University of Education

Faisalabad Campus
Department of Economics and Business Administration

Internship Report
PepsiCo

A REPORT SUBMITTED TO THE DEPARTMENT OF ECONOMICS AND BUSINESS

ADMINISTRATION, UNIVERSITY OF EDUCATION, FAISALABAD CAMPUS IN
THE PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF
BACHELOR OF BUSINESS ADMINISTRATION

Submitted By:
Bsf1702435
Araiz
2017-2021
20 October 2020

University of Education
 Faisalabad Campus
Department of Economics and Business Administration

LETTER OF UNDERTAKING

This report was submitted by Araiz S/o Bashir Ahmad Tariq Roll No

Bsf1702435 for the partial fulfillment of the requirements for the degree of

BBA
Session (2018-2022)
with specialization in
Marketing
and is hereby accepted by the evaluation committee.

Internship/Project/Work Supervisor ________________________

HOD / Coordinator ________________________

External Examiner ________________________

Dedication

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I dedicate my dissertation work to my family and many friends. A special feeling of
gratitude to my loving parents, whose words of encouragement and push for tenacity ring
in my ears.

Acknowledgement

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I wish to thank my committee members who were more than generous with their
expertise and precious time. A special thanks to the faculty of my university for their
countless hours of reflecting, reading, encouraging, and most of all patience throughout
the entire process.

Executive Summary

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The PepsiCo Company is a nonalcoholic beverage company in the world and one of the world's
most recognizable brands. It is home to more than 500 beverage brands, some 20 of those
billion-dollar-brands, including four of the top five soft drinks: PepsiCo, Diet Coke, Fanta, and
Sprite. In addition to soft drinks, it markets waters, enhanced water and sports drinks; juice
drinks, dairy and plant-based beverages, ready-to-drink teas and coffees and energy drinks. Other
top brands include Minute Maid, Powerade, Dasani, Honest Tea, and vitamin water. With the
world's largest beverage distribution system, PepsiCo reaches thirsty consumers in more than
200 countries. Nearly 70% of its sales comes from outside the US.

PepsiCo manages six operating segments (most of them geographically-based), including

Europe, the Middle East, and Africa (EMEA); Latin America; North America; Asia Pacific;
Bottling Investments; and Global Ventures.

Its geographic operating segments primarily manufacture and sell beverage concentrates and
syrups. North America is the largest geographic segment, accounting for over 30% of revenue;
the EMEA and Asia-Pacific regions generate some 15% each, followed by Latin America, which
brings in just more than 10% of total revenue.

The shrinking Bottling Investments segment generates 20% of revenue and includes company-
owned and consolidated bottling operations, regardless of the geographic location of the bottler.
Their company's Bottling Investments operating segment also includes equity income from the
majority of their equity method investments. Company-owned or consolidated bottling opera-
tions derive the majority of their revenues from the sale of finished beverages.

The Global Ventures operating segment account for over 5% of total revenue and includes the
results of the company's Costa, innocent and dogadan businesses as well as fees earned pursuant
to distribution coordination agreements between the Company and Monster.

Soft drinks account for about 70% of PepsiCo's worldwide unit case volume.

PepsiCo reaches customers through the largest beverage distribution system in the world, made
up of company-owned or controlled bottling and distribution operations, as well as indepen-
dently owned bottling partners, distributors, wholesalers, and retailers.

The Company expenses production costs of print, radio, television and other advertisements as of
the first date the advertisements take place. All other marketing expenditures are expensed in the
annual period in which the expenditure is incurred. Advertising costs included in the line item
selling, general and administrative expenses in their consolidated statements of income were $4
billion in 2019, 2018 and 2017. As of fiscal 2019 and 2018, advertising and production costs of
$55 million and $54 million, respectively.

Net operating revenues were $37.3 billion in 2019, compared to $34.3 billion in 2018, an in-
crease of $3.0 billion, or 9%. The increase was due to worldwide concentrate sales volume and
unit case sales volume both grew 2 percent compared to 2018.

Company's net income increased by $2.5 billion to $8.9 billion in 2019 compared to $6.4 billion
in the prior year. The rise was primarily due to the increase on their revenue.

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Cash held by the company in 2019 decreased by $2.6 billion to $6.5 billion, compared to $9.3
billion in the prior year. Cash provided by operations was $10.5 billion while cash used for in-
vesting and financing activities were $4.0 billion and $9.0 billion, respectively.

The company's objective is to execute their growth strategy centered around disciplined portfolio
growth; an aligned and engaged bottling system; and winning with PepsiCo's stakeholders — all
supported by revenue growth management and brand-building initiatives — to become more
competitive and to accelerate growth in a manner that creates value for their shareowners.

In addition to the beverage brands the company own, they also provide marketing support and
otherwise participate in the sales of other nonalcoholic beverage brands through licenses, joint
ventures and strategic partnerships, including, but not limited to, the following:

Certain PepsiCo system bottlers distribute certain brands of Monster Beverage Corporation
("Monster"), primarily Monster Energy, in designated territories in the United States, Canada and
other international territories pursuant to distribution coordination agreements between the Com-
pany and Monster and related distribution agreements between Monster and PepsiCo system bot-
tlers.

PepsiCo have a strategic partnership with Aujan Industries Company J.S.C. ("Aujan"), one of the
largest independent beverage companies in the Middle East. The company own 50% of the entity
that holds the rights in certain territories to brands produced and distributed by Aujan, including
Rani, a juice brand, and Barbican, a flavored malt beverage brand.

Table of contents

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1. Introduction to the industry ……………………………………………………… 09
2. Overview of the Organization

 Brief history, Mission and Vision of the organization …………………… 10

 Introduction of the organization, corporate objective and market standing
………...……………………………………………………………………… 10
 Policy of the organization…………………………………………………... 11

 Competitors…………………………………………………………………. 11
 Business Volume……………………………………………………………. 12
 Product Lines.…………….………………………………………………… 12

3. Organizational Structure

 Organizational Hierarchy chart…………………………………………… 14

 Number of employees………………………………………………………. 15
 Main Offices………………………………………………………………… 15
 Departments………………………………………………………………… 16
 Comments…………………………………………………………………… 19

4. Critical Analysis

 Marketing Work

 Analysis of micro environment of the organization.…………….. 20

 Analysis of the macro environment of the organization.……...… 20
 Industry analysis ………………………………………………..…. 21
 Marketing Mix …………………………………………………….. 22

 Human Resource

 Recruitment and Selection …………………………………….… 25

 Training & development…………………………………………. 28
 Compensation & benefits…………….…………..………………. 29

5. Finance Work

 Consolidated Income Statement………………………………………… 32

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  Consolidated Balance Sheet: Assets…………………………………….. 33
 Consolidated Cash Flow Statement…………………………………….. 35
 Short-term Activity Ratios (Summary)………………………………… 37

6. SWOT Analysis

 Strengths in the SWOT Analysis of Toyota…………………………………….…. 39

 Weaknesses in the SWOT Analysis of Toyota…………………………………….. 39
 Opportunities in the SWOT Analysis of Toyota………………………………….. 40
 Threats in the SWOT Analysis of Toyota………………………………………… 41

7. Conclusion ………………………………………………………………………….. 42
8. Recommendations…………………………………………………………………... 43
9. References and Sources…………………………………………………………….. 44

Introduction to the industry

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The Beverage Industry is a mature sector and includes companies that market nonalcoholic and
alcoholic items. Since growth opportunities are few compared to existing business, many mem-
bers of the industry endeavor to diversify their offerings to better compete and gain share. Too,
they may pursue lucrative distribution arrangements and/or acquisitions to expand their opera-
tions, product portfolios, and geographic reach.
Most equities in this group are suitable for conservative investors. The largest companies offer
reliable dividends, with regular increases, and above-average Stock Price Stability. There are a
few selections for those that are more venturesome. Such issues might serve a particular market
niche, for example, energy drinks or developing overseas markets. Generally, the group turns in
a steady performance throughout the business cycle, but it will generally suffer in the most
stressful of economic times.

