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View Attachments STRATEGIC CHOICES (Background Reading) In Module 3, we will concentrate our efforts on strategic alternatives at the corporate, business, and functional levels. Companies follow strategies at each of these levels, as well as at the global level. · At the functional level, strategies are short term in nature, and refer to company functions such as marketing, manufacturing, materials management, customer service, and R&D. · At the business level, strategies are of medium range. They include the companys market positioning, geographic locations, and distribution channels. · At the corporate level, strategies are long term, and include options such as horizontal and vertical integration, diversification, strategic alliances, and mergers and acquisitions (M&A). Click on the link for a presentation on  Strategic Choices  by Professor Anastasia Luca. Competitive Advantage In this module, we will focus on the strategic options available to companies at the business level. Companies select business strategies to obtain Sustained Competitive Advantage (SCA) against competitors. Read about SCA here: Competitive advantage. (2010). Quick MBA.  http://www.quickmba.com/strategy/competitive-advantage/ SCAs are advantages that cannot be easily copied or imitated by competitors. A few years ago, strategists talked in terms of Porters generic strategies (basically cost and differentiation). Read about Porter’s generic strategies here: Porters generic strategies. (2007). Quick MBA.  http://www.quickmba.com/strategy/generic.shtml Today, we have four distinct strategies we use to analyze strategic options, although there are various approaches to achieving these strategies. They are: · Cost Leadership · Differentiation · Niche/Focus · Preemptive Move (or first-mover advantage) Cost leadership Most people think of economies of scale when they think of low-cost strategies. McDonald’s and Wal-Mart notwithstanding, high volume is not the only way to achieve low prices. Here are some other approaches to implementing a low-cost strategy: No frills: Southwest Airlines eschewed big airports and cut costs by flying to smaller airports. Competitors such as Delta and American were too heavily invested in the hub business model to change. Product design: Masonite developed an alternative to expensive wood products by using sawdust and woodchips. Telecommunications companies now bundle their products, offering cable/satellite TV, high-speed Internet and telephone service for one low price. Hersheys shrank the chocolate bar to keep from raising its low price. Operational economies: Companies can save money by eliminating high costs in the value chain. For example, a company such as Amazon can reduce its costs by reducing the rate of customer returns. Clearly, mass sales or mass production serve to increase economies of scale as the company’s operations become increasingly efficient. Economies of Scale: With higher sales, fixed costs such as R&D, overhead, advertising, and even legal support can be spread over a larger revenue base. Experience: Costs decline at a predictable rate with a firm’s accumulated experience. Such declines are attributed to the learning curve, technological improvements, and product redesign resulting in product and process efficiencies. Here is another way of looking at low-cost strategies: Scilly, M. (2015). Examples of cost leadership and strategy marketing. Small Business Chron.  http://smallbusiness.chron.com/examples-cost-leadership-strategy-marketing-12259.html Differentiation Strategies If a company positions itself as offering a product or service that is different from its competitors in a way that customers value, it is following a differentiation strategy. A successful differentiation strategy will create customer value that is perceived as such by the customer. Many so-called new-and-improved products have fallen flat because the customer simply didnt care. In addition, a successful differentiation strategy will only build Sustained Competitive Advantage to the degree that it is difficult to copy. There are many ways to add value to any aspect of a business through differentiation: · Ingredients/components: Healthier, greener, longer-lasting ingredients/materials (e.g., Maytag appliances, Healthy Choice frozen dinners). · Product offering: Better-designed products (new generation products). · Combining products: Two is better than one (e.g., Colgate 2 in 1 toothpaste and mouthwash). · Added services: Extra services beyond the basic purpose of the product or service (e.g., concierge service with American Express cards). · Breadth of Product Line: Extra convenience in dealing with fewer vendors (e.g., Wal-Mart offers one-stop shopping, eliminating the need to go to multiple stores). · Channel: Offering items or services through a medium or channel unavailable in that form anywhere else (e.g., eBay offers instant access to hundreds of individuals worldwide, simultaneously or asynchronously). · Design: Product or service is unique (e.g., bed-and-breakfasts offer a more homey alternative to standardized hotel rooms). In general, there are two ways to build SCA through differentiation strategies. Most of the methods of adding value mentioned above can be related to either quality or brand recognition. Quality Strategy: In this type of differentiation, a company tries to set its product/service apart on the basis of superior quality. It is probably the most widely used method of attaining Sustained Competitive Advantage. Usually, quality