PepsiCo has been the world’s leading company in the food & beverages industry for many decades. To retain this leading position, the company needs to address the external factors as analyzed in PESTLE/PESTEL analysis. This analysis is based on a strategic tool used by the management. It exposes the external factors prevalent in the business environment of the company. The analysis has revealed several factors, including political, economic, social or sociocultural, technological, legal, and environmental. These factors determine many growth opportunities and threats as well. PepsiCo needs to exploit these opportunities while addressing the threats, as shown in the analysis below. Therefore, PepsiCo must devise wise policies and shrewd strategies based on this analysis to ensure long-term business growth and expansion.
PepsiCo’s growth and expansion are dependent on the capacity of the company on how it addresses the major problems exposed in this PESTLE/PESTEL analysis. The company must devise strategies that can boost its resilience against these issues prevailing in its macro-environment.
Political Factors influencing PepsiCo
Political institutions and governments are the significant political factors that require compliance by the company to ensure the smooth operations of the company’s business. Therefore, this section of the analysis deals with the political decisions and actions affecting PepsiCo’s remote environment. The company is facing the following political factors:
- The political stability of developed markets (opportunity)
- Enhanced intergovernmental collaboration (opportunity)
- Restrictions on carbonated beverages (threat)
The company has its major business operations in the American continent, including Canada and the US. These nations are politically stable and have stable economic markets that contribute to a growth opportunity for the company. Moreover, the growing intergovernmental cooperation across the globe provides expansion opportunities. Nevertheless, the increasing restrictions against the manufacturing of unchecked carbonated drinks may harm the revenues of the company. Therefore, PepsiCo needs to address the issue related to carbonated drinks, as revealed by this analysis.
Economic Factors affecting PepsiCo
The company is directly related to the economic variables of the markets. Their influence on the growth of the company is covered in this section of PepsiCo. These elements are prevalent in the external environment of PepsiCo, as identified in this PESTLE/PESTEL analysis. The succeeding political factors are prevalent:
- Stable economies of major markets (opportunity)
- Rapidly growing economies (opportunity)
- The declining economy of China (threat)
The company has many opportunities based on the economic conditions of developed nations. These stable economies foster stable growth of the business. Moreover, the growing economies of many states of Asia and Africa are another opportunity for the company to expand its operations. Nevertheless, the declining economic indicators may threaten the company as the Chinese market is among the biggest consumer-based market. Therefore, as revealed by his analysis, the company must ensure diversification in its industry and products to penetrate internationally.
Social/Sociocultural Factors Affecting PepsiCo’s Business
The company is subject to these social factors as the consumers are influenced by the social trends. This section of the analysis identifies those factors that influence PepsiCo’s macro-environment. The ensuing factors are significantly affecting the business of PepsiCo company:
- Increasing Health consciousness among consumers (opportunity and threat)
- Elevating busy lifestyles (opportunity)
- Discrimination attitudes toward the quality of the product (opportunity)
The company is facing a threat as health is becoming a priority of the consumers. Many of the company’s products are high in salt, fat, and sugar content. Nonetheless, PepsiCo can benefit from this factor by introducing health-friendly products. Moreover, PepsiCo can benefit from the busy schedules and lifestyles of more developed or urbanized markets as this would make the consumers more dependent on ready-to-eat food items. Moreover, PepsiCo can increase its revenue and growth by supplementing quality products as the consumers have developed discriminatory attitudes towards the quality of the products. Therefore, as revealed in this analysis, PepsiCo must address these threats and opportunities prevalent in the external environment of the business.
Technological Factors influencing the company
PepsiCo is connected to technological factors in many ways. This section of analysis will highlight the impacts of technology on the remote working environment of the company. The prevalent technological factors influencing the business are discussed below:
- Modest investment in R&D (opportunity)
- Enhancing the knowledge and management system (opportunity)
- Improving business automation (opportunity)
As the food and beverage industry is witnessing a moderate level of research & development, PepsiCo can enhance its growth by investing in this era to improve its product quality and uniqueness. Moreover, the company can improve its business quality and operations by improving its knowledge of management systems. This improvement would enhance the company’s decision-making and product innovation. Furthermore, the increased business automation can increase the scale of operations and improvement in performance. Therefore, this PESTLE/PESTEL analysis reveals that the company must improve technology to ensure business competitiveness.
Environmental/Ecological Factors
PepsiCo is influenced by the trends of environmental preservation and eco-friendly business operations. The brand image and supply chain are significantly prone to this element. The ensuing environmental external factors are worth debatable:
- Business sustainability trends (opportunity)
- Complicated expectations of waste disposal standards (opportunity)
- Climate change (opportunity & threat)
The consumers push companies to improve their business sustainability. Thereby, PepsiCo can enhance its waste disposal techniques like recycling to optimize its brand reputation. Nonetheless, climate change can suppress the company’s supply chain network. But PepsiCo can address this threat by diversifying its business’s global supply chain. As revealed by this analysis, the company must optimize its environmental influence to retain consumers and diversify its supply chain.
Legal factors influencing PepsiCo
The food and beverage industry are subject to many legal checks and balances. These regulations and laws are analyzed in this element of the analysis. These policies and regulations devised by governmental institutions are significantly prevalent in the external environment of PepsiCo. The most notable are listed here:
- GMO ingredients regulations (opportunity)
- Safety of product and health and related regulations (opportunity)
- Modest regulatory change rate (opportunity)
Genetically Modified Organisms (GMOs) are aggressively regulated worldwide, especially in Europe. The company must reduce its use to avoid regulatory challenges. Moreover, the company must ensure the safety of product use and its impact on the health of the consumers to enhance sales. However, the modest regulatory changes still present an opportunity for the company to ensure long-term strategic benefits. Therefore, this section of the PESTLE/PESTEL analysis has revealed that the company can foster more growth by ensuring the quality and innovation of its products.
Recommendations
The company has secured a leading position globally in the food & beverage industry business. This analysis has revealed that the company is facing some acute challenges as well as many opportunities prevalent in its remote working environment. These factors can determine the growth and expansion at local and global levels. The succeeding takeaways are given in this section of the analysis.
- Expansion opportunities in developing states
- Product innovation to enhance health and quality
- Achieving business sustainability
- Diversification in the supply chain
+447462439809