PepsiCo. Strategic Plan Design

314235540
Design Strategic Plan

Individual Case Analysis (PepsiCo-2009)
NAZIFA BTE ABD. GHANI (MR111037)
Assoc. Prof. Dr. Mas Bambang Baroto
International Business School

University Technology Malaysia
April, 2013
[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009
Contents
1.0 Company background ....................................................................................................................... 3
2.0 Description of Industry ..................................................................................................................... 4
3.0 External Assessment ......................................................................................................................... 5
3.1 Positioning Diagram Strategic Group Identification ..................................................................... 5
3.2 Opportunities & Threats ............................................................................................................... 7
3.3 EFE matrix................................................................................................................................... 10
4.0 Internal Assessment ........................................................................................................................ 11
4.1. Strengths & weaknesses ............................................................................................................ 11
4.2 IFE Matrix .................................................................................................................................... 12
4.3 Value Chain Analysis (Non-Alcoholic beverages Segment)......................................................... 13
5.0 Strategy Formulation ...................................................................................................................... 16
5.1. SWOT Matrix .............................................................................................................................. 16
5.2 IE Matrix ...................................................................................................................................... 18
5.3 Strategy Formulation Conclusion................................................................................................ 18
6.0 Strategy Implementation ............................................................................................................ 19
6.1 Operation Management Process.................................................................................................. 19
6.1.1 Supply Management Process .............................................................................................. 19
6.1.2 Production Management Process ........................................................................................ 25
6.1.3 Distribution Process ............................................................................................................. 30
6.1.4 Risk Management Process ................................................................................................... 33
6.2 Customer Management Process .................................................................................................. 47
6.2.1 Customer Selection Process ................................................................................................ 47
6.2.2 Customer Acquisition Process ............................................................................................. 52
6.2.3 Customer Retention Process ............................................................................................... 57
6.2.4 Customer Growth Process .................................................................................................. 61
2|Page
1.0 Company background
Founder
Caleb Bradham in New Bern, North Carolina, 1898
Division
Non-alcoholic Beverage Industry
Net
revenue
Net
revenue by
division
Mission &
vision
The salty or Savory Snack Food Industry

Breakfast Food Industry
* PepsiCo is organized into three business units.
However, its three business units are comprised of six divisions: FLNA, QFNA, LAF,
PAB, EKEU, and MEAA
2006
2007
2008
$
$
$
(million)
(million)
(million)
35,137
39,474
43,251
2,615
2,845
2,959
FLNA
554
568
582
QFNA
655
714
897
LAF
2,315
2,487
2,026
PAB
700
774
811
UKEU
401
535
667
MEAA
Mission statement:
Our mission is to be the worlds premier consumer products company focused on
convenient food and beverages. We seek to produce financial rewards to investors as
we provide opportunities for growth and enrichment to our employees, our business
partners and the communities in we operate. And in everything we do, we strive for
honesty, fairness and integrity.
Vision statement:
PepsiCos responsibility is to continually improve all aspects of the world in which we
operate-environment, social, economic-creating a better tomorrow than today. Our
vision is put into action through programs and a focus on environmental stewardship,
activities to benefits society, and a commitment to build shareholder value by making
PepsiCo a truly sustainable company.
3|Page
2.0 Description of Industry

* Because of the lack information given in the case study and time limitation, the whole
analysis for this report will be only focused on Non-alcoholic beverages segment.
Name of the
industry
Industry Market
Cap
Industry Net
Income
Main competitors in
the industry
Non-Alcoholic Beverage Industry
Industry products
and services
PepsiCo: PepsiCo of late has a more focused strategy in the snack, breakfast
food and non-alcoholic beverage markets. The company produces Mountain
Dew, Mug Root Beer, Sierra Mist, Slice, Aquafina, Dola Juices and SoBe.
Make up a $395billion world market with carbonated drinks the largest share
of the market at $150 billion.
1. Coca-Cola
2. PepsiCo
Coca Cola: Coca Cola has continued to strengthen their juice, ready-to-drink
tea and coffee products, water and sport drinks along with the introduction
of Truvia as a sweetener.
*The industry composed of carbonated soft drinks, fruit and vegetables

juices, bottled water, sports and energy drinks, concentrates and ready-todrink coffee and teas.
4|Page
3.0 External Assessment

3.1 Positioning Diagram Strategic Group Identification
*Because of lack of information on Non-alcoholic beverages segments competitors, the
analysis is only focused on PepsiCo and Coca Cola Company since it is clear mentioned in
the case study that both of them are the major player in the industry.
Case facts of X axis - Market Share

Coca Cola and PepsiCo holding the largest share of the U.S market at 23 percent and
25percent respectively .Coca Cola however holds the largest share of the U.S cola market
at 41 percent with Pepsi second at 36.7 percent (Pg 74, Para 5).
Pepsi and Coke have fought the cola wars for decades and has generally beaten out Pepsi
for market share (Pg. 78, Para 3)
Case facts of Y axis Financial Position

The financial for Coca Cola shows a strong cash position of $4,979 billion and long term
debt only $2,781 billion. Coca Cola net profits of $5,807 billion in 2008 (See Exhibit 8) (Pg.
76, Para 1). Coca Cola shows a strong financial position and smaller long term debt
compare to PepsiCo.
Cost of sales for PepsiCo has increased as would be expected. These costs have increased
from 41.32 percent of sales to 43.43 percent of sales net income has decreased from $5.6
billion to $ 5.1 billion , return on assets has dropped from 18.81 percent to 15.17 percent ,
inventory turnover has decreased from 8.02 times to 7.81 times and long term debt has
increased from $4,203 billion in 2007 to $7.858 in 2008 (Pg.73, Para1).
5|Page

Size of circle Product Diversification
Pepsi as bottlers of soft drinks. The company produces alsoMountain Dew, Mug Root Beer,
Sierra Mist, Slice, Aquafina, Dola Juices and SoBe (Pg.69, Para 4). In addition, Pepsi Co
includes the brands of Tropicana and Gatorade and this is just a partial list of the branded
products sold by Pepsi (Pg. 69, Para 4). PepsiCo has developed liquid refreshment products
that are light, calorie free, sugar free, caffeine free, sport and energy directed and flavoured
(Pepsi, Aquafina, Voltage). (Pg.70, Para1). Pepsi has ventured into conglomerate
diversification from van moving lines to sporting goods to fast foods. PepsiCo of late has a
more focused strategy in the snack, breakfast food and non-alcoholic beverage markets (Pg.
69, Para3). Today PepsiCo is a larger and more diversifies company than Coca Cola (Pg. 78,
Para 3).
Coca Cola has kept a fairly narrow focus. Coca-Cola seems to be following a very
concentrated strategy by focusing almost exclusively on non-alcoholic beverages with little
tendency to diversify. Additional as the demand for dark colas has diminished, Coca Cola has
continued to strengthen their juice, ready to drink tea and coffee products, water and sports
drinks along with the introduction of Truvia as a sweetener (Pg.76, Para 2).
Strong
Coca Cola
(25%)
Financial Position
PepsiCo
(23%)
Weak
10%
6|Page
20%
U.s
Market Share
3.2 Opportunities & Threats

To choose opportunities and threats I tried to find those that were critical for company and
able to give greatest impact to PepsiCo.
No.
1.
2.
3.
Opportunities
Steady overall growth for the last five years of around 9 percent with sports drinks, bottled
water, and energy drinks showing the largest growth (Pg.74, Para 4).
A recent environmental campaign against plastic containers has impacted the sales of
bottled water and forced manufacturers to develop more environmentally friendly
containers (Pg74, Para 6).
The market for these products requires manufactures to constantly develop new products to
meet those changing demands (Pg74, Para 6)
Opportunities
O1: Steady overall growth
for the last five years of
around 9 percent with
sports drinks, bottled
water, and energy drinks
showing the largest growth
(Pg.74, Para 4).
O2: Growth in the
carbonated drink market
was largest in Asia and
Europe (Pg74, Para 4).
O3: The market for these
products requires
manufactures to constantly
develop new products to
meet those changing
demands (Pg74, Para 6)
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Probability
Impact
Justification
Almost
certain
Extraordinary
Perform highest impact to PepsiCo in

conjunction to reduction demand on
carbonated drinks. Consumers start to
concern more on their healthy lifestyle.
Possible
Moderate
Likely
Major
Expanding business on these countries

might help increase PepsiCo revenues
and sales.
Able to give impact on PepsiCo

revenues and profits since the taste of
consumers always change.

Probability
Almost
certain
Insignificant
Low
Minor
Medium
Moderate
High
Major
High
Extraordinary
High
1
Likely
Low
Medium
Medium
High
Possible
Low
Low
Medium O2
High
High
Unlikely
Rare
Low
Low
Low
Low
Low
Low
Medium
Medium
Medium
Medium
O3
High
No. Threats
1. The downturn in the economy has also affected the sales of colas and water as some
consumers have switched to store brands and tap water as cheaper alternatives to the
national brands (Pg.74, Para 6).
2. Consumer taste continues to change, and Pepsi must also continue to change (Pg 69, Para 3).
In United States, the carbonated soft drinks market has shown a decline of 0.4 percent as
consumers shifted from soft drinks to bottled water and sports drinks (Pg. 74, Para).
3. Fought the Cola wars, Coca Cola holds the largest share of the U.S cola market at 41 percent
(Pg74, Para 5). Coca Cola is the largest producer and distributor in the world and is PepsiCos
major competitor (Pg. 76, Para 1).
Threats
T1: The downturn in the
economy has also affected
the sales of colas and water
as some consumers have
switched to store brands
and tap water as cheaper
alternatives to the national
brands (Pg.74, Para 6).
T2: Consumer taste
continues to change, and
Pepsi must also continue to
change (Pg 69, Para 3). In
United States, the
carbonated soft drinks
market has shown a
decline of 0.4 percent as
consumers shifted from soft
drinks to bottled water and
sports drinks (Pg. 74, Para).
T3: Fought the Cola wars,
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Probability
Impact
Likely
Major
Able to reduce PepsiCo sales and

revenues since the consumers have an
ability to switch to their national brands
as well as interested more on cheaper
price.
Almost
certain
Extraordinary
In order to avoid competition from

other rivals and as to retain loyal
consumer, the company should fast
responsive to the consumer
preferences.

