Pepsi Keeping Up With the Challenge Essay

Pages: 3 (965 words)  ·  Bibliography Sources: 2  ·  File: .docx  ·  Level: College Junior  ·  Topic: Business

PepsiCo has struggled with many of the same issues as Coca-Cola Company, but internally they are more dynamic, a function of two variables. The first is the company's market share. By trailing Coke, Pepsi has been forced to be more innovative in order to win more market share. The second is Pepsi's involvement in food service industries. Historically, Pepsi's businesses were kept separate from one another but over the years there has been increasing integration of Pepsi's different lines. As the result of this, the company has become more dynamic internally, due to the transfer of talent and ideas between PepsiCo units. Pepsi's strategy is more congruent with its environment than is Coke's as a result of its market share and corporate culture.

Whether innovation is a source of strength for Pepsi depends on one's view of the industry. Compared with Coke, Pepsi is an innovative firm. The company has historically been more willing to enter into joint ventures such as that with Starbucks for coffee beverages. Pepsi is not, however, an innovative company in the soft drink segment altogether. It has relied all too heavily on brand extensions rather than true innovation in order to pursue a growth strategy, leaving true product innovation to smaller firms (Khermouch & Howard, 1999).Download full Download Microsoft Word File
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Essay on Pepsi Keeping Up With the Challenge Assignment

One key strength of Pepsi is that is has a broader outlook to growth and profits than does Coca-Cola. The company has in the past operated fast food restaurants such as Pizza Hut and Taco Bell; has been a producer of salty snacks (Frito-Lay) and has acquired successful properties in emerging beverage markets such as Quaker Oats for Gatorade (Venkataraman, 2008). This broader outlook provides the company with greater growth and the ability to respond more quickly to changes in the external environment. Another strength is the company's hard-driving management culture. The company benchmarks against its rival Coca-Cola and has fostered an achievement oriented underdog culture that drives strong performance from managers. The culture is focused around personal accountability and decentralized decision-making. This has also fostered a more innovative style than at Coke. Pepsi also has very strong brands, 19 of which are valued at over $1 billion (2009 PepsiCo Annual Report). These brands can be extended -- two Pepsi brand extensions (Diet Pepsi and Pepsi Max) are now worth over $1 billion. This provides significant opportunity for future growth even using the relatively staid brand extension formula.

Pepsi has few obvious internal weaknesses. The company is more diverse than Coke is, which reflects the company's commitment to bringing the best possible ideas on board. This also reflects the company's commitment to building its international business, which it hopes will grow by double the global GDP growth (2009 PepsiCo Annual Report). Pepsi has strong financials. However, it remains reliant on its core business of carbonated beverages (three of its five top brands are soda). Pepsi Americas accounts for 71% of the… [END OF PREVIEW] . . . READ MORE

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Pepsi Keeping Up With the Challenge.  (2010, June 24).  Retrieved June 15, 2021, from https://www.essaytown.com/subjects/paper/pepsi-keeping-up-challenge/5164

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"Pepsi Keeping Up With the Challenge."  Essaytown.com.  June 24, 2010.  Accessed June 15, 2021.
https://www.essaytown.com/subjects/paper/pepsi-keeping-up-challenge/5164.