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Strategy Formulation for Pepsi Limited Company

Strategy Formulation

Strategy formulation is the process through which the long term goals of an organization are designed for implementation. The long term goals should be formulated cooperatively due to the fact that their implementation requires the input of all stakeholders since they are all critical in the implementation process.  Before formulation and implementation phases thereof, the business environment has to be scanned (Pasha& Poister, 2017). Business environment in this case refers to the factors within the business surrounding that affect its operations. These factors may emanate within the business organization (internal environment) or from without the business organization (external environment). This paper analyses briefly the strategy formulation process for Pepsi Limited Company.

Long Term Goals and Objectives

Pepsi Limited Company operates in a very competitive market. Other than the global market, the company’s major market segment in the United States is very competitive. The company’s long term objectives touches on the critical interest of all the stakeholders who are involved directly and indirectly in the company’s operations .The long term objective of the company is to become a world class beverage and food Products Company that produces safe and quality products that meet the exact desire of consumers. Besides this, the company has an objective of maximizing the shareholders’ wealth while upholding sustainable operations’ principle. It is from these objectives that the company has designed a performance slogan known as ‘’performance with a purpose.’’ Pepsi Limited Company believes that their success is dependent on their level of investment in the company, the people (their clients) and the general society from which the company draws its stakeholders. According to the company’s directors, this level of incorporation will ensure that the company makes the vision of sustainable performance alive.

Strategy Formulation

This as had been reiterated earlier, is the process through which a particular company defines the best course of action that is to be followed by the company in realizing its long term objectives. Strategy formulation is part of strategic management. . According to Satyro et al. (2017), strategies typically emanate from the current policies of the subject organization or the present strategies. The diagram below summarizes a few aspects that must be taken into consideration in strategy formulation;

Other than the above aspects, the company will have to undergo the following stages in formulating the long terms strategies. The six phases that is required in strategy formulation are as follows;

Setting Up of the Objectives

Strategy is also known as the company vision. It is essentially where the company would like to be in the next foreseeable future. The objectives of a company are defined through the mission and the mission statements. As stated above, the company has a vision of being a world-class food and beverage class meeting the desires of the customers in both monetary and products’ terms. This according to the company will ensure that sustainability is upheld.

Scanning the Environment

            This is analysis of the internal and external factors that affect the operations of the company. The best tool used in environmental scanning is SWOT analysis. This is a tool that looks at the Strength, Weakness, Opportunities and Threats. Strength and weakness are internal environmental factors while opportunities and strengths are external environmental factors. The company has formulated and internal control system, in an effort to reduce the level of calls for its products (PepsiCo Inc SWOT Analysis, 2017). For external environment on the other hand, the company has put in place research and innovation that will ensure that it gains competitive advantage.

Setting up of Quantitative Targets

             These are tangible targets that the company would like to achieve after a certain duration. Targets are achieved through the production policies that the company has put in place. In case of Pepsi Limited Company, the quantitative targets are to have a profit margin of more than 30% within the next 4 years and be able to have a revenue of $ 70,000.

Customization of the Aims (Aiming within the Divisional Context)

       As was mentioned earlier, strategic management is achievable through corporate management. At this section, therefore, the contribution of each department or division to the overall strategy will be established (PepsiCo Inc SWOT Analysis, 2017). In the case of Pepsi Company, however, both divisional aims and subsidiaries’ aims will have to be put in place.

Performance Analysis          

         This involves a critical focus on the current production levels as well as the gaps that exists. It is worth to note that the gaps in operations are key contributors to efficiency levels. In the case of Pepsi Limited Company, the gap that exists is inefficiency in production that has led to recall of certain products. The company intends to fill the gap through intensified.

Choice of Strategy

      Based on the above, the company has chosen a strategy of stakeholder’s management and sustainable management in realizing its goals.

The Potential Markets and Unique Features to Purse Them

       The current market for Pepsi limited is concentrated in the United States. The company, therefore, plans to pursue the potential markets that it has identified in the continents of Asia and Africa. These will be pursued through provision of unique packaging which are attractive to the customers. Besides these, the company plans to introduce certain flavors like mango and pears that are perceived to be a preference for the potential markets.

Resources Capabilities and Management of Competitive Advantage

    According to PepsiCo Inc SWOT Analysis (2017), the company intends to have an injection of $ 300,000 that will be done in two phases during the next two trading periods. This will go along in increasing the production volume and intensifying the required research and development necessary for the company’s growth. Besides this, the company plans to intensify product promotion to counter the current high level of competition that it faces.

Business Management Strategy, Cost and Differentiation Strategy

      The company has settled on stakeholders’ management as one of its strategies in gaining competitive advantage. In an effort to attract more customers, the company will use a penetration pricing strategy. This means that the prices for the products will be set at a lower rate than the current market price of the substitute products.

Vertical Integration and Strategic Alliances

       Based on the fact that the company has branches globally, it must have a reliable means of distribution. The company is, therefore, planning to have large distribution points in all the countries where it has subsidiaries. Besides, the company will have licensed agents who will be reporting to the main distributors. In an effort to ensure that the company’s supply chain is efficient, the company will have an alliance with the suppliers of the containers it uses it packaging its products.

Company’s Chart Preferable

     In order to ensure that there is efficiency in implementing the above strategy, the following chart can be adopted;