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... al growth rate (CAGR) of 5. 0 % between 1993 and 1998. But for the five-year period from 1998 - 2003, the CAGR is estimated to drop to about 4 %. Although colas are the most important soda flavor on the market, the strongest growth in the industry is in the non-cola segment. IV. INTERNAL ENVIRONMENT A.
Corporate Structure PepsiCo owns its corporate headquarters buildings in Purchase, New York. The company is engaged in the snack food, soft drink and juice businesses. Each product category is further divided into North America segment US and Canada and international segment. (PepsiCo 2000 Annual Report) Frito-Lay North America (FLNA) Frito-Lay North America manufactures, markets, sells and distributes salty and sweet snacks. Products manufactured and sold in North America include Lays and Ruffles brand potato chips, Doritos and Tostitos brand tortilla chips, Cheetos brand cheese-flavored snacks, Frito's brand corn chips, a variety of branded dips and salsas and Road Gold brand pretzels. Low-fat and no-fat versions of several brands are also manufactured and sold in North America.
Frito-Lay International (FLI) Frito-Lay International manufactures, markets, sells and distributes salty and sweet snacks. Products include Walkers brand snack foods in the United Kingdom, Smiths brand snack foods in Australia, Sabritas brand snack foods and Alert and Games brand sweet snacks in Mexico. Many of our U. S. brands have been introduced internationally such as Lays and Ruffles brand potato chips, Doritos and Tostitos brand tortilla chips, Frito's brand corn chips and Cheetos brand cheese-flavored snacks. Principal international snack markets include Mexico, the United Kingdom, Brazil, Spain, the Netherlands, Australia and South Africa.
Pepsi-Cola North America (PCNA) Pepsi-Cola North America manufactures concentrates of brand Pepsi, Mountain Dew, Mug, Slice, Fruit works, Sierra Mist and other brands for sale to franchised bottlers. PCNA also sells syrups to national fountain accounts. PCNA markets and promotes its brands. PCNA also manufactures, markets and distributes ready-to-drink tea and coffee products through joint ventures with Lipton and Starbucks and licenses the processing, distribution and sale of Aquafina bottled water. In addition, PCNA manufactures and sells Dole juice drinks for distribution and sale by Pepsi-Cola bottlers. Pepsi-Cola International (PCI) Pepsi-Cola International manufactures concentrates of brand Pepsi, 7 UP, Miranda, KAS, Mountain Dew and other brands internationally for sale to franchised bottlers and company-owned bottlers.
PCI operates bottling plants and distribution facilities in various international markets for the production, distribution and sale of company-owned and licensed brands. PCI markets and promotes its brands internationally. Principal international markets include Mexico, China, Saudi Arabia, India, Argentina, Thailand, the United Kingdom, Spain, the Philippines and Brazil. Tropicana Tropicana produces, markets, sells and distributes its juices in the United States and internationally. Products primarily sold in the United States include Tropicana Pure Premium, Seasons Best, Tropicana Twister and Dole brand juices.
Many of these products are distributed and sold in Canada and brands such as Fruit, Look and Copella are also available in Europe. Principal international markets include Canada, the United Kingdom and France. B. Corporate Culture PepsiCo, Inc. has been systematically changed over the past two decades from passivity to aggressiveness in order to avoid stagnation and to adapt to changing competitive threats and the changing economic or social environments. Once the company was content in its number two spot, offering Pepsi as a cheaper alternative to Coca-Cola.
But today, a new employee at PepsiCo quickly learns that beating the competition, whether outside or inside the company, is the surest path to success. In its soft-drink operation, for example, Pepsi's marketers now take on Coke directly, asking consumers to compare the taste of the two colas. The culture of the company now is based on the goal of becoming the number one of soft drinks. Managers are pitted against each other to grab more market share, to work harder and to wring more profits out of their businesses. Because winning is the key value at Pepsi, losing has its penalties. Severe pressure was put on managers to show continual improvement in market share, product volume, and profits.
All Employees know they must win merely to stay in place and must devastate the competition to get ahead. To keep everyone on their toes, "creative tension" is continually encouraged among departments at Pepsi. The staff is kept lean and managers are moved to new jobs constantly, which results in people working longs hours and engaging in political maneuvering just to keep their jobs from being reorganized out from under them. C. Corporate Resources 1. Marketing: Pepsi has now beaten Coke in the domestic take-home market, and it is mounting a challenge to Coca Cola overseas.
Pepsi has been making inroads: Besides monopolizing the Soviet market, it has dominated the Arab Middle East ever since Coke was ousted in 1967, when it granted a bottling franchise in Israel. The companys products are transported from manufacturing plants to its major distribution centers, principally by company-owned trucks. The company utilizes a direct store delivery system, whereby its sales force delivers the products directly from distribution centers to the store shelf. This system permits the company to work closely with retail trade locations and to be responsive to their needs.
The company believes this form of distribution allows it to have a marketing advantage and is essential for the proper distribution of products with a short shelf life. PepsiCo has developed the national marketing, promotion and advertising programs that support the its many brands and brand image, oversee the quality of the products; develop new products and packaging, and coordinates selling efforts. (PepsiCo 2000 Annual Report) 2. Finance: PepsiCo, Inc. manufactures, markets and sells soft drinks and concentrates (Pepsi-Cola, Mountain Dew, Slice, etc. ), snack foods (Frito-Lay) and Tropicana branded juices. For the 12 weeks ended 3 / 24 / 01, net sales increased 8 % to $ 4. 54 billion. Net income increased 18 % ($ 498 million).
Revenues benefited from volume gains across all divisions. Net income also reflects an increased gross profit due to higher effective net pricing. Even though sales of PepsiCo were going down slightly on the last three years but they still have very high profits on that years. On the Ratio PepsiCo just only 33 % on debt / equity ratio and profit margin is 10. 9 compare with industry just only 8. 10 %. On the first quarter of this year net sales advance 8 % to over $ 4. 5 billion with earnings per share increasing 17 % to $. 34. PepsiCo is very strong revenue growth.
EPS grows 15 % in the 16 -week quarter to 38 cents, and 17 % for the 52 -week year to $ 1. 45 Each division boosts Q 4 volume, and gains market share for the year Net sales advance 8 % to over $ 6 billion for the quarter, annual sales grow 8 % and exceed $ 20 billion Every division posts double-digit operating profit growth in the quarter, annual operating profits advance 13 % to $ 3. 5 billion Operating cash flow grows 33 % to $ 2. 7 billion Return on invested capital (ROIC) improves to 23 % -- a 250 basis point increase 2001 outlook for continued double-digit earnings growth 3. Operations: Most of the sales are through the companys own direct store distribution (DSD) systems, where they actually take the products to stores and put them on the shelf. These systems reach hundreds of thousands of outlets, from the tiniest liquor stores to the mightiest club store. The DSD systems give the company the ability to merchandise its products for maximum appeal to consumers. PepsiCo has been adding new platforms for growth, which strengthen the companys portfolio and enhance its vitally important innovation capabilities.
For example, in January 2001 the company acquired a majority of the South Beach Beverage Company, whose SoBe line of drinks adds to the Pepsi-Cola portfolio some of the fastest-growing brands in the fastest-growing segment of the industry, non-carbonated beverages. Another example is the planned merger with the Quaker Oats Company, which is expect to complete in the second quarter of 2001. This is without question the biggest step to ensure a bright future of growth for PepsiCo. The merger will make PepsiCo an even more effective competitor in the expanding market for convenient foods and beverages. It will add two very powerful brands to its portfolio, Gatorade and Quick...
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