Coca Cola holds the largest
share of the U.S cola
market at 41 percent (Pg74,
Para 5). Coca Cola is the
largest producer and
distributor in the world and
is PepsiCos major
competitor (Pg. 76, Para 1).
Likely
Probability
Almost
certain
Likely
Major
Able to give major impact towards

PepsiCos business, growth and
position in the industry since Coca Cola
is the closest competitor. Coca Cola has
a strong brand reputation and even
posses strong financial position if
compare to PepsiCo.
Insignificant
Low
Minor
Medium
Consequences
Moderate
Major
High
High
Low
Medium
Medium
High
T1
Possible
Low
Low
Medium
High
Unlikely
Rare
Low
Low
Low
Low
Low
Low
Medium
Medium
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Extraordinary
High
T2
1
High
T3
High
Medium
Medium
3.3 EFE matrix
No.
1.
2.
3.
EFE
Opportunities
Steady overall growth for the last five years of

around 9 percent with sports drinks, bottled
water, and energy drinks showing the largest
growth (Pg.74, Para 4).
Growth in the carbonated drink market was largest
in Asia and Europe (Pg74, Para 4).
The market for these products
requires
manufactures to constantly develop new products
to meet those changing demands (Pg74, Para 6)
No
Threats
1.
The downturn in the economy has also affected the

sales of colas and water as some consumers have
switched to store brands and tap water as
cheaper alternatives to the national brands (Pg.74,
Para 6).
Consumer taste continues to change, and Pepsi
must also continue to change (Pg 69, Para 3). In
United States, the carbonated soft drinks market
has shown a decline of 0.4 percent as consumers
shifted from soft drinks to bottled water and
sports drinks (Pg. 74, Para).
Fought the Cola wars, Coca Cola holds the largest
share of the U.S cola market at 41 percent (Pg74,
Para 5). Coca Cola is the largest producer and
distributor in the world and is PepsiCos major
2.
3.
Weight Ratings Weighted score

0.18
0.72
0.13
0.39
0.17
0.51
0.16
0.48
0.20
0.80
0.16
0.48
Total
1
10 | P a g e
3.38

4.0 Internal Assessment
4.1. Strengths & weaknesses

In order to choose the Strengths and weaknesses, I have classified the strength level into three
significant categories (Competence, Core Competence and Distinctive Competence). In this
case, Distinctive Competence will be chosen for further assessment as this category shows
that PepsiCo able to perform unique capabilities that distinguish the organisation from its
competitors .
No.
1.
2.
3.
4.
5.
6.
7.
Strengths
Competence
Pepsi has ventured into conglomerate diversification from van moving lines to sporting goods
to fast foods (Pg. 69, Para3).
PepsiCo must appeal to the ultimate consumer through extensive advertising and promotional
activities. This Pull marketing strategy is highly dependent on creative marketing and
development of catchy slogans along with Pepsi Cola brands (Pg. 70, Para 1).
PepsiCo recently offered $6billion to retake ownership of its two largest bottlers, Pepsi
Bottling Group (PBG) and Pepsi Americas(PAS) (Pg. 68, Para 5).
Core Competence
Bradham followed the example of Coca Cola and used the bottling franchise system in which
he produced the syrup and others bottled and distributed. This business model allowed for
quick expansion and market penetration (Pg.69, Para69).
Pepsi and Coke become the largest worldwide producer of non-alcoholic beverages (Pg. 69,
Para3)
PepsiCo., Inc. is indeed a large company and is defined in the 10K as a leading global
beverage.. in approximately 200 countries with largest operations in North America
(Unites States and Canada) Mexico and United Kingdom (Pg. 69, Para5)
Distinctive Competence
Doubled the size of its bottle to 12 ounces, charging one nickel, when the standard was
6ounces. This lowcost differentiation strategy proved very successful and become a major
player in Cola industry (Pg.69, Para 2)
8.
Pepsi seems to be developing synergy between product categories with breakfast foods, and
non alcoholic beverage markets and at the same time moving into the water and sport
beverage market.(Pg69, Para3). These combinations and promotions allow PepsiCos bottlers
enhanced ability to gain retail shelf space (Pg. 78, Para 4).
9.
Pepsi continues to expand its markets in beverage through market penetration, mergers and
acquisitions (Pg. 69, Para6). Acquired Amacoco Nordeste Ltda and Amacoco Sudeste Ltda,
Brazil largest makers of packaged coconut water drinks and is expanding its presence in South
Americas largest nation (Pg. 78, Para 6).
11 | P a g e

No. Weaknesses
Highly dependent on supplies
1.
of clean water (Pg.74, Para 6).
2.
3.
Cost of sales has increased as

would be expected, net
income has decreased, return
on assets has dropped ,
inventory turnover has
decreased and long term
debt has increased. The
trends might indicate future
problem areas.(Pg.73, Para1).
Force PepsiCo to innovate
new products and at the
same time re-evaluate
current product offerings
(Pg.78, Para4).
Most Incompetence
Justification
Compare to PepsiCo closest
competitor Coca Cola,
PepsiCo should be able to
establish its own water
sources as producing
contaminated carbonated
drink results to damage
PepsiCo brand reputation.
Most Incompetence
As Coca Cola posses strong
financial position, PepsiCo
encountered financial
problem that need to be
resolved. This financial
instability gives impact
towards PepsiCo performance
and profitability in future.
Most Incompetence
As meeting consumer
demands is critical in this
industry, innovation is the key
success for PepsiCo
4.2 IFE Matrix
No.
1.
IFE
Strengths
Weight Ratings Weighted score
Doubled the size of its bottle to 12 ounces,

charging one nickel, when the standard was
6ounces. This lowcost differentiation strategy
proved very successful and become a major player
in Cola industry (Pg.69, Para 2)
0.22
0.88
2.
Pepsi seems to be developing synergy between

product categories with breakfast foods, and non
alcoholic beverage markets and at the same time
moving into the water and sport beverage
market.(Pg69, Para3). These combinations and
promotions allow PepsiCos bottlers enhanced
ability to gain retail shelf space (Pg. 78, Para 4).
0.16
0.48
3.
Pepsi continues to expand its markets in beverage

through market penetration, mergers and
acquisitions (Pg. 69, Para6). Acquired Amacoco
Nordeste Ltda and Amacoco Sudeste Ltda, Brazil
largest makers of packaged coconut water drinks
and is expanding its presence in South Americas
largest nation (Pg. 78, Para 6).
0.20
0.80
12 | P a g e

No.
1.
Weaknesses
Highly dependent on supplies of clean water
(Pg.74, Para 6).
2.
Cost of sales has increased as would be expected,

net income has decreased, return on assets has
dropped , inventory turnover has decreased and
long term debt has increased. The trends might
indicate future problem areas.(Pg.73, Para1).
Force PepsiCo to innovate new products and at the
same time re-evaluate current product offerings
(Pg.78, Para4).
3.
Total
0.18
0.18
0.12
0.12
0.12
0.24
2.70
4.3 Value Chain Analysis (Non-Alcoholic beverages Segment)

Value Chain provides a model of how PepsiCo, makes revenue and profit from the raw
materials. The facts in Value chain is the critical facts based on an internal assessment.
13 | P a g e
Culture
Management
Pepsis desire to own its own bottlers is to spur its non-carbonated health and
wellness products, which are often smaller volume, slower moving products (Pg.
68, Para 5). And in everything we do, we strive for honesty, fairness and
integrity. At PepsiCo, were committed to achieving business and financial success
while leaving a positive imprint on society-delivering what we call Performance
with Purpose. (Pepsi Co Mission &Vision, March 2009).
PepsiCo recently offered $6billion to retake ownership of its two largest bottlers,
Pepsi Bottling Group (PBG) and Pepsi Americas(PAS) (Pg. 68, Para 5). Pepsi has
ventured into conglomerate diversification from van moving lines to sporting
goods to fast foods (Pg. 69, Para3). PepsiCo is organised using three business units
of PepsiCo Americas Foods, PepsiCo America beverages and PepsiCo
International. (Pg. 69, Para7).
Finance
First quarter 2009 PepsiCos net revenue of $8,263 million were down $70 million
from the same quarter in 2008 (Pg.68,Para2). PepsiCo invest $1bilion in Russia
over the next three years, bringing its total investment to$4billion over a ten year
time span. PepsiCo will also invest over $1billion in China over the next 4 years
(Pg.68, Para4) .
Production
PepsiCo opened a new factory in Shanghai in June 2009and plans to open another
five plants in China over the next two year. The new plant will manufacture Pepsi
Cola, Mountain Dew, Gatorade, Tropicana juices and bottled water. The new
Pepsi plant uses 22 percent less water and 23 percent less energy than the
average Pepsi plant in China (Pg.68, Para3). PepsiCo control costs by decreasing
cost of goods sold by $90million (Pg.68,Para2). Initiated projects to increase
recycled materials and reduce materials used in packaging (Pg.74,Para2).
R&D/ MIS
Raw
Material
The principal
ingredient of
its primary
product is
waterdevel
oped countries
(Pg.74, Para2).
14 | P a g e
Appealing Web pages with the latest ads and product-related games (Pg.70, Para2).
Production/
Operation
Product/ Service
Marketing
Distribution
PepsiCo results
continued the down
ward trend with
beverage volume
down 6 percent.
However international
beverages volume was
up 6 percent (Pg.68,
Para2). Loft doubled
the size of its bottle
to 12 ounces,
charging one nickel,
when the standard was
6ounces. This lowcost differentiation
strategy proved very
successful (Pg.69,
Para 2).
Pepsi manufacture the
concentrates and
syrups which are then
sold to bottlers (
Pg.74, Para 6).
Operates in Canada,
Latin America,
Europe, Middle East,
Asia, Northern Asia,
Australia and Asia
Pacific (Pg. 69,
Para5).
Bradham followed
the example of Coca
Cola and used the
bottling franchise
system in which he
produced the syrup
and others bottled
and distributed
(Pg.69, Para69). .
The company
produces Mountain
Dew, Mug Root
Beer, Sierra Mist,
Slice, Aquafina,
Dola Juices and
SoBe (Pg.69, Para4).
Developed liquid
refreshment products
that are light, calorie
free, sugar free,
caffeine free, sports
and energy directed
and flavoured
(Pepsi, Voltage,
Aquafina) (Pg. 70,
Para1)
Pepsi and Coke become

the largest worldwide
producer of nonalcoholic beverages
(Pg. 69, Para3).
PepsiCo. in
approximately 200
countries with largest
operations in North
America
Mexico and United
Kingdom (Pg. 69,
Para5). PepsiCo must
appeal to the ultimate
customer through
extensive advertising
and promotional
activities. This pull
marketing strategy
highly dependent on
creative marketing and
development of catchy
slogans(Pg70, Para1).
Uses all available media
to promote its products
and attempts to attract
younger consumers
through Web-related
media such as You tube
and have appealing
Web pages with the
latest ads and product
related games (Pg.70,
Para2).
PBG and PAS

distribute
nearly 75
percent of
Pepsi drinks in
the United
States,
excluding
Gatorade (Pg.
68, Para5).
PepsiCo works
closely with its
bottlers and
retailers
(Pg.70,Para2).
Distribute the
finished
products to
grocery stores,
convenience
stores,
restaurant and
vending
machines
(Pg.74, Para6).

Value Chain Flowchart
(Non-Alcoholic beverages Segment):
Products:
Received Raw
materials from
Supplier
Manufacturing
Serves non-alcoholic beverage markets: Pepsi-Cola,

Mountain Dew, Mug Root Beer, Sierra Mist, Slice, Aquafina,
Dola Juices and SoBe projectors, Gatorade, Tropicana juices
&bottled water
(concentrate and
syrups)
(The principal
ingredient is
water)
Marketing efforts: (Value Propositioning, brand development and

management, market development, Channel management).
Spent heavily on sales incentives, discounts, advertising and promotions.
Works closely with bottlers and retailers in promoting and advertising its products.
Creates memorable and catchy slogans to attract and hold consumers.
Service:
Customer liaison
Distributor liaison
Product and service liability
Customers/ Retailers
Distribution (Value Delivery):
(Its major customers are large

retailers Wall Mart)
PBG and PAS distribute nearly 75

percent of Pepsi drinks in the United
States, excluding Gatorade (Pg. 68,
Para5). Bottlers Distribute the finished
products to grocery stores, convenience
stores, restaurant and vending machines
(Pg.74, Para6).
Consumers
Reference:
Process Flow :
Information and Money
Flow
15 | P a g e
5.0 Strategy Formulation

5.1. SWOT Matrix
SWOT Matrix
Opportunities
1. Steady overall growth for
the last five years of around 9
percent with sports drinks,
bottled water, and energy
drinks showing the largest
growth (Pg.74, Para 4).
2. Growth in the carbonated

drink market was largest in
Asia and Europe (Pg74, Para
4).
3. The market for these

products requires
manufactures to constantly
develop new products to meet
those changing demands (Pg74,
Para 6)
Strengths
1. Doubled the size of its bottle to 12
ounces, charging one nickel, when the
standard was 6ounces. This lowcost
differentiation strategy proved very
successful and become a major player in
Cola industry (Pg.69, Para 2)
2. Pepsi seems to be developing synergy

between product categories with breakfast
foods, and non alcoholic beverage
markets and at the same time moving into
the
water
and
sport
beverage
market.(Pg69,
Para3).
These
combinations and promotions allow
PepsiCos bottlers enhanced ability to
gain retail shelf space (Pg. 78, Para 4).
3. Pepsi continues to expand its markets
in beverage through market penetration,
mergers and acquisitions (Pg. 69, Para6).
Acquired Amacoco Nordeste Ltda and
Amacoco Sudeste Ltda, Brazil largest
makers of packaged coconut water
drinks and is expanding its presence in
South Americas largest nation (Pg. 78,
Para 6).
16 | P a g e
SO Matches
SO1 : Utilize Total Quality