means superior performance, and a premium brand as opposed to discount or economy brands. Such top-of-the-line offerings command a high price tag. However, quality does not always mean expensive. Both Mercedes (expensive) and VW (less expensive) connote high-quality German engineering. Branding: Brands build SCA through customer familiarity, loyalty, and trust. Aspirin is aspirin, but Bayer continues to thrive against low-priced generics due to the power of the brand. Blue Ocean: An Alternative Approach A combination of low-cost and differentiation strategies has created a buzz in the recent business press. Known as Blue Ocean strategy, it is a new idea that challenges the standard classifications of strategy. The following is the official Blue Ocean website. Check out some of the links to view the tools and frameworks for Blue Ocean strategic planning: Kim, W. C., & Mauborgne, R. (2009). What is BOS? Nine key points of Blue Ocean Strategy. Blue Ocean.  http://www.blueoceanstrategy.com/abo/what_is_bos.html Niche/Focus Strategies Niche or Focus strategies are really variations of a cost or differentiation (or both) strategy, only concentrating the companys efforts on a single or limited product or market. By focusing its efforts, the firm is able to realize the following advantages: · Avoid distraction or dilution: All of the firm’s efforts are directed toward a single end, and competitive pressures are diminished. All company resources and capabilities are matched to the market needs, creating SCA (remember RBV?). · Maximize limited resources: When resources are tight, they will go farther and create a greater impact when the target is limited. · Circumvent competitors’ resources and capabilities: By operating in a niche market, say, private-label manufacturing, a firm does not have to contend with the big advertising and distribution capacities of the brand names. Competitive pressures are diminished overall as there are likely to be fewer competitors. · Establish a unique identity: Offering a narrow product line, or operating in a limited geographic area can confer a certain cachet. In-N-Out Burger, for example, competes successfully with the huge fast food franchises by refusing to offer anything but hamburgers, made with the freshest site-prepared ingredients, in California, Nevada and Arizona only. There are basically three ways a firm can establish a focus strategy. It can concentrate on one of these approaches, or a combination. Focusing the product line: Firms that focus their product line often do so because they possess some expertise and special interest that often translates into technical superiority. These products excite and electrify. Take Bose Corporation, for example. It manufactures a small line of exceedingly high-quality audio products that are based on astonishing technology. If Bose broadened its offerings to all kinds of consumer electronics, it would run the risk of sliding into mediocrity with ho-hum products. Targeting market segments: This is essentially snob appeal broadly defined. Gucci handbags target high-end fashionistas, Harley-Davidson targets rebellious non-conformists (at least in their own minds), and Castrol motor oil, which is not even sold in service stations, targets independent male do-it-yourselfers. Limited geographic area: We have already considered In-N-Out Burger, but many other products are conferred a kind of cachet because you cannot get them just anywhere. Other examples include small breweries (e.g., Shiner Beers in Texas), coffee shops (independent and locally owned), or bakeries (Tim Hortons donuts in Canada and the northeast United States). For another take on niche strategies, including some important caveats about potential pitfalls, read: Iansiti, M., & Levien, R. (2004). Strategy for small fish. Harvard Business School Working Knowledge.  http://hbswk.hbs.edu/item/4331.html Preemptive Strategy By being the first entrant into a new market or business area, a firm can establish competencies or assets that competitors are not able to copy or develop on their own. The first-mover advantage can create high switching costs for customers, erect high barriers to entrance for competitors, and tie up contracts with suppliers. Thus, a preemptive strategy can confer SCAs both from internal and external sources. Preemptive strategies are usually implemented in one of three ways: Product opportunities: The first product offered in a new market can generate advantages in terms of dominant position that can be hard for competitors to later dislodge or overcome. A company can establish the standard for an industry, such as Intel did with microprocessors and Microsoft with operating systems. Of course, firms must continue investment in improvements lest an upstart come up with a better mousetrap. Production systems: When a firm invents a better or more efficient production system that expands capacity, reduces cost and/or improves quality, they have created SCA. Customer advantages: First movers have an advantage with customers—creating brand loyalty and increasing switching costs. Customers become used to a familiar product or brand and see no reason to switch. Some companies get customers to make long-term commitments—as in long contracts for the latest in iPhone or BlackBerry technology. Banks may vie to get first-mover advantage in online banking because such systems involve substantial switching costs for customers who pay all their bills online. Here is a brief article discussing the first-mover advantage in practice: Liang, T., Czaplewski, A., Klein, G., & Jiang, J. (2009). Leveraging first-mover advantages in internet-based consumer services. Communications of the ACM, 52(6), 146-148. Available from EBSCO in the Trident Online Library. Optional Reading Akan, O., Allen, R. S., Helms, M. M., & Spralls, S. A. (2006). Critical tactics for implementing Porters generic strategies. The Journal of Business Strategy, 27(1), 43-53. Available from ProQuest in the Trident Online Library. Ormanidhi, O., & Stringa, O. (2008). Porters model of generic competitive strategies. Business Economics, 43(3), 55-64. Available from EBSCO Business Source Complete in the Trident Online Library. Running head: STRATEGIC CHOICES 1 STRATEGIC CHOICES 12 Case 3 Assignment: Strategic Choices MGT 599: Strategic Management Executive Summary PepsiCo is a leader in a highly competitive market. The company can manufacture, distribute, and sell affordable and convenient foods and beverages. The secret behind the companys success is the cost leadership strategy. The strategy involves being a low-cost producer in the industry. A decision that has ensured the company can sell its products at affordable prices is in line with its mission statement. The company has a presence in over 200 countries and an excellent distribution channel that supports the strategy. Integrating the companys strategy can bring strategic choices like investment in research and development, effective distribution channels, monitoring of operating costs, and investment in production facilities. These strategic choices align with the companys generic strategy of cost leadership. However, there are various disconnect points, especially with the companys weakness of reliance on food and beverages. It should be noted that the companys generic strategy supports the companys vision and mission. This shows that the companys vision, mission, goals, and objectives should not be revised. Strategic Choices Introduction PepsiCo has remained competitive in a highly competitive market due to its competitive strategies like creativity, investing in technology, and research and development. However, companies that are successful in their industries possess a competitive advantage over their rivals. The competitive advantage makes them stand out against their rivals, making them sustain profits over a long period. PepsiCo, like most companies, has a competitive advantage over the competition. Cost leadership strategy is used when a company projects itself as the cheapest provider of goods or services (Roy, 2019). It is a strategy used by big corporations and has worked well with PepsiCo in a highly competitive market. The strategy can be integrated with the companys strengths, weaknesses, opportunities, and threats (SWOT). Comparing prices between PepsiCo and its biggest competitor Coca-Cola has shown that PepsiCos prices are lower due to PepsiCo being a low-cost producer and has successfully sold its products at average prices and earn a profit. The process of strategic analysis can show which strategy is effective and can help the company create a competitive advantage over its rivals. Generic Strategies There are four generic strategies that any company can leverage to create a competitive advantage (Potter, 1998). These strategies are commonly referred to as Porters strategies, including cost leadership strategy, differentiation strategy, focus strategy, and preemptive move. The companys strength falls under one of two strategies of cost leadership strategy or differentiation strategy. Companies use business-level strategies to sustain a competitive advantage against competitors (Potter, 1998). In a highly competitive market, the company must leverage its strategy to ensure sustained profitability. PepsiCo operates in a highly competitive market that requires applying a generic strategy that will help sustain a competitive advantage over the competition. PepsiCo follows a cost leadership strategy that allows the company to remain competitive. Cost leadership strategy allows the company to become a low-cost producer for a given level of quality. The strategy requires the company to sell its products at lower prices to earn higher profits than the competition (Roy, 2019). Cost leadership strategy allows the company to have the most competitively priced product in the market (Leonard, 2019). It is a strategy that can be acquired by improving process efficiencies, cutting down or avoiding costs, having access to raw materials at a lower cost, and vertical integration decisions. PepsiCos investment in research and development and technology has increased the level of creativity in the company. The company can design products for efficient manufacturing. It can cut down on unnecessary costs allowing them to reduce the prices of their products. The company also has access to vast amounts of capital and has, over the years, enjoyed profitability (Annual Report, 2019). It is allowing the company to make significant investments in production assets. Its presence in over 200 countries shows that it has excellent distribution channels to succeed in cost leadership. Integrating the Strategy The SWOT analysis for PepsiCo shows the companys various strengths, weaknesses, opportunities, and threats. The strength of the company is its global presence where the company is in over 200 countries. The global presence shows an increase in branding and awareness among its customers. The weakness is the reliance on beverages and foods. The company depends on carbonated beverages and packed foods when its competitors are diversifying