Anda di halaman 1dari 71

314235540

Design Strategic Plan


Individual Case Analysis (PepsiCo-2009)

NAZIFA BTE ABD. GHANI (MR111037)

Assoc. Prof. Dr. Mas Bambang Baroto

International Business School


University Technology Malaysia
April, 2013

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Contents
1.0 Company background ....................................................................................................................... 3
2.0 Description of Industry ..................................................................................................................... 4
3.0 External Assessment ......................................................................................................................... 5
3.1 Positioning Diagram Strategic Group Identification ..................................................................... 5
3.2 Opportunities & Threats ............................................................................................................... 7
3.3 EFE matrix................................................................................................................................... 10
4.0 Internal Assessment ........................................................................................................................ 11
4.1. Strengths & weaknesses ............................................................................................................ 11
4.2 IFE Matrix .................................................................................................................................... 12
4.3 Value Chain Analysis (Non-Alcoholic beverages Segment)......................................................... 13
5.0 Strategy Formulation ...................................................................................................................... 16
5.1. SWOT Matrix .............................................................................................................................. 16
5.2 IE Matrix ...................................................................................................................................... 18
5.3 Strategy Formulation Conclusion................................................................................................ 18
6.0 Strategy Implementation ............................................................................................................ 19
6.1 Operation Management Process.................................................................................................. 19
6.1.1 Supply Management Process .............................................................................................. 19
6.1.2 Production Management Process ........................................................................................ 25
6.1.3 Distribution Process ............................................................................................................. 30
6.1.4 Risk Management Process ................................................................................................... 33
6.2 Customer Management Process .................................................................................................. 47
6.2.1 Customer Selection Process ................................................................................................ 47
6.2.2 Customer Acquisition Process ............................................................................................. 52
6.2.3 Customer Retention Process ............................................................................................... 57
6.2.4 Customer Growth Process .................................................................................................. 61

2|Page

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

1.0 Company background

Founder

Caleb Bradham in New Bern, North Carolina, 1898

Division

Non-alcoholic Beverage Industry

Net
revenue

Net
revenue by
division

Mission &
vision

The salty or Savory Snack Food Industry


Breakfast Food Industry
* PepsiCo is organized into three business units.
However, its three business units are comprised of six divisions: FLNA, QFNA, LAF,
PAB, EKEU, and MEAA
2006
2007
2008
$
$
$
(million)
(million)
(million)
35,137
39,474
43,251
2,615
2,845
2,959
FLNA

554
568
582
QFNA
655
714
897
LAF
2,315
2,487
2,026
PAB
700
774
811
UKEU
401
535
667
MEAA
Mission statement:
Our mission is to be the worlds premier consumer products company focused on
convenient food and beverages. We seek to produce financial rewards to investors as
we provide opportunities for growth and enrichment to our employees, our business
partners and the communities in we operate. And in everything we do, we strive for
honesty, fairness and integrity.

Vision statement:
PepsiCos responsibility is to continually improve all aspects of the world in which we
operate-environment, social, economic-creating a better tomorrow than today. Our
vision is put into action through programs and a focus on environmental stewardship,
activities to benefits society, and a commitment to build shareholder value by making
PepsiCo a truly sustainable company.

3|Page

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

2.0 Description of Industry


* Because of the lack information given in the case study and time limitation, the whole
analysis for this report will be only focused on Non-alcoholic beverages segment.

Name of the
industry
Industry Market
Cap
Industry Net
Income
Main competitors in
the industry

Non-Alcoholic Beverage Industry

Industry products
and services

PepsiCo: PepsiCo of late has a more focused strategy in the snack, breakfast
food and non-alcoholic beverage markets. The company produces Mountain
Dew, Mug Root Beer, Sierra Mist, Slice, Aquafina, Dola Juices and SoBe.

Make up a $395billion world market with carbonated drinks the largest share
of the market at $150 billion.

1. Coca-Cola
2. PepsiCo

Coca Cola: Coca Cola has continued to strengthen their juice, ready-to-drink
tea and coffee products, water and sport drinks along with the introduction
of Truvia as a sweetener.

*The industry composed of carbonated soft drinks, fruit and vegetables


juices, bottled water, sports and energy drinks, concentrates and ready-todrink coffee and teas.

