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Financial Analysis 4
Financial Analysis 4
This analysis is only limited on analyzing the liability and Equity section of the Far Eastern
University Inc. It does not include the asset section and it does not reflect the whole
performance of the company.
INTRODUCTION
I. Overview of PepsiCo Inc.
PepsiCo Inc., is an American multinational food, snack and beveregas
corporation headquartered in Purchase, New York. PepsiCo has interest in
manufacturing, marketing and distribution of grain-based food snacks, beverages, and
other products. Tge Company was formed in 1965 with tge merger of Pepsi-Cola
Company and Frito-Lay Inc. PepsiCo has since expanded from its namesake product
Pepsi to a broader food and beverage brand, the largestvof which is the acquisition of
Tropicana Products in 1998 and Quaker Oats Company in 2001, which added the
Gatorade brand to its portfolio.
As of January 26, 2012, 22 of PepsiCo's brand generated a retail sales of
more than $1 billion apiece, and the company's product is distributed across more than
200 countries, resulting in annual net revenue of $43.3 billion. Base on the net revenue,
PepsiCo is the second largest food and beverage business in the world. Within North
America it is the largest food and beverage business by net revenue. Indra Krishnamuthy
Nooyi has been cheif executive of PepsiCo since 2006. The company's beverag
distribution and bottling is conducted by PepsiCo as well as by licensed bottler in certain
regions. Approximately 274,000 employees generated, $66.145 billion in revenue as of
2013.
Pepsi-Cola Products Philippines, Inc. engages in manufacturing, sale, amd
distribution of carbonated soft-drinks(CSD) and noncarbonated beverages (NCB) in the
Philippines. The Company offers carbonated soft-drinks under Pepsi-Cola , 7Up,
Mountain Dew and Mirinda brand names; noncarbonated beverages under Gtorade,
Tropicana/ Twister, and Lipton brands; Sting energy drink and Propel fitness water.
Pepsi-Cola Proxucts Philippines offer its product through retail outlets, including direct
sales, distributors and wholesalers; small retailers ( sari-sari stores and carinderias) ,
supermakets, restaurants, and convenience store chains.
Pepsi-Cola Products Philippines, Inc. (the "Company") was registered
within the Philippine Securities and Exchange Commission (SEC) on March 8, 1989 with
a corporate life of 50 years, primarily to engage in manufacturing, sale and distribution of
CSD, NCB and confectionery products to retail, wholesaler, restaurants and bar trades.
The registered and principal place of business of the Company is at Km. 29, National
Road, Tunasan, Muntinlupa City.
The Company is listed in the Philippine Stock Exchange (PSE) and included
in the PSE composite index since February 1, 2008. Lotte Chilsung Beverage Co., Ltd.,
with a 38.88% stake in the Company, is te largest shareholder of the Company. Quaker
Oats Global Investments B. V. is a major shareholder with 25.00% stake. Lotte Chilsung
Beverage Co., Ltd., was organized and exosting under the laws of South Korea. Quaker
Oats Global Investments B.V. was organized and existing under the laws of Netherlands.
Values:
Passion, Excellence, Professionalism, Service , and Integrity.
A. Principal Products
The Company is a licensed bottler of PepsiCo, Inc. (PepsiCo) and Pepsi Lipton
Internationational Limited (Pepsi Lipton) in the Philippines. It manufactures a range of
carbonated soft drink (CSD), noncarbonated beverages (NCB) that includes well known
brands; Pepsi-Cola, 7Up, Mountain Dew, Mirinda, Mug, Tropicana/Twister, Lipton,
Sting, and Propel.
b. Foreign sales
Foreign sales represent 0.02%, 0,02% and 0.08% of total net sales for the calendar
years ended December 31, 2013, 2012, and 2011, respectively.
The Company’s sales volumes depend on the reach of its distribution network. It
increases the reach of distribution system by adding routes and increasing penetration by
adding outlets on existing routes that currently do not stock its products. It relies on a
number of channels to reach retail outlets, including direct sales, distributors and
wholesalers.
The Company also employs its own sales force, which principally sells to what
is referred to as the “modern trade” channel, consisting largely of supermarkets,
restaurants and convenience store chains. Most of these sales are credit sales. In addition,
it sells products to third party wholesalers and distributors, which sell them to retail
outlets.