Management Practice aiming for
high quality of end products by
simultaneously driving down cost
(S1, O1,03)
SO2: Develop Innovative

Customer-Oriented Product by
relying on well-research
customer needs to respond
towards the growing demand of
sports drinks, bottled water
and energy drinks (S3,O1,03)
Threats
1. The downturn in the
economy has also affected the
sales of colas and water as
some consumers have
switched to store brands and
tap water as cheaper
alternatives to the national
brands (Pg.74, Para 6).
2. Consumer taste continues
to change, and Pepsi must also
continue to change (Pg 69,
Para 3). In United States, the
carbonated soft drinks market
has shown a decline of 0.4
percent as consumers shifted
from soft drinks to bottled
water and sports drinks (Pg.
74, Para).
3. Fought the Cola wars, Coca
Cola holds the largest share of
the U.S cola market at 41
percent (Pg74, Para 5). Coca
Cola is the largest producer
and distributor in the world
and is PepsiCos major
ST Matches
ST1: Innovate product line by
offering healthier alternatives
in order to differentiate
PepsiCo from Coca Cola
(S1,T3)
ST2: Satisfy the buyer's

requirements by offering more
promotions and discounts to
prevent sales from decreasing
(S2,T1)
Weaknesses
1. This company highly dependent on
supplies of clean water (Pg.74, Para 6).
2. Cost of sales has increased as would

be expected, net income has decreased,
return on assets has dropped , inventory
turnover has decreased and long term
debt has increased. The trends might
indicate future problem areas.(Pg.73,
Para1).
WO Matches
Improve business sales by
responding towards increasing
demands for sports drinks,
bottled water and energy drinks
(W2,O1)
Increase presence in the
International market and
expand Pepsi Soda product in
Asia and Europe in order to
improve financial stability
(W2,O2)
WT Matches
Forecast the trends by relying
on marketing intelligence and
Research & Development to
distinctively different from the
rest of the market.(W1,W3,T3)
Adjust production of bottlers
with downturn in economy by
utilising flexible manufacturing
system to create differentiated
products at low cost
(W2,W3,T1)
3. Force PepsiCo to innovate new

products and at the same time reevaluate current product offerings
(Pg.78, Para4).
SWOT conclusion:
Based on the SWOT analysis the corporate level and business level strategies are as follows:
Corporate Level Strategy
No
1.
Type of strategy
Cost Leadership
(Type 2)
SO1 : Utilize Total Quality Management Practice aiming for

high quality of end products by simultaneously driving down cost
(S1, O1,03)
Business Level Strategy

No
Type of strategy
1.
Product
Development
SO2: Develop Innovative Customer-Oriented Product by relying

on well-research customer needs to respond towards the growing
demand of sports drinks, bottled water and energy drinks
(S3,O1,03)
*IE matrix will be used in the analysis in order to support the company strategy chosen
from SWOT analysis.
17 | P a g e
5.2 IE Matrix
The IFE Total Weighted Score
Strong
Average
Weak
The EFE Total Weighted Score
1.0
4.0
High
3.0
2.0
Grow and Build
3.0
Medium
2.0
Low
1.0
EFE
IFE
3.38
2.70
The division falls into cell II which can be described as grow and build. Intensive strategies
such as product development can be most appropriate for this division.
5.3 Strategy Formulation Conclusion

IE matrix results, shows that PepsiCo should Grow and Build its position. This means
intensive and aggressive tactical strategies should be done. Therefore, related strategies with
grow and build (market penetration, market development, and product development) will be
extracted from S/O strategies (SWOT Matrix). These alternative strategies:
18 | P a g e
Original Sentences:
Business Level Strategy Cost Leadership (Type 2): SO1 : Utilize Total Quality
Management Practice aiming for high quality of end products by simultaneously driving
down cost (S1, O1,03)
Corporate Level Strategy Product Development: SO2: Develop Innovative CustomerOriented Product by relying on well-research customer needs to respond towards the growing
demand of sports drinks, bottled water and energy drinks (S3,O1,03)
6.0 Strategy Implementation

6.1 Operation Management Process
The theme of Operational Management Processes:
Implement TQM practice for lowering the costs of production with better quality of
produced products
Produce new healthier drinks and sports drinks from well-research customer needs
6.1.1 Supply Management Process

Define the objectives in Supply Processes
Reduce the cost of ownership for raw materials of sports drinks, bottled water and
energy drinks
Achieve Just-In-Time supplier capability
Implement efficient supplier quality management
19 | P a g e

Objective
Balance Scorecard (BSC)
Reduce the cost of ownership

for raw materials of sports
drinks, bottled water and
energy drinks
Measure
Target
Price/cost of product,
customer profitability
10% reduction target

5% Increase in terms of customer
profitability (compare to
competitor selling price)
Achieve Just-In-Time
supplier capability
Quick response time,

On-time delivery, correct quantity,
Percent of late orders
flexibility to respond to unexpected
demand changes, willingness to
participate in PepsiCo new product
development
5 % Increase in terms of speeding

up customer response while
minimizing inventories (compare
to year before)
Implement efficient supplier

quality management
Supplier feedback survey, supplier

performance survey, quality level,
presence of certification/ other
documentation
Percent of perfect order received,
percent of supplier qualified to
deliver without incoming
inspection
Zero defect production
Linkage to Production
Operation Management Processes (Supply)
Production
Objectives
Reduce the cost of ownership for

raw materials of sports drinks,
Achieve Just-In-Time supplier
capability

quality management
LPCSDBW&ED
LPCSDBW&ED
EQCNPL
Note:
1. LPCSDBW&ED = Lower Production Costs of Sports Drinks, Bottled Water &

Energy Drinks
2. EQFNPL = Ensure Quality Control for New Production Line
20 | P a g e

Linkage to Risk Management
Risk Management
Objectives
Reduce the cost of ownership for raw

materials of sports drinks, bottled
water and energy drinks
MSR, MTR1

capability
MQR1,
MOR1
Implement efficient supplier quality

management
Note
MQR1 = Manage Quality Risk
MTR1= Manage Technological Risk
MOR1 = Manage Operational Risk
MSR = Manage Supplier Risk
(Supply)
Linkage to Customer Perspective
Operation Management
Processes (Supply)
Price
Customer Perspective
(Customer Value Proposition)
Quality Availability
Selection
Brand
OLPV
IPA
FOPSC
ICS
EQ
IPA
FOQSC
ERBI*
EQ
IPR
FOQSC
ERBI*
Objectives
Reduce the cost of

ownership for raw
materials of sports
drinks, bottled water
and energy drinks
supplier capability
Implement efficient
supplier quality
21 | P a g e
LPC

management
Note:
(CVP)
OLPV, IPA, FOPSC, ICS = Offer lower price with Value, Increase
Product Availability, Focus on Price Sensitive Customer, Increase
Customer Satisfaction
LPC = Lower Production Costs
FOQSC = Focus On Quality Sensitive Customer
ERBI* = Enhance Reputation on Brand Image
IPV = Increase Product Variety
IPR = Increase product Reliability
EQ = Enhance Quality
*indirect objective through Customer Management processes
Linkage to Financial Perspective
Operation Management Processes

(Supply)
Objectives
Financial Perspective
Improve
Cost
Structure
Increase
Assets
Utilization
LPC
Expand
Revenue
Opportunities
Enhance
Customer
Value
IBV
DCC
Reduce the cost of ownership

for raw materials of sports
energy drinks
capability

quality management
22 | P a g e
MIC
TD,MROI
GHS, IOM
RDC,
RCSE
EQIM
IRG
LTRLT,
OCC,
PQP
Note
LPC = Lower Production Costs
IBV = Increase Business Volume
DCC = Decrease Customer Costs
ISPSC = Increase Satisfaction Among Price Sensitive Customers
GHS, IOM = Generate Higher Sell, Increase Operating Margin
MIC = Minimum Inventory Cost
TD = Timely Delivery
OCC = Offer Customers Convenience
PQP = Provide Quality Product
MROI = Maximize Return on Investment
RDC, RCSE = Reduce Defect Cost, Reduce the Cost of Supplier Errors
LTR-LT = Long Term Relationship-Loyalty and Trust
MSCQ = Maximize supply Chain Quality
RWC= Reduce Waste Cost
IRG = Increase revenue Growth
(Supply)
Those objectives should later be carried out to the Financial Pers. accumulatively
Linkage to Learning & Growth
Learning & Growth
Objectives
Human
Capital
Information
Capital
Organizational
Capital
Reduce the cost of ownership for raw

materials of sports drinks, bottled
water and energy drinks
LPST,ACBMSC
DTFPI
IFS

capability
LPST,ACBMSC
DTFPI
ECA , IFS,FQC
DSK,DSM
DFC,DPC,QPC
IQMS,IFS, FQC
Implement efficient supplier quality

management
23 | P a g e

Note:
LPST,ACBMSC =Learning the Principles, Skills and Technologies ,
Adequate Communications between the Members of Supply Chain
ECA,IFS, FQC = Enhance Completive Advantage, Improve Finance Situation, Foster
Quality Culture
DTFPI = Develop Technology for Process Improvement
ESCE,QPC = Enhance Supply chain Effectiveness, Quality Policies Conformity
QFD,QPC = Quality Function Deployment, Quality Policy Conformity
ECA = Enhance Completive Advantage
DSK,DSM = Develop Self-Knowledge, Develop Self-Motion
DFC,DPC,QPC= Develop Fishbone Chart, Develop Pareto Chart, Quality Policies &
Conformity
IQMS,IFS,FQC,ICS = Improve Quality Management System, Improve Finance Situation,
Foster Quality Culture
24 | P a g e

6.1.2 Production Management Process
Define the objectives in Production Processes
Lower Production Costs of Sports Drinks, Bottled Water & Energy Drinks (Linkage
from Supply Process)
Ensure Quality of Finished Product (Linkage from Supply Process)
Produce Innovative products based on well-research customer needs (New
Objectives)
Objective
Lower Production Costs of
Sports Drinks, Bottled
Water & Energy Drinks
Ensure Quality of Finished
Product
Produce Innovative
products based on wellresearch customer needs

Measure
Cost per unit of Output,
Percent of operating income,
Percent of cash flow improvement
Target
Increase 15% of company
profitability (compared to
year before)
Percent of defect reduction

Number of customer complains,
Survey of customer satisfaction,
Percent of shipments returned due
to poor quality
Percent of sales obtained from new
products,
Number of New Product Launches,
Measure of how well the company
identifies the customers future
need
Zero defect
Increase sales from new

products,
customer needs met,
customer satisfaction
customer retention
Linkage to Distribution
(Production)
Distribution
Objectives
Lower Production Costs of Sports

Drinks, Bottled Water & Energy Drinks
Ensure Quality of Finished Product
LCS
PSDBWEDMQE
Produce Innovative products based on

well-research customer needs
Note:
LCS=lower Cost to Serve
PSDBWEDMQE = Production of Sports Drinks, Bottled Water and Energy Drinks Meet Quality
Expectation
25 | P a g e

(Production)
Objectives

Note
MFCR = Manage Forecast Cost Risk
26 | P a g e
Risk Management
MOR2
MQR2
MFCR
MTR2
(Production)