4|Page

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

3.0 External Assessment


3.1 Positioning Diagram Strategic Group Identification
*Because of lack of information on Non-alcoholic beverages segments competitors, the
analysis is only focused on PepsiCo and Coca Cola Company since it is clear mentioned in
the case study that both of them are the major player in the industry.

Case facts of X axis - Market Share


Coca Cola and PepsiCo holding the largest share of the U.S market at 23 percent and
25percent respectively .Coca Cola however holds the largest share of the U.S cola market
at 41 percent with Pepsi second at 36.7 percent (Pg 74, Para 5).

Pepsi and Coke have fought the cola wars for decades and has generally beaten out Pepsi
for market share (Pg. 78, Para 3)

Case facts of Y axis Financial Position


The financial for Coca Cola shows a strong cash position of $4,979 billion and long term
debt only $2,781 billion. Coca Cola net profits of $5,807 billion in 2008 (See Exhibit 8) (Pg.
76, Para 1). Coca Cola shows a strong financial position and smaller long term debt
compare to PepsiCo.
Cost of sales for PepsiCo has increased as would be expected. These costs have increased
from 41.32 percent of sales to 43.43 percent of sales net income has decreased from $5.6
billion to $ 5.1 billion , return on assets has dropped from 18.81 percent to 15.17 percent ,
inventory turnover has decreased from 8.02 times to 7.81 times and long term debt has
increased from $4,203 billion in 2007 to $7.858 in 2008 (Pg.73, Para1).

5|Page

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Size of circle Product Diversification
Pepsi as bottlers of soft drinks. The company produces alsoMountain Dew, Mug Root Beer,
Sierra Mist, Slice, Aquafina, Dola Juices and SoBe (Pg.69, Para 4). In addition, Pepsi Co
includes the brands of Tropicana and Gatorade and this is just a partial list of the branded
products sold by Pepsi (Pg. 69, Para 4). PepsiCo has developed liquid refreshment products
that are light, calorie free, sugar free, caffeine free, sport and energy directed and flavoured
(Pepsi, Aquafina, Voltage). (Pg.70, Para1). Pepsi has ventured into conglomerate
diversification from van moving lines to sporting goods to fast foods. PepsiCo of late has a
more focused strategy in the snack, breakfast food and non-alcoholic beverage markets (Pg.
69, Para3). Today PepsiCo is a larger and more diversifies company than Coca Cola (Pg. 78,
Para 3).
Coca Cola has kept a fairly narrow focus. Coca-Cola seems to be following a very
concentrated strategy by focusing almost exclusively on non-alcoholic beverages with little
tendency to diversify. Additional as the demand for dark colas has diminished, Coca Cola has
continued to strengthen their juice, ready to drink tea and coffee products, water and sports
drinks along with the introduction of Truvia as a sweetener (Pg.76, Para 2).

Strong
Coca Cola
(25%)

Financial Position

PepsiCo
(23%)

Weak
10%

6|Page

20%
U.s
Market Share

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

3.2 Opportunities & Threats


To choose opportunities and threats I tried to find those that were critical for company and
able to give greatest impact to PepsiCo.
No.

1.
2.
3.

Opportunities
Steady overall growth for the last five years of around 9 percent with sports drinks, bottled
water, and energy drinks showing the largest growth (Pg.74, Para 4).
A recent environmental campaign against plastic containers has impacted the sales of
bottled water and forced manufacturers to develop more environmentally friendly
containers (Pg74, Para 6).
The market for these products requires manufactures to constantly develop new products to
meet those changing demands (Pg74, Para 6)

Opportunities
O1: Steady overall growth
for the last five years of
around 9 percent with
sports drinks, bottled
water, and energy drinks
showing the largest growth
(Pg.74, Para 4).
O2: Growth in the
carbonated drink market
was largest in Asia and
Europe (Pg74, Para 4).
O3: The market for these
products requires
manufactures to constantly
develop new products to
meet those changing
demands (Pg74, Para 6)

7|Page

Probability

Impact

Justification

Almost
certain

Extraordinary

Perform highest impact to PepsiCo in


conjunction to reduction demand on
carbonated drinks. Consumers start to
concern more on their healthy lifestyle.

Possible

Moderate

Likely

Major

Expanding business on these countries


might help increase PepsiCo revenues
and sales.

Able to give impact on PepsiCo


revenues and profits since the taste of
consumers always change.