Historically, two large entities have dominated the nonalcoholic beverage land-
scape: Pepsi (PEP) and PepsiCo (KO - Free PepsiCo Stock Report). They distribute their well-
known carbonated and noncarbonated drinks internationally via sizeable bottling companies. The
bottlers depend on these two industry leaders to create new products, improve existing offerings
and maintain sufficient advertising. Related capital spending amounts to several billion dollars
each year. The industry titans often boost their results (and those of their subsidiaries) by pur-
chasing smaller market players or by inking promising distribution agreements. In prosperous
economic times, consumers usually favor the most famous brand names. Still, when customers
are short of disposable income, they can turn to competing, inexpensive private label and lesser-
known beverages. Sales are seasonal, not surprising, peaking during warm summer months. Con-
sumer preferences will drive product diversification. Most notably, greater awareness of the
causes of common health issues, e.g., obesity and diabetes, has increased demand for bottled wa-
ter and other low-sugar or sugar-substitute drinks. Soda, including diet options, continues to fall
out of favor. In response, beverage companies have capitalized on the popularity of energy
drinks and ready-to-drink coffee. However, energy drinks have come under scrutiny due to their
high levels of caffeine, as regulators attempt to size up the associated risks. Product diversifica-
tion may be achieved through internal or external means. The same goes for geographic expan-
sion. The BRIC Nations (Brazil, Russia, India, and China), key markets in the global arena, have
gotten much attention. Beverage companies have spent heavily to open new bottling plants and
develop distribution networks in these countries. Some carry significant debt leverage, but cash
flow is fairly predictable and usually more than sufficient to cover annual interest payments (and
dividends) and maturities.

Both the nonalcoholic and alcoholic sides of the Beverage Industry are dominated by a few size-
able players and competition among them is often intense. Changing consumer tastes adds oper-
ating risk. Pricing and margins frequently come under pressure. Also, volatile commodity costs
will challenge managements to protect profitability. Good operating efficiency and cost-control
practices, mostly on an ongoing basis, are important. Notably, some companies hedge raw mate-
rial (e.g., aluminum and carbon dioxide) costs. Missteps in reading the trends of ingredient prices
can have a measurable negative impact on earnings. We find that beverage makers with the most
established brands produce the widest operating and net income margins.

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 Overview of the Organization
Brief history, Mission and Vision of the organization.

The PepsiCo Company is the world's number one maker of soft drinks, holding 51 percent of the
global market. PepsiCo's red and white trademark is probably the best-known brand symbol in
the world. Headquartered since its founding in Atlanta, PepsiCo makes two of the top three soft
drinks in the world, PepsiCo Classic at number one and Diet Coke at number three. The
company also operates one of the world's most pervasive distribution systems, offering its more
than 160 beverage products in nearly 200 countries worldwide. Nearly two-thirds of sales are
generated outside North America, with revenues breaking down as follows: North America, 37
percent; Greater Europe (which includes parts of Eurasia, such as Russia), 26 percent; Middle
and Far East, 21 percent; Latin America (including Mexico), 12 percent; Africa, three percent;
and other regions, one percent. Among the company's products are a variety of carbonated
beverages, sports drinks, juices, teas, coffees, and bottled water, under such brands as Fanta,
Sprite, Mr. PiBB, Mello Yello, TAB, Surge, Citra, POWERaDE, Fruitopia, Saryusaisai,
Aquarius, Bonaqa, and Dasani. PepsiCo owns the Minute Maid Company, a leading North
American maker of juices and other beverages, including Hi-C fruit drinks, Five Alive citrus
drinks, Bright & Early breakfast beverages, and Bacardi mixers. Moreover, the company,
through its Schweppes Beverages unit, also holds the rights to such brands as Schweppes,
Canada Dry, Dr Pepper, and Crush in 157 countries, primarily located outside North America
and Europe. PepsiCo's development into one of the most powerful and admired firms in the
world has been credited to proficiency in four basic areas: consumer marketing, infrastructure
(production and distribution), product packaging, and customer(vendor)marketing.

PepsiCo’s vision is as follows:

“Our vision is to craft the brands and choice of drinks that people love, to refresh them in
body & spirit. And done in ways that create a more sustainable business and better shared
future that makes a difference in people’s lives, communities and our planet.”

Introduction of the organization, corporate objective and market standing

The inventor of PepsiCo, Dr. John Styth Pemberton, came to Atlanta from Columbus, Georgia,
in 1869. In 1885 he set up a chemical laboratory in Atlanta and went into the patent medicine
business. Pemberton invented such products as Indian Queen hair dye, Gingerine, and Triplex
liver pills. In 1886 he concocted a mixture of sugar, water, and extracts of the coca leaf and the
kola nut. He added caffeine to the resulting syrup so that it could be marketed as a headache
remedy. Through his research Pemberton arrived at the conclusion that this medication was
capable of relieving indigestion and exhaustion in addition to being refreshing and exhilarating.

The pharmacist and his business partners could not decide whether to market the mixture as a
medicine or to extol its flavor for its own sake, so they did both. In PepsiCo: An Illustrated
History, Pat Watters cited a PepsiCo label from 1887 which stated that the drink, 'makes not only
a delicious ... and invigorating beverage ... but a valuable Brain Tonic and a cure for all nervous

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affections.' The label also claimed that 'the peculiar flavor of PepsiCo delights every palate; it is
dispensed from the soda fountain in the same manner as any fruit syrup.' The first newspaper
advertisement for PepsiCo appeared exactly three weeks after the first batch of syrup was
produced, and the famous trademark, white Spenserian script on a red background, made its
debut at about the same time.

The PepsiCo Company is a leader in the beverage industry with a reputable brand and strong
global presence. According to the PepsiCo Company’s mission statement and 2020 vision, some of
its Objectives include:
• Increase profit by cutting down costs through productive and efficient production facilities.
• Focus on environment friendly bottling production and enforce sustainability.
• Continue to diversify its portfolio through innovations and partnerships, keeping consumer
demands in mind.