(Production)
(Customer Value Proposition)
Objectives
Price
Sports Drinks, Bottled Water
& Energy Drinks
Product
Produce Innovative products
based on well-research
customer needs
Quality
LCC
Availability Selection
HPA
FOPSC
EBV
EBV,
LTRCL&T
EBV,
LTRCL&T
ORP
EQP
HPA,DOT
FOQSC
ORP
ICL
RRCP
FOCHL
Note:
LCC =Lower customers cost
ORP = Offer Reasonable Price
FOPSC = Focus on Price Sensitive Customers
FOQSC = Focus on Quality Sensitive Customers
FOCHL = Focus on Consumers Healthy Lifestyle
EQP = Excellence Quality Product
EBV = Enhance Brand Value
DOT = Deliver on Time
HPA = High Product Availability
ICL = Increase Customer Loyalty
RRCP = Rapid Respond to consumer Preferences
LTR-CL&T = Long Term Relationship Customer Loyalty & Trust
* Those objectives should later be carried out to Customer Pers. Accumulatively.
27 | P a g e
Brand
Processes (Production)
Objectives
Improve Cost
Structure
Sports Drinks, Bottled
Water & Energy Drinks
Product
Produce Innovative
products based on wellresearch customer needs
DPC,RIC,
RWC, IOI
Increase
Assets
Utilization
MROI,
IPE&P
Expand
Revenue
Opportunities
ISG,
IRFNPS
Enhance
Customer
Value
IRMCE
ICP, ICS
IRRRCP,
IRCPI
ICS
ICP
MFAU
RD, RWC
Note
DPC, RIC, RWC, IOI = Decrease Production Costs , Reduce Incurred Cost, Increase Operating
Income
RD, RWC = Reduce Defects, Reduce Waste Costs
MROI, IPE&P = Maximizing Return on Investment, Increase Process Efficiency
&Productivity
ISG = Increase Sales Growth
IRMCE = Increase Revenue for Meeting Customer Expectation
IRCPI = Increase Revenue for continual Product Improvement
IRRRCP = Increase Revenue for Rapidly Respond to Consumer Preferences
ICP = Increase Customer Profitability
ICS = Increase Customer Satisfaction
MFAU = Maximize fixed asset utilization
IRFNPS = Increase Revenue From Number of Product Sold
*Those objectives should later be carried out to the Financial Pers. Accumulatively
28 | P a g e
Linkage to Learning & Growth Perspective

(Production)
Learning & Growth
Objectives


Human
Capital
Information
Capital
Organizational
Capital
ISTQM,CEPI,
ETITQME
ETIQA,
DSK,DSM,
PHACCPTP,
PGMPTP
DCS
IABC
DTQMC,IOE,
IFS
IQC,
IQMS,GCA
ICPI, ICSL,
GMP,HACCP
ICSL, ITFPI
DP, FIC,
CCII&C,
DC-OC
Note:
ISTQM, CEPI, ETITQME= Improve Skills in Total Quality Management, Competence Employee in
Process Improvement, Employees Training in TQM Environment
IABC = Implement Activity-Based Costing
DTQMC, IOE, IFS = Improve Operational Efficiency, Improve Finance Situation, Develop TQM
Culture
ITFPI = Improve Technology that Facilitates Product Improvement
DP, FIC, CCII&C, DC-OC = Develop Patent, Foster Innovation Culture, Culture of Continuous
Improvement, Innovation and Creativity, Develop Customer-Oriented Culture
ETIQA, DSK, DSM = Employees Training in Quality Assurance, Develop Self-Knowledge, Develop SelfMotion
ICPI, ICSL = Improve Customer Preferences Information , Improve Customer Satisfaction
Level
IQC, IQMS, GCA = Improve Quality Culture, Improve Quality Management System, Gain
Competitive Advantage
DCS = Develop Creativity Skills
ICSL, ITFPI = Improve Customer Satisfaction Level, Improve Technology that Facilitates
Product Improvement
PHACCPTP = Provide Hazards Analysis Critical Control Points Training Program
PGMPTP = Provide Good Manufacturing Practice Training Program
GMP = Good Manufacturing Practices
HACCP = Hazard Analysis Critical Control Points
*Those Objectives should be carried out to the Learning &Growth Perspective accumulatively
29 | P a g e
6.1.3 Distribution Process

Define the objectives in Distribution Processes
Lower Cost to Serve (Linkage from Production)
Production of Sports Drinks, Bottled Water and Energy Drinks Meet Quality
Expectation (Linkage from Production)
Responsively Delivery Capability (New Objective)
Objective
Lower Cost to Serve
Production of Sports Drinks,

Bottled Water and Energy
Drinks Meet Quality
Expectation
Responsively Delivery
Capability

Measure
*ABC cost of storage and delivery
to customers,
Cycle Time
Percentage of shipments returned
Due to poor quality, Number of
items reworked
Target
15 % Increase in Sales
Growth, Decrease Cycle
Time
5 % decrease of shipment
returned, Increase quality
Percent of Delivery On-Time

Number of overdue deliveries,
Customer Response Time
Increase On-Time Delivery

(Distribution)
Objectives
Lower Cost to Serve
Production of Sports Drinks, Bottled Water
and Energy Drinks Meet Quality
Expectation
Responsively Delivery Capability
Note
MTR3 = Manage Technology Risk
MOR3= Manage Operational Risk
MDR = Manage Distribution Risk
MQR3 =Manage Quality Risk
Risk Management
MOR3
MQR3
MDR,MTR3
(Distribution)
Those objectives should later be carried out to the Risk Management as

accumulative Objectives.
30 | P a g e
Processes (Distribution)
Objectives
Lower Cost to Serve
Drinks Meet Quality
Expectation
Capability
Customer Perspective (Customer Value Proposition)
Price
Quality
Availability
Selection
Brand
EQ
HPA
HPA
FOPSC
FOQSC,
FOCHL
EBI
ILTBN
EQ
DOT
DPP
ILTBN
Note:
DOT = Deliver on Time
EQ = Excellence Quality
FOQSC = Focus on Quality Sensitive Customers
FOCHL = Focus on Consumer Healthier Lifestyle
BPA = Broader Range of Products
ICT =Increase Customer Trust
EBI = Enhance Brand Image
ILTBN = Increase Loyalty to Brand Name
MPQ = Maintain Product Quality
Those objectives should later be carried out to Customer Pers. Cumulatively.
31 | P a g e

Processes (Distribution)
Improve
Cost
Structure
Increase
Assets
Utilization
Expand
Revenue
Opportunities
Enhance
Customer
Value
ICF,IRPSC,ISG
ICP
Objectives
Lower Cost to Serve
EVA, DCGS
Production of Sports Drinks, Bottled

Water and Energy Drinks Meet
Quality Expectation
IRMCE, IRQSC
Note
EVA,DCGS = Economic Value Added, Decrease Cost of Goods Sold
ICF, IRPSC,DFG = Increase Cash Flow, Increase Revenue of Price Sensitive
Customers, Increase Sale Growth
IRQSC = Increase Revenue of Quality Sensitive Customers
IRMCE = Increase Revenue for Meeting Customer Expectation
IRQSC = Increase Revenue of Quality Sensitive Customers

Those objectives should later be carried out to the Financial Pers. Cumulatively
Linkage to Learning & Growth Perspective
(Distribution)
Human
Capital
Learning & Growth

Information Organizational
Capital
Capital
Objectives
Lower Cost to Serve
Production of Sports Drinks, Bottled Water
and Energy Drinks Meet Quality Expectation
MSC
CEIQC
CEDPI
IQAP, SOCS,
QPC
DTFPI
IFS
IQMS, FQC
IQMS
Note
CEDPI = Competence Employees in Distribution Process Improvement
IFS = Improve Finance Situation
MSC = Maintain Staff Competence
CEIQC = Competence Employees in Quality Control
IQAP, SOCS,QPC = Improvement on Quality Assurance Policies, Survey on
Customer Satisfaction, Quality Policy Conformity
DTFPI = Develop Technology for Process Improvement
IQMS, FQC = Improve Quality Management System, Foster Quality Culture
Those Objectives should be carried out to the Learning &Growth Perspective cumulatively.
32 | P a g e

6.1.4 Risk Management Process
Define the objectives in Risk Management Processes (Importing from previous
processes)
Note:
1.
2.
3.
4.
(Supply)
MSR = Manage Supplier Risk
Note:
1.
2.
3.
4.
(Production)
MFCR = Manage Forecast Cost Risk
Note:
1.
2.
3.
4.
(Distribution)
MTR3 = Manage Technology Risk
MOR3= Manage Operational Risk
MDR = Manage Distribution Risk
Define the objectives in Risk Management Processes (New)
MFR= Manage Financial Risk
33 | P a g e

Define the objectives in Risk Management Processes
1. MOR1 = Manage Operational Risk from Supply
2. MOR2 Manage Operational Risk from Production
3. MOR3= Manage Operational Risk from Distribution
4. MQR1 = Manage Quality Risk from Supply
5. MQR2 = Manage Quality Risk from Production
6. MQR3 = Manage Quality Risk from Distribution
7. MTR1= Manage Technological Risk from Supply
8. MTR2= Manage Technological Risk from Production
9. MTR3 = Manage Technology Risk from Distribution
10. MSR = Manage Supplier Risk from Supply
11. MDR = Manage Distribution Risk from Distribution
12. MFCR = Manage Forecast Cost Risk from Production
13. MFR = Manage Financial Risk
Linkages to Customer Perspective
Operation
management
process
Objectives
Customer Perspective (Customer Value Proposition)
Price
Quality
Availability
Manage
Operational
Risk from
Selection
FOPSDB
WED
RRO
P
Service
Partnership
Brand
JVP
EBI
Supply
Manage
Operational
RRO
P
FOPSDB
WED
EBI
FOPSDB
WED
EBI
FOHQ
SDBWED
ICTL
Risk from
Production
Manage
Operational
RRO
P
EOTD
Risk from
Distribution
Manage
EPQ
Quality Risk
from Supply
Manage
Quality Risk
34 | P a g e
EPQ
FOHQ
SDBWED
ICTL

from
Production
Manage
FOHQ
SDBWED
EPQ
Quality Risk
ICTL
from
Distribution
Manage
Technological
Risk from
FOMTRR
PSDBWE
D
EBI
FOMTRP
SDBWED
EBI
FOMTRP
SDBWED
EBI
Supply
Manage
Technological
Risk from
Production
Manage
Technological
Risk from
Distribution
Manage
EOTD,
ESD
Supplier Risk
ASRMFPS
DBWED
JVP
EBI
OTDSDB
WED
JVP
ICTL
from Supply
Manage
EOTD,
ADR,
HPA
Distribution
Risk from
Distribution
FOCHL
EBI,
ICTL
FOPSC
EBI
Manage
Forecast Cost
Risk from
Production
Manage
Financial Risk
35 | P a g e
RCC
Note
RROP =Reduce The Risk of Overpaying
FOHQSDBWED = Focus on High Quality Sports Drinks, Bottled
Water and Energy Drinks
FOPSDBWED = Focus on Production of Sports Drinks, Bottled Water
and Energy Drinks
FOMTRPSDBWED = Focus on Managing Technology Related to
Production of Sports Drinks, Bottled Water and
Energy Drinks
ASRMFPSDBWED = Adequate Supply of Raw Material for
Production of Sports Drinks, Bottled Water and
Energy Drinks
OTDSPBWED = On-Time Delivery of Sports Drinks, Bottled Water and
Energy Drinks
FOCHL = Focus on Consumer Healthier Lifestyle
ESD = Ensure Secure Delivery

EOTD = Ensure On-Time Delivery
EBI = Enhance Brand Image
EPQ= Excellence Product Quality
ICTL = Increase Customer Trust and Loyalty
RCC = Reduce Customer Cost
ADR = Avoid Delay Risk
JVP = Joint Venture Partners
Those objectives should later be carried out to Customer Pers. Accumulatively.
36 | P a g e

