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PepsiCo (SWOT Analysis)

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“SWOT is an acronym for the internal Strengths and Weaknesses of a firm and the environmental Opportunities and Threats facing that firm. SWOT analysis is a widely used technique through which managers create a quick overview of a company’s strategic situation. The technique is based on the assumption that an effective strategy derives from a sound “fit” between a firm’s internal resources (strengths and weaknesses) and its external situation (opportunities and threats). A good fit maximizes a firm’s strengths and opportunities and minimizes its weaknesses and threats. Accurately applied, this simple assumption has powerful implications for the design of a successful strategy.”

PepsiCo 

PepsiCo is one of the largest food and beverage companies in the world. The company manufactures, markets, and sells a range of salty, convenient, sweet and grain-based snacks, and carbonated and non-carbonated beverages. The company holds 38% market share of the total US savory snacks market and a 25% market share of the US liquid refreshment beverage market. The company figures at the 58th position in the Fortune 500 ranking for 2008. Strong market position allows the company to launch new products and also increases its bargaining power in the market. However, the high transportation cost resulting from the higher oil prices has increased PepsiCo’s shipping and handling cost from $4.1 billion in 2005 to $5.1 billion in 2007. Given the intense competition in the market, the company may not be able to pass on increases in operating costs to its customers. High oil prices would adversely affect the margins of the company.

Strengths, Weaknesses, Opportunities and Threats (SWOT)

Location of Factor

TYPE OF FACTOR

Favorable

Unfavorable

Internal

Strengths

  • Strong market position
  • Strong brand portfolio
  • Strong growth in revenues and profits

Weaknesses

  • Business concentration

External

Opportunities

  • Acquisitions and alliances
  • Growing bottled water market
  • Growing Hispanic population in US

Threats

  • Sluggish growth of carbonated beverages
  • Intense competition
  • High oil prices
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