepsi over the other local product due to its promising taste (Keegan Campus, 2016). Four strategic recommendations for PepsiCo Firstly PepsiCo should strive hard to expand human sustainability. It needs to focus on developing more healthy and innovative products by choosing an appropriate demography. This will not only create more opportunities but is one of the essential tools against its rivals. This will provide generous profits to PepsiCo. Secondly, PepsiCo need to expand its beneficiary programs in underdeveloped countries. This will help in securing a better position against its major rival Coca Cola. CSR is one of the significant tools used by the business organization to create a sustainable position in the market. Thirdly, it is suggested that PepsiCo should strive for the populate marker (Maruffi, Petri, Malindretos, 2013). They need to focus on developing the Asian market due to possible growth. It needs to focus on a particular segment in the market which will help in attainment of desired results (Madadipouya, 2015). Lastly, there is a necessity to implement a strong promotional technique which will help in securing a better position against its rival. In a modern age social media has become one of the most common manners to create awareness among people. They need to implement the strategies in a significant manner which will help in attainment of significant results. Conclusion The report is based on the success story of the world famous brand PepsiCo. It describes various strategies used by the brand in order to create success story against its competitors Coca Cola. The report provides a brief introducing into the history of the organization. The company has merged with various other organizations across the globe in order to achieve sustainable growth. PESTEL analysis helps in understanding the macro environmental factors that can affect the growth of the organization on a long run. It is one of the most important tools that help in determining the strength while entering an international market. The porter five forces model is an important tool that is used for understanding the power of the business. It is a powerful tool used by companies in order to understand both the strength and weakness. Every business is suggested to understand the competition in the market in order to grow significantly. The report includes the porter 5 forces model describing the nature of buyer, consumer etc. this analysis will help in understanding the market strength of it. Lastly there are four recommendations related to the company in order to attain a competitive edge against Coca Cola. It is recommended that the company need to focus on upgrading promotional techniques in order to grow. References Aggarwal, M. S., Sharma, B. (2015). Green HRM: Need of the hour .International Journal of Management and Social Science Research Review,1(8), 69. Banks, M. A., Vera, D., Pathak, S., Ballard, K. (2016). Stakeholder management as a source of competitive advantage.Organizational Dynamics,1(45), 18-27. David, M. E., David, F. R., David, F. R. (2014). Mission statement theory and practice: A content analysis and new direction.International Journal of Business, Marketing Decision Science,7(1), 95-110. Felin, T., Powell, T. C. (2016). 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