Operation
management
process
Objectives
Manage Operational
Risk from Supply
Manage Operational
Risk from Production
Manage Operational
Risk from
Improve Cost
Structure
Increase
Assets
Utilization
Expand
Revenue
Opportunities
LIC, RSCC
DOCFPSDBWED
LIC, ROC,
DOCFPSDB,WED
Enhance
Customer Value
ICVTROC
MFAU
IBV, ICP
IMS
LIC,
DOCFPSDBWED
ICVTROC, SPSC
ICVTROC
Distribution
IRTHQP
ICSL, SQSC
IRTHQP
ICSL, SQSC
IRTHQP
ICSL, SQSC
LIC
IRTHTD
OCC
RSCC
IRFNC
Manage Quality Risk

from Supply
Manage Quality Risk
from Production
Manage Quality Risk
from Distribution
Manage
RSCC
Technological
Risk from Supply
Manage
Technological Risk
from Production
Manage
Technological Risk
from Distribution
Manage Supplier
LIC
Risk from Supply

Manage Distribution
LIC
OCC
Risk from
Distribution
Manage Forecast
IRFMCD
ICLL
IBV, IMS, ICP
SPSC
Cost Risk from

Production
Manage Financial
Risk
37 | P a g e
LIC, IROI
Note:
LIC = Less Incurred Cost
ROC = Reduce Operating Costs
RSCC = Reduce Supply Chain Costs
MFAU = Maximize fixed asset utilization
ICP = Improve Company Profitability
IRTHTD = Increase Revenue through High Technology Distribution
ICVTROC = Improve Customer Value Through Reduction of Operational Cost
SPSC = Satisfy Price Sensitive Customers
SQSC = Satisfy Quality Sensitive Customers
IRTHQP = Increase Revenue Through High Quality Product
IRFMCD = Increase Revenue for Meeting Customer Demands
DOCFPSDBWED = Decrease Operational Costs from Production of Sports
Drinks, Bottled Water and Energy Drinks
ICSL = Increase Customer Satisfaction Level
ICLL = Increase Customer Loyalty Level
OCC = Offer Customers Convenience
IMS = Increase Market Share
IROI = Increase Return On Investment
Linkage to Learning &Growth Perspective

Operation
management
process
Objectives
Learning & Growth
Human Capital
Information Capital
Organizational
Capital
Manage
PETQMTR, DCE
ESC, IKS, ISCS
DTQMC ,IOE, IKM
PETQMTR, DCE,
PHACCPTP, PGMPTP
IKS, GMP, HACCP
DTQMC,IOE, IKM
PETQMTP ,DCE
IKS
DTQMC ,
IOE, IKM
DEKOQMS,
PETQMTP, PHACCPTP,
PGMPTP
DEKOQMS,
PETQMTP, PHACCPTP,
PGMPTP
ESC, IKS, GMP, HACCP
DTQMC ,
IKM
IKS, GMP, HACCP
DTQMC,
IKM
DEKOQMS,
PETQMTP, PHACCPTP,
IKS, IDP, GMP, HACCP
DTQMC,
IKM
Operational Risk
from Supply
Manage
Operational Risk
from Production
Manage
Operational Risk
from Distribution
Manage Quality
Risk from Supply
Manage Quality
Risk from
Production
Manage Quality
Risk from
38 | P a g e

Distribution
PGMPTP
Manage
PETTMT
ESC, IKS
IKM
PETTMT
IKS
IKM
PETTMT
IKS, IDP
IDP, IKM
IKS, ISCS
IKM
IKS, IDP
IKM
DCE
RDTNP
DC-OC, IKM
RCE
IKMS
EPRBE
Technological
Risk from
Supply
Manage
Technological Risk
from Production
Manage
Technological Risk
from Distribution
Manage Supplier
Risk from Supply
Manage
Distribution Risk
from Distribution
Manage
Forecast Cost
Risk from
Production
Manage Financial
Risk
Note:
DEKOQMS = Develop Employees Knowledge on Quality Management System
PETQMTP = Provide Essential Total Quality Management Training Program
PETFTH = Provide Extensive Training to Manage Technology
PHACCPTP = Provide Hazards Analysis Critical Control Points Training Program
PGMPTP = Provide Good Manufacturing Practice Training Program
ESC = Enhance Supply Chain
DTQMC = Develop TQM Culture
DC-OC = Develop Customer Oriented Culture
IKS = Increase Knowledge Sharing
IKM = Improve Knowledge Management
IOE = Improve Operation Efficiency
IDP = Improve Distribution Process
RDTNP = Reduce Development Time of New Products
RCE = Retain Competence Employees
ISCS = Improve Supply Chain System
EPRBE = Enhance Performance Retain Better Employees
IKMS = Improve Knowledge Management System
GMP = Good Manufacturing Practice
HACCP = Hazard Analysis Critical Control Points
39 | P a g e

Summarizing the objectives Operation Management Processes
No
Operation
Management
Processes
Objectives
Measure
Target
1
10% reduction
Reduce the cost of
ownership for raw
materials of sports
drinks, bottled water
and energy drinks
Price/cost of product,
Customer Profitability
target (ideal
standard)
5% Increase in
terms of
customer
profitability
(compare to
competitor selling
Supply
price)
supplier capability
Quick response time,

On-time delivery, correct
quantity,
Percent of late orders
flexibility to respond to
unexpected demand changes,
willingness to participate in
PepsiCo new product
development
5 % Increase in
terms of speeding
up customer
response while
minimizing
inventories
(compare to year
before)
Implement efficient
supplier quality
management
5
Sports Drinks, Bottled Water
& Energy Drinks
7
Operation
and
Production

Product
Supplier feedback survey,

supplier performance survey,
quality level, presence of
certification/ other documentation
Percent of perfect order received,
percent of supplier qualified to
deliver without incoming
inspection
Cost per unit of Output,
Percent of operating income,
Percent of cash flow improvement
Percent of defect reduction

Number of customer complains,
Survey of customer satisfaction,
Percent of shipments returned due
to poor quality
8
Produce Innovative products
based on well-research
customer needs
40 | P a g e
Percent of sales obtained from

new products,
Number of New Product
Launches,
Measure of how well the
Zero Defect
Production
Increase 15% of
company
profitability
(compared to year
before)
Zero defect
Increase sales from

new products,
customer needs
met,
customer
satisfaction
Lower Cost to Serve
company identifies the customers

future need
customer retention
*ABC cost of storage and

delivery to customers,
Cycle Time
15 % Increase in
Sales Growth,
Decrease Cycle
Time
5 % decrease of
shipment returned,
Increase quality
Distribution
Drinks Meet Quality
Expectation
Capability
10
11
Percentage of shipments returned

Due to poor quality, Number of
items reworked
Percent of Delivery On-Time
Number of overdue deliveries,
Customer Response Time,
Customer loyalty level
Increase On-Time
Delivery ,
5 % Increase in
terms of customer
retention level
(compare to year
before
Summarizing the objectives Operation Management Processes Linkages
No
Processes
Objectives
Measure
Target
Percent of supply chain target

cost achieved
10% cost
reduction
target (ideal
standard)
15% increase
in terms of
PepsiCo
market share
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price
15% increase
in terms of
PepsiCo
market share
SUPPLY:
Lower Production Costs
Increase Business Volume
Company market share
Decrease Customer Costs
Customer cost ratio
Increase Satisfaction Among Price Sensitive

Customers
Customer profitability
Generate Higher Sell, Increase Operating

Margin
Customer growth,
Profitability
6
7
Minimum Inventory Cost

Timely Delivery
8
19
Offer Customers Convenience

Provide Quality Product
Financial
Perspective
PRODUCTION:
41 | P a g e
Ordering
Relative Response Time,
time-based measures
Customer feedback survey
Quality-oriented measure,
defect rates
Met
customers
Needs

10
Decrease Production Costs , Reduce Incurred

Cost, Increase Operating Income
Cost per unit of sport drinks

production,
Cost per unit of bottled water
production, cost per unit of
energy drinks production,
Non value-added costs
Percent of target cost
achieved,
Manufacturing cost,
warehousing cost,
Number of defect produced,
Supply Chain cost of
ownership
Quality-oriented measures
11
Reduce Defects, Reduce Waste Costs
12
13
Maximize supply Chain Quality

Maximizing Return on Investment, Increase
Process Efficiency &Productivity
14
Increase Sales Growth
Customer growth,
Profitability
15
Increase Revenue for Meeting Customer

Expectation
Customer growth,
Profitability
16
Increase Revenue for continual Product

Improvement
Customer growth,
Profitability
17
Increase Revenue for Rapidly Respond to

Consumer Preferences
Customer growth,
Profitability
18
Increase Customer Profitability
Customer profitability ratio
19
Increase Customer Satisfaction
Customer satisfaction Level,

CVR
20
Maximize fixed asset utilization
Return on supply chain assets
21
DISTRIBUTION:
Economic Value Added, Decrease Cost of
Goods Sold
Increase Cash Flow, Increase Revenue of
22
42 | P a g e
Profit margin, supply chain

cycle efficiency
Customer Value
Ratio, transportation cost,
Profit margin
10% cost
reduction
target (ideal
standard)
Zero defects
Customer
margins
earned should
increase as the
length of the
relationship
increase
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
Increase 15%
of company
profitability
(compared to
year before)
Increase 15%
of company
profitability
(compared to
year before)
Increase 15%
of company
profitability
(compared to
year before)
5 % Increase
in terms of
speeding up
customer
response while
minimizing
inventories
(compare to
year before)
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
10 % increase
in efficiently
use of its
assets

Price Sensitive Customers
Increase Sales Growth
23
Customer growth for sports

energy drinks, Profitability
24
Increase Revenue
Customers
Sensitive
Customer growth,
Profitability
25

Expectation
Customer growth,
Profitability
26
Increase Revenue
Customers
Customer growth,
Profitability
27
SUPPLY:
Offer lower price with Value, Increase
Product Availability, Focus on Price Sensitive
Customer, Increase Customer Satisfaction
28
Lower Production Costs
of
of
Quality
Quality
Sensitive
Customer Value
Ratio,
Percent of target cost

achieved
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
Each new
customers
added should
be profitable
Each new
customers
added should
be profitable
Each new
customers
added should
be profitable
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
10% cost
reduction
target (ideal
standard)
29
Focus On Quality Sensitive Customer
30
Enhance Reputation on Brand Image
31
32
33
Customer
Perspective
Increase Product Variety

Increase product Reliability
Enhance Quality
34
PRODUCTION:
Lower customers cost
35
Offer Reasonable Price
36
Focus on Price Sensitive Customers
43 | P a g e
Measure of customer
satisfaction level on product
quality
Measure of customer
perception in terms of
Number of defect
Zero defects
Non value-added costs,

, cost per unit of production
Customer profitability ratio
Measure of consumer
satisfaction in terms of selling
price of energy drinks, bottled
water and sports drinks
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price

37
Focus on Quality Sensitive Customers
38
Focus on Consumers Healthy Lifestyle
39
Excellence Quality Product
40
Enhance Brand Value
41
Deliver on Time
42
43
High Product Availability

Increase Customer Loyalty
44
Rapid Respond to consumer Preferences
45
Long Term Relationship Customer Loyalty

& Trust
Measure of consumer
acceptance on quality of sport
energy drinks produced
Customer Perception of
Flexible Response,
Measure of consumer
acceptance on sports drinks,
bottled water and energy
drinks produced
Quality product checklist
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
Measure of customer
perception on PepsiCo brand
image of healthier drinks
Relative Customer Order
Response Time
Number of product delayed
Measure of customer loyalty
level
Customer Perception of
Flexible Response
Customer feels
free to make
customized
choices

level
46
DISTRIBUTION :
High Product Availability
47
Deliver on Time
48
Excellence Quality
49
Focus on Price Sensitive Customers
50
Focus on Quality Sensitive Customers
Measure of quality survey
51
Focus on Consumer Healthier Lifestyle
Measure of consumer
acceptance on sport drinks,
drinks
52
Broader Range of Products
53
Increase Customer Trust
44 | P a g e
Customer feels
free to make
customized
choices
Number of Customer Contact