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Probability
Almost
certain

Insignificant
Low

Minor
Medium

Moderate
High

Major
High

Extraordinary
High
1

Likely

Low

Medium

Medium

High

Possible

Low

Low

Medium O2

High

High

Unlikely
Rare

Low
Low

Low
Low

Low
Low

Medium
Medium

Medium
Medium

O3

High

No. Threats
1. The downturn in the economy has also affected the sales of colas and water as some
consumers have switched to store brands and tap water as cheaper alternatives to the
national brands (Pg.74, Para 6).
2. Consumer taste continues to change, and Pepsi must also continue to change (Pg 69, Para 3).
In United States, the carbonated soft drinks market has shown a decline of 0.4 percent as
consumers shifted from soft drinks to bottled water and sports drinks (Pg. 74, Para).
3. Fought the Cola wars, Coca Cola holds the largest share of the U.S cola market at 41 percent
(Pg74, Para 5). Coca Cola is the largest producer and distributor in the world and is PepsiCos
major competitor (Pg. 76, Para 1).

Threats
T1: The downturn in the
economy has also affected
the sales of colas and water
as some consumers have
switched to store brands
and tap water as cheaper
alternatives to the national
brands (Pg.74, Para 6).
T2: Consumer taste
continues to change, and
Pepsi must also continue to
change (Pg 69, Para 3). In
United States, the
carbonated soft drinks
market has shown a
decline of 0.4 percent as
consumers shifted from soft
drinks to bottled water and
sports drinks (Pg. 74, Para).
T3: Fought the Cola wars,
8|Page

Probability

Impact

Likely

Major

Able to reduce PepsiCo sales and


revenues since the consumers have an
ability to switch to their national brands
as well as interested more on cheaper
price.

Almost
certain

Extraordinary

In order to avoid competition from


other rivals and as to retain loyal
consumer, the company should fast
responsive to the consumer
preferences.

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Coca Cola holds the largest
share of the U.S cola
market at 41 percent (Pg74,
Para 5). Coca Cola is the
largest producer and
distributor in the world and
is PepsiCos major
competitor (Pg. 76, Para 1).

Likely

Probability
Almost
certain
Likely

Major

Able to give major impact towards


PepsiCos business, growth and
position in the industry since Coca Cola
is the closest competitor. Coca Cola has
a strong brand reputation and even
posses strong financial position if
compare to PepsiCo.

Insignificant
Low

Minor
Medium

Consequences
Moderate
Major
High
High

Low

Medium

Medium

High
T1

Possible

Low

Low

Medium

High

Unlikely
Rare

Low
Low

Low
Low

Low
Low

Medium
Medium

9|Page

Extraordinary
High
T2
1
High

T3

High
Medium
Medium

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

3.3 EFE matrix

No.
1.

2.
3.

EFE
Opportunities

Steady overall growth for the last five years of


around 9 percent with sports drinks, bottled
water, and energy drinks showing the largest
growth (Pg.74, Para 4).
Growth in the carbonated drink market was largest
in Asia and Europe (Pg74, Para 4).
The market for these products
requires
manufactures to constantly develop new products
to meet those changing demands (Pg74, Para 6)

No

Threats

1.

The downturn in the economy has also affected the


sales of colas and water as some consumers have
switched to store brands and tap water as
cheaper alternatives to the national brands (Pg.74,
Para 6).
Consumer taste continues to change, and Pepsi
must also continue to change (Pg 69, Para 3). In
United States, the carbonated soft drinks market
has shown a decline of 0.4 percent as consumers
shifted from soft drinks to bottled water and
sports drinks (Pg. 74, Para).
Fought the Cola wars, Coca Cola holds the largest
share of the U.S cola market at 41 percent (Pg74,
Para 5). Coca Cola is the largest producer and
distributor in the world and is PepsiCos major
competitor (Pg. 76, Para 1).

2.

3.

Weight Ratings Weighted score


0.18

0.72

0.13

0.39

0.17

0.51

0.16

0.48

0.20

0.80

0.16

0.48

Total
1

10 | P a g e

3.38

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


4.0 Internal Assessment

4.1. Strengths & weaknesses


In order to choose the Strengths and weaknesses, I have classified the strength level into three
significant categories (Competence, Core Competence and Distinctive Competence). In this
case, Distinctive Competence will be chosen for further assessment as this category shows
that PepsiCo able to perform unique capabilities that distinguish the organisation from its
competitors .

No.

1.
2.

3.
4.

5.
6.

7.

