About Pepsico: A Brief Introduction
Pepsi is one of the leading brands in the soda industry with a strong global sales and distribution network.
Its large product portfolio includes 22 billion dollar brands.
The company is headquartered in Harrison, NewYork.
Its leading rival in the global market is Coca Cola.
The company has a large customer base, which is a key source of competitive advantage for the brand.
Pepsi’s popularity around the world is based on several factors.
Apart from its large range of soda products that come in various flavours, its focus on marketing and brand image are also key factors that have helped the company succeed in the global market.
Pepsi has continued to improve its competitive advantage by investing in digital technology and by building additional capabilities through acquisitions.
In 1965, Pepsi Cola and Frito lay merged together to form Pepsico.
This led to the birth of the soda beverages and food industry giant we know today.
Since then, Pepsico has continued to expand its product portfolio through more acquisitions like Tropicana and Quaker Oats.
In this VRIO analysis, we will study the core competencies of Pepsico that have helped it achieve sustainable competitive advantage in the food and soda beverages industries.
Pepsico’s core competencies:
| Core competency | Valuable | Rare | Inimitable | Organized | Competitive Advantage |
| Large Product Portfolio | Yes | Yes | No | Yes | Temporary advantage |
| Marketing | Yes | Yes | Yes | Yes | Competitive advantage |
| Brand image | Yes | Yes | Yes | Yes | Competitive Advantage |
| Global presence | Yes | No | No | Yes | Temporary advantage |
| Supply chain | Yes | No | No | Yes | Temporary advantage |
| HRM | Yes | Yes | No | Yes | Temporary advantage |
| Technology | Yes | Yes | No | Yes | Temporary advantage |
Large Product Portfolio:
One of the most important core competencies of Pepsico is its large product portfolio.
The company has continued to expand its product portfolio through several acquisitions it made in its history.
For example, the acquisition of Tropicana helped Pepsico introduce health friendly juices to the global market.
Its large product portfolio includes 22 billion dollar brands.
Apart from selling beverages, the company also sells food products including lays chips, quaker oats and Doritos.
Some of its top global brands include Pepsi, Doritos, Lays, Tropicana, and Quaker Oats.
However, while Pepsi is a leading brand in the food and beverages industries, its competitors including Coca Cola, Nestle, and others also have large product portfolios that include several beverages and food products.
To grow its competitive edge in this area, the company has continued to diversify its product portfolio by adding new food and nutrition products.
Marketing:
Marketing is also a key source of competitive advantage for Pepsico.
The soda beverages industry has grown highly competitive and companies have to invest a lot in marketing and customer engagement to maintain their competitive position and market shares.
Coca Cola is a leading rival of Pepsico and both the soda giants invest heavily in advertising and promotions.
Pepsi spends a large sum each year on marketing, which is a key driver of sales and revenue growth for the company.
In 2019 and 2020, it spent $4.7 billion and $4.6 billion on marketing.
The company is mainly using digital channels for marketing and promotions.
While marketing is a key driver of demand and revenue growth for Pepsi, it is also a leading source of competitive advantage for the brand.
Brand image:
Pepsi has focused on maintaining a strong brand image in the food and beverages industry.
The company invests in producing good quality products and maintaining a customer friendly image.
Its pricing strategy has also played a key role in helping the company maintain a customer centric image.
Pepsi’s brand image is a key driver of competitive advantage for the brand.
Pepsi has differentiated itself from the other brands in the food and beverages industry through its marketing strategy and by building a distinct image.
It also invests in philanthropy to maintain a strong social image.
Its brand image is a key source of sustainable competitive advantage for the brand.
Global presence:
Pepsi’s global presence is also a key source of competitive advantage for the brand.
There are very few brands in the food and beverages industry that have achieved the same size and scale as Pepsi.
While one of them is Coca Cola, others include Nestle, Kraft Heinz and Mondelez.
However, apart from Coca Cola and Nestle very few others have achieved the same global scale as Pepsi.
Several more brands that compete with Pepsico have remained confined to smaller market regions or only their local markets.
Pepsi is an international brand that sells its products across 200 countries.
It has a global distribution network that involves bottlers, resellers, and retailers.
Pepsi also uses some direct channels.
However, its large network of distributors has helped it maintain a strong global presence.
Its rival Coca Cola also sells its products across 200 countries.
Therefore, its global presence offers a limited competitive advantage and the company has to continuously invest in marketing and innovation to maintain its market share.
Distribution and Supply chain:
The company has managed one of the best supply chain and distribution networks in the industry.