Points
On-Time Delivery as defined
by customers,
Relative Customer Order
Response Time
Quality survey , measure
customer retention level
Measure of customer
satisfaction level in terms of
selling price
Measure of customer
retention level,
Number of new products
produced
Measures for warranty,

defects and returns
5 % Increase
in terms of
customer
retention level
(compare to
year before
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before
5 % Increase
in terms of
customer
retention level
(compare to
year before
5 % Increase
in terms of
customer
retention level
54
Enhance Brand Image
55
Increase Loyalty to Brand Name
56
SUPPLY:
Learning the Principles, Skills and
Technologies ,Adequate Communications
between the Members of Supply Chain
57
Enhance Completive Advantage, Improve

Finance Situation, Foster Quality Culture
Measure on customer
retention level for brand
image,
Measure of customer
perception on PepsiCo brand
image of healthier drinks.
level
Percent of employees trained

supply chain management
techniques, The number of
shared data sets relative to
total data sets
Measure of financial
improvement
(compare to
year before
5 % Increase
in terms of
customer
retention level
(compare to
year before
5 % Increase
in terms of
customer
retention level
(compare to
year before
Zero defect,
reduce waste,
cut cost
10% cost
reduction
target (ideal
standard) ,
Learning &
Growth
perspective
cost-centric
culture
58
Develop Technology for Process

Improvement
Process improvement rate,

Efficiency Rate
59
Enhance Supply chain Effectiveness, Quality

Policies Conformity
60
Quality Function Deployment, Quality Policy

Conformity
Forecast errors
61
Enhance Completive Advantage
62
Develop Self-Knowledge, Develop SelfMotion
63
Develop Fishbone Chart, Develop Pareto

Chart, Quality Policies & Conformity
Forecast errors
64
Improve Quality Management System,

Improve Finance Situation, Foster Quality
Culture
Quality Control & Assurance

checklists, quality- Oriented
measure
65
66
PRODUCTION:
Improve Skills in Total Quality Management,
Competence Employee in Process
Improvement, Employees Training in TQM
Environment
Implement Activity-Based Costing
67
68
Improve Operational Efficiency, Improve

Finance Situation, Develop TQM Culture
69
Improve Technology that Facilitates Product

Improvement
70
Develop Patent, Foster Innovation Culture,

Culture of Continuous Improvement,
45 | P a g e
Quality Control & Assurance

checklists, quality- Oriented
measure
Self-Assessments
In house Training Hours,

quality management
techniques, process
improvement rate
Activity-base-cost
Production Schedule
Percentage of sales from new
products, process
improvement rate
Product Finalization Point,
Product Category
Commitment Ratio, Demand
Continuous
Innovation &
learning
Continuous
Innovation &
learning
Continuous
Innovation &
learning
Met
Customers
Needs
Continuous
Innovation &
learning
Met
Customers
Needs
Continuous
Innovation &
learning
Continuous
Innovation &
learning
10% cost
reduction
target (ideal
standard),
cost-centric
culture
Continuous
Innovation &
learning
Continuous
Innovation &
learning
To push sports
drinks, bottled
water and
71
72
73
74
Innovation and Creativity, Develop

Customer-Oriented Culture
Forecast for Healthier drinks
Employees Training in Quality Assurance,

Develop Self-Knowledge, Develop SelfMotion
Improve Customer Preferences Information ,
Improve Customer Satisfaction Level

quality management
techniques
Forecast Errors, customers
survey
Improve Quality Culture, Improve Quality

Management System, Gain Competitive
Advantage
Develop Creativity Skills
Human resource management

measure, quality- Oriented
measure
Self-Assessment
75
Improve Customer Satisfaction Level,

Improve Technology that Facilitates Product
Improvement
76
Provide Hazards Analysis Critical Control

Points Training Program

HACCP procedures
77
Provide Good Manufacturing Practice

Training Program
78
Good Manufacturing Practices

GMP procedures
Certification
79
Hazard Analysis Critical Control Points
Performance trajectories of
competing Technologies
Certification
energy drinks
produced as
close to the
final customer
in an effort to
reduce
inventories
and minimize
the risk of
unsold
product.
Continuous
Innovation &
learning
Met
Customers
Needs
Continuous
Innovation &
learning
Continuous
Innovation &
learning
Assess which
emerging
technologies
may become a
threat to
PepsiCo
Operation
HACCP
Certification
for production
of energy
drinks, bottled
water and
sports drinks.
GMP
Certification
for production
of energy
drinks, bottled
water and
sports drinks
HACCP
Certification
for production
of energy
drinks, bottled
water and
sports drinks
DISTRIBUTION:
80
Economic Value Added, Decrease Cost of
Goods Sold
81
Increase Cash Flow, Increase Revenue of

Price Sensitive Customers, Increase Sale
Growth
82
Increase Revenue
Customers
46 | P a g e
of
Quality
Sensitive
Customer Value
Ratio , The number of shared
data sets relative to total data
sets
Point-of-sale data for sports

energy drinks
Customer growth,
Profitability
Zero
duplication,
zero waste &
respond
flexibly to
customers
Increase 15%
of company
profitability
(compared to
year before)
Each new
customers
added should
be profitable

83

Expectation
84
Number of Advance shipping

Notices for sport drinks,
drinks.
Customer Profitability
Ratio
Met
Customers
Needs
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
6.2 Customer Management Process

The Theme of Customer Management Processes:
Focus on Managing Customer Relationship with Continuous Product Innovation by relying

on Well-Research Customer
Providing High Quality and Low Price Product Offering to Respond towards the Growing
Demand of Sports Drinks, Bottled Water and Energy Drinks
6.2.1 Customer Selection Process

Define the objectives in Customer Selection Processes
Understand Customer Segments
Screen unprofitable customers
Target High-Value Customers
Objective
Understand Customer
Segments

Measure
Target
Profit contribution by segment
Increase 15% of company

profitability (compared to year
before)
Screen unprofitable
customers
Percent of unprofitable customers

Number of Strategic accounts
20% reduce in screening

unprofitable customers
20% Increase in terms of strategic
accounts number
Allocate 10 percent marketing resources to active sports minded and health Conscious customer segments
47 | P a g e

Linkage to Customer Acquisition
Customer management processes
(Selection)
Objectives
Customer Acquisition
CVPQSDBWEDP
CMMPSC,ASM&HCCS
ANC
Note:
CVPSDBWED = Communicate Value Proposition for a quality Sport Drinks, Bottled Water and
Energy Drinks Products
CMMPSC,ASM&HCCS = Customize Mass Marketing to Price Sensitive customers, Active Sports
Minded and Health Conscious Customer Segment
ANC = Acquire New Customers
Linkage to Customer Retention

(Selection)
Objectives
Customer Retention
PSE
CV-P
Note:
PPCS = Provide Excellence Service
CV-AP = Create value-added Partnership
Linkage to Customer Growth

(Selection)
Objectives
Note:
1.C-SC = Cross-Sell Customers
2. PWC = Partner with customers
48 | P a g e
Customer Growth
C-SC
PWC

Customer management
processes (Selection)
Objectives
Understand Customer
Segments
Screen unprofitable
customers
Improve Cost
Structure
LCSPSC
Increase Assets
Utilization
IRFPC
IRPC
IRPC
Note:
LCSPSC = Lower Cost Satisfying Price Sensitive Customer
CNSRFNC = Create New Source of Revenue from New Customers
IRFPC = Increase Revenue from Profitable Customers
IRFHVC = Increase Revenue from High Value customers
IRPC = Increase Revenue Per Customer
49 | P a g e
Expand
Revenue Opp
CNSRFNC
IRFHVC
Enhance
Cust Value
ICP

Customer
management
processes
(Selection)
Objectives
Price
Quality
Availability
Selection
Functionality
Service
LPCC
EQ
HASDBWED
EFH&ED
C-OP
BONOTG
Screen
unprofitable
customers
EQ
HASDBWED
EFH&ED
C-OP
BONOTG
Target
High-Value
Customers
EQ
HASDBWED
HPSC,
FOQSC,
FOASM,
HCC
HPSC,
FOQSC,
FOASM,
HCC
HPSC,
FOQSC,
FOASM,
HCC
EFH&ED
C-OP
BONOTG
Understand
Customer
Segments
Partnership
IBI
DC-RP
Note:
LPCC = Lower Price Compare to Competitor
HPSC, FOQSC, FOASM,HCC = Highlight Price Sensitive Customers, Focus on
Quality Sensitive Customers, Focus on Active Sports Minded, Health Conscious
Customers
HASDBWED = High Availability of Sports Drinks, Bottled Water and Energy
Drinks Products
BONOTG = Based on needs of Target Group
EQ = Enhance Quality
EFH&ED, C-OP = Essential for health & Energetic Drinks, Customer-Oriented
Products
DZPDTC= Deliver Zero Product Defect to Customers
PAVP = Perform Attractive Value Proposition
IBI = Increase Brand Image
IBV = Increase Brand Value
DC-RP = Develop Community Researcher Partnership
IBV = Increase Brand Value
*As Customer Management Process has direct linkage with service, partnership and brand;
however, considering defines customer segments and customer value proposition, the other
factors of customer perspective would also have indirect linkage while customer selection .
50 | P a g e
Brand
IBV

Linkage to Learning and Growth
Customer management
processes (Selection)
Objectives
Understand Customer
Segments
Screen unprofitable
customers
Learning and Growth

Human Capital
SSICS, RCE&N
PGSPHVC
Information Capital
MR,
DPCMI&DS
EECAM&CSATS
MR, IKS
Organization Capital
C-OC, PIC, CRM, RTIE
RVC, IKS, DSCRMP
PIC, CRM
CRM
Note:
SSICS, RCE&N = Strategic Skills In Customer Segmentation, Research
on Customer Expectation & Needs
MR, DPCMI&DS, EECAM&CSATS = Market Research, Develop Portfolio
of Customer Management Information & Data System, Establishing
Effective Communication among Marketing& Customer Service about the
Segmentation
CO-C, PIC,CRM, RTIE = Customer-Oriented Culture, Positive Internal
Culture , Customer Relationship Management, Respond to the Information
Effectively
MR, IKS, DSCRMP = Market Research, Increase Knowledge Sharing,
Develop Strategic CRM Portfolio

PGSPHVC = Particular Group Serve Particular High-Value Customers
RVC, IKS= Records of Valued Customers, Increase Knowledge Sharing,
PIC, CRM = Positive Internal Culture, Customer Relationship Management
51 | P a g e

6.2.2 Customer Acquisition Process
Define the objectives in Customer Acquisition Processes
Communicate Value Proposition for a quality Sport Drinks, Bottled Water and
Energy Drinks Products (linkage from Selection Process)
Customize Mass Marketing to Price Sensitive customers, Active Sports Minded and
Health Conscious Customer Segment (linkage from Selection Process)
Acquire New Customers (linkage from Selection Process)
Develop Relationship with Dealer/distributor (New Objective)
Objective
Communicate Value
Proposition for a quality
Sport Drinks, Bottled Water
and Energy Drinks Products
Customize Mass Marketing to
Price Sensitive customers,
Active Sports Minded and
Health Conscious Customer
Segment
Acquire New Customers
Develop Relationship with

Dealer/distributor
52 | P a g e

Measure
Target
Brand awareness for sports drinks,
15 percent Increase in terms of
(survey)
Brand awareness
Customer respond rate to

campaigns, number of customer
using promotions to sample the
products
Market share, Cost per new
customer acquired, measure of
customer lifetime value of new
customers acquired
Dealer feedback, dealer
performance
Allocate 15 percent marketing

resources to active sports minded
and health Conscious customer
segments
15% increase in terms of PepsiCo
market share
5% Increase in terms of respond to

dealer feedback

Linkage to Customer Retention
(Acquisition)
Objectives
Customer Retention
Communicate Value Proposition for a

quality Sport Drinks, Bottled Water
Customize Mass Marketing to Price
Sensitive customers, Active Sports
Minded and Health Conscious
Customer Segment
Dealer/distributor
PPCSPCSDBWED
CHLC
CHLC
Note:
PPCSPCSDBWED = Provide Premium Customer Service For Premium Customer of Sports
CHLC = Create Highly Loyal Customers