Policy of the organization

We delight our customers and consumers with great beverages and great service, with our great
people. We aim to be a force for good in our communities. We operate in different countries with
different local laws, regulations, cultures and traditions, but we have common standards and run
our business in a law-abiding, ethical and practical way everywhere. This manual sets out our
policies and where you can find guidance and more details These policies and practices apply to
all of us in PepsiCo European Partners plc (CCEP plc) and all of its consolidated subsidiaries
(together CCEP, or the Group). Our growth and long-term sustainable success will only come
with consistently high standards of corporate governance. Please take time to read this manual.
We should be proud to work at CCEP, proud of what we achieve together and proud of how we
do it.
Over 300 million people can enjoy our drinks in Western Europe, including some of the world’s
leading brands, such as PepsiCo, Diet Coke, PepsiCo Zero Sugar, Fanta and Sprite. We also sell
a growing range of water such as GLACÉAU Smart water, juices and juice products such as
ViOBiO, sports and energy drinks and ready-to-drink teas and coffees such as Fuze Tea, Honest
Tea and Honest Coffee. We operate in Andorra, Belgium, France, Germany, Great Britain,
Iceland, Luxembourg, Monaco, the Netherlands, Norway, Portugal, Spain and Sweden, with
further offices in Bulgaria. Our aim is to delight customers and consumers with great beverages
and service, creating shared and sustainable value. As a growth company, CCEP has defined a
strategy and ways of working that will enable it to be a total beverage company, a leading
consumer goods company and the world’s most valuable PepsiCo bottler

Competitors

NAME FOUNDED HEADQUARTERS EMPLOYEES

PepsiCo 1965 New Bern, North Carolina 267,000

Nestlé 1866 Vevey, Switzerland 308,000

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 Keurig Dr. Pepper 2008 Plano, Texas 25,000+

RedBull 1984 Fuschl, Austria 12,736

Danone 1919 Paris, France 105,783

Unilever 1929 London, United Kingdom 168,832

Britvic 1845 Hertfordshire, United Kingdom 4,795

Jacobs Douwe Egberts 2015 Amsterdam, Netherlands 10,000+

Suntory 1899 Minato City, Tokyo 40,210

Monster Beverage Corporation 1935 Corona, California, 3,429

Business Volume

The PepsiCo Company is a key global player in the beverage industry. The firm is headquartered
in Atlanta, GA and has over 200 bottling partners worldwide. Everyone has heard of PepsiCo,
and you would be hard pressed to find somebody who was unable to recognize the iconic white
lettering against the bright red background of this global brand. PepsiCo has been consistently
ranked as the top soft drink brand worldwide, with a global brand value of over 71 billion U.S.
dollars. Other soft drink brands manufactured and sold by the PepsiCo Company include Diet
Coke, Sprite, and Fanta.

The PepsiCo Company’s revenue has fluctuated globally in recent years, reaching almost 40

billion U.S. dollars in their most recent financial year. Almost one third of the PepsiCo
Company’s total revenue was generated in North America in that year, making it their most
lucrative operating segment by far. Bottling Investments are the company’s second biggest
revenue stream. PepsiCo’s advertising campaigns are innovative and memorable. As one way to
maintain high revenues, the company has increasingly invested in advertising, spending over
four billion U.S. dollars in recent years.

Product Line

The PepsiCo Company is a total beverage company, offering more than 200 brands—from
sodas to waters, from coffees to teas, from juices to kombuchas —in more than 200+ countries
and territories.

In addition to the PepsiCo brands, our portfolio includes some of the world’s most valuable bev-
erage brands, including:

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  AdeS soy-based beverages
 Aquarius
 Ayataka green tea
 Chivita
 Ciel water
 Costa Coffee
 Dasani waters
 Del Valle juices and nectars
 Fairlife
 Fanta
 Fresca
 Fuze Tea
 Georgia coffee
 Gold Peak teas and coffees
 Honest Tea
 ILOHAS
 innocent smoothies and juices
 Minute Maid juices
 Powerade sports drinks
 Simply juices
 Schweppes
 smartwater
 Sprite
 Topo Chico
 vitaminwater

We’re constantly transforming our portfolio, from reducing sugar in our drinks to bringing inno-
vative new products to market to meet the needs of our consumers.

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 Organizational Structure

Organizational Hierarchy Chart

The PepsiCo company's organizational structure consists of a board of directors, elected by the
shareholders, that has final decision-making power in the running of the company. Members of
senior management and a number of standing committees carry out the decisions of the board of
directors.

The board of directors of the PepsiCo company is answerable only to the shareholders. The
board's responsibility includes the selection and oversight of senior management, including the
chief executive officer and the vice CEO. As of May 2014, Muhtar Kent was both the CEO and
the chairman of the board of directors. The seven standing committees include audit, compensa-
tion, directors and corporate governance, executive, finance, management development, and pub-
lic issues and diversity review. The committees evaluate themselves and report to the board of
directors. The board of directors is responsible for annual self-evaluation and evaluation of the
CEO. Besides the board of directors, further leadership structures include the senior operations
leadership, which is responsible for PepsiCo operations and oversight on various continents, and
senior functional leadership, which is responsible for administration, public affairs, finances and
other practical considerations.

The PepsiCo company itself does not distribute and sell the finished product. Instead, it manufac-
tures and sells syrups, concentrates and beverage bases to bottling partners that are responsible
for packaging, merchandising and distributing. These bottlers work with customers such as gro-
cery stores, restaurants and many other outlets to get the finished products to consumers.

Number of employees

PepsiCo and its nearly 225 independent bottling partners employ more than 700,000 people,
helping bring economic opportunity to local communities worldwide. Due to the strength of this
unique system, we are able to create global reach with local focus. While many may view us as
“PepsiCo”, our system operates through multiple local channels, and our bottling partners work
closely with customers to execute localized strategies developed in partnership with our
company. Customers then sell our products to consumers at a rate of 1.9 billion servings per day.

Main offices

PepsiCo or sometimes known as Cola is a famous American soft drink company headquartered

in Atlanta, GA, United States of America. The corporate headquarters of PepsiCo is one of
the largest business offices in Atlanta, GA. They own popular variants and products, such
as Caffeine-Free PepsiCo, PepsiCo Vanilla, PepsiCo Zero Sugar, and much more. In few

14
countries, they were in controversy due to some reasons. They are the market leader in soft
drinks in the US and other countries.

Departments

The main functional areas are Human Resources, Production, and Administration, Finance,
Marketing, R&D. the main functional areas in the PepsiCo company are HR, Production and
Administration.

Human Resources

The human resources department recruits the best people for the right jobs. For PepsiCo the
human resources department looks for people who have skills and experience in driving Lorries.
They should be honest and happy in what they do. They produce a frame work which helps them
to identify the right person for the work. They check out the attendance, punctuality of the
employees. They check whether the employees are paid on time and whether they are late. They
first advertise internally for a job that needs to be replaced before advertising it externally. They
make sure that an employee only works over one time once a week. There is a training manager
in PepsiCo who trains employees from ages 16-65. They never stop training and they have to
train themselves continuously.

Production

Production department helps improve the products. Managers help others in their work in the
production department and they guide them through their jobs. They tell the employees in that
department what to do and they produce new ideas and alternative to the company. Their main
target is to only loose about �10000 a year of yield and �2000 a week. They also help to
improve machines. They have a microbiologist in the PepsiCo company. He inspects the
hygiene, in the production line and the raw material. He checks for contamination like moulds,
bacteria and coli foam, he checks normal hygiene as well. Costic and parasitic acid removes the
debris from inside the vessels and sterilizes it; he makes sure that this is still not in it while
making the product. All areas are checked by a swab before production and the documents have
to be checked by him.

They have around 300 people working in the production department in PepsiCo and around
47,735 people working in McDonalds. Comparing this to PepsiCo there is a big difference. This
shows that machines have taken over in PepsiCo but not in McDonalds. This also tells us that
PepsiCo has grown and developed faster than the tertiary sector that is McDonalds. PepsiCo
make 24,000 drinks per hour.

Administration

In the administration department they have to do the filing and arrangements to see people. The
PA Wendy Savides aim is to make sure that the boss knows where he is to be at a certain time.
She also has to manage other people. She has a diary which contains the appointment for the
boss and she helps him in any way, with meetings, charities, local donations.

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Marketing

There are four basic aspects of marketing that is used in PepsiCo called the "four P's":

Product: The item or service they sell.

Price: The amount they charge for their product or service.

Promote: The ways they inform the market as to who, what and where they are.

Provide: The channels you use to take the product to the customer.

