Pepsico Analysis

PepsiCo, Inc.

Katherine Schryner

MBA5002 - Microeconomics And Decision-Making

James Slate

03/09/08

I. Executive Summary

In1898, Caleb Bradham created the Pepsi Company (PepsiCo). The Pepsi-Cola Company merged with other companies (Frito-Lay, Tropicana and Quaker Foods to list a few) between 1965 and 2001 and is now referred to as PepsiCo, Inc. PepsiCo, Inc. has many headquarters worldwide for the several different companies. The main world PepsiCo headquarters residing in New York. These mergers made PepsiCo, Inc. a refreshment and snack company ranking 5th in the world (Pepsi). PepsiCo, Inc. is listed on four stock exchange markets. In 2006, they reported over $35 billion in revenues and listed having 168,000 employees (PepsiCo2).

II. Table of Contents

III. Supply, Demand and Price Analysis………………………………..Page 5

Company Introduction Page 5

Product description Page 5

Factors affecting supply, demand and price of product Page 6

Elasticity of demand and price for product Page 6

Suggested initiatives to improve revenue Page 7

IV. Cost Analysis………………………………………………………...Page 7

Fixed Costs Page 7

Variable Costs Page 7

Life Cycle Costs Page 8

Operating Costs Page 8

Cost Considerations Page 9

Revenue Page 9

Strategies to Enhance Profits Page 10

V. Market Structure………………………………………………….…Page 11

Pricing Strategies Page 12

Maintaining and Improvement Measure Page 14

VI. Comparative Advantage and Environmental Issues………………Page 15

International Trade Page 15

Risk Management Page 17

Comparative Advantages Page 17

Environmental Concerns Page 18

VII. Company’s Overall Strategy and Decision-making Process……..Page 20

Mission Statement Page 20

Business Opportunities Page 22

Long Term Objectives Page 22

VIII. References……………………………………………..…………….Page 24

IX. Appendices…………………………………………….…………….Page 30

III. Supply, Demand and Price Analysis

Company Introduction

This large company is a mix of several other companies. PepsiCo, Inc. is made up of four subgroups. First is the Frito-Lay North America (FLNA), second is the PepsiCo Beverages North America (PBNA), third is the PepsiCo International (PI) and lastly is the Quaker Foods North America (QFNA) (PepsiCo3, pg.6). The PBNA (Pepsi) and the PepsiCo world corporate offices are located in Purchase, New York. Other locations around the world are found in Chicago, IL, Plano, TX, Mexico, Switzerland, Hong Kong and United Arab Emirates (PepsiCo3, pg. 9). PepsiCo, Inc. was created in 1965 when Pepsi-cola and Frito-Lay joined forces. Later, Tropicana was added in 1998 followed by the Quaker and Gatorade in 2001 (PepsiCo2). Net revenues totaled over $35 billion. They reported PI at 37%, FLNA at 31%, PBNA at 27% and QFNA at 5%. The total assets were $29,930. The total liabilities were $14,562. The stockholders equity totals were $15,447 (PepsiCo3, pg. 6). There are worldwide locations in North and South America, Europe, Asia, the Middle East and Australia.

Product description

PepsiCo’s companies cumulatively provide of several successful products. These