(Acquisition)
Objectives
Communicate Value Proposition for a
quality Sport Drinks, Bottled Water
Customize Mass Marketing to Price
Sensitive customers, Active Sports
Minded and Health Conscious
Customer Segment
Dealer/distributor
Customer Growth
CI&H-IVP
Note:
CHI&H-IVP = Creating Innovative & High-Impact Value Propositions
MSRB = Premium Price Customer Service
ICSL = Increase Customer Satisfaction Level
53 | P a g e
PPCS
ICSL

Customer management
processes (Acquisition)
Objectives
Communicate Value
Proposition for a quality Sport
Drinks, Bottled Water and
Customize Mass Marketing to
Price Sensitive customers,
Segment
Dealer/distributor
Improve Cost Structure
ISP
Expand
Revenue Opp.
CNSORFNP
Enhance
Cust. Value
ICP
ISP
CNSORFNP
ICP
ISP
ISP
CNSORFNC
IBV
CLTSV
Note:
CNSORFNC =Create New Sources Revenue from New Customer
CNSORFNP = Create New Sources of Revenue from New Products
ISP = Improve sales productivity
IBV = Increased business volume
CLTSV = Creating Long Term Shareholder Value
*Customer management process (acquisition) is directly linked with expand revenue opportunity
and enhance customer value. However, considering communicating proposition value, customised
mass marketing, acquiring new customers , and developing relationship with dealer ; would also
have indirect link with Improve Cost Structure through reduction in operating costs.
54 | P a g e

Customer
management
processes
(Acquisition)
Objectives
Price Quality
Availability
Selection
Service Partnership Brand
HPSC,
HASDBWED
Communicate
LPCC
EQ
ICA
IBA
FOQSC,
Value Proposition
FOASM,HCC
for a quality Sport
Drinks, Bottled
Water and Energy
Drinks Products
HPSC,
HASDBWED
Customize Mass
LPCC
EQ
ICA
IBA
FOQSC,
Marketing to Price
FOASM,HCC
Sensitive
customers, Active
Sports Minded and
Health Conscious
Customer
Segment
HPSC,
HASDBWED
Acquire New
EQ
DPM
ICA
IBA
FOQSC,
Customers
FOASM,HCC
Develop
Relationship with
Dealer/distributor
EQ
RRCF
DGU&EC
IBA
Note:
HASDBWED = High Availability of Sports Drinks, Bottled Water and Energy Drinks Products
HPSC, FOQSC, FOASM,HCC = Highlight Price Sensitive Customers, Focus on Quality
Sensitive Customers, Focus on Active Sports Minded, Health Conscious Customers
RRCF = Rapidly Response to Customer Feedbacks
DPM = Direct Purchasing Method
ICA = Increase Customer Awareness
IBA = Increase Brand Awareness
DGU&EC = Demonstrate Great Understanding and Efficient Communication
*Customer management process (acquisition) is directly linked with service, partnership and
brand. However, considering Communicating Value Proposition, Customising Mass Marketing,
Acquiring New Customers and Developing Relationship with Customer ; from customer
perspective would also have indirect link with price, quality, availability and selection.
55 | P a g e

Customer management
processes (Acquisition)
Objectives
Communicate Value
Customize Mass Marketing
to Price Sensitive customers,
Segment
Dealer/distributor
Learning and Growth

Human Capital
DSC
Information Capital
CD&TK
C-OC, PIC, CRM,
DMEL&TD
IKS
IKMC
DEM&T
ITPM&ST
DPCMI&DS
DPCMI&DS
CRM
PIC, CRM
Note:
DSC = Develop Strategi Competencies
DEL& TD= Develop Marketing Effective leader & Teamwork Depth
DEM&T =Develop Extensive Marketing & Sales Training

CD&TK = Continually Develop & Transfer Knowledge
C-OC, PIC,CRM = Customer-Oriented Culture, Positive Internal Culture, Customer
Relationship Management
DPCMI&DS = Develop Portfolio of Customer Management Information & Data System
ITPM&ST= Interactive training programs for Management and Sales Teams
IKS = Increase Knowledge Sharing
IKMC = Increase Knowledge Management Culture
56 | P a g e
6.2.3 Customer Retention Process

Define the objectives in Customer Retention Processes
Provide Premium Customer Service For Premium Customer of Sports Drinks, Bottled
Water and Energy Drinks (Linkage from Customer Acquisition Process)
Create Highly Loyal Customers (Linkage from Customer Acquisition Process)
Create Lifetime Customers (New Objectives)
Objective
Provide Premium Customer

Service For Premium Customer
of Sports Drinks, Bottled Water
and Energy Drinks
Create Highly Loyal Customers

Measure
Target
Number of Premium Customers,
quality rating from premium
20 percent increase of premium
customers
customers
Percent captured of customers
spending in sports drinks, Bottled
water and Energy Drinks
20 percent Increase in creating

Highly Loyal customers
Customer Lifetime Value
Increase 15 percent of company

profitability (compared to year before)
Create Lifetime Customers

(Retention)
Objectives
Provide Premium Customer Service
For Premium Customer of Sports
Drinks, Bottled Water and Energy
Drinks
Note:
ROSP = Retention-Oriented Sales Promotion
C-SC = Cross-Sell Customers
PWC = Partner with Customers
57 | P a g e
Customer Growth
ROSP
C-SC
PWC

Customer management
processes (Retention)
Objectives
Service For Premium
Customer of Sports Drinks,
Drinks
Improve Cost
Structure
ISP
Increase Assets
Utilization
IASEC, MFAU
Expand
Revenue Opp.
LRTCOP
Enhance
Cust. Value
ICP
LCMCOT
LCMCOT
MFAU
IBV
PLTVTPFNP
ICP
Note:
LCMCOT = Lower Customer Management Cost Over Time
ISP = Improve sales Productivity
IASEC, MFAU = Increase Account Share with Existing Customers, Maximize Fixed Assets Utilisation
LRTCOP = Less Responsive To Competitors Offered Price
PLTVTPFNP =Prediction of Lifetime Value to predict Future Net Profit
ICP, LCC = Increase Customer Profitability
58 | P a g e

Customer
management
processes
(Retention)
Objectives
Provide
Premium
Customer
Service For
Premium
Customer of
Sports Drinks,
Bottled Water
and Energy
Drinks
Create Highly
Loyal
Customers
Create Lifetime
Customers
Price
Quality
Availability
Selection
Functionality
Service
Partnershi
p
Brand
EQ
HASDB
WED
PCO
SDBW
EDP
EFH&ED
FSR
ICS
IBI&R
LPCC
EQ
HASDB
WED
EFH&ED
ECPS,
ZDDTC
MER
ICL
LPCC
EQ
HASDB
WED
HPSC,
FOQS
C,
FOAS
M,HCC
HPSC,
FOQS
C,
FOAS
M,HCC
EFH&ED
ECPS,
ZDDTC
MER
IBI&R
Note:
MER = Maintain Excellence Relationship
ICLT= Increase Customer Loyalty
IBI&R = Increase Brand Image & Reputation
EFH&ED = Essential for health & Energetic Drinks
ZDDTC = Zero Defects Delivery to Customers
PCO SDBWEDP = Premium Customers of Drinks, Bottled Water and Energy Drinks Products
FSR = Fast Service Responsiveness
ICS = Increase Customer Satisfaction
ECPS = Ensure of Constant Product Supply
*Customer management process (retention) is directly linked with service, partnership and
brand. However, providing premium customer service, creating loyal customers and creating
lifetime customers; would also have indirect link with price, quality, functionality, availability
and selection.
59 | P a g e

Customer management
processes (Retention)
Objectives
Learning and Growth

Human Capital

Service For Premium Customer of
Sports Drinks, Bottled Water and
Energy Drinks
PCE
CPGA
ARTT
Information Capital
RPC
CFOPI, IKS
CFIOI
CC-FC
CRM,CIC, KMS,QMS
CC-FC
Note:
RVSC = Records of Premium Customers
CPGA = Create Personel Goal Alignment
PCE = Personnel Commitments and Efforts
ARTT = Attract and Retain Top Talent
CFOPI, IKS = Customer Feedback on Product Improvement, Increase Knowledge Sharing
CRM, CIC, KMS, QMS= Customer Relationship Management, Continuous Improvement Culture ,
Knowledge Management System, Quality Management System
CC-FC = Create Customer Focus - Culture
60 | P a g e
6.2.4 Customer Growth Process

Define the objectives in Customer Growth Processes
Retention-Oriented Sales Promotion (Linkage from Retention Process)
Cross-Sell Customers (Linkage from Retention Process)
Partner with Customers (Linkage from Retention Process)
Customer Education for Healthier and Energetic drinks (New Objective )
Objective
Retention-Oriented Sales
Promotion
Cross-Sell Customers
Partner with Customers

Measure
Target
Over
95
percent
of
the population use the
Number of promotion sample of
promotion sample
sports drinks, bottled water and
energy drinks used by customer
Number of products per customer
Target for sports drinks, bottled
water and energy drinks per
customer
Increase 15% of company profitability
Number or gain sharing agreement
Customer Education for

Healthier and Energetic drinks
Hours with customers
(compared to year before)

Allocate 2 hours per each new customer to
educate them understand the nutritious
value of PepsiCo healthier drinks

Customer management
processes (Growth)
Objectives
Promotion
Improve Cost
Structure
ISP
Increase Assets
Utilization
IASEC, MUEFA
Expand
Revenue Opp.
IRPC
Enhance
Cust. Value
ICP
LCMCOT
LCMCOT
IASEC, MUEFA
IBV
IBV
IRPC
DCC
PLCSTCP
IASEC
Note:
LCMCOT = Lower Customer Management Cost Over Time
IRPC = Increase Revenuer Per Customer
ISP = Improve Sales Productivity
IASEC, MUEFA = Increase Account Share with Existing Customers, Maximise Use of Existing Fixed
Assets
DCC =Decrease Customer Costs
PLCSTCP = Providing Lower Cost Solutions To Customers Problems
61 | P a g e

Customer
management
processes
(Growth)
Objectives
Price
Quality
Availability
Selection
Functionality
Service
RetentionOriented Sales
Promotion
Cross-Sell
Customers
LPCC
EQ
HASDBWED
PCOSDBWEDP
EFH&ED
LCC
RIIBV
LPCC
EQ
HASDBWED
EFH&ED
HLCS
RIIBV
Partner with
Customers
LPCC
HPSC,
FOQSC,
FOASM,HCC
HPSC,
FOQSC,
FOASM,HCC
HPSC,
FOQSC,
FOASM,HCC
EFH&ED
HLCS
Customer
Education for
Healthier and
Energetic
drinks
HASDBWED
EFH&ED
HLCS
Partnership
Brand
RIIBV
MEC&R,
ICL
MEC&R
RIIBV
Note:
RIIBV = Rapid Increase In Brand Value
LCC = Loyalty Club Card
MEC&R ,ICL= Maintain Excellence Communication and Relationship , Increase Customer Loyalty
ECPS = Ensure of Constant Product Supply
PCOSDBWEDP = Premium Customers of Drinks, Bottled Water and Energy Drinks Products
HLCS = High Level of Customer Service
EFH&ED = Essential for health & Energetic Drinks
62 | P a g e

