PepsiCo Inc’s is a renowned multinational American corporation, which operates in, beverage and food processing industry. It’s headquarter is located in, New York, United States of America. Corporation distributes its products in two hundred countries around the globe. PepsiCo has its own distribution network and bottling manufacturing units. Its main products are, breakfast bars, energy drinks, coffee drinks, snacks, soft drinks and sports nutrition. The corporation, formerly owned many giant Brands which are as follow; taco bell, KFC, Pizza hut, (which are currently under the Brand dominion of Yum Brands) Pizza Kitchen, North American Van Lines, Chevys Fresh Mex and Wilson sporting Goods. PepsiCo is famously known for its strategy of horizontal integration, in 2001, it merged Tropicana; an orange juice company with Quaker oat. Quaker oat is still owned by PepsiCo, nevertheless, mostly breakfast bars and cereals, are sold, under the umbrella of mentioned subsidiary, following are some products which are manufactured under the trademark of Quaker oat; Quaker Chewy Granola Bars, Quaker Dipps Granola Bars, Quaker Old Fashioned Oats, Quaker Yogurt Granola Bars, Quaker Oatmeal to Go Bar, Quaker Essentials, Quaker Instant Oatmeal, Quaker Shredded Wheat Cereal and many more. However, despite the enormous product line and range, corporation core business focus is on Beverages. In 2009 Pepsi (soft drink) was the highest selling product of corporation.
Conglomerate like, PepsiCo is not easy to manage. It has many segments each compete in different industry therefore, each segment requires a special attention from the top level management regarding strategic planning. From time to time, corporation one segment has high market share another has low market share, in the operating industry. That’s the scenario where top level management role initiates, to formulate strategy for each segment nonetheless, suppose if the top level management formulate same strategy for all the segments; what will happen? The answer is obvious that, it will not work, because each segment requires a distinct strategic plan, keeping in view the market share of each segment in the operating industry. For the above mentioned dilemma, there are many tool available, for top level management to suggest, formulation of distinct strategies for multiple segments, operating under the singular conglomerate in multiple industries. One of the tool is BCG Matrix.
BCG matrix was specially designed for corporations, which operates in diverse industries. This framework was designed by a private consulting agency located in Boston, namely, Boston consulting group. This is a four dimensional framework which depict the multiple segments position, with regard to its relative market share and industry sale growth rate. BCG matrix has four component namely, Dogs, Cash Cows, Stars and Question mark. PepsiCo has 6 division, each segment operate in distinct industry or geographical region. Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), North America Beverages (NAB), Latin America, Europe Sub-Saharan Africa (ESSA), Asia, Middle East and North Africa (AMENA) are the segments of PepsiCo at present. Following is the detailed BCG Matrix analysis of PepsiCo.
Question Mark
According to BCG matrix; Question mark are those segments which, operate in high sales growth industry and have low relative market share. Quaker Foods North America (QFNA) segment of PepsiCo comes in to the category of Question mark. This segment particularly manufacture, distribute, and sells breakfast bars and cereal. QFNA share of revenue was reported 3.56 % of total revenue and market share was also low around 1.02 %. PepsiCo should focus on horizontal integration to increase QFNA market share and bring the segment into the fold of stars.
Stars
Those segments fall into the category of stars, which operates and compete in high sales growth industry and have high relative market share. Fortunately, PepsiCo has many star segments, which make sense because it is one of the world largest beverage and food processing corporation. North America Beverages (NAB), Latin America food and Europe Sub-Saharan Africa (ESSA) are the stars segments of PepsiCo. NAB segment products are soft drinks and bottled water under different brands name following are some eminent brand names; Aquafina, Pepsi, Mountain dew and Sierra mist. In 2015 NAB generated 33% of corporation total revenue which was, 20.6 billion and its market share was 10%. Market development and product development strategy is suggested for such segments.
Cash Cows
Cash cows are considered to be those segments which are operating in low industry sales growth rate and have high market share. Frito-Lay North America (FLNA) can be included into cash cows category. Segments has witnessed growth in the revenue compare to previous years despite the decline of industry sales growth rate. 22% of revenue was generated by FLNA of total revenue. This segment deals in snacks, some of the prominent products are as follow; Tostitos tortilla chips, branded dips, Lay’s potato chips, Doritos tortilla chips, Cheetos , Ruffles potato, Tostitos tortilla chips, Fritos corn chips, Ruffles potato chips and Santitas tortilla chips. FLNA can be considered as the backbone of company because such segment can, keep on generating good revenue for company for long-term.
Dogs
Dogs are considered to be the futile segments of company. Those segments embrace the category which have low relative market share in low sales growth industry. Fortunately, PepsiCo’s, none of the segment can be included into this category.
References
PepsiCo 2015 annual report. Retrieved from.
https://www.pepsico.com/docs/album/annual-reports/pepsico-2015-annual-report_final_s57dqszgmy22ggn.pdf?sfvrsn=0
PEP’s Competition by Segment and its Market Share. Retrieved from.
http://csimarket.com/stocks/competitionSEG2.php?code=PEP
Pepsico Inc’s Business Segments Description. Retrieved from.
http://csimarket.com/stocks/segments.php?code=PEP
Pepsi says three drinks now billion-dollar brands
Diet Mountain Dew, Brisk tea and Starbucks bottled beverages each generate at least $1 billion in annual sales. Retrieved from.
http://articles.chicagotribune.com/2012-01-26/news/chi-pepsi-says-three-drinks-now-billiondollar-brands-20120126_1_starbucks-products-pepsi-max-diet-pepsi
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