Pepsi Strategic and Competitive Analysis

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Pepsi (PEP) Symbol: PEP Exchange: NYSE Industry: Processed & Packaged Goods Sector: Consumer Goods Purchase Price: $43.12 Purchase Date: December 2002 52week High $78.09 52week Low $61.89 Initial Floor 2 $74.26 Trailing Floor 3 $77.87 Beta N/A Market Cap $123.11 billion Shares Outstanding 1.61 billion Dividend Yield 1.50% P/E Ratio 20.49 Competitor #1 Coca-Cola (KO) Competitor #2 Cadbury Schweppes (CSG) Type of Security: Large Cap Growth Predicted Shareholder Return 1 year: 14.1% Past 5 years: 34.53% Past 10 years: 128% Predicted Annual Return: 14.9% Strategic and Competitive Analysis The first point of analysis which should be examined when using Porter’s five forces is the competition within the industry. Pepsi has varying…show more content…
The company developed the S.M.A.R.T lifestyle program, involving five steps to a healthier living, and plans to build 12 Smart Spot playgrounds in inner city locations across the country. Pepsi’s broad strategy of meeting customer’s changing wants and desires will be successful. However, each specific new product or product development depends on Pepsi’s ability to identify, gauge, and properly assess changing environments. Pepsi appears to be going in the right direction by shifting their focus from carbonated to noncarbonated beverages as well as by focusing on healthier alternatives. Pepsi’s second main strategy is to grow and expand internationally. There is more room for growth internationally due to emerging foreign markets, including Asia and India. Pepsi has proven a success in the international arena and should continue to develop. International sales have greatly increased the value of Pepsi, as a decline in US currency brings higher exchange rates for international business. Pepsi’s focus on their international businesses has paid them well during a market correction, which has stemmed from massive deferrals on adjustable-rate mortgages. Pepsi’s main competitor in the drink business is Coca Cola and in the snack market the major competitors are Proctor and Gamble and General Mills. The nonalcoholic beverage industry is maturing but is deep in stiff competition. It has a history of price wars. Pricing,

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