into other products. The increased investment in consumer-related research and development creates an opportunity for the company (Gupta, 2021). The research and development are essential as it will help develop new products which will make the company more competitive. The competition is the main threat for the company, with competitors like Nestle, Coca-Cola, and Dr. Peppers reducing the global market share. Cost leadership strategy can be integrated with the companys strengths, weaknesses, opportunities, and threats. The companys global presence means that they have excellent distribution channels that allow the strategy to succeed. The companys strength works well with the strategy and can be effective in helping the strategy succeed. Cost leadership strategy has been successful with multinationals with good distribution channels that allow the companies to increase their sales. The strength of the company aligns with the cost leadership strategy. There is an opportunity in research and development with the company being able to increase investment in research. The investment allows for more creative methods of manufacturing. The efficient manufacturing methods will allow the company to reduce the cost of production. This can be done either by shortening the assembly process or by adequate packing. The competition being the main threat for the company means that the company has to create a competitive advantage. Cost leadership strategy can be a competitive advantage for the company. The strategy is effective with an investment in production facilities, monitoring of operating costs, and experience (Hashem et al., 2012). The strategy can therefore be effective in mitigating the threat of the competition. The cost leadership strategy can be aligned with the threat identified for the organization. Therefore, the strategic choices the company should be taking include; investment in research and development, effective distribution channels, monitoring of operating costs, and investment in production facilities. The strategic choices of the company align with the companys cost leadership strategy. There is a disconnect on the companys weakness of reliance on beverages and foods. The company relies on carbonated beverages and packed food products. This is a significant weakness considering the competition like Nestle, Coca-Cola, and Dr. Peppers have diversified their products. The company needs to create unique products that will make them stand out against the competition. However, the cost leadership strategy uses the price to create a competitive advantage—the other disconnect on the threat. The competition may use the same strategy to create a competitive advantage, countering what has already been applied, making it difficult for the strategy to work effectively. Leveraging on Strengths The primary purpose of having a business strategy is to achieve sustainable competitive advantage. PepsiCos main strength is its global presence, giving it access to a bigger market than its competition. The company can leverage this broader market to increase its global presence and alter its strategic choices to leverage its strengths. PepsiCo should include value creation among the strategic choices. Value creation involves having specific activities that the company can use to create a competitive advantage (Potter, 1998). Value chain activities include; inbound logistics, operations, outbound logistics, marketing and sales, and service (Potter, 1998). The company can use technology to support the value chain activities. Altering the strategic choices by including value creation can also be effective in showering up its weaknesses. Value creation activities can ensure that the dependence on beverages and foods is changed. Activities like operations will ensure the final product can compete with the other products in the market. The activity will add value to the already available products making them competitive. PepsiCo can take advantage of environmental opportunities by altering its strategic choices. Research and development support value creation that will ensure the company sustains its competitive advantage. Value creation will ensure investments are made in the research and development of new products and methods of creating competitive advantage. It will also minimize the threat of competition as the company can engage in activities that will sustain its competitive advantage. Therefore, altering the strategic choices and including value creation will be beneficial for PepsiCo. The company will have to incorporate two or more value creation activities to take advantage of the environmental opportunities and minimize the environmental threats. PepsiCos Mission and Vision PepsiCos mission statement is Create more smiles with every sip and every bite. Whereas, PepsiCos vision statement is To be the global leader in convenient foods and beverages by winning with purpose (Mission and vision) . The process of strategic analysis has reconfirmed my view of PepsiCos mission and vision. Part of the mission statement involves the desire of the company to satisfy the needs of the consumer. This is to be done through the provision of affordable, convenient, and complementary foods and beverages. The mission has been reconfirmed through strategic analysis as the company has a strategy that ensures the products are affordable to the consumers. Strategy analysis has also ensured the strategic choices like value creation will improve customer satisfaction and ensure the brand remains competitive. PepsiCos vision and