The Company has no publicly-announced new products that are in the planning or
prototype stage.
e. Competition
Competitors in the CSD market are The Coca-Cola Company and Asiawide
Refreshments Corporation. The substantial investment in multiple plants, distribution
infrastructure and systems and the float of RGBs and plastic shells required to operate a
nationwide beverage business using RGBs represent a significant barrier to potential
competitors in widening their reach.
The market for NCB (including energy drinks) is more fragmented. Major
competitors in this market are Del Monte Pacific Limited, Universal Robina Corporation,
Zesto Corporation, The Coca-Cola Company, and Asia Brewery Incorporated, among
others. In recent years, the market has been relatively fluid, with frequent product
launches and shifting consumer preferences. These trends are expected to continue.
Over half of total costs comprise purchases of raw materials. Largest purchases
are sugar and beverage concentrates. The Company purchases sugar requirements
domestically because of import restrictions imposed by the Philippine government. It
purchases beverage concentrates from PepsiCo and Pepsi Lipton thru Pepsi Cola Far East
Trade Development Co., Inc. (PCFET) at prices that are fixed as a percentage of the
wholesale prices charged for the finished products, subject to a price floor in U.S. dollars.
Another substantial cost is packaging. The major components of this expense are
purchases of PET pre-forms, which are converted into PET bottles at the plants, non-
reusable glass bottles, aluminum cans and closures. It also makes regular purchases of
RGBs to maintain float at appropriate levels. Purchases of each of these materials are
from suppliers based in the Philippines and in other parts of Asia, usually under short
term, fixed price contracts
G. Customers
The Company has a broad customer base nationwide. Its customers include
supermarkets, convenience stores, bars, sari-sari stores and carinderias
The Company does not own any intellectual property that is material to the
business. Under the Exclusive Bottling Agreements, the Company is authorized to use
brands and the associated trademarks owned by PepsiCo and, in the case of the Lipton
brand and trademarks, Unilever N.V. Trademark licenses are registered with the
Philippine Intellectual Property Office. Certificates of Registration filed after January
1998 are effective for a period of 10 years from the registration date unless sooner
cancelled, while those filed before January 1998 are effective for 20 years from the
registration date. The table below summarizes most of the current Certificates of
Registration.
The Company produces its products under licenses from PepsiCo and Pepsi
Lipton and depends upon them to provide concentrates and access to new products. Thus,
if the Exclusive Bottling Agreements are suspended, terminated or not renewed for any
reason, it would have a material adverse effect on the business and financial results.
Refer to Note 23 to the December 31, 2013 Audited Financial Statements for details of
transactions with PepsiCo and Pepsi Lipton.
While the foregoing agencies actively monitor the Company’s compliance with
environmental regulations as well as investigate complaints brought by the public, it is
required to police its own compliance and prevent any incident that could expose the
Company to fines, civil or even criminal sanctions, considerable capital and other costs
and expense for refurbishing or upgrading environmental compliance system and
resources, third party liability such as clean-ups, injury to communities and individuals,
including, loss of life.
The research and development costs amounted to P nil, P54,060, and P189,553 for
the calendar years ended December 31, 2018, 2017, and 2016 respectively.
Compliance with all applicable environmental laws and regulations, such as the
Environmental Impact Statement System, the Pollution Control Law, the Laguna Lake
Development Authority Act of 1966, the Clean Air Act, Toxic and Hazardous and
Nuclear Waste Act and the Solid Waste Management Act has not had, and in the
Company’s opinion, is not expected to have a material effect on the capital expenditures,
earnings or competitive position. Annually, it invests about P30 million in wastewater
treatment and air pollution abatement, respectively, in its facilities
n. Employees
All of the regular and permanent production employees at the bottling plants and
sales offices are represented by a union. The Company is a party to 13 collective
bargaining agreements, with separate agreements for the sales and the non-sales forces in
some business units. The collective bargaining agreements contain economic and non-
economic provisions (such as salary increase and performance incentive, sale
commission, laundry allowance, per diem, bereavement assistance, union leave, calamity
loan, and assistance to employees’ cooperative), which generally have a contract period
of three years and remain binding on the successors-in-interest of the parties, while the
representation aspect is valid for five years.
The Company believes that the relationship with both unionized and non-unionized
employees is healthy. It has not experienced any work stoppages due to industrial
disputes since 1999.
o. Major Risks
Sales and profitability are affected by the overall performance of the Philippine
economy, the natural seasonality of sales, the competitive environment of the beverage
market in the Philippines, as well as changes in cost structures, among other factors.
