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The Issues Of PepsiCo International Strategy

Coca-Cola, the major rival of Pepsi has been exiled from the desert kingdom. Because of this, Pepsi extended into Arab Countries & comes with an 80% talk about of the $1 billion Saudi soft-drink market. Saudi Arabia is the third largest foreign market of Pepsi, after Mexico and Canada. In 1993, about 7% of Pepsi-Cola International's sales came from Saudi Arabia. The surroundings in Saudi Arabia makes the country very favorable to soft-drink sales because alcohol is prohibited & climate is scorching and dry out.

Mode of Growth:

Pepsi uses franchise system for international development.

Sources of Competitive Advantage:

PepsiCo has competitive benefit in terms of worldwide syndication & the business is able to produce all its products in the united states where they are really consumed. Pepsi has a competitive advantages over Coke because of its brand image & good word of mouth. Pepsi promotes itself as the main choice of the "Next Era".

Government Policies:

Currently a 50 percent surge in Pepsi prices in Saudi has angered customers and provoked the kingdom's federal to ask more than 30 soda companies to hold off on further price hikes. Pepsi increased the price tag on a can to 1 1. 50 riyals $0. 40 from 1 riyal. it. Saudi Consumer Cover Association looked into the sudden "unjustified" price hike, the Saudi Gazette reported that recognized permission should be granted to soft drink firms before they are simply permitted to increase prices and price climb shouldn't be more than 10 percent.

PEST Analysis

Political Affects:

Many PepsiCo products are at the mercy of different federal laws and regulations because of the manufacturing, syndication & use, like the Food, Medicine and Cosmetic Function, the Occupational Basic safety and Health Work ad the People in america with Disabilities. The international ventures are subject to the Government balance and companies are subjected to different taxation guidelines in each consumer country.

Economic Affects:

PepsiCo depends on trucks to go products so gasoline is an important subject matter & fuel costs matters. The economic impact of forex rates movements to them is complicated because such changes are often linked to variability in real expansion, inflation, interest levels, governmental activities, etc. PepsiCo is also put through other economical factors like money source, energy availability, cost and business cycles.

Socio-Cultural Influences:

Pepsi is subject to the approach to life changes, so it bases her advertising campaigns in people with special lifestyle. For your PepsiCo must pay special attention on changes in lifestyle. It has to be very careful with the possible problems with the governments and the ones which could go up from PepsiCo take action with the folks of KSA.

Technological Affects:

PepsiCo is exposed to new making techniques, for its three sections, treats, juices and soft drinks. It must give consideration while adopting versatile & advanced distribution techniques.

PORTER 5 Causes Analysis

1. Risk of New Entrants: The risk of new entrants on the market is small yet substantial. This is because there are already four players on the market other then Pepsi itself.

2. Threat of Substitute Products:

Currently, the risk of new viable competition in the carbonated soft drink industry is not so large. Possible substitutes that constantly put pressure on Pepsi include tea, coffee, juices, milk, and hot chocolate.

3. Bargaining Electric power of Suppliers:

The bargaining ability of the suppliers is commonly low based on the recent evaluation. PepsiCo must manage its relationships carefully with the bottling units to make changes in its way to market the local merchants.

4. Bargaining Electricity of Buyers:

Here the matter is how to increase market share and retain its current customer because customer always try to optimize gain. The buying vitality of consumers also poses a key threat on the market. Moreover consumers can merely swap to other drinks with little cost or importance.

5. Rivalry Among Opponents:

Pepsi has 48. 9% show of market & it is situated within an environment that is ever before changing and active because coca cola is retaining 30. 9% share & Cadbury Schweppes 8%. The local brands are also in the market to remain competitive Pepsi. These brands are Mecca cola having 0. 5% market show and 0. 6% Zamzam cola.

SWOT Analysis

Pepsi is substandard in its fountain drink department. The ownership in fast food restaurants is definitely difficult for pepsi. Coca Cola has been around the most notable locations for fountain beverages because of their ownership in Taco Bell, Pizza Hut, KFC, and many more.

In addition to its large consumer platform, Saudi Arabia has a few of the region's biggest athletic golf clubs, most passionate activities fans, and has an evergrowing population of athletes and dynamic people. When PepsiCo started out its own Pepsi Bottling Company, it allowed these to cut costs, reduce over head, and coordinate their distribution to make an improved synergy.

Critical Issues or Barriers:

Pepsi can serve the 90% market but problem is the bottling of the drink.

War problems between Palestine and Israel is taking hate against Pepsi that why USA is not interest in resolving the issue

As Pepsi is US product and nowadays US and foreign products are campaigned never to be used to show rage against non-Muslim acts.

Due to recent olive oil prices increase, there is international factor of inflation and on the other palm Pepsi is cheaper in KSA in comparison to other countries, so Pepsi is facing problem to keep up the profits.

Since employers in KSA are required to give their workers time for you to pray toward Mecca five times each day, as established in the Koran, break times brought on additional operating cost.

Health and stomach diseases anticipated to over use.

Obesity problem which is becoming common in Saudis.

Rumors of Haram elements.

The difficult competition is completed through packaging as well as price.


Pepsi is being pressured to re-examine their tactical models, predicated on carbonated soft drinks and move to new drink categories. Heavy investmentment in dangerous inventions may be suggested to be able to copy resources from other brands. Pepsi spends 15% of overall budget on advertising and marketing to be no. 1 in the consumer perception. Pepsi should use all media vehicles to catch the attention of consumers.


Consumers want to buy soft drinks delivered at convenient locations with the right package. Pepsi have to make sure that the marketplace keeps growing each year, and this company products are available everywhere you go. Pepsi has gained the International Quality Award and Bottlers of the entire year Award, therefore the company feels quite optimistic. Although difficult troubles lay in advance, yet to exploit opportunities through the execution of an effective and thorough marketing plan 2009.


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