As you can see, marketing encompasses much more than just advertising or selling. For example,
a major part of marketing involves researching your customers: What do they want? What can
they afford? What do they think? Your understanding and application of the answers to such
questions play a major role in the success or failure of your business. Advertising is a good way
to inform people what is available to buy and if there where no adverts we wouldn't know what
to buy or we would end up buying the same products and not trying anything different. But on
the other hand adverts can encourage us to buy things that we don't need because they make the
product look or sound really good and a lot of the time the product isn't as good as
advertisements make them out to be.

PepsiCo spent around 569 million into ads in 2002. This shows that they have put a lot of
time, money and ideas into the advertisements and they have made their money by the number of
drinks they have sold. PepsiCo's target audience varies with the different drinks. Fanta is aimed
for women and teenagers. PepsiCo classic is aimed for all ages. Diet cola is aimed mostly for
women from ages 25-35. This is quite alike with McDonalds because only a certain age people
buy a product like women buy salads and a chicken sandwich.

Finance

HR is the most important functional area to the workers but to the boss its finance. This area
controls all money in the business, and they are responsible for all money that goes in and out the
business. Every so often the gives the other departments some money and they must stick to that.
If they break their budget they must explain why. All money, which is spent, must first go
through finance and only a senior worker can give consent for it. They are also responsible for
paying every one in the company. They must give as report every week of how their cash flow is
going, they must be precise to the last digit or they will be in big trouble. They must also prepare
cash flow forecasts and break even charts; these must be shown at each company meeting. If all
of these things aren't done correctly then the company could go bankrupt or the financial
manager may get done for fraud. This section is very important and is vital for the businesses
success.

Marketing helps them in the aim of having bottled water. They can advertise their product and
help them find out what people really want from their money.

16
HR can help find experienced people for the different work, which will help them achieve
improving working relationship.

Finance helps them to see how much money they have and how much they need to buy things.
Administration helps them to control the communication between the functions. They deal with
internal and external communications. It facilitates the successful production of products and
efficiency in the business.

Production is the heart of the business as it creates profit and is the reason the business is
running. This helps them achieve most of their aims like major rise in profit.

The human resources department needs to communicate with production manager for several
reasons. I asked Andrea Reeves the HR manager and she said, 'we communicate well to know
the attendance, punctuality of the employees so that we can see which workers are good for
promotions and stuff like that.' She said that 'we have to even communicate to the finance
department to see that the employees are paid. We do this by Email internally, presentation.'

PA needs to communicate with production manager to see whether they are producing enough
bottles per hour and if they are going according the plan. They would want to check if they are
being environmentally friendly. They communicate by phone or e-mail internally.

The production manager would communicate with the microbiologist to see if there are any
bacteria or whether they should start producing the drinks. They would want to know the status
of the machines and whether they need to through out any drinks that are if the bacteria was in
the machines while the drinks were made. This would contaminate the drinks. They
communicate face to face or by phone internally. The marketing manager needs to communicate
with the finance department to see how much money they have to invest in a making of a
product. They communicate by the phone and by fax.

The functional areas of PepsiCo are strong and secure; they help PepsiCo achieve their aims.
They need to communicate with each other for several reasons, whether it's important or just a
question about lateness.

The advantages of talking, intranet and meetings are that it is efficient and quicker. Using e-
mails and phone record involves ICT which can make things complicated and can take time.

The business communicates to customers through the website mainly and sometimes through
news articles. They sell their products through promotions their latest one is the
free music download. If there is a problem then the customers call the customer line. They can
complain to the services about the product which then goes to the PepsiCo administration
department. PepsiCo is responsible for the product till it reaches the hands of the customer. To
do this the company needs to keep in contact with the store or market. They also need to contact
about the times they need to deliver new drinks and where the drinks should be kept as well.

The company gets their yield ready made so they don't know what it is made of but they put
down some basic ingredients like caffeine.

17
Comments on the organizational structure 

The PepsiCo company structure is a combination of both the mechanistic and the organic model
working together, the most area of concern n the PepsiCo company is on the responsiveness
(Dawson and Halpert,2009). The intertwined nature of integrated mechanisms as previously dis-
cussed are the main characteristics of an organic structure (Bogo only, 2004). The company’s as-
pects associated with mechanistic model structure are the centralization and the high standardiza-
tion, the company’s stability and flexibility. Therefore it is the mechanistic organic, as for the or-
ganic model is concerned with efficiency, high low standardization, responsiveness specializa-
tion, high low integrating mechanisms, the simple complex centralization, the high low commu-
nication and the top to down (Dawson and Harpert,2009). The putting together of both types of
structure appears to be very ideal for the organization.

Being flexible is very crucial for a company trying to appeal to a very diverse and large number
do very independent markets. Nevertheless, high standardization is very vital to continue being
efficient in production. The company utilization of complex integrating mechanistic model
makes it able to clear the coordination of the company globally; furthermore, centralization
keeps organizational deliberations in line with the company’s goals and objectives.

The information in the company is moving smoothly in almost every direction, this is because
the upper management is able to have easy access to the information hastier than it did before;
this is viewed as the modernistic advantage, adding to the company’s flexibility and high respon-
siveness. The modern changing towards a thorough decentralized and organic structure corre-
spond with the instability of the company’s environment. the main strategic structural dynamics
that the company had to go through in the recent past has Influenced it positively, the sales has
very highly increased and employees were more satisfied (Bogolomolny,2004).

The organization is trying to develop a more creative tradition by moving towards decentraliza-
tion even though it seems that it is not satisfied with its beverage industry trends, however it is
fighting on to remain undisputed in the production of new and most thrilling products.

18
 Critical Analysis

Marketing work
1. Analysis of micro environment of the organization

Micro Environment
Elements that are have direct influence on performance and strategies of company. It means
that internal factors installed into the business organization. Microenvironment also well-
known under the name like operating environment of a company, and it includes Suppliers,
Customers, Shareholders, Competitors and Media.

THE COMPANY

Strong work ethic – “…treat our people well, help them develop and give them a rewarding life.”
PepsiCo also excel in performance, develop skills and move towards their career goals. They
were ranked No.26 in the Great Place to Work Institute (PepsiCo, 2010).
CUSTOMERS

PepsiCo focus on “brand love”. PepsiCo believe that in the long-term that customer loyalty will
strengthen their position.
“We know that we would only have sustainable growth if we are able to build relationships with
our consumers, these relationships convert into sales” Muenster, Director of knowledge and in-
sights (Warc, 2010).

SUPPLIERS

A ‘sound, stable and ethical supply’ are vital to continued success (PepsiCo Company, 2013)

COMPETITION

Pepsi – 14% growth in net revenue in 2011 and has their brand distributed in over 200 countries.
(PepsiCo, 2011).

PepsiCo and Pepsi are both competitive with their pricing.

2. Analysis of the macro environment of the organization

Macro Environment
The organizational environment includes factors that influence its technique. Macro
environment is one of the sections of external environment that can influence to the economy
growth when organization does not have any options with regarding tax policy of company in
many republics.

19
POLITICAL

changes in regulations i.e., nutritional info on packaging – fluctuating exchange rates could result
in a loss when trading overseas and sourcing materials.

SOCIAL

increased interest from consumers in a healthy lifestyle + knowledge of nutritional info – particu-
larly sugar/fat content (PepsiCo Company, 2009).

ECONOMIC

Recession, UK 2010 – positive influence on PepsiCo’s retail sales. Sales reached £1 billion for
‘My Coke’ (PepsiCo, Diet Coke and PepsiCo Zero). This was the “first ever time that the com-
bined sales of the three Coke brands have broken through the £1 billion barrier” (PepsiCo Com-
pany, 2010).