Sales volume are also affected by the weather, generally being higher in the hot,
dry months from March through June and lower during the wetter monsoon months of
July through October. In addition, the Philippines is exposed to risk of typhoons during
the monsoon period. Typhoons usually result in substantially reduced sales in the affected
area, and have, in the past, interrupted production at the plants in affected areas. While
these factors lead to a natural seasonality in sales, unseasonable weather could also
significantly affect sales and profitability compared to previous comparable periods.
Sales during the Christmas/New Year holiday period in late December tend to be higher
as well.
The CSD and NCB markets are both highly competitive. The actions of
competitors as well as the Company’s own continuous efforts on pricing, marketing,
promotions, and new product development affect sales. Some of the smaller competitors
have lower cost bases than the Corporation and price their products lower than the
Company’s prices. Thus, in addition to the cost of producing and distributing our
beverages, sales prices are greatly affected by the availability and price of competing
brands in the market.
All of the Company’s sales are denominated in Philippine pesos. However, some
of the significant costs, such as purchases of packaging materials, are denominated in
United States dollars. Some of the other costs, which are incurred in Philippine pesos, can
also be affected by fluctuations in the exchange rate between the Philippine peso and
United States dollars, Euro and Malaysian Ringgit. In respect of monetary assets and
liabilities held in currencies other than the Philippine peso, the Company ensures that its
exposure is kept to an acceptable level, by buying foreign currencies at spot rates where
necessary to address short-term imbalances. The Company considered the exposure to
foreign currency risk to be insignificant.
The business requires a significant supply of raw materials, water and energy. The
cost and supply of these materials could be adversely affected by changes in the world
market prices or sources of sugar, crude oil, aluminum, tin, PET resins, other raw
materials, transportation, water, and energy, and government regulation, among others.
Although direct purchases of fuel are relatively small as a proportion of total costs, the
Company is exposed to fluctuations in the price of oil through the dependence on freight
and delivery services. Changes in materials prices generally affect the competitors as
well.
Margins differ between beverage products and package types and sizes. Excluding
packaging, production costs are similar across the range of carbonated beverages, but
vary with non-carbonated beverages. Packaging costs vary, with RGBs being less
expensive than PET, aluminum cans or non- returnable glass. The incremental cost of
producing larger-sized serves in the same package type is proportionately lower than the
increased volume, creating opportunities to achieve higher margins where customers
perceive value in terms of volume.
As a result of the factors discussed above, the margins the Company earns on the
products can be substantially different, and the margins can change in both absolute and
relative terms from period to period. While the Company attempts to adjust its product
and package mix to maximize profitability, changes in consumer demand and the
competitive landscape can have a significant impact on mix and therefore profitability.
The Company is also subject to credit risk, liquidity risk and various market risks,
including risks from changes in commodity prices, interest rates and currency exchange
rates (refer to Notes 25 of the December 31, 2013 Audited Financial Statements for
discussion on Financial Risk Management).
The Company was not aware of any event that resulted in a direct or contingent
financial obligation as of December 31, 2013 that was material to the Company,
including any default or acceleration of an obligation. To the Company’s knowledge,
there are no material off-balance sheet transactions, arrangement, obligations (including
contingent obligations), and other relationship of the Company with unconsolidated
entities or other persons created during the reporting period.
Cash Dividends
Dividend Policy
Cash dividends are subject to approval by the BOD without need for
stockholders’ approval. Stock dividends require the further approval of the stockholders
representing no less than 2/3 of our outstanding capital stock.
Changes in Control
The Company is not aware of any voting trust agreement or any other similar
agreement which may result in a change in control of the Company.
STATEMENT OF THE PROBLEM
As the worlds second largest food snack and beverages distributor by net
revenue, PepsiCo, tge Company must determine the Marketing and Management Strategy
that helps Pepsi-Cola Products Philippines, Inc. (PCPPI) regain its sales after the number
fever promotional disaster way back in 1992.
3. To determine the factors that affects Liability and Equity section in the business
operation.
Liabilities
The Company’s trade payables mostly pertain to raw material purchases made by
the Company with a general payment term of 30 to 90 days.
Accrued contract services pertain to accrued freight charges, tolling fees and other
services.
Accrued personnel cost includes current portion of accrued retirement cost, salaries
and other employee benefits.
The Company’s other accrued expenses consist mainly of accruals for utilities and
other operating expenses which are not individually significant.
