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Globalization comes up with different challenges and opportunities for a company. The development of technology and innovation through new solutions to make life better and easier has several impacts on the growth of business on a global platform. The case study presents different facts related to challenges of growth through innovation for PepsiCo. PepsiCo is a well-recognized beverage brand across the globe. The case study shows the challenges faced by the company due to innovation. Along with that, PepsiCo needs to face the problem of immense competition due to innovation. The paper will focus on identifying the causes of problems and opportunities for the company and developing a proper solution to help PepsiCo grow in the international market.
Identification of Problems
PepsiCo’s market growth and product development can be termed as the significant challenges to the senior management. By realizing the broader size of the business landscape of the corporation, top-line market growth, and operational consistency have been identified as primary objectives to the management (Gardner & McGowan Jr, 2012). In order to meet the demand of the investors’ expectations, the company has interested in a series of acquisitions and mergers to transform the traditional food and beverages business. By identifying the earnings expectations of the market investors, the company has wanted to exploit diverse marketplace for further business expansion (Moses & Vest, 2010). On the other hand, continuous shifting of the competitive business landscape has been one of the major business challenges to PepsiCo. For instance, Coca-Cola’s diverse business model has presented significant challenges to PepsiCo creating a competitive market advantage (Dhar, Chavas, Cotterill & Gould, 2005). Hence, changing competitive nature of critical business competitors and earnings demand of the global investors has been considered as the major problems for PepsiCo in the global platform.
Causes of problems
The major reason for the problems is the new innovative ideas. It can be seen that the rival companies have implemented the innovative ideas to develop their business on the global platform. Coco-Cola is the primary rival of PepsiCo that provides the company with high competition in the market (Church & Godley, 2003). Along with that, it can be seen that Coco-Cola provides it investors with better returns as compared to PepsiCo. It becomes difficult for PepsiCo to maintain quick expansion with its merger and acquisition strategy. Furthermore, PepsiCo faces difficulty in implementing the new innovative ideas with its present ideology and marketing strategy. There is a need to make an investment in changing the ways in which PepsiCo carries its businesses in the international market.
Alternative solutions
There are several alternative solutions that can be used by PepsiCo to grow its business. It needs to use the diversified techniques of business expansion that would be helpful in mitigation the risk of financial losses (Kung & Zhang, 2011). The company needs to find new emerging markets and invest in new businesses other than beverage and drinks. Furthermore, the company needs to acquire new businesses by implementing new strategies and innovative ideas to grow new businesses. The use of competitive strategy with new business models will help the company to grow in the international market.
Recommended Solutions
Justification of Recommendations
As the global market competitors of PepsiCo has engaged in the diverse business model to get the maximum response from the international target demographics, PepsiCo should follow the latest trend as well (Kish, Riskey & Kerin, 2001). As the investors of the company have demanded an additional return to their investment, it is the responsibility of the global business organization to response to their requirement (Chaharbaghi & Lynch, 2009). Therefore, developing restaurants business and strengthening the core values through mergers and acquisition can be an effective solution to the situation. By utilizing the market reputation and flexible market operating system, PepsiCo can significantly take over the lost business footprint to fuel further business endurance and expansion (Haase & Franco, 2015). Hence, the addition of highly complementary brand to the PepsiCo’s target list can deliver more room to the organization to enlarge the market landscape. Diversifying nature of business through acquisition and mergers, PepsiCo can achieve the deserved status on the global platform (Grant, 2001).
The company needs to find new investors by implementing new business ideas. A proposal for new business will help PepsiCo raise funds for business expansion. The growth and financial position will be the most important benchmark for evaluating the success of the recommended strategies. PepsiCo needs to hire experienced and professional experts capable of monitoring the new businesses. A continuous monitoring of the performance of the new business in the new emerging market will judge the success of the recommended strategies. Hence, the implementation of the new ideas to gain a competitive advantage will be helpful in seeking growth in the global platform.
References
Chaharbaghi, K., & Lynch, R. (2009). Sustainable competitive advantage: towards a dynamic resource‐based strategy. Management Decision, 37(1), 45-50. http://dx.doi.org/10.1108/00251749910252012
Church, R., & Godley, A. (2003). The Emergence Of Modern Marketing: Internation Dimensions.Business History, 45(1), 1-5. http://dx.doi.org/10.1080/713999301
Dhar, T., Chavas, J., Cotterill, R., & Gould, B. (2005). An Econometric Analysis of Brand-Level Strategic Pricing Between Coca-Cola Company and PepsiCo. J Economics Management Strategy,14(4), 905-931. http://dx.doi.org/10.1111/j.1530-9134.2005.00087.x
Gardner, J., & McGowan Jr, C. (2012). Valuing Coca-Cola And PepsiCo Options Using The Black-Scholes Option Pricing Model And Data Downloads From The Internet. Journal Of Business Case Studies (JBCS), 8(6), 559. http://dx.doi.org/10.19030/jbcs.v8i6.7377
Grant, R. (2001). The Resource-Based Theory of Competitive Advantage: Implications for Strategy Formulation. California Management Review, 33(3), 114-135. http://dx.doi.org/10.2307/41166664
Haase, H., & Franco, M. (2015). When small businesses go international: alliances as a key to entry.Journal Of Business Strategy, 36(3), 37-45. http://dx.doi.org/10.1108/jbs-03-2014-0032
Kish, P., Riskey, D., & Kerin, R. (2001). Measurement and tracking of brand equity in the global marketplace ‐ The PepsiCo experience. International Marketing Review, 18(1), 91-96. http://dx.doi.org/10.1108/02651330110382014
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Kung, M., & Zhang, Y. (2011). Creating Competitive Markets for Small Businesses with New Media and E-Business Strategy. International Journal Of E-Business Research, 7(4), 31-49. http://dx.doi.org/10.4018/jebr.2011100103
Moses, C., & Vest, D. (2010). Coca-Cola and PepsiCo in South Africa: A Landmark Case in Corporate Social Responsibility, Ethical Dilemmas, and the Challenges of International Business. Journal Of African Business, 11(2), 235-251. http://dx.doi.org/10.1080/15228916.2010.509166