It has suppliers located in various corners of the world.
The company sources raw material for production of food and beverages and for packaging from suppliers located around the globe.
Sugar is among the most used raw materials for the production of Pepsi’s beverages.
The company sources sugar mainly from India, Thailand, and Brazil.
Apart from that, the company also sources palm oil from Indonesia, Malaysia, and Mexico.
Its main source of Soy is Brazil.
The company’s well managed supply chain is also a key source of competitive advantage for the brand.
However, the company has to continuously invest in its supply chain to maintain its efficiency and agility.
Its rivals also invest heavily in maintaining their supply chains and their digitalization.
It is why Pepsi’s supply chain offers only a temporary competitive advantage.
Human Resource Management:
HR management has become a key focus area for companies operating internationally.
A company’s employees are a key source of competitive advantage for the brand.
They are among the most critical sources of competitive advantage for the company.
Pepsi has also maintained a significant focus on attracting, developing and retaining top quality talent.
Its focus on HR management is critical to the long-term success and growth of the company.
According to its 2020 annual report the company employed 291,000 people at the end of the year.
The company invests in maintaining an equitable and secure work environment.
It has established an organizational culture that fosters higher employee satisfaction.
Its culture of diversity and inclusion is a key source of competitive advantage that drives higher innovation organizationwide.
As of the end of 2020, its global workforce included around 2u5% female employees and had around 41% female employees in management roles.
The human capital of any major organization are key assets of the company.
However, as the industry environment has kept growing highy competitive, companies across all industry sectors including food and beverages sectors are investing in maintaining an innovative organizational culture and a talented workforce.
In this area, its competitors like Coca Cola and Nestle also invest heavily.
Overall, its HR capital offers Pepsico a temporary competitive advantage.
Technology:
Technology is now a key driver of competitive advantage for businesses across all industry sectors.
Across all sectors including food and beverages sector, companies are investing more in technological innovation to grow their sales, market share and competitive edge.
Pepsi has been investing in digital technology to bring higher efficiency to its business processes, have a highly efficient supply chain and production system and for reaching out to its customers worldwide.
Pepsi has been investing over the past several years into digitalization of its operations and effective incorporation of digital tools across all its areas of business operations.
Its focus on digital marketing and data analytics has also increased.
The company makes use of digital channels for marketing as well as sales and distribution.
Overall, while digital technology is a significant driver of competitive advantage across the entire food and beverages industry, Pepsi’s investment in this area has helped it improve the efficiency of its business processes and marketing campaigns.
It also uses the social media channels like Facebook and YouTube for marketing and user engagement.
The company uses video marketing heavily for promotions and to engage its customers and followers worldwide.
YouTube is among the most popular marketing channels used by the food and beverages brands to reach out to their customers worldwide.
The company also invests in research and development to improve its product portfolio and to develop new technologies that drive higher efficiency and superior sales.
In 2020, the company spent $719 million on research and development.
Technology is among the leading drivers of competitive advantage in the food and beverages industry.
However, Pepsico’s competitors including Coca Cola, Nestle and others are also investing heavily in technology to gain higher market share.
The company will need to maintain a very high degree of focus on technology and innovation to grow its market influence and strengthen its competitive advantage in the food and beverages industry.
A few last words about Pepsico:
Pepsico is among the largest brands in the food and beverages industry.
The company has achieved several sources of competitive advantage.
However, it is also facing tough competition from Coca Cola, Nestle and several more food and beverages brands.
Due to the level of competition and the size and scale of rival businesses, most of its core competencies have failed to generate sustainable competitive advantage.
Its competitors are also investing heavily in product quality, technology and other resources so as to maintain their competitive position and market share.
However, Pepsi’s differentiated brand image and its focus on marketing have helped it achieve sustainable competitive advantage.
It has a large and diversified product portfolio.
However, there are several more brands including its two main rivals, Coca Cola and Nestle that offer similar products.
Pepsi competes with several businesses at a global scale.
While the level of competitive rivalry among food and beverages brands has continued to intensify, the company has also grown its investment in marketing hand digital technology to achieve higher productivity and customer engagement.
Overall, it is positioned against some tough rivals in the market.
Its competitive position however, is quite strong and in the longer term the company must maintain its focus on innovation and digital marketing to grow its market share.
Abhijeet Pratap is a passionate blogger with seven years of experience in the field. Specializing in business management and digital marketing, he has developed a keen understanding of the intricacies of these domains. Through his insightful articles, Abhijeet shares his knowledge, helping readers navigate the complexities of modern business landscapes and digital strategies.