Customer management
processes (Growth)
Objectives
Promotion
Learning and Growth

Human Capital
DSCSP
Information Capital
RPCSDBWED
CC-CC,
DSCSP , PCE
PCE
A&RTT
EUOKMS
EUKMS, CRMP
IKSFBP,EUKMS
ICRBI, HQ&HC
CC-CC, CRM
RSWP, KMS
Note:
DSCSP = Develop Strategic Competencies in Sales and Promotion
PCE = Personnel Commitments and Efforts
RPCSDBWED = Record of Premium Customer for Sports Drinks, Bottled Water and Energy Drinks
IKSFBP, EUKMS = Increase Knowledge Sharing for Best Practices, Extent Usage of Knowledge
Management System
EUKMS, CRMP = Extent Usage of Knowledge Management System, Customer Relationship
Management Portfolio
CC-CC, CRM = Create a Customer Centric Culture, Customer Relationship Management
ICRBI, HQ&HC = Improve Company Reputation and Brand Image, High Quality & Healthy Culture
A&RTT = Attract & Retain Top Talent
RSWP, KMS = Rewarding Staff with Performance, Knowledge Management Systems
63 | P a g e
Summarizing the objectives Customer Management Processes

No
Customer
Management
Processes
Objectives
Measure
Target
Profit contribution by segment
Increase 15% of
1
Understand Customer
Segments
company
profitability
(compared to year
before)
Selection
20% reduce in
screening
unprofitable
customers
Number of Strategic accounts
20% Increase in
terms of strategic
accounts number
Screen unprofitable
customers
3
Target High-Value
Customers
Communicate Value
Percent of unprofitable customers
Brand awareness for sports

drinks, bottled water and energy
drinks (survey)
15 percent
Increase in terms
of Brand
awareness
Acquisition
Customize Mass Marketing

to Price Sensitive customers,
Segment

Dealer/distributor
7
Retention
8
64 | P a g e
Customer respond rate to

campaigns, number of customer
using promotions to sample the
products
Market share, Cost per new

customer acquired, measure of
customer lifetime value of new
customers acquired
Dealer feedback, dealer
performance

Service For Premium
Customer of Sports Drinks,
Drinks
Number of Premium Customers,

quality rating from premium
customers
Create Highly Loyal

Customers
Percent captured of customers

spending in sports drinks, Bottled
water and Energy Drinks
Allocate 15
percent marketing
resources to active
sports minded and
health Conscious
customer segments
15% increase in
terms of PepsiCo
market share
5% Increase in
terms of respond
to dealer feedback
20 percent increase
of premium
customers
Customer Lifetime Value
20 percent
Increase in
creating Highly
Loyal customers
Increase 15
percent of
10
Promotion
Number of promotion sample of

sports drinks, bottled water and
energy drinks used by customer
11
Number of products per customer
Growth
12
Number or gain sharing

agreement
13

Healthier and Energetic
drinks
Hours with customers
65 | P a g e
company
profitability
(compared to year
before)
Over 95 percent of
the population use
the promotion
sample
Target for sports
drinks, bottled
water and energy
drinks per
customer
Increase 15% of
company
profitability
(compared to year
before)
Allocate 2 hours
per each new
customer to
educate them
understand the
nutritious value of
PepsiCo healthier
drinks

Summarizing the objectives Customer Management Processes Linkages
No
Processes
Objectives
Measure
Target
Cost of sales per product
10% cost
reduction target
(ideal standard
SELECTION :
Lower Cost Satisfying Price Sensitive
Customer
Profits per customer

(activity-based costing)
5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)
Increase Revenue from Profitable Customers
Revenue from profitable

customers
Increase Revenue from High Value

customers
Revenue from high value

customers
Increase Revenue Per Customer
15% increase in
terms of
PepsiCo market
share
15% increase in
terms of
PepsiCo market
share
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
7
8
ACQUISITION:
Create New Sources Revenue from New
Customer
Revenue from new

customers
Create New Sources of Revenue from New

Products
Revenue from new

products
Financial
Perspective
Revenue per customer
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
10% cost
reduction target
(ideal standard
Improve sales productivity
Cost of sales per product
10

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)
11
Increased business volume
revenue per product
Sales growth
Increase to
15%,
66 | P a g e

The sales for
any one
customer
should steadily
increase each
year
12
13
14
15
17
16
17
18
19
20
21
Creating Long Term Shareholder Value

RETENTION:
Lower Customer Management Cost Over
Time
Improve sales Productivity
Increase Account Share with Existing
Customers, Maximize Fixed Assets
Utilisation
GROWTH
Lower Customer Management Cost Over
Time
Increase Revenue Per Customer
Improve Sales Productivity
23
24
67 | P a g e
10% cost
reduction target
(ideal standard
revenue per product
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)
Cost of sales
10% cost
reduction target
(ideal standard
Less Responsive To Competitors Offered

Price
Prediction of Lifetime Value to predict
Future Net Profit
Maximise Use of Existing Fixed Assets,

Increase Account Share with Existing
Customers,
22
Cost of sales
Sales/asset ratio
revenue per product
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)

25
26
27
28
29
30
31
32
33
Customer
Perspective
Decrease Customer Costs
Cost per customer
Providing Lower Cost Solutions To

Customers Problems
SELECTION:
Lower Price Compare to Competitor
Highlight Price Sensitive Customers, Focus
on Quality Sensitive Customers, Focus on
Active Sports Minded, Health Conscious
Customers
High Availability of Sports Drinks, Bottled
Water and Energy Drinks Products
After sale service
Based on needs of Target Group

Enhance Quality
Essential for health & Energetic Drinks,
Customer-Oriented Products
Deliver Zero Product Defect to Customer
Perform Attractive Value Proposition
Cost per product

energy drinks

energy drinks
Zero defects
Percentage of highly
satisfied customers
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before)
15% increase in
terms of
PepsiCo market
share
15% increase in
terms of
PepsiCo market
share
Increase Brand Image
Market share
35
Increase Brand Value
Market share
36
Develop Community Researcher Partnership

ACQUISITION:
Excellence Quality
39
41
42
43
Highlight Price Sensitive Customers, Focus

on Quality Sensitive Customers, Focus on
Active Sports Minded, Health Conscious
Customers
Rapidly Response to Customer Feedbacks
Direct Purchasing Method
Increase Customer Awareness
44
Increase Brand Awareness
40
68 | P a g e
Increase 15%
of company
profitability
(compared to
year before)
Increase 15%
of company
profitability
(compared to
year before)
Quality survey
34
37
38
5% Increase
in terms of
customer
profitability
(compare to
competitor
selling price


energy drinks
5 % Increase in
terms of
customer
retention level
(compare to
year before)
Increase 15%
of company
profitability
(compared to
year before)
Response rate
Market share
Market share
15% increase in
terms of
PepsiCo market
share
15% increase in
terms of
PepsiCo market
share
45
Demonstrate Great Understanding and

Efficient Communication.
RETENTION:
46
Excellence Quality

47
Maintain Excellence Relationship
satisfied customers
48
Increase Customer Loyalty

49
Increase Brand Image & Reputation
50
51
52
Essential for health & Energetic Drinks

Excellence Quality
53
Zero Defects Delivery to Customers
54
Premium Customers of Drinks, Bottled Water and

55
GROWTH:
56
Excellence Quality
56
Rapid Increase In Brand Value
58
Loyalty Club Card
59

Maintain Excellence Communication and
Relationship , Increase Customer Loyalty
60
61
62
69 | P a g e
Ensure of Constant Product Supply

Premium Customers of Drinks, Bottled
Cost per product produced
Market share

10% cost
reduction target
(ideal standard)
5 % Increase in
terms of
customer
retention level
(compare to
year before
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before)
5 % Increase in
terms of
customer
retention level
(compare to
year before
15% increase in
terms of
PepsiCo market
share
5 % Increase in
terms of
customer
retention level
(compare to
year before
Zero defects
Number of premium customers
Cost per product produced

Market share
10% cost
reduction target
(ideal standard)
5 % Increase in
terms of
customer
retention level
(compare to
year before
15% increase in
terms of
PepsiCo market
share
Number of loyalty club

member
20 %
increase of
club
member
satisfied customers
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before)
Number of late delivery

Number of premium

SELECTION :
Strategic Skills In Customer Segmentation,
Research on Customer Expectation &
Needs
63
customers
Human capital readiness
Market Research, Develop Portfolio of

Customer Management Information & Data
System, Establishing Effective
Communication among Marketing&
Customer Service about the Segmentation
Application portfolio
readiness
65
Customer-Oriented Culture, Positive Internal

Culture , Customer Relationship
Management, Respond to the Information
Effectively
Customer survey
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before
66
Market Research, Increase Knowledge

Sharing, Develop Strategic CRM Portfolio
100 percent
target
67
Particular Group Serve Particular HighValue Customers

Records of Valued Customers, Increase
Knowledge Sharing,
Number of customer hits

to knowledge
management system
to knowledge
management system
100 percent
target
64
Learning &
Growth
perspective
68
70
71
72
73
74
ACQUISITION:
Develop Strategic Competencies
Develop Marketing Effective leader &
Teamwork Depth
Develop Extensive Marketing & Sales
Training
Continually Develop & Transfer Knowledge
75
Customer-Oriented Culture, Positive

Internal Culture, Customer Relationship
Management
76
78
Develop Portfolio of Customer Management

Information & Data System
Interactive training programs for
Management and Sales Teams
Increase Knowledge Sharing
79
Increase Knowledge Management Culture
80
RETENTION:
81
Records of Premium Customers
82
Create Personel Goal Alignment
83
84
Personnel Commitments and Efforts

Attract and Retain Top Talent
77
70 | P a g e

Training hours
to knowledge
management system
Customer survey
100 percent
target
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before
readiness
Training hours
to knowledge
management system
to knowledge
management system
Number of premium
customers
Employee objectives
linked to BSC
100 percent
target
100 percent
target

85
86
87
88
89
90
Customer Feedback on Product

Improvement, Increase Knowledge Sharing
Create Customer Focus Culture
GROWTH:
Develop Strategic Competencies in Sales
and Promotion
Personnel Commitments and Efforts
Record of Premium Customer for Sports
Increase Knowledge Sharing for Best
Practices, Extent Usage of Knowledge
Management System
Response rate
Customer survey

from sales and
promotion department
Number of premium
customers
to knowledge
management system
91
Customer Relationship Management

Portfolio
readiness
92
Create a Customer Centric Culture,

Customer Relationship Management
Customer survey
93
Improve Company Reputation and Brand

Image, High Quality & Healthy Culture
94
95
Attract & Retain Top Talent

Rewarding Staff with Performance,
Knowledge Management Systems
71 | P a g e
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before
Market share
Mission, vision
100 percent
target
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before
15% increase in
terms of
PepsiCo market
share
Mission
achieved

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314235540

Design Strategic Plan

NAZIFA BTE ABD. GHANI (MR111037)

Assoc. Prof. Dr. Mas Bambang Baroto

International Business School

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

1.0 Company background

Caleb Bradham in New Bern, North Carolina, 1898

Non-alcoholic Beverage Industry

The salty or Savory Snack Food Industry

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

2.0 Description of Industry

Non-Alcoholic Beverage Industry

*The industry composed of carbonated soft drinks, fruit and vegetables

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

3.0 External Assessment

Case facts of X axis - Market Share

Case facts of Y axis Financial Position

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

3.2 Opportunities & Threats

Perform highest impact to PepsiCo in

Expanding business on these countries

Able to give impact on PepsiCo

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Able to reduce PepsiCo sales and

In order to avoid competition from

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Able to give major impact towards

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

3.3 EFE matrix

Steady overall growth for the last five years of

The downturn in the economy has also affected the

Weight Ratings Weighted score

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

4.1. Strengths & weaknesses

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Cost of sales has increased as

4.2 IFE Matrix

Weight Ratings Weighted score

Doubled the size of its bottle to 12 ounces,

Pepsi seems to be developing synergy between

Pepsi continues to expand its markets in beverage

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Cost of sales has increased as would be expected,

4.3 Value Chain Analysis (Non-Alcoholic beverages Segment)

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Pepsi and Coke become

PBG and PAS

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Serves non-alcoholic beverage markets: Pepsi-Cola,

Marketing efforts: (Value Propositioning, brand development and

Distribution (Value Delivery):

(Its major customers are large

PBG and PAS distribute nearly 75

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

5.0 Strategy Formulation

2. Growth in the carbonated