LEGAL

Changes in income or corporation tax – increase in such taxes could negatively effect the finan-
cial position of PepsiCo. PepsiCo earns income in many foreign countries, not just the US. A re-
form to the US tax system changing corporation tax on foreign earnings, could adversely impact
PepsiCo’s financial results (PepsiCo Company, 2012).

ENVIRONMENTAL

Challenged to use more sustainable and environmental friendly products for their

packaging
 Cans/bottles always state if they are recyclable and how to dispose of correctly
 Bottles/cans which are recycled has a positive effect on environment
TECHNOLOGICAL

 Do as much as they can on technological front – produced various applications for

smartphones.
 Recent app – Share a Coke – allowed users to create a digital can and send it to
someone. This is a fun way to communicate with friends through the brand and is
something that isn’t offered by counter brand Pepsi.

3. Industry analysis

The role of the porter’s five forces is necessary to undertake to examine the industry with which
the company operates. Therefore, these forces must be examined and operates. These forces are
present and always have an impact on the performance of the company in larger context. These
factors include:
 Bargaining power of suppliers
 Bargaining power of buyers

20
  Rivalry among the firms
 Competition
 Threats of substitutes
All above-mentioned factor form the porters five forces model that sheds light on the perfor-
mance of the company in that instance. The rivalry among the firm is quite high, and the firms
are trying to capture the market share. The Pepsi Cola and other local and international brands
are important in that regard. They are striving to take the market share, and that could be a threat.
Threats of the substitute are moderate, and it is not much high. The substitute beverages are
available; however, they are not the replacement of the beverages that are on the market. Thus, it
can be concluded that these threats are not much high. However, the bargaining power of the
buyer is quite high. The suppliers of the raw material are quite large in number, and therefore, it
is thus easy to acquire raw material on cheap rates.
The competition is very tough, and the competitors are trying to capture a large share of the mar-
ket in that instance. Therefore, adequate policies are needed to build to handle such level of com-
petition in that instance. Otherwise, the market share of the company could be difficult to capture
in that essence. Thus, the consideration of the porters five forces model is thus quite important to
consider.

4. Marketing mix strategies

PepsiCo is one of the two leading brands in the soda industry and the largest brand of non-
alcoholic beverages in the world. The international empire of PepsiCo spans more than 200
countries. The company has a large product portfolio of sparkling and still beverages. The soda
industry has felt the pinch of economic slow-down and post-recession, currency fluctuations
have affected the profits of leading soda brands. The popularity of soda drinks has also reduced
due to the growing popularity of health drinks and other health trends.

Apart from the large market share, PepsiCo is known for its strong brand image and high
customer loyalty. It invests a very large sum each year in marketing and promotion for growing
brand recognition and customer engagement. In recent years, it has focused on optimizing its
product mix to cater to the changing taste of consumers worldwide.

Product in the Marketing mix of PepsiCo  

PepsiCo has a large product portfolio of 500 sparkling and still brands. It provides nearly 3,900
beverage choices. Its leading product PepsiCo is one of the world’s most recognized and
valuable brands.  There are 21 billion-dollar brands in its portfolio, of which 19 are available in
low or no-calorie choices.

Here are some of the most known brands in PepsiCo’s portfolio:

 PepsiCo –  Most popular and highest selling soft drink in history and also one of the most
recognizable brands in the world.
 Sprite: A popular lemon-lime flavored soft drink introduced in 1961.

21
  Fanta: The second oldest brand from PepsiCo, introduced in 1940, comes in orange fla-
vor.
 Diet Coke: Known as PepsiCo light in many markets. A sugar and calorie-free soft drink.
Introduced in 1982.
 PepsiCo Zero: Launched in 2005, this zero sugar brand acquired the status of a million-
dollar brand in 2007.
 PepsiCo life: A low-calorie drink with cane sugar and Stevia leaf extract.
 Minute Maid: A juice brand acquired by PepsiCo in 1960.
 Ciel: Purified non-carbonated bottled water introduced in 1996.
 Powerade:  Drink for energy and hydration made with carbohydrates, electrolytes, and
fluids.
 Powerade zero: Sports and fitness drink with electrolytes minus the calories.
 Simply orange:  Premium 100% orange juice available in six varieties.
 Fresca: Caffeine-free soft drink with a unique citrus taste.
 Glaceau Vitaminwater: Nutrient enhanced water beverage available in 26 countries.
 Del Valle: A premium line of juices and nectars sold mainly in Latin America and Cen-
tral America.

Place in the Marketing mix of PepsiCo  

PepsiCo has an extensive beverage distribution system. Its products are sold in more than 200
countries across 6 operating regions including Europe, Latin America, North America, Pacific,
Eurasia & Africa. PepsiCo sells an average of 1.9 billion servings each day. Traditionally, the
company has relied on its bottling partners for the packaging and distribution of its products.

As PepsiCo notes, “While many view our Company as simply “PepsiCo,” our system operates
through multiple local channels. Our Company manufactures and sells concentrates, beverage
bases and syrups to bottling operations, owns the brands and is responsible for consumer brand
marketing initiatives. Our bottling partners manufacture, package, merchandise and distribute the
final branded beverages to our customers and vending partners, who then sell our products to
consumers” (PepsiCo company).

Its bottling partners work closely with customers including grocery stores, restaurants, street ven-
dors, convenience stores, movie theatres, and amusement parks, among many others. Together
they execute localized strategies of PepsiCo company. These customers sell PepsiCo products to
the final customers.

Pricing in the Marketing mix of PepsiCo  

Pepsi is the arch-rival of PepsiCo and the closest competitor in the beverages segment. Both
brands price their products competitively. Prices are not too high to go beyond the average cus-
tomers’ reach and nor too low to give an impression of low quality. PepsiCo’s pricing strategy is
aimed at driving brand loyalty. Moreover, due to the decreasing demand for soda products, price
competition between PepsiCo and Pepsi has gotten even intense. The prices lower as the size of

22
the package grows bigger. Bulk buyers of the product may have to pay significantly lower prices
than ones buying single PepsiCo products.

Promotion in the Marketing mix of PepsiCo   

Due to the intense competition in the soda industry, the top brands spend much on advertising to
drive higher sales and revenue. PepsiCo’s marketing expenditure in 2016 was $4 billion. In
2018, the marketing expenditure grew to $4.1 billion. It utilizes both traditional and modern
channels to promote its brand and products. PepsiCo launched its Taste the Feeling campaign in
2016 which unites all of its brands. This one brand approach taken by PepsiCo marks a
significant shift from its previous marketing strategy. Apart from TV ads and outdoor ad
campaigns, the company serves its ads across the internet and on social media.  Its social media
accounts are used to connect with its fans and followers and for customer engagement.  There are
more than 1,250 promotional videos of PepsiCo on its official YouTube channel. As competition
has kept intensifying in the soda industry, companies are focusing more than ever on their social
image and reputation. PepsiCo is also investing a lot in CSR and sustainability and developing a
sustainable supply chain and manufacturing network. Investing in socially beneficial projects has
proved beneficial for the company and has strengthened its image in the market.

23
 Human Resource work

Detailed analysis of HR functions

1. Recruitment and Selection

PepsiCo has a compulsory hiring process that must be undergone by anyone who wants to be an
employee at the company.

Here are the stages or levels involved in the PepsiCo company hiring process:

1. Job Application

To begin your journey into the PepsiCo hiring process, you need to submit an online application
to the company through their website.

It’s a simple process that involves visiting PepsiCo’s official website, click on the careers button
to move to a page where you can upload your resume or CV containing significant detailed
information about your work experience and suitability for the role.

