Analysis Of The Pepsi International Strategy

Analysis Of The Pepsi International StrategyPespiCo is facing price salary increase set off in Saudi-Arabian-Arabian Arabia it is hurting its go on expansion in demulcent imbibe attention. PepsiCo requested ministry of economy of UAE to approve a price hike for their products in the country. But ministry said authorities will send it to the high committee of consumer protection association for approval.Reasons For Expanding To Foreign MarketsCoca-Cola, the major competitor of Pepsi has been exiled from the waste kingdom. Beca wont of this, Pepsi expanded into Arab Countries has an 80% shargon of the $1 billion Saudi yielding-drink market. Saudi Arabia is the third largest unknown market of Pepsi, after Mexico and Canada. In 1993, about 7% of Pepsi-Cola Internationals sales came from Saudi Arabia. The environment in Saudi Arabia makes the country truly favorable to soft-drink sales because alcohol is banned climate is very anxious and dry.Mode of ExpansionPepsi uses fra nchise system for international expansion.Sources of Competitive favourPepsiCo has competitive advantage in terms of universal distribution the golf club is able to produce all its products in the country where they are consumed. Pepsi has a competitive advantage all over Coke because of its brand image grave word of mouth. Pepsi promotes itself as the number one choice of the Next Generation.Government PoliciesCurrently a 50 percent rise in Pepsi prices in Saudi has angered customers and provoked the kingdoms government to call on more(prenominal) than 30 soft drink companies to hold off on further price hikes. Pepsi increased the price of a idler to 1.50 riyals $0.40 from 1 riyal.it. Saudi Consumer Protection Association investigated the sudden unjustified price hike, the Saudi publish reported that official permission should be granted to soft drink firms before they are al depleteded to increase prices and price rise should non be more than 10 percent.PEST AnalysisPol itical InfluencesMany PepsiCo products are subject to different federal laws due to their manufacturing, distribution use, such as the Food, Drug and Cosmetic Act, the Occupational Safety and Health Act ad the Americans with Disabilities. The international ventures are subject to the Government stability and businesses are subjected to different taxation policies in each consumer country.Economic InfluencesPepsiCo relies on trucks to move products so fuel is an important subject fuel prices matters. The economic impact of strange exchange rates movements on them is complex because such changes are ofttimes linked to variability in real growth, inflation, interest rates, governmental actions, etc. PepsiCo is also subjected to other economical factors like money supply, energy availability, live and business cycles.Socio-Cultural InfluencesPepsi is subject to the lifestyle changes, so it bases her advertising campaigns in hatful with special lifestyle. For that PepsiCo has to dedicate special attention on lifestyle changes. It has to be very careful with the possible occupations with the governments and those which could rise from PepsiCo act with the people of KSA. proficient InfluencesPepsiCo is exposed to newfangled manufacturing techniques, for its three business units, snack food, juices and soft drinks. It has to pay attention while adopting flexible advanced distribution techniques.PORTER 5 FORCES Analysis1. Threat of New Entrants The threat of new entrants in the industry is small so far substantial. This is because there are already four players in the market other then Pepsi itself.2. Threat of Substitute ProductsCurrently, the threat of new viable competitors in the carbonated soft drink industry is not very substantial. Possible substitutes that continuously put pressure on Pepsi squeeze tea, coffee, juices, milk, and hot cho dummyte.3. Bargaining reason of SuppliersThe bargaining occasion of the suppliers tends to be low according to the recent analysis. PepsiCo needs to manage its relationships carefully with the bottling units in order to make changes in its way to market the local anesthetic retailers.4. Bargaining Power of BuyersHere the concern is how to increase market share and retain its flowing customer because customer always try to optimize benefit. The buying power of consumers also poses a key threat in the industry. Moreover consumers can simply switch to other beverages with little cost or importance.5. disceptation Among CompetitorsPepsi has 48.9% share of market it is situated in an environment that is ever ever-changing and dynamic because coca cola is holding 30.9% share Cadbury Schweppes 8%. The local brands are also in the market to compete Pepsi. These brands are Mecca cola holding 0.5% market share and 0.6% Zamzam cola.SWOT Analysis1.Internal Attributes(Strengths Weaknesses)Pepsi has strong worldwide distribution system. But it is poorer in its fountain drink division. The ownership i n fast food restaurants has always been challenging for Pepsi. The Coca Cola has been in the top position for fountain beverages because of their ownership in famous fast-food restaurants.2. out-of-door Attributes(Opportunities Threats)External influences that are affect externalizening include the actions of competitors, and a series of social, legal, economic, and scientific factors. An effective plan therefore needs to be designed to take account of the external environment threats. In addition to its large consumer base, Saudi Arabia has some of the regions biggest athletic clubs, most passionate sports fans, and has a development people of athletes and active people. When PepsiCo started its own Pepsi Bottling Company, it allowed them to cut costs, reduce overhead, and coordinate their distribution to score a better synergy.Critical Issues or BarriersPepsi can serve the 90% market but problem is the bottling of the drink.War crisis between Palestine and Israel is delivera nce hate against Pepsi that why USA is not interest in resolution the issueAs Pepsi is US product and these days US and foreign products are campaigned not to be used to show rage against non-Muslim acts. payable to recent oil prices increase, there is international factor of inflation and on the other hand Pepsi is cheaper in KSA compared to other countries, so Pepsi is facing problem to maintain the profits.Since employers in KSA are required to give their employees time to pray toward Mecca five times per day, as set forth in the Koran, chemise times caused additional operating cost.Health and stomach diseases due to over use.Obesity problem which is becoming common in Saudis.Rumors of Haram ingredients.The tough ambition is carried out through packaging as well as price.RecommendationsPepsi is universe forced to re-examine their strategic models, based on carbonated soft drinks and move to new beverage categories. Heavy investmentment in risky innovations whitethorn be sugg ested in order to transfer resources from other brands. Pepsi spends 15% of overall budget on advertising and marketing to be no.1 in the consumer sight. Pepsi should use all media vehicles to attract consumers.ConclusionConsumers want to buy soft drinks delivered at convenient locations with the right package. Pepsi have to make sure that the market keeps growing annually, and that company products are available everywhere. Pepsi has won the International Quality confront and Bottlers of the year Award, so the company feels quite optimistic. Although difficult challenges lay ahead, yet to exploit opportunities through the implementation of an effective and comprehensive marketing plan 2009.Appendix