PEST analysis of pepsi.Co

PEPSI.CO PEST ANALYSIS:

PepsiCo, Inc. is an American multinational food, snack and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase. PepsiCo has interests in the manufacturing, marketing, and distribution of grain-based snack foods, beverages, and other products. PepsiCo was formed in 1965 with the merger of the Pepsi-Cola Company and Frito-Lay, Inc. PepsiCo has since expanded from its namesake product Pepsi to a broader range of food and beverage brands, the largest of which included an acquisition of Tropicana Products in 1998 and the Quaker Oats Company in 2001, which added the Gatorade brand to its portfolio.

1.Political.

2.Ecocnomics.

3.Social.

4.Technological:

Ø     POLITICAL FACTORS:-

Pepsi.co is a multinational company that operates in more than 200 countries. Due to their worldwide production, different political factors affect their operations.

Since people have started focusing more on their health, a lot of countries have started imposing soda tax on such sugary-carbonated drinks to reduce the supply in their country. Pepsi has also gained excess to new countries and cities and has got a lot of new opportunities in different politically stable countries. Improved intergovernmental cooperation has also enabled PepsiCo to increase its supply. Countries have cooperated with PepsiCo since it provides job opportunities to the country's local people. A stable government together with a developed (or even developing) economy can help PepsiCo climb the profits charts to success. At the same time, however, the FMCG giant must be mindful of the latest health regulations that are imposed on it, together with compliance issues. Pepsico, Inc. can closely analyze the following factors before entering or investing in a certain market- 

·         Political stability and importance of Beverages.

·         Level of corruption - especially levels of regulation in Consumer Goods sector. 

·         Bureaucracy and interference in Beverages - Soft Drinks industry by government. 

·         Legal framework for contract enforcement

·         Trade regulations & tariffs related to Consumer Goods

·         Favored trading partners

·         Anti-trust laws related to Beverages.

·         Pricing regulations – Are there any pricing regulatory mechanism for Consumer Goods

·         Taxation.

·         Wage legislation - minimum wage and overtime

 

 

 

Ø     ECONOMICAL FACTORS:-

The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign exchange rate

Consumer spending etc. to forecast the growth trajectory of not only –sector name—sector but also that of the organization. Economic factors that PepsiCo, Inc. Should consider while conducting PESTEL analysis are –

·    Political stability in major economies (opportunity)

·    Improved intergovernmental cooperation (opportunity)

·    Government initiatives against carbonated drinks (threat)

·    Government intervention in the free market and related Consumer Goods

·    Economic growth rate

·    Discretionary income

·    Unemployment rate

·    Inflation rate

·    Interest rates

 

On the other hand, economic crises, such as the ongoing trade wars between the US and China, are bound to have a negative impact on the revenue of PepsiCo. With changes in international exchange rates and swaying economic conditions, the fate of PepsiCo depends largely on economic stability across the globe.

 

Therefore, it can be concluded that economic trends are indeed significant determinants of general economic and business performance.

 

Ø    SOCIAL FACTORS:-

With the social factor, a business can analyze the socioeconomic environment of the given industry's market to understand how consumer needs .Among the items that should be examined are demographics, population growth rates, age distribution, attitudes toward work and job market trends.

 

Recently the world has seen a cultural shift from the fast-food loving crowds to a population that is more health-conscious than ever not only just older people but also middle age people and young ones too. As more and more people shift from carbonated drinks to flavored water and other alternatives, In Pepsi drinks there are so many calories and so many sugar which cause a bad effect on a persons health. PepsiCo has seen a fall in their fortunes recently.

·         Demographics : pepsi is economy so majority can afford it.

·         Class structure and power structure in the society.

·         Age distribution : It mostly targets the youth , as they have strong immune too.

·         Culture (gender roles, social conventions etc.) : Pepsi include itself in our culture no event is complete without it.

·         Attitudes (health, environmental  etc.): pepsi is not healthy but they are moving towards health and start producing healthy drinks that also targets the older ones and health of people Is being considered.

·         Leisure interests.

 

 

Ø     TECHNOLOGICAL FACTORS:-

Technology is fast disrupting various industries across the board. Technological factors affect business concerning technological investment, technological application and the effect of technology on markets.  Therefore, any technological advancement affects highly the business in a country. Technology analysis involves understanding the following impacts -

~Recent technological developments by PepsiCo, Inc. competitors

~Technology's impact on product offering

~Impact on cost structure in Beverages - Soft Drinks industry

~Impact on value chain structure in Consumer Goods sector

~Rate of technological diffusion.

 

As a company, PepsiCo is well placed to take advantage of the latest technological disruption. Using big data analytics and machine learning capabilities, PepsiCo can streamline their R&D processes and launch more targeted, focused marketing campaign across the entire gamut of digital media.

Automation technologies can also help the company increase the efficiency of their production and logistics processes. Advancements in artificial intelligence can help the company optimize their supply chain and build a better infrastructure for catering to its patrons.

 

CONCLUSION:-

In conclusion it can be said that while PepsiCo does face threats from political instability and economic downturns, an improved, health-oriented product line and sustainable business practices can help the global giant maintain its top position in the market and even expand into newer territories

A blog by : Deepa Khatri