Some positions might require you to upload a cover letter or provide answers to a set of
competency or motivationally based questions.

Carefully read through the application and ensure you give all the necessary information that the
hiring team is searching for.

2. Phone or Video Interview

After submitting your application, the hiring team will review it and decide if you should
continue the hiring process or not.

The next stage after an online application is usually a phone or video interview.

The phone interview is normally conducted by one of the hiring team members, which involves
questions concerning your role and the resume you submitted.

This is to verify if you would be suitable for the job, and if you truly possess the competencies
contained in your resume.

Alternatively, it might be a video interview. The hiring team would send you a link to a number
of questions that are already pre-recorded.

One or two minutes would be given to get your answer ready, and about five minutes to get your
answer recorded through webcam.

This interview would be focused on your skills and what you are able to offer the company.

24
Since you will be having this interview from the comfort of your home, it is advised to prepare a
cheat sheet containing points that would give you an edge during the interview.

The interview questions that you may be asked include:

 Do you know the skills required in your role, and why?

 Has there been any time you displayed leadership? And tell me about it.
 Have you ever influenced someone to have a change of mind or behavior? Tell me
about it.
  Assessment Tests
Assessment tests are likely to come up in the hiring process, after you have been interviewed
through the phone call.

The assessment tests are timed and are multiple choice tests, which make it pretty difficult.

It is highly recommended to take practice tests, in order to sharpen your skills and improve your
confidence.

The exact tests that would be given to you strongly depend on the role you applied for, but here
are the most usual ones:

 Numerical reasoning test:

During this test, one or more pieces of information will be provided for you. Your compulsory
task is to calculate basic percentages, functions, or currencies so as to know the appropriate an-
swer from the list of options made available.

 Personality test:
During this test, your suitability for the role and being a PepsiCo employee will be assessed.
Even though your answers cannot be wrong, observing the structure of the test and the types of
questions involved will aid you in providing more accurate answers.

4. PepsiCo assessment center

Getting invited to the PepsiCo assessment centre is a very significant stage of the hiring process.

You can only make it to this stage if you succeeded at the previous stages. This might be the last
stage of the hiring process, or would be followed by an interview – the final stage.

Prior to the assessment centre, you would be told what to expect during the assessment.

However, here are some exercises that are typically conducted at the PepsiCo assessment center:

 Written case study: For this exercise, sufficient time will be provided for you to
read a set of case study information, and then create at least two written reports
based on what you read. Being time conscious is very vital during this exercise, as
well as being able to read and understand the most information in the text.
 Group discussion: For this exercise, you will be placed in a little group of people
(fellow applicants), and then provided with a case study for about an hour. Your re-
sponsibility is to discuss together with your group concerning a result and action
plan for a specific problem. All through the discussion, the recruitment team will

25
 assess your communication skills, ability to work in a team, and how well you are
able to hear other people’s opinion concerning an issue.
 PepsiCo role play: This exercise is not conducted all the time, depending on the role
of the applicants. During this exercise, you will be asked to simulate a PepsiCo em-
ployee. The assessors will ask you to represent the company and act like you are al-
ready an employee.
5. Interview Process
Every hiring process must consist of at least one interview, so is the PepsiCo hiring process.

This interview is typically competency-based, putting your work experiences and skills to test
against the competencies needed for the role you are applying for.

Since you have been through a lot of screening, this final interview wouldn’t be very difficult to
successfully pass.

Your interviewer will ask straight forward and not-too-difficult questions during the interview
session.

You will be asked to give examples of times when you exhibited your skills and why you did so.

You might also be asked how your skills can be best utilized to solve work-related issues.

Preparing for the interview is highly recommended to give you an edge.

Here are tips that you should take note of when making preparations:

 Before your interview date, prepare several examples about how your skills were
exhibited in resolving complex work-related tasks.
 Ensure you make research about the PepsiCo Company to get acquainted with their
score value, goals, and what they really want from employees.
 Completely understand what are required in your role.

 Drug Test
Once you have been offered a job, you will need to go for a drug test. This test is very compul-
sory, and the recruitment team utilizes the test to ensure that an applicant doesn’t do drugs.

PepsiCo does not expect you to be absolutely clean without flaws. All they want is an applicant
who hasn’t done drug for at least one year, or not at all.

7. Training and Orientation Process

The PepsiCo recruitment team usually conducts an orientation and training for newly employed
staffs in order to get them acquainted with their typical work duties and the culture, history and
policy of the company.

The orientation involves watching videos and being lectured by some personnel about all you
need to know as a PepsiCo employee, while the training aspect is a practical learning process
that teaches you everything that your role entails.

26
 

2. Training & development

We aim to establish long term relationships with our employees. One of the needs identified by
our employees was for opportunities for professional development. With this in mind we have
developed special programs.

First Few Sips: The purpose of this training is to provide CCIPL new hires with a sense of Vi-
sion, Purpose, Direction, Belonging, Pride and Passion. This is the induction program to train
hires on company policies and provide them function overview. It is a 5 day workshop that in-
cludes a plant tour and a sales visit.

Pegasus Program: The Pegasus program seeks to develop all-round top talent to fuel a pipeline
of future roles within CCIPL.

Mantra: Mantra is our university relations program; we have consistently been a preferred re-
cruiter in leading B-school campuses. Through the Mantra program, students get an opportunity
to work on 2-month summer internship projects with PepsiCo India. The program is designed for
maximum learning and consists of a robust mix of project work, coaching and assignments.

Management Trainee Program: The best performing summer interns (from the Mantra pro-
gram) are recruited as Management Trainees. The Management Trainee program is of 18 months
duration and offers comprehensive, cross-functional experience in different business verticals
and the group's CSR activities.

Women in Leadership program: Globally, The PepsiCo Company has been striving to increase

the number of women in our talent pool through recruitment and internal development strategies’
Women in Leadership program was kick started in India in 2010. The program aims at grooming
women talent in the middle management level to take up higher responsibilities.

Catalyst: Catalyst is a training program for selected managerial staff, relatively high in the orga-
nizational hierarchy, grooming them for taking up senior management positions. Within the or-
ganization, we recognize the need for performance and development reviews. Our approach to
these reviews is three pronged.

 On the job - Learning gained through current work assignments and special projects
 Coaching and mentoring - Knowledge built through interaction with others
 Formal training – Courseware designed to develop knowledge and skills

27
In 2011 we launched 7 Integrated Career, Development & Performance Planning Workshops,
covering 147 associates who are people managers. Across the organization we were able to have
performance plans for 100% of the employees, career plans for 94%, development plans for 93%
and mid-year reviews for 100% of the employees.

3. Compensation & benefits

Compensation & Benefits Analyst

 
Team Overview

Our Warsaw based Compensation & Benefits team is a mix of energetic, young professionals
with backgrounds in HR and Finance, bringing together the best from different cultures. We
work hard, we play hard, and in the process we develop ourselves and the people and processes
around us every day. Utilizing Operational Excellence and Customer Service Excellence tools
and methodologies comes almost natural to us, but we´re happy to train anyone who decides to
join our team. Our customers are employees, managers, HR and Finance peers, as well as our
external service providers (especially benefits vendors) scattered across two huge geographies:
Europe and Eurasia/Africa. Having said that, working in the GBS Compensation & Benefits
(C&B) team provides us with a truly international environment and gives us the opportunity to
build sustainable relationships all over the world. Come join us, we´re waiting for you!