mission should not be revised. The mission caters to the needs of the consumers globally and looks at affordability and convenience. These are part of the areas highlighted in the strategic analysis. The vision statement looks at sustainability and top financial performance, which can only be achieved through competitive advantage. Therefore, the mission, vision, goals, and objectives of the company should not be revised. Conclusion Like any other company, PepsiCo can only sustain its profits by possessing a competitive advantage. The company follows a cost leadership competitive strategy. The strategy has been integrated with the companys strengths, weaknesses, opportunities, and threats to develop strategic choices. An evaluation of the strategy shows that the strategy is effective for the company as the strategic choices can be aligned with the companys choice of strategy. The company can also alter its strategic choices and include value creation to leverage its strengths, take advantage of environmental opportunities, and minimize environmental threats. This can be accomplished with the involvement of value creation activities. References Annual Report. (2019). Retrieved from https://www.pepsico.com/docs/album/annual-reports/2019-annual-report.pdf?sfvrsn=35d1d2bc_2 Gupta, S., K. (2021). PepsiCos SWOT Analysis 2021. Retrieved from https://bstrategyhub.com/pepsico-swot-analysis/ Hashem Valipour, Hamid Birjandi and Samira Honarbakhsh (2012). The Effects of Cost Leadership Strategy and Product Differentiation Strategy on the Performance of Firms. Journal of Asian Business Strategy, Vol. 2, No.1, pp. 14-23. Leonard, Kimberly. (2019). Examples of Cost Leadership & Strategy Marketing. Retrieved at https://smallbusiness.chron.com/examples-cost-leadership-strategy-marketing-12259.html Mission and vision. PepsiCo, Inc. Official Website. (n.d.). https://www.pepsico.com/about/mission-and-vision. Potter, Michael. (1998). Competitive Advantage: Creating and Sustaining Superior Performance Roy, Suvendu. (2019). Cost Leadership Strategy Enhancing Competitiveness: A Critical Study On Mnc Retails. 10.13140/RG.2.2.29115.34083. Running head: EXTERNAL ENVIRONMENT FOR PEPSICO 1 EXTERNAL ENVIRONMENT FOR PEPSICO 12 External Environment for PepsiCo Student’s Name Institutional Affiliation Executive Summary PepsiCo is a frontrunner in the production and selling of soft drinks and other beverages. It mainly produces beverages and fast foods as the core of its business. PepsiCos success is defined by its ability to manage the internal and external business environments that affect business operations. This paper analyses the five competitive forces for PepsiCo by Porters, SWOT analysis, and PEST analysis. This way, the research can utilize the results to recommend some of the strategies that can be used to improve the productivity, profitability, and performance of PepsiCo Corporation. Introduction PepsiCo, originally known as Pepsi-Cola is located in New York City. It mainly produces beverages and fast foods as the core of its business. The company has dozens of products under its operations. PepsiCos success is defined by its ability to manage the internal and external business environments that affect business operations. In this light, a SWOT analysis is necessary to examine how well the company performs both internally and externally. This paper presents an industry analysis for PepsiCo Company, including the internal and external environments. It also discusses Porters five forces analysis of the industry as well as a PEST analysis for the company. Finally, it gives recommendations basing on the SWOT, PEST, and PORTERS results and conclusions. Porters Five Forces Analysis of PepsiCo Company Competitive Rivalry One of the major competitors for PepsiCo is Coca Cola Company. It presents a strong and intense competitive force in the beverage industry. This in turn drives down the prices for the commodities produced by PepsiCo and reduces its profit margins in the industry (Dobbs, 2014). This intense competition presented by Coca-Cola and other soft drink companies takes a huge toll on the long-term and general profitability of PepsiCo. Bargaining Power of Customers PepsiCo values its consumers and includes this in its mission statement. However, these consumers have strong bargaining power over the companys products. This bargaining power comes as a result of the intense competition that offers much cheaper prices compared to PepsiCo (Benjamin, 2014). The consumers determine the success rate for this company. They hope to buy the best products at cheaper prices. This takes a huge toll on PepsiCos profitability in the long haul. Bargaining Power of Suppliers PepsiCo strives to maintain a positive relationship with its suppliers. The bargaining power of these suppliers presents a weak force in the industry as there are several suppliers in the industry offering the same raw materials and resources for the production of soft drinks (PepsiCo Inc, 2012). The suppliers in the prevailing positions can reduce the profit margin for the company by negotiating for higher prices from the company. However, this is not the case as PepsiCo has several suppliers and can always shift to the ones that offer the best and affordable prices for the raw materials and resources. Threat of Substitutes PepsiCos products could suffer a strong threat of substitutions from other companies that offer alternative products. This is because several emerging soft drink companies continue to develop and meet customer needs by producing the same