Strengths
Competence
Pepsi has ventured into conglomerate diversification from van moving lines to sporting goods
to fast foods (Pg. 69, Para3).
PepsiCo must appeal to the ultimate consumer through extensive advertising and promotional
activities. This Pull marketing strategy is highly dependent on creative marketing and
development of catchy slogans along with Pepsi Cola brands (Pg. 70, Para 1).
PepsiCo recently offered $6billion to retake ownership of its two largest bottlers, Pepsi
Bottling Group (PBG) and Pepsi Americas(PAS) (Pg. 68, Para 5).
Core Competence
Bradham followed the example of Coca Cola and used the bottling franchise system in which
he produced the syrup and others bottled and distributed. This business model allowed for
quick expansion and market penetration (Pg.69, Para69).
Pepsi and Coke become the largest worldwide producer of non-alcoholic beverages (Pg. 69,
Para3)
PepsiCo., Inc. is indeed a large company and is defined in the 10K as a leading global
beverage.. in approximately 200 countries with largest operations in North America
(Unites States and Canada) Mexico and United Kingdom (Pg. 69, Para5)
Distinctive Competence
Doubled the size of its bottle to 12 ounces, charging one nickel, when the standard was
6ounces. This low- cost differentiation strategy proved very successful and become a major
player in Cola industry (Pg.69, Para 2)

8.

Pepsi seems to be developing synergy between product categories with breakfast foods, and
non alcoholic beverage markets and at the same time moving into the water and sport
beverage market.(Pg69, Para3). These combinations and promotions allow PepsiCos bottlers
enhanced ability to gain retail shelf space (Pg. 78, Para 4).

9.

Pepsi continues to expand its markets in beverage through market penetration, mergers and
acquisitions (Pg. 69, Para6). Acquired Amacoco Nordeste Ltda and Amacoco Sudeste Ltda,
Brazil largest makers of packaged coconut water drinks and is expanding its presence in South
Americas largest nation (Pg. 78, Para 6).

11 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


No. Weaknesses
Highly dependent on supplies
1.
of clean water (Pg.74, Para 6).

2.

3.

Cost of sales has increased as


would be expected, net
income has decreased, return
on assets has dropped ,
inventory turnover has
decreased and long term
debt has increased. The
trends might indicate future
problem areas.(Pg.73, Para1).
Force PepsiCo to innovate
new products and at the
same time re-evaluate
current product offerings
(Pg.78, Para4).

Most Incompetence

Justification
Compare to PepsiCo closest
competitor Coca Cola,
PepsiCo should be able to
establish its own water
sources as producing
contaminated carbonated
drink results to damage
PepsiCo brand reputation.

Most Incompetence
As Coca Cola posses strong
financial position, PepsiCo
encountered financial
problem that need to be
resolved. This financial
instability gives impact
towards PepsiCo performance
and profitability in future.
Most Incompetence

As meeting consumer
demands is critical in this
industry, innovation is the key
success for PepsiCo

4.2 IFE Matrix

No.
1.

IFE
Strengths

Weight Ratings Weighted score

Doubled the size of its bottle to 12 ounces,


charging one nickel, when the standard was
6ounces. This low- cost differentiation strategy
proved very successful and become a major player
in Cola industry (Pg.69, Para 2)

0.22

0.88

2.

Pepsi seems to be developing synergy between


product categories with breakfast foods, and non
alcoholic beverage markets and at the same time
moving into the water and sport beverage
market.(Pg69, Para3). These combinations and
promotions allow PepsiCos bottlers enhanced
ability to gain retail shelf space (Pg. 78, Para 4).

0.16

0.48

3.

Pepsi continues to expand its markets in beverage


through market penetration, mergers and
acquisitions (Pg. 69, Para6). Acquired Amacoco
Nordeste Ltda and Amacoco Sudeste Ltda, Brazil
largest makers of packaged coconut water drinks
and is expanding its presence in South Americas
largest nation (Pg. 78, Para 6).

0.20

0.80

12 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


No.
1.

Weaknesses
Highly dependent on supplies of clean water
(Pg.74, Para 6).

2.

Cost of sales has increased as would be expected,


net income has decreased, return on assets has
dropped , inventory turnover has decreased and
long term debt has increased. The trends might
indicate future problem areas.(Pg.73, Para1).
Force PepsiCo to innovate new products and at the
same time re-evaluate current product offerings
(Pg.78, Para4).

3.