Position Overview

As Compensation & Benefits Analyst you will be responsible for the administration and delivery
of pre-payroll, compensation and benefit plans to employees for countries in Europe or Eurasia
and Africa as well as responsible to provide support and coaching to managers on the
Compensation and Benefits related processes and services. In particular:

·  Compensation: Ensure annual rewards management cycle is run smoothly end-to-end, and

administer local country benefits programs as well as global programs applicable in the location
(if any, i.e. Captive Insurance).
·  Pre-Payroll: Interface with Finance and provide pre-payroll input to Payroll Finance.
·  Time & Attendance: Ensure accurate and timely change to employee data, work schedules
and leave balances that cannot be administered via self-service.
·  Employee Separation: Coordinate and ensure all compensation, benefits and payroll related
activities are undertaken correctly and timely; support Employee Relations with Severance
calculations; educate and assist managers with separation process, once agreement signed where
necessary.

In this role you will also be responsible for ensuring internal equity and consistency of practices
throughout your assigned location(s), as well as management of external vendors. Additionally,
you will be coordinating with the Finance and Payroll teams any changes outside of SAP.

Key Responsibilities

28
Compensation

·  Support the implementation of different compensation projects (i.e. market benchmarking) by

providing data and implementing adjustments.
·  Perform due diligence in order to identify opportunities or concerns with ongoing plan
administration, including monitoring vendor performance against SLAs.
·  Review and consult on compensation package offers for new hires, promotions, lateral moves
respecting internal and external equity.
·  Provide detailed, constructive impact analysis of proposed plan and legislative changes from
legal, administrative, participant and other resources through in-depth research, monitor changes
and development in labor codes/legislation, and inform Center of Expertise accordingly.
·  Responsible for successful implementation of annual rewards management cycle (including
but not limited to training managers, supporting them on the recommendations, ensuring accurate
rewards statements), off-cycle compensation process and implementation of global and local
bonus plans; responsible for delivering compensation training (either virtual or in-class) to
managers and associates per the need.
Benefits

·  Administer on-going benefits programs and Flexible Benefits.

·  Develop and execute implementation/communication strategies for any plan changes and other
benefits initiatives, and support Center of Expertise on collecting market benchmarking data.
·  Provide data for local benefits surveys if applicable.
·  Perform due diligence in order to identify opportunities or concerns with ongoing plan
administration, including monitoring vendor performance against Service Level Agreements.
·  Educate managers and employees on benefits plans and programs, practices, and processes.
·  Ensure communication channels (intranet and other internal systems and databases) are kept
up-to-date of changes in benefit plans and programs, processes and tools; serve as internal client
relationship manager between the Company and third party service providers.
·  Process any benefits plans purchase orders, including follow up and reconciliation.
Pre-Payroll

Responsible to provide pre-payroll input including, but not limited to new hires, leavers,
health/life insurance inputs, salary changes, etc.

What you can expect

·  A diverse team-environment amongst highly skilled professionals.
·  A truly international work environment as well as client group (within either Europe or Eurasia
and Africa geographies).
·  Manifold challenges and responsibilities and a diverse portfolio of tasks from reporting to
consultancy.
·  A chance to develop your skill set and portfolio in a fast-paced, industry leading company.
·  An ice-cold Coke whenever you crave for it :)
What you need to be successful

In order to be successful in this role you should have a background (at least Bachelor´s Degree)

29
in Human Resources, Social Sciences or Economics, and bring 3-5 years of experience in HR in
a multinational environment, preferably in shared-services , and have worked in the
compensation and benefits area for at least 1-3 years .

If you come along with in-depth knowledge and expertise in the field of compensation and
benefits with proven experience in providing advice and guidance on compensation packages
and ratios to various stakeholders across an organization, you´re already well-equipped.
Additionally, you should be experienced in vendor management and benefits programs as this
will be a main responsibility in your new role.

Since you´ll be facing conflicting priorities and different requirements working with various
countries at the same time , it is required that you have faced and dealt with this type of
challenge in the past. Experience of social legislation is highly preferable.

Basic Qualifications
·  Fluency in English, any additional language is a plus (ideally French, German, Spanish,
Turkish, or Russian).
·  Strong communication skills, oral and written.
·  Strong SAP and MS Office skills, especially Excel.
·  Excellent analytical skills.
·  Organizational skills with the ability to prioritize according to business needs and urgency.
Leadership Behaviors

·  Drive Innovation
·  Collaborate with System, Customers and Key Stakeholders
·  Act Like an Owner
·  Inspire Other
·  Develop Self and Other

30
 Finance work

PepsiCo Co.
Consolidated Income Statement

US$ in millions
12 months ended: Dec 31, 2020 Dec 31, 2019
Net operating revenues 33,014 37,266
Cost of goods sold (13,433) (14,619)
Gross profit 19,581 22,647
Selling, general and administrative expenses (9,731) (12,103)
Other operating charges (853)
Operating income 8,997 10,086
Interest income 370
Interest expense (1,437)
Equity income, net 978
Other income (loss), net 841
Income from continuing operations before income taxes 9,749 10,786
Income taxes from continuing operations (1,981) (1,801)
Net income from continuing operations 7,768
Income (loss) from discontinued operations, net of income taxes —
Consolidated net income 7,768
Net income attributable to noncontrolling interests (21)
Net income attributable to shareowners of The PepsiCo Com-
pany 7,747

31
PepsiCo Co.
Consolidated Balance Sheet: Assets

US$ in millions
  Dec 31, 2020 Dec 31, 2019
Cash and cash equivalents 6,795
Short-term investments 1,771
Cash, cash equivalents and short-term investments 8,566
Marketable securities 2,348
Trade accounts receivable, less allowances 3,144
Inventories 3,266
Prepaid expenses and other assets 1,916
Assets held for sale —
Assets held for sale, discontinued operations —
Current assets 19,240 20,411
Equity method investments 19,273 19,025
Other investments 812
Other assets 6,184
Deferred income tax assets 2,460
Property, plant and equipment, net 10,777 10,838
Trademarks with indefinite lives 10,395
Goodwill 17,506 16,764
Other intangible assets 649
Intangible assets, including goodwill 28,550 26,766
Noncurrent assets 68,056 65,970
Total assets 87,296 86,381

PepsiCo Co.
Consolidated Cash Flow Statement

32
US$ in millions
12 months ended: Dec 31, 2020 Dec 31, 2019
Consolidated net income 7,768
(Income) loss from discontinued operations —
Net income from continuing operations 7,768
Depreciation and amortization 1,536
Stock-based compensation expense 126
Deferred income taxes (18)
Equity income, net of dividends (511)
Foreign currency adjustments (88)
Significant (gains) losses, net (914)
Other operating charges 556
Other items 699
(Increase) decrease in trade accounts receivable 882
(Increase) decrease in inventories 99
(Increase) decrease in prepaid expenses and other assets 78
Increase (decrease) in accounts payable and accrued expenses (860)
Increase (decrease) in accrued income taxes (16)
Increase (decrease) in other liabilities 507
Net change in operating assets and liabilities 690
Net cash provided by operating activities 9,844 10,471
Purchases of investments (13,583) (4,704)
Proceeds from disposals of investments 13,835
Acquisitions of businesses, equity method investments and non-
marketable securities (1,052) (5,542)
Proceeds from disposals of businesses, equity method invest-
ments and nonmarketable securities 189
Purchases of property, plant and equipment (1,177) (2,054)
Proceeds from disposals of property, plant and equipment 189
Other investing activities 122
Net cash (used in) provided by investing activities (1,477) (3,976)
Issuances of debt 26,934 23,009
Payments of debt (28,796) (24,850)
Issuances of stock 647
Purchases of stock for treasury (118) (1,103)
Dividends (7,047) (6,845)
Other financing activities 310
Net cash used in financing activities (8,070) (9,004)
Net cash provided by operating activities from discontinued oper-
ations —
Net cash used in investing activities from discontinued operations —
Net cash provided by (used in) financing activities from discon-
tinued operations —