The Company’s exposure to liquidity risk related to accounts payable and accrued
expenses is disclosed in Note 25 to the financial statements.
a. Short-term Debt
Total proceeds from these short-term loans amounted to P3.650 billion and P1.650
billion in 2013 and 2012, respectively, while total payments totaled P4.050 billion and
P1.450 billion in 2013 and 2012, respectively. As at December 31, 2013 and 2012, the
balance of short-term debt amounted to P550 million and P950 million, respectively.
b. Long-term Debt
On March 8, 2013, the Company entered into a loan agreement with MBTC to
partially finance the Company’s capital expenditure for its carbonated and non-
carbonated beverage business. The loan is unsecured and with a term of 7 years, payable
in 20 successive quarterly principal repayments to commence at the end of the 9th quarter
from the initial drawdown date and with a fixed interest rate based on PDST-F at
drawdown date plus 0.75% spread. PDST-F rate is the average of the best sixty percent
(60%) of the live bids of participating fixing banks in the secondary market for the 5-year
Philippine peso-denominated Treasury bills and bonds.
Under the terms of the long-term loan agreement with MBTC, the Company may,
at its option, prepay the loan in full or in part without penalty, together with interest due.
Prepayment shall be applied against the scheduled installment payments in the inverse
order of their maturity. The Company shall give a notice of such prepayment not less than
30 days prior to such proposed date of prepayment.
The loan agreement also provides certain covenants, the more significant of which are as
follows:
Debt-to-equity ratio shall not exceed 1:1 based on the financial statements; and
Current ratio of at least 0.40:1 based on its financial statements.
P1 Billion term loan from BPI
On October 16, 2013, the Company entered into a loan agreement with BPI to
refinance the Company’s short-term debt. The loan is unsecured and with a term of 7
years, payable in 20 successive quarterly principal repayments to commence at the end of
the 9th quarter from the initial drawdown date and with a fixed interest rate which shall
be determined using the base rate plus a spread of seventy (70) basis points per annum or
four (4%) percent per annum on the drawdown date.
Under the terms of the long-term loan agreement with BPI, the Company may, at its
option, prepay the loan in full or in part without penalty, together with interest due.
Prepayment shall be applied against the scheduled installment payments in the inverse
order of their maturity. The Company shall give a notice of such prepayment not less than
30 days prior to such proposed date of prepayment.
The loan agreement also provides certain covenants, the more significant of which are
as follows:
Debt-to-equity ratio shall not exceed 1:1 based on the financial statements;
Current ratio of at least 0.40:1 based on its financial statements; and Debt service
coverage ratio of 1:1 based on the financial statements.
As at December 31, 2013, the Company is compliant with all of the financial
covenants of its loan agreements.
Information about the Company’s exposures to interest rate risk and liquidity risk
are disclosed in Note 25 to the financial statements.
Icome Taxes
The Company reviews the carrying amounts of deferred tax assets at each reporting
date and reduces the deferred tax assets to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred tax assets to
be utilized. The Company also reviews the expected timing and tax rates upon reversal of
temporary differences and adjusts the impact of deferred tax accordingly. The Company’s
assessment on the recognition of deferred tax assets is based on the forecasted taxable
income of the subsequent reporting periods. This forecast is based on the Company’s past
results and future expectations on revenues and expenses.
The Company has no unrecognized deferred tax assets as at December 31, 2013 and
2012.
The Company has a funded, noncontributory, final salary defined benefit plan
covering substantially all of its regular and full time employees. The Company has a
Retirement Committee, which is composed mainly of the Company’s employees, that
sets the policies for the plan and has appointed two Philippine banks as trustees to
manage the retirement fund pursuant to the plan. Annual cost is determined by a qualified
actuary using the projected unit credit method. The latest actuarial valuation was made on
December 31, 2013.
Under the existing regulatory framework, Republic Act 7641, “The Retirement Pay
Law”, a company is required to provide retirement pay to qualified private sector
employees in the absence of any retirement plan in the entity, provided, however, that the
employee’s retirement benefits under collective bargaining and other agreement shall not
be less than those provided under the law. The law does not require minimum funding of
the plan.
The determination of the Company’s net defined benefit liability and retirement cost
is dependent on the selection of certain assumptions used by the actuary in calculating
such amounts. Remeasurements of the net defined benefit liability are recognized in other
comprehensive income and comprise of actuarial gains and losses on the net defined
benefit liability, return on plan assets, excluding amounts included in the net interest of
the net defined benefit liability and any change in the effect of asset ceiling, excluding
amounts included in the net interest on the net defined benefit liability.
