The Issues Of PepsiCo International Strategy

The Issues Of PepsiCo International StrategyCoca-Cola, the major competitor of Pepsi has been exiled from the abdicate kingdom. Because of this, Pepsi expanded into Arab Countries has an 80% sh be of the $1 billion Saudi-Arabian round the bend- sop up market place. Saudi Arabia is the third spaciousst abroad 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 in truth favorable to soft-drink sales because alcohol is banned climate is very burning and dry.Mode of ExpansionPepsi uses franchise system for international expansion.Sources of Competitive benefitPepsiCo has competitive advantage in terms of worldwide dispersion the community is able to produce all its products in the country where they are consumed. Pepsi has a competitive advantage over Coke because of its brand image frank word of mouth. Pepsi promotes itself as the number one choice of the N ext Generation. organization PoliciesCurrently a 50 percent rise in Pepsi prices in Saudi has angered customers and provoked the kingdoms government to call on more than 30 soft drink companies to hold off on raise price hikes. Pepsi increased the price of a bay window to 1.50 riyals $0.40 from 1 riyal.it. Saudi Consumer Protection Association investigated the sudden unjustified price hike, the Saudi gazette reported that official permission should be granted to soft drink firms before they are aldepressioned to increase prices and price rise should not be more than 10 percent.PEST AnalysisPolitical InfluencesMany PepsiCo products are subject to assorted federal laws collect 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 count ry.Economic InfluencesPepsiCo relies on trucks to move products so fuel is an important subject fuel prices matters. The economic impact of foreign exchange rates movements on them is complex because such changes are practically linked to variability in real growth, flash, interest rates, governmental actions, and so forth PepsiCo is also subjected to other economical factors like money supply, energy availability, salute and business cycles.Socio-Cultural InfluencesPepsi is subject to the lifestyle changes, so it bases her advertising campaigns in plenty with special lifestyle. For that PepsiCo has to catch up with special attention on lifestyle changes. It has to be very careful with the possible problems with the governments and those which could rise from PepsiCo act with the people of KSA. scientific InfluencesPepsiCo is exposed to raw(a) manufacturing techniques, for its three business units, snack food, juices and soft drinks. It has to pay attention while adopting fle xible advanced distribution techniques.PORTER 5 FORCES Analysis1. Threat of New Entrants The threat of new entrants in the patience is small yet substantial. This is because there are already four p directers in the market other then Pepsi itself.2. Threat of Substitute ProductsCurrently, the threat of new viable competitors in the carbonate soft drink industry is not very substantial. Possible substitutes that continuously put pressure on Pepsi hold tea, coffee, juices, milk, and hot cho poopte.3. Bargaining force-out of SuppliersThe bargaining situation of the suppliers tends to be low according to the recent analysis. PepsiCo needs to manage its relationships carefully with the bottling units in stray to make changes in its way to market the local retailers.4. Bargaining Power of BuyersHere the concern is how to increase market share and retain its true customer because customer unceasingly try to optimize benefit. The buying power of consumers also poses a key threat in the industry. Moreover consumers can simply switch to other beve peevishnesss with little cost or importance.5. competition 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 is inferior in its fountain drink division. The self-control in fast food restaurants has always been problematic for pepsi. Coca Cola has been in the top locations for fountain beverages because of their ownership in Taco Bell, Pizza Hut, KFC, and many others.2.External Attributes(Opportunities 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 maturement population of athletes and act ive people. When PepsiCo started its own Pepsi Bottling Company, it allowed them to cut costs, reduce overhead, and coordinate their distribution to create a better synergy.Critical Issues or BarriersPepsi can suffice the 90% market but problem is the bottling of the drink.War crisis between heaven and Israel is bringing hate against Pepsi that why USA is not interest in resolving 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.Due 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 set about problem to maintain the profits.Since employers in KSA are required to give their employees clip to pray toward Mecca five times per day, as set forth in the Koran, break 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 knobbed competition is carried out through packaging as well as price.RecommendationsPepsi is being forced to re-examine their strategic models, based on carbonated soft drinks and move to new beverage categories. Heavy investmentment in unsound innovations may be suggested in order to transfer resources from other brands. Pepsi spends 15% of overall budget on advertising and merchandise 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 feature Award 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 marke ting plan 2009.Appendix