Total

0.18

0.18

0.12

0.12

0.12

0.24

2.70

4.3 Value Chain Analysis (Non-Alcoholic beverages Segment)


Value Chain provides a model of how PepsiCo, makes revenue and profit from the raw
materials. The facts in Value chain is the critical facts based on an internal assessment.

13 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Culture

Management

Pepsis desire to own its own bottlers is to spur its non-carbonated health and
wellness products, which are often smaller volume, slower moving products (Pg.
68, Para 5). And in everything we do, we strive for honesty, fairness and
integrity. At PepsiCo, were committed to achieving business and financial success
while leaving a positive imprint on society-delivering what we call Performance
with Purpose. (Pepsi Co Mission &Vision, March 2009).
PepsiCo recently offered $6billion to retake ownership of its two largest bottlers,
Pepsi Bottling Group (PBG) and Pepsi Americas(PAS) (Pg. 68, Para 5). Pepsi has
ventured into conglomerate diversification from van moving lines to sporting
goods to fast foods (Pg. 69, Para3). PepsiCo is organised using three business units
of PepsiCo Americas Foods, PepsiCo America beverages and PepsiCo
International. (Pg. 69, Para7).

Finance

First quarter 2009 PepsiCos net revenue of $8,263 million were down $70 million
from the same quarter in 2008 (Pg.68,Para2). PepsiCo invest $1bilion in Russia
over the next three years, bringing its total investment to$4billion over a ten year
time span. PepsiCo will also invest over $1billion in China over the next 4 years
(Pg.68, Para4) .

Production

PepsiCo opened a new factory in Shanghai in June 2009and plans to open another
five plants in China over the next two year. The new plant will manufacture Pepsi
Cola, Mountain Dew, Gatorade, Tropicana juices and bottled water. The new
Pepsi plant uses 22 percent less water and 23 percent less energy than the
average Pepsi plant in China (Pg.68, Para3). PepsiCo control costs by decreasing
cost of goods sold by $90million (Pg.68,Para2). Initiated projects to increase
recycled materials and reduce materials used in packaging (Pg.74,Para2).

R&D/ MIS

Raw
Material
The principal
ingredient of
its primary
product is
waterdevel
oped countries
(Pg.74, Para2).

14 | P a g e

Appealing Web pages with the latest ads and product-related games (Pg.70, Para2).

Production/
Operation

Product/ Service

Marketing

Distribution

PepsiCo results
continued the down
ward trend with
beverage volume
down 6 percent.
However international
beverages volume was
up 6 percent (Pg.68,
Para2). Loft doubled
the size of its bottle
to 12 ounces,
charging one nickel,
when the standard was
6ounces. This lowcost differentiation
strategy proved very
successful (Pg.69,
Para 2).
Pepsi manufacture the
concentrates and
syrups which are then
sold to bottlers (
Pg.74, Para 6).
Operates in Canada,
Latin America,
Europe, Middle East,
Asia, Northern Asia,
Australia and Asia
Pacific (Pg. 69,
Para5).

Bradham followed
the example of Coca
Cola and used the
bottling franchise
system in which he
produced the syrup
and others bottled
and distributed
(Pg.69, Para69). .
The company
produces Mountain
Dew, Mug Root
Beer, Sierra Mist,
Slice, Aquafina,
Dola Juices and
SoBe (Pg.69, Para4).
Developed liquid
refreshment products
that are light, calorie
free, sugar free,
caffeine free, sports
and energy directed
and flavoured
(Pepsi, Voltage,
Aquafina) (Pg. 70,
Para1)

Pepsi and Coke become


the largest worldwide
producer of nonalcoholic beverages
(Pg. 69, Para3).
PepsiCo. in
approximately 200
countries with largest
operations in North
America
Mexico and United
Kingdom (Pg. 69,
Para5). PepsiCo must
appeal to the ultimate
customer through
extensive advertising
and promotional
activities. This pull
marketing strategy
highly dependent on
creative marketing and
development of catchy
slogans(Pg70, Para1).
Uses all available media
to promote its products
and attempts to attract
younger consumers
through Web-related
media such as You tube
and have appealing
Web pages with the
latest ads and product
related games (Pg.70,
Para2).

PBG and PAS


distribute
nearly 75
percent of
Pepsi drinks in
the United
States,
excluding
Gatorade (Pg.
68, Para5).
PepsiCo works
closely with its
bottlers and
retailers
(Pg.70,