33
 Net cash provided by discontinued operations —
Effect of exchange rate changes on cash, cash equivalents, re-
stricted cash and restricted cash equivalents 76
Net increase (decrease) in cash, cash equivalents, restricted
cash and restricted cash equivalents during the year 373 (2,581)
Cash, cash equivalents, restricted cash and restricted cash equiva-
lents at beginning of year 6,737
Cash, cash equivalents, restricted cash and restricted cash
equivalents at end of year 7,110

PepsiCo Co.
Short-term (Operating) Activity Ratios

  Dec 31, 2020 Dec 31, 2019

Turnover Ratios
Inventory turnover 4.11
Receivables turnover 10.50
Payables turnover 3.82
Working capital turnover 7.12

Average No. Days

Average inventory processing period 89
Add: Average receivable collection period 35
Operating cycle 124
Less: Average payables payment period 96
Cash conversion cycle 28

34
 SWOT Analysis

This Analysis of PepsiCo will elaborate on the internal and external analysis of PepsiCo.

PepsiCo STRENGTHS

Strengths of PepsiCo tells that what is brand is good at based on its strategies, market share,
resources etc. These indicate the internal factors of a brand.

Brand Value: PepsiCo has a strong brand positioning and a vast portion of market share. It has a
profit margin of approximately 6-8 million dollars every year. Because of its worldwide
recognition and brand equity, this brand is one of the leading companies like Google, Microsoft,
and Facebook etc. around the world. From its logo to packaging, everything has a distinct
identity. Its branding and marketing have made its logo and name recognizable to people from
children to elders.

Loyal Customer Base: This brand has a huge loyal and stable consumer base around the world
on the beverage industry. Many beverage brands have come and go, but there wasn’t a bit
alteration of PepsiCo’s consumer base; instead, it’s increasing day by day. People of every age
groom generation to generation are fond of PepsiCo’s drinks.

Global Presence: This brand, with its large and sophisticated distribution channel, operating
itself among 200 countries worldwide. It’s serving approximately 1.9 billion people every day
through the world. It has made itself always available on every market with its extensive supply
chain management network. Every corner of the world, either privileged or underprivileged, is
having the taste of PepsiCo.

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Branding & Promotion: The marketing campaigns of this brand is always unique and fresh
than any other brands. Its promotions are considered as the world’s best ones! People consider
PepsiCo as a storyteller with which they feel connected. With each promotional act, this bra:nd
reaches a milestone of popularity.

Large Product Portfolio: The broad product portfolio is one of its biggest strength. It has more
than 500 product lines includes mineral water, energy drinks, soft drinks etc. It is also constantly
working on new product development for different target market globally. And each of them is
equally popular among people of every age.

PepsiCo WEAKNESSES

The weaknesses of PepsiCo indicates the lacking it has inside the company, which is hindering
its growth in the market.

Water Management: The production of this brand uses a tremendous amount of water without
any proper management, which has led to mass criticism and legal consequences. People of
many countries have also protested against it that has led to some unfavorable promotion in the
market. Also, as water is a primary ingredient for PepsiCo, it had to face many difficulties in
production management and still facing it.

Health Issue: Nowadays, people are getting more health-conscious. As a result, they’re

criticizing high sugar carbonated beverages which is affecting PepsiCo a lot because its main
product lines are dependent on those ingredients. And it is fount that those used ingredients are
unhealthy and are one of the main reasons for causing obesity and diabetes. As a result, the sales
margin is being affected.

Lack of Product Diversification: Though this brand has an extensive product portfolio, it lacks
diversification. PepsiCo is more concentrated on drinks, where it’s competitions like Pepsi is
enjoying a massive reach by entering into snacks products. As a result, the competition is getting
higher PepsiCo is losing its market share.

PepsiCo OPPORTUNITIES

Opportunities are the scope for PepsiCo to spread its wings more and to get into a higher level. It
can grab those chances and overcome the obstacles.

New & Healthy Products: PepsiCo can enter into the snack industry with new and diversified
products to capture a new market, instead of focusing only on drink related products, and
increase its sales and profit margin. Also, it can start to produce healthier product lines with less
sugar and calorie ingredients so that people don’t get the chance to boycott its drink for health
reasons.

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Entering into Developing Countries: PepsiCo has a huge potential in developing countries
because of its growing standard of living and environment. Although it are already available
there but establishing production plants there will help to reduce the operating and promotional
cost and capture the market on a broader level.

Partnership & Acquisition: PepsiCo is already operating globally, but if it starts to do

partnership and acquisition with other companies, it’ll get more advantages and efficiency in
distribution, promotion and manufacturing. Such as, Starbucks and Nestle has built a partnership
which led to more popularity, quality improvement and increase sales.

Promoting Less Popular Products: PepsiCo has some product lines which didn’t get much
popularity initially and now is wholly ignored. But this brand can introduce those products in a
trendy way with new packaging and value propositions. Many brands are following this strategy
and getting successful. And it won’t be difficult for a brand like PepsiCo to retargeting its less
popular products.

PepsiCo THREATS

Threats are the factors which can affect PepsiCo in the future. These things are not visible yet but
can happen anytime soon, which can cause a crisis for a brand.

Higher Competition: Though PepsiCo is one of the leading companies in beverage industries,

the competition is getting higher and sometimes this brand it getting behind of others. Pepsi is
getting string with its product diversification, the partnership of Nestle and Starbucks, etc. are
giving PepsiCo an alarming rise of competition that can cause it to lose its market share.

Government Regulations: Government regulations and taxation policies are getting highly

imposed on PepsiCo, both directly and indirectly. As this country is operating though more than
200 countries and each state differ in regulations, a sudden change can cause enormous harm to
this company. Recently the UK has imposed new tax rule on sugar, and many countries are
thinking to restrict water usage, and these are not a good sign for PepsiCo.

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 Conclusion
In this SWOT, we have found a good number of strengths that helped the company to
achieve great competitive advantages over its competitors. Besides, we have found
several weaknesses as well. These can be improved by utilizing their strengths to improve
its business.
While the number of challenges facing PepsiCo are abundant, this company does possess
a good deal of promise for the future. Its overall size, leverage, and financial resources
have it well positioned to take advantage of worthwhile acquisition targets. Too, the
company’s brand appeal and cult-like following insure that it will probably remain a top-
tier beverage provider going forward. PepsiCo’s vast distribution network should enable
better volumes ahead and success in burgeoning markets. All told, conservative investors
wanting a reliable source of income and a bit of capital gains exposure might want to give
The PepsiCo Company a glance. 

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 Recommendations
Some recommendations are explained as follows:

1. Stepping into the food market – PepsiCo needs to introduce new products in snacks and
food segments.
2. Focusing on health-related matters – It should bring some solution to address the rising
health concerns from social activists.
3. Improving its water management system and dealing with the criticisms from environ-
mental agencies.
4. Expanding into developing countries with humid temperatures – There are many products
of PepsiCo like Fuze Tea, Dasani and Hi-C which aren’t distributed in many developing
countries. PepsiCo needs to increase the distribution of such products.
5. Increasing the distribution of packaged drinking water like Kinley.
6. Working on sustainability and green marketing It can improve its brand image in the mar-
ket.

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