Proposed Strategic Plan For Managing And Developing Pepsico


PepsiCo, Incorporated is a Fortune 500, American multinational corporation headquartered in Purchase, New York, with interests in manufacturing and marketing a wide variety of carbonated and non-carbonated beverages, as well as salty, sweet and cereal-based snacks, and other foods. Besides the Pepsi brands, the company owns the brands Quaker Oats, Gatorade, Frito-Lay, SoBe, Naked, Tropicana, Copella, Mountain Dew, Mirinda and 7 Up (outside the USA).

The various strategic plans for managing and developing the growth of PepsiCo are as follows:-

INTENSIVE GROWTH (Identifying the opportunities to achieve further growth within the current business) "Product -market expansion grid" is useful framework for detecting new intensive growth opportunities

Market penetration strategy(The company first considers whether it could gain more market share with its current products in the current markets): Headquartered in Purchase, New York, with Research and Development Headquarters in Valhalla, The Pepsi Cola Company began in 1898 by a NC Pharmacist and Industrialist Caleb Brad ham, but it only became known as PepsiCo when it merged with Frito Lay in 1965.Major products of both the companies were before they got merged were-

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Pepsi-Cola Company - Pepsi-Cola was formulated in 1898, Diet Pepsi (1964) and Mountain Dew (introduced by Tip Corporation in 1948).

Frito-Lay, Inc. - Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato chips (created by Herman W. Lay in 1938), Cheetos brand cheese flavored snacks (1948), Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961).

So, the Pepsi -cola and Frito-Lay both were amongst the renowned and best sellers till they got merged.

Market development strategy (next it considers whether it can find or develop new markets for its current products)-Pepsi-Cola was considered a takeover target not only because it ran a distant second in the soft drink sector to industry giant Coca-Cola Company, but also because little of the company's stock was in the hands of management. Following the creation of PepsiCo, however, the new company's directors held a much larger proportion of shares, with Lay holding a 2.5 percent stake himself. A second force behind the merger was Frito-Lay's desire to more aggressively pursue overseas markets. The company's sales had largely been restricted to the United States and Canada, but it could now take advantage of Pepsi's strong international operations, through which Pepsi products were sold in 108 countries.

Product development strategy

A third force was the perceived synergy between salty snacks and soft drinks. As Kendall succinctly related to Forbes in 1968, "Potato chips make you thirsty; Pepsi satisfies thirst." The plan was to jointly market PepsiCo's snacks and soft drinks, thereby giving Pepsi a potential advantage in its ongoing battle with Coke. Unfortunately, these plans were eventually scuttled by the resolution of a Federal Trade Commission antitrust suit brought against Frito-Lay in 1963. The FTC ruled in late 1968 that PepsiCo could not create tie-ins between Frito-Lay and Pepsi-Cola products in most of its advertising. PepsiCo was also barred from acquiring any snack or soft drink maker for a period of ten years.

integrative growth

INTEGRATIVE GROWTH (Identifying opportunities to build or acquire business that are related to current business) - Each company faces challenge of selection between different marketing strategies of growth. PepsiCo has a bunch of strategies called integrated growth strategies to:

'Expand the Global Leadership Position of Our Snacks Business'. PepsiCo is the global snacks leader, with the No. 1 savoury category share position in virtually every key region across the globe. They have advantaged positions across the entire value chain in more than 40 developed and developing regions in which they operate as they capitalize on local manufacturing and optimized go-to-market capabilities in each region, as well as the ability to introduce locally relevant products using global capabilities.

'Ensure Sustainable, Profitable Growth in Global Beverages'. When combined with the actions we are taking to refresh their brands across the entire beverage category, they believe this game-changing transaction will enable them to accelerate their top-line growth and also improve their profitability. They continue to see significant areas of global beverage growth, particularly in developing markets and in evolving categories. They will invest in those attractive opportunities, concentrating in geographies and categories in which they are the leader or a close second, or where the competitive game remains wide open

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'Unleash the Power of "Power of One"'. The combination of snacks and beverages-with our high-demand global and local brands-makes PepsiCo an essential partner for large-format as well as small-format retailers.

'Rapidly Expand Our "Good-for-You" Portfolio'. By investing to accelerate the growth of these platforms, and they use the knowledge from these initiatives to improve their core snack and beverage offerings and also to develop highly nutritious products for undernourished people across the world.

'Continue to Deliver on Our Environmental Sustainability Goals and Commitments'. They actively work with their farmers to promote sustainable agriculture and developing new packaging alternatives in both snacks and beverages to reduce the impact on the environment.

'Cherish Our Associates and Develop the Leadership to Sustain Our Growth'. By implementing tailored training programs to provide the managers and senior executives with the strategic and leadership capabilities required in a rapidly changing environment.

diversification growth

DIVERSIFICATION GROWTH (identifying opportunities to add attractive business unrelated to current business) - US based PepsiCo conducted a major restructuring exercise in 1997-98 by spinning-off its restaurant and bottling business. The restructuring was aimed at achieving improved focus on the company's core beverage (Pepsi-Cola) and snack food operations (Frito-Lay). By successfully adopting the 'focus' strategy since 1997, PepsiCo has emerged as the second largest consumer packaged goods company (in terms of revenues) in the world. By acquiring leading beverages' company like Tropicana products (July 1998), South Beach Beverage Company (October 2000) and Quaker Oats (December 2000), the company has significantly strengthened its competitive position in the beverages segment.