The current portion of accrued retirement cost (included under “Accounts payable
and accrued expenses” account in the statements of financial position) amounted to P50.0
million as at December 31, 2013 and 2012, while the noncurrent portion (included under
“Other noncurrent liabilities” account in the statements of financial position) amounted to
P568.5 million and P484.3 million as at December 31, 2013 and 2012, respectively.
Retirement cost is allocated between “Cost of Goods Sold” account in the statements
of profit or loss and other comprehensive income, which amounted to P4.5 million, P4.8
million and P4.7 million for the years ended December 31, 2013, 2012 and 2011,
respectively, and “Operating Expenses” account in the statements of profit or loss and
other comprehensive income, which amounted to P76.4 million P64.4 million and P40.6
million for the years ended December 31, 2013, 2012 and 2011, respectively (see Notes
16, 17, 18 and 20).
As at December 31, 2013 and 2012, the present value of defined benefit obligation
amounting to P747.8 million and P644.0 million, respectively, pertains to active
members.
These defined benefit plans expose the Company to actuarial risks, such as longevity
risk, interest rate risk, and market (investment) risk.
The Retirement Committee reviews the level of funding required for the retirement
fund. Such a review includes the asset-liability matching (ALM) strategy and investment
risk management policy. The Company’s ALM objective is to match maturities of the
plan assets to the retirement benefit obligation as they fall due. The Company monitors
how the duration and expected yield of the investments are matching the expected cash
outflows arising from the retirement benefit obligations.
The Company’s expected contribution to the plan for the year 2014 is P50.0 million.
Any future contribution to the plan is determined taking into account the cash flow and
financial condition as at the date of intended contribution, as well as other factors as the
Company may consider relevant.
The Company’s funding policy is to contribute to the Plan’s fund as required under
actuarial principles to maintain the fund balance in sound condition. In addition, the
Company reserves the right to discontinue, suspend or change the rate and amount of the
contributions to the fund at any time due to the business necessity or economic
conditions.
Equity
Capital Stock
Capital Management
The Company’s objectives when managing capital are to increase the value of
shareholders’ investment and maintain reasonable growth by applying free cash flow to
selective investments that would further the Company’s product and geographic
diversification. The Company sets strategies with the objective of establishing a versatile
and resourceful financial management and capital structure.
The Chief Financial Officer has overall responsibility for the monitoring of capital
in proportion to risk. Profiles for capital ratios are set in the light of changes in the
Company’s external environment and the risks underlying the Company’s business
operations and industry.
The Company maintains its use of capital structure using a debt-to-equity ratio
which is gross debt divided by equity. The Company includes within gross debt all
interest- bearing loans and borrowings, while the Company defines equity as total equity
shown in the statements of financial position.
Retained Earnings
The BOD approved the declaration of cash dividends on May 24, 2013, with the record
date of June 7, 2013, and a payment date of June 28, 2013, amounting to P258.6 million
or P0.07 per share for the year ended December 31, 2013.
The Company’s risk management policies are established to identify and analyze the
risks faced by the Company, to set appropriate risk limits and controls, and to monitor
risks and adherence to limits. Risk management policies and systems are reviewed
regularly to reflect changes in market conditions and the Company’s activities. The
Company, through its training and management standards and procedures, aims to
develop a disciplined and constructive control environment in which all employees
understand their roles and obligations.
The Company has an Audit Committee, which performs oversight over financial
management and internal control, specifically in the areas of managing credit, liquidity,
market and other risks of the Company. The Company’s Audit Committee is assisted in
the oversight role by the Internal Audit (IA). The Company’s IA undertakes both regular
and ad hoc reviews of risk management controls and procedures, the results of which are
reported to the Audit Committee.
Credit Risk
Credit risk represents the risk of loss the Company would incur if credit customers
and counterparties fail to perform their contractual obligations. The Company’s credit
risk arises principally from the Company’s cash and cash equivalents, receivables and
due from related parties
Most of the Company’s customers have been transacting with the Company for
several years, and losses have occurred from time to time. Customer credit risks are
monitored through annual credit reviews conducted on a per plant basis. Results of credit
reviews are grouped and summarized according to credit characteristics, such as
geographic location, aging profile and credit violations. Historically, credit violations
have been attributable to bounced checks, denied and absconded credit accounts.
Receivables from these customers are considered by the Company to be impaired.
Liquidity Risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting
financial obligations as they fall due. The Company manages liquidity risk by forecasting
projected cash flows and maintaining a balance between continuity of funding and
flexibility. Treasury controls and procedures are in place to ensure that sufficient cash is
maintained to cover daily operational and working capital requirements, as well as capital
expenditures and debt service payments. Management closely monitors the Company’s
future and contingent obligations and sets up required cash reserves as necessary in
accordance with internal requirements.
It is not expected that the cash flows included in the maturity analysis could occur
significantly earlier, or at significantly different amounts.
The Company considers expected cash flows from financial assets in assessing and
managing liquidity risk. To manage its liquidity risk, the Company forecasts cash flows
from operations for the next six months which will result in additional available cash
resources and enable the Company to meet its expected cash outflow requirements.
Market Risk
Market risk is the risk that changes in market prices, such as commodity prices,
foreign exchange rates, interest rates and other market prices, will affect the Company’s
income or the value of its holdings of financial instruments. The objective of market risk
management is to manage and control market risk exposures within acceptable
parameters, while optimizing the return.
The Company is subject to various market risks, including risks from changes in
commodity prices, interest rates and currency exchange rates.
The risk from commodity price changes relates to the Company’s ability to recover
higher product costs through price increases to customers, which may be limited due to
the competitive pricing environment that exists in the Philippine beverage market and the
willingness of consumers to purchase the same volume of beverages at higher prices. The
Company is exposed to changes in Philippine sugar prices.
The Company is exposed to foreign currency risk on purchases that are denominated in
currencies other than the Philippine peso, mostly in United States (U.S.) dollar and Euro.
In respect of monetary assets and liabilities held in currencies other than the Philippine
peso, the Company ensures that its exposure is kept to an acceptable level, by buying
foreign currencies at spot rates where necessary to address short-term imbalances. The
Company considered the exposure to foreign currency risk to be insignificant. Further,
the Company does not hold any investment in foreign securities as at December 31, 2013
and 2012.
The Company’s exposure to interest rates pertains to its cash and cash equivalents, short-
term, long-term debt and finance lease obligation. These financial instruments bear fixed
interest rates and accordingly, the Company is not significantly exposed to interest rate
risk.
Fair Values
As at December 31, 2013 and 2012, the carrying amounts of the financial assets and
liabilities, which include cash and cash equivalents, receivables, short-term debt and
accounts payable and accrued expenses, reasonably approximate fair values due to the
short-term nature of these financial instruments.
ALTERNA TIVES
Despite of being a successful company with subtancial revenue, and a large
footprint in the marketplace, PeosiCo should expand their growth and take advantage of
potential opportunities by continuing to improve on areas at the corporate top level, in the
market that they are in, and in the new markets and maket segments they wish they are in
to. So, PepsiCo , might take in to consideration these following alternatives;
1. They sbould expand markets and market to expand their market share into the global
level and to increase their overall revenue.
2. Continue to expand with their "Human Sustainability". The healthy eatimg market is a
demographic that will comtinue to grow in thr future and will provide generous profits if
PepsiCo will able to obtain a large market share.
3. Capture more of the aging papulations market share. Pepsi focuses on the younger
market hoping to repeat the worldwide success of Coca Cola in regards to brand loyalty
with the generations born on 1980, hawever there is still a large market with the Baby
boomer demographic that they can break into.
4. PepsiCo shoud look to cut somd of their expenses as they have currently $10 billion
more in revenue than the competition, but they has a simillar Net Income of $5.5 billion.
EVALUATION OF ALTERNATIVES
1. PepsiCo should expand into markets and market segment they are currently not in such
as Asia, India, and South America, in order to expand their market share at the global
level and to increase their overall revenue. In doing so, they should increase the revenue
percentage above the current below 20%. They should evaluate the situation and growth
again in on calendar year, and analyze the total effect.
2. PepsiCo should do survey about their target market segments in order to analyze the
existing brand awareness in the market place every two quarters and then analyze the
overall change and overall trend in the two quarters.
3. They should cut their expenses by a set percentage in order to increase their Net
Income each quarter and year. This would increase the bottom line and benefit the
stockholders. It would be advised to reduce cost by 10% from the original amount, and
then potentially increase after few trial quaters.
4. They should position themselves on the edge of health trend in the market place by
increasing funds in the R&D in order to research new potential product ideas. Cunding
should be increase significantly and then ROI on the positioning should be analyzed after
multiple quarters of study.
REFERENCES:
● https://www.slideshare.net
● https://www.pepsi.com/who-we-are/our-history/
● https://www.studocu.com