products as PepsiCo (Benjamin, 2014). When this case happens, the industry is likely to suffer great losses. The threat of substitute products for PepsiCo is high and this could call for a value proposition that is distinctively different from the present ones. The threat of New Entrants PepsiCo needs to stay strong despite the likelihood of new companies competing against it. New entrants in the market always come with innovative and advanced strategies that could take over the industry and make most customers run away from PepsiCo (Dobbs, 2014). Therefore, the company needs to manage this threat and develop the most effective barriers to protect its competitive advantage against these new entrants in the industry. External Analysis Using the Components of PEST Analysis Political Factors The development of soda taxes in the United States in 2017 grappled over the product prices for the beverage and fast food industry. This regulation was majorly mandated to prevent people from drinking much soda and soft drinks and improve their health and wellbeing. This led to the reduction of sales for soft drink companies, including PepsiCo. The buying power of the consumer is the major success factor for PepsiCo. Such political regulations can decrease the companys profit margins by reducing soda consumption. Economic Factors The major economic factor that is likely to adversely influence business operations for PepsiCo is the dollar value working against them. The company is scared about customer opinion and the strength of the dollar (PepsiCo Inc, 2012). Economic factors such as recession, economic instability, inflation, and high taxes can affect the company negatively. Furthermore, the foreign exchange rate can either be a hit or a miss for the corporation. Social Factors The need to move along with the times is putting huge pressure on PepsiCo to develop its products into more advanced and innovative products. Fluctuations in money spending, lifestyles, and buying behavior may negatively impact revenue and sales (Zhang, 2019). These changes cannot be preempted. Currently, the company has been facing negative changes from the increasing need of customers for healthy soft drinks. Soda was considered one of the deal-breakers when it comes to healthy eating. Therefore, the company was forced to research ways to introduce soft drinks that meet the dietary needs of their consumers. This led to the loss of revenue before the company could get back into running on profits. Technological Factors Gone are the days when corporations could advertise their products on a 20-second ad on TV. Thanks to advanced technological development, PepsiCo can explore online advertisement, social media sales and marketing, and video marketing (Dobbs, 2014). The company can borrow Coca-Colas online marketing idea whereby the company placed peoples names on bottles and sold their products using this strategy. Besides, the company can take advantage of artificial intelligence, digital bots, and machine learning for product development and connect better with its customers worldwide. The Results of the External Analysis including their Labels The threat of New Entrants PepsiCo has the following threats for the new entrants. It has low switching costs which present a strong force. It also has moderate customer loyalty, something that could lead to a moderate force (PepsiCo Inc, 2012). Also, it has a higher cost of brand development which presents a weak force. New companies can easily threaten the company as the customers can easily change their direction to the company that offers the cheapest prices. Bargaining Power of Suppliers PepsiCo has a weak bargaining power of suppliers due to the following factors. It has a high supply which presents a weak force. This increases the options for the company to acquire raw materials. The forward integration plan for the suppliers is low, leading to a weak force. This factor restricts the suppliers power over the supply chain management. Finally, the sizes of suppliers are moderate. Competition The high aggressiveness of the rival companies presents a strong competitive force against PepsiCo. Most of the companies in this industry are aggressive particularly in product innovation and development (Benjamin, 2014). Second, the low switching costs present a strong competitive force against the company. This enables customers to easily switch to companies that offer cheaper prices. Third, the high number of corporations in this industry presents a moderate competitive force. This presents several options for customers to get their desired products. Bargaining Power of Customers Some of the external factors leading to the bargaining power of the customers include low switching costs, the high number of substitutes, and high access to information. The low switching costs enable customers to switch from one company to the other (Zhang, 2019). This factor reinforces the customers ability to influence the company into reducing prices. Also, the extensive and readily available information can make the consumer compare products online and go for their preferences, which may not be PepsiCo. Finally, the substitutes may offer more valid reasons to avoid PepsiCos products. Threat of Substitutes Some of the external factors leading to a higher threat of substitute products include the high performance of substitutes, a high number of substitutes, and low switching costs. All these factors lead to a stronger force. Most of the alternative products to PepsiCos are pleasing. For instance, the customers enjoy drinking