Pest

http://web.ics.purdue.edu/~pbawa/421/pepsi%20cola%20pest%20case%20study.htm

PEST CASE STUDY: PEPSI COLA

SOME PERTINENT FACTS:

International markets have now become the hotspots for Pepsi. These markets are Eastern Europe, Mexico, china, Saudi Arabia and India.

* Pepsi has 37% global market share operating in 190 countries.

* At every level of Pepsi Cola Company great care is taken to ensure that highest standards are met in everything they do. In their product, packaging, marketing and advertising, they strive for excellence because they think their customer deserves better quality products. They promise to work towards improvements in all areas of their organisation.

* In their manufacturing and bottling process, strict quality controls are followed to ensure that Pepsi Cola products meet the same high standards of quality that customers expect from them. They also follow strict quality procedures during manufacturing and filling of their packages. Each bottle and can goes through inspection and testing process. Containers are rinsed and quickly filled through a high speed, state of the art process that helps prevent any foreign material from entering the product. Additional quality control measures help to ensure the integrity of Pepsi Cola products throughout the distribution process from warehouse to store shelf.

* Pepsi Cola local bottlers determine which products to pack and sell in their territory based on local consumer demand and other market factors. (VI 12) How do they promote their product

* Pepsi has a big enough market share to challenge Coca Cola. They have their best balance of promotions, communicating to their target audience through celebrities like Robbie Williams, David Bekham, Britney Spears, etc. The Pepsi chart also helps in promoting as the youth like music. Pepsi is gaining the football market from Coke. Pepsi also promotes on internet, newspaper, through sponsorships, radios, etc (http://www.pepsi.com/current/index.html)

* Pepsi also promote its products in the supermarkets by keeping discounts like buy one get one free. It also keeps competition with great prizes which catches the eye of the consumer.

PEST ANALYSIS

The PEST analysis examines changes in a marketplace caused by Political, Economical, Social and Technological factors.

P: Political change, from one party to another in control- for example the rise in private healthcare and privatisations under Conservative governments.

Political Analysis for Coca-Cola

Non-alcoholic beverages fall within the food category under the FDA. The government plays a role within the operation of manufacturing these products in terms of regulations. There are potential fines set by the government on companies if they do not meet a standard of laws.

The following are some of the factors that could cause Coca-Cola company's actual results to differ materially from the expected results described in their underlying company's forward statement:-

? Changes in laws and regulations, including changes in accounting standards, taxation requirements, (including tax rate changes, new tax laws and revised tax law interpretations) and environmental laws in domestic or foreign jurisdictions.

? Changes in the non-alcoholic business environment. These include, without limitation, competitive product and pricing pressures and their ability to gain or maintain share of sales in the global market as a result of action by competitors.

? Political conditions, especially in international markets, including civil unrest, government changes and restrictions on the ability to transfer capital across borders.

? Their ability to penetrate developing and emerging markets, which also depends on economic and political conditions, and how well they are able to acquire or form strategic business alliances with local bottlers and make necessary infrastructure enhancements to production facilities, distribution networks, sales equipment and technology.

E: Economic change, for example a recession creating increased activity at the lower ends of product price ranges. Rate of interest rises depressing business and causing redundancies and lower spending levels.

Economic Analysis for Coca-Cola

Last year the U.S. economy was strong and nearly every part of it was growing and doing well. However, things changed. Most economists loosely define a recession as two consecutive quarters of contraction, or negative GDP growth. On Monday 26, the government officially declared that the U.S. has been in recession since March. (CBS Market Watch. " U.S. Officially in a recession." Rex Nutting. [nov 26,2001]. www.cbsmarketwatch.com)

However, because of aggressive action by the Federal Reserve and Congress it will be short and mild. The economy will return to sustained, positive growth in the first half of 2002.

Future Outlooks

The Federal Reserve is doing all that it can help the economy recover. They have cut the interest rate ten times this year. The rate now lies at a 40-year low of 2%. Lowering the interest rates will ultimately excite consumer demand in the economy. Companies will expand and increase use of debt as a result of the low borrowing rates. Coca-Cola can borrow money for investing in other products as