SECTION I
1. Review the critical external and internal environmental factors that have strategic implications in the future for Pepsi.
The implications indicate that changes in demographic tastes, and the need to improve economies of scale have forced Pepsi into scrambling to recover dominance of market share. This is demonstrated by job cuts, revving up marketing, and China R&D plant. Integration of stevia-sweetened products reflect consumer tastes for less artificial beverages. These changes for Pepsi between 2012 and 2014, give them a better chance to continue its market share – to some degree – given the factor that the diversity of its product base is not solely dependent on soda revenues. According to the Harvard article, roughly one-fourth of its US income derives from soda.
2. Are Pepsi recipients or creators of the market for their products? Why? How is this factored into the decisions of each firm?
Pepsi is a creator of the market for their products. Because, of diversification efforts, Pepsi has managed to be creators of the market to a degree. It factors into decision of each firm by their efforts to continue to dominate market power. A main reason why is because the decisions reflect its ability to shape, and dominate nations’ bottlers and buy-and-sell companies suitable to their capitalist needs. By the same token, Coca-Cola has demonstrated big moves in order to retain, expand, or retrieve its worldwide dominant position by instituting similar moves. According to the handout Harvard article on the situation, Coca-Cola has made definite moves to clamp down on its control of economies of scale, differentiation, and tightening up gaps in its distribution channels. Planning to spend the approximate $5 in Africa by 2020, factors into the decision of the Coke Company as trying to hang onto bottling dominance by creating ever-expanding market spaces, to account for increased competition. The decisions of each firm represents ways to gain revenues in an increasingly internationalized society, which also has a great influence on demographic opinions of the buyers (as consumers), especially with the advent and ubiquitous nature of social media. If you really think about it, both these firms have created and exercised market power, and yet are proactively working towards maintenance of business power.
3. What recommendations can you make to the task force to enhance the effectiveness of Pepsi’s strategy or change the strategic approach for better results?
With the consideration of high exit barriers, and even amidst technological developments, perhaps one recommendation to make to the task force, in terms of enhancing Pepsi’s strategy, is to invest in a percentage of an energy-drink firm like Coca-Cola did with Monster. This strategic approach would give Pepsi a stronger, more efficient boost in a kind of strategic move of an economic opportunity of vertical integration. Furthermore, it may make sense for Pepsi to re-consider why it sold its Chinese bottling operations, just in order to purchase a Russian company. Confronting a deep study of the strengths and weaknesses of their competitor, Pepsi might attempt to figure out a more innovative approach which its major competitor (Coca-Cola) is not in a position to effectively, or convincingly achieve. This means focusing on intangible resources development, as strategies, because you can never go wrong in business when you please the customers.
SECTION II
Can they keep it going for another 100 years?
No, it is highly doubtful. Nowadays, people are aware of both their consumer power, and their vulnerability to the international economic machine. However, that said, as mentioned earlier social media and opinions are good sources to capture what people value. Through conducting surveys, and continued market research, value can be measured. At the same time, human capital is a vital feature in the strategic mix. People matter. Since Coca-Cola plans to expand in Africa, Pepsi should keep a close watch on how it treats their agents on that continent. If Coca-Cola fails to demonstrate a good record, Pepsi can mirror better behavior in its expansions.
Works Cited
“Case Flash Forward – Cola Wars Continue: Coke and Pepsi in 2010 by Harvard Business School.” Name of School. City, State. 2016. [Online Copy Handout].