real fruit juices and home-brewed coffee compared to soda products offered by PepsiCo (Jallow, 2014). This may present a huge threat to the company. Consumers can easily shift to these satisfactory products. Also, the substitutes are readily available both online and offline. Conclusions about the Overall Opportunities and Threats Facing Pepsico As Revealed By the Analysis of Five Forces Analysis and the PEST Analysis Implications of Porter Five Forces on Pepsico, Inc. By examining the five forces of competition, PepsiCo can have a clear picture of the factors that impact its profitability in the industry either positively or negatively. The company can identify the game-changing trends that it can utilize to respond to the available opportunities for growth and expansion of its business. Besides, the managers can utilize this information to shape the focus in the favor of PepsiCo Corporation. PepsiCo can handle the threats to the new entrants in the market by innovating its products. This move can bring new customers and keep the existing ones. Also, the company can handle the bargaining power of suppliers by developing efficient supply chain management with different suppliers (PepsiCo Inc, 2012). Third, it can address the issue of the bargaining power of buyers by developing a strong customer base. This will reduce customers bargaining power and also enable the corporation to streamline its production process. It can handle the threat of substitute products by focusing on service provision. Finally, it can handle rivalry by product differentiation. PepsiCo Internal Analysis Strengths and Weakness First, the company has a wide market share that enables it to obtain high revenues. It is the fourth largest food producer in the United States and adjacent countries. Second, it has a big market share that produces alternative products. Third, it has a strong reputation for its brand (Jallow, 2021). Fourth, it has a steady financial position that enables expansion plans. Contrarily, the corporation has a few weaknesses including the inability to outdo Coca-cola in the beverage industry. Coca-Cola continues to be a great threat and competitor to the company. Also, the company may lose its market share if chooses to major in other products. External Environmental Analysis Opportunities and Threats Regarding the threats, PepsiCo has a low level of entrants in the industry. This implies that the company is not likely to experience intense competition. Therefore, it can expand its production by taking advantage of this low competition. Second, it experiences a low bargaining power of suppliers (Zhang, 2019). This means that the company can always negotiate for cheaper prices from their suppliers. Besides, the company can acquire high-quality products from its suppliers. On the negative side, the company experiences a higher threat of substitute products from rival companies. This threat reduces the ability of the firm to increase its prices. Eventually, this leads to a negative influence on revenues and profits. Specific and Informed Recommendations as to What the Company Should Do Basing On the Analysis Cost Leadership Strategy PepsiCo can utilize the cost leadership strategy in its production process. This strategy can help the company to sell its products at principal prices, thereby increasing its profitability and revenues (Zhang, 2019). The company can also reduce the prices for its commodities to improve its rate of market penetration. Such a strategy will improve its share in the market, particularly for the newly introduced products. Therefore, the cost leadership strategy can be executed by enhancing the efficiency of production to reduce their costs. Differentiation Strategy Basing on the results from the SWOT analysis and other internal and external analyses of the industry, PepsiCo can utilize a differentiation strategy to improve its performance (Jallow, 2021). This encompasses manufacturing products at low costs and offering new features in the products. Presently, there is intense competition from different companies trying to refocus on product differentiation. The company can only protect its competitive edge by following the same trail. This way, it can improve the existing products and increase customer loyalty. Eventually, customer loyalty will act as a barrier for the other companies products and therefore, help to counter competition. Conclusion PepsiCo is a frontrunner in the production and selling of soft drinks and other beverages. This research analyzes the competitive environment by looking at the internal and external market conditions that could influence business operations for PepsiCo. Overall, the results showed that the company has low bargaining power for suppliers, high competition, increased threats from new entrants, and strong customers bargaining power for its products. The company can use technology as a driving force to improve its operations. Besides, it can use the recommended strategies to improve its performance in the industry. References Dobbs, M. (2014). Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45. Jallow, D. (2021). A Strategic Case Study on PepsiCo. Available at SSRN 3828353. Benjamin, M.A. Pommer (Author), 2014, Market definition and analysis of Pepsi-Cola, Munich, GRIN Verlag, https://www.grin.com/document/279083 PepsiCo Inc. (2012). PepsiCo Announces Strategic Investments to Drive Growth . Zhang, Z. (2019). Risk Analysis of Two Leader Drink Company: PepsiCo and Coca-Cola. Asian Business Research, 4(3), 42. Appendix Swot analysis Diagram