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PepsiCo’s Strategic Financial Management

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PepsiCo’s Strategic Financial Management

Brief Description of PepsiCo

PepsiCo is a global company that deals in snacks, beverages and food. It was founded in 1965 and has over 18 brands that generate more than one billion dollars in its retail sales. They are engaged in the manufacture and distribution of several of these products in about 200 nations with Mexico, the United Kingdom and North America where they have their largest greatest operations.

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It is structured into three main units of business and five key reportable segments. These include PepsiCo: American foods, American beverages and International. The remaining two are the segments based in the Middle East, Asia, Africa and the United Kingdom. In early 2010, revenue increased by 13.4% while earnings grew by 26% (Sander, 2010, p. 284-285).

Internal Factors that may Impede Development of PepsiCo’s Strategic Financial Plan

However, there are several of PepsiCo’s internal factors that may hinder the development of its financial plan. First, in the recent past, the firm had lower productivity from its employees as compared to its competitors. This translated into the company’s revenue per employee is about $ 219, 439 (Marketing, 2011, p. 1).

Secondly, PepsiCo over-depends on its market in the US despite it having a global presence. This focus on one area leaves the company prone to labor strikes and dynamic economic conditions. This may pose a risk to the marketability of its products and hence hinder it from developing a strategic financial plan that is successful (DeThomas, Oliver & Seereiter, 1987, p. 28).

Therefore, in a bid to increase employee productivity, PepsiCo can adopt some strategies. First, the company can create a conducive and safe working environment through the creation of medical and safety systems that will motivate employees who are absent due to sickness to report back promptly. Secondly, the company can increase the salaries of the employees to motivate them to work productively (Quehl, 2000, p. 34).

SWOT analysis of PepsiCo

SWOT analysis is a tool that is very crucial in an organization. It is used in both making of decisions as well as understanding several situations in a business or an organization. It is an acronym that stands for Strengths, Weaknesses, Opportunities and threats (Chapman, 2011, p. 1).

Concerning strengths, first, the company’s branding is one of the most outstanding. It is among the most recognized globally. In the year 2008, it was ranked among the top 100 world’s top brands. Its market presence in the US about beverages and snack food is outstanding. The second strength is its diversification. It has about 18 top brands and each one of them contributes greatly to its annual sales (Anon, 2011, p. 1).

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The company has some weaknesses. First, it over-relies on one main customer; Wal-Mart. Consequently, its performance is determined by Wal-Mart’s strategies. This is in particular on Wal-Mart’s focus on private label based sales that give it more gains compared to national ones. Secondly, the company recalled some of its products sometime back which has damaged its image. In 2008, some of the firm’s products were found to be contaminated with salmonella and were pulled from its shelves (Anon, 2011, p. 1).

The firm has some opportunities. First, the company is in the process of overcoming its weakness of depending on the US market. This is to be done by acquiring a juicy Company in Russia and another one in the UK. Secondly, the company has the potential of expanding internationally. PepsiCo has great plans of investing in China, India, Mexico and Brazil.

One of the threats facing the company is the projected decline in soft drink sales in 2012. Although the company is planning to diversify, the projected decline is likely to affect it (Anon, 2011, p. 1). Secondly, the company also faces a lot of competition from its competitors such as Coca-cola, Kraft Foods and Nestle (Penzkofer, 2007, p. 4).

Using SWOT analysis as part of a strategic financial plan to benefit an organization. A management team that is experienced and talented is of major internal asset especially when the firm is in a competitive or changing environment. In financial management, most decisions implemented by the management may be advanced by the organization’s strength. However, the organization’s financial weakness such as heavy debt may hinder the organization from responding to the opportunities available to it externally (Hankin, Seidner & Zietlow, 1998, p. 113).

Reference list

Anon. (2011). Marketing SWOT Analysis PepsiCo. Web.

Chapman, A., (2011). Swot Analysis: SWOT analysis method and examples, with free SWOT template. Web.

DeThomas, A., Oliver, J., & Seereiter, D. (1987). Designing the Strategic Financial Planning System (Attached Material). (p.28)

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Hankin, J., Seidner, A., & Zietlow, J. (1998). Financial Management for Nonprofit Organizations (p.113). NY: John Wiley and Sons.

Penzkofer, A. (2007). The Market of Pepsi/PepsiCo (p.4). NY: GRIN Verlag. Quehl, S., (2000). Bottom line and Beyond Finance: Financial Plans Guided Philadelphia and New Haven to Recovery (Attached Material). 34.

Sander, P., (2010). The 100 Best stocks you can buy in 2011 (p.284-285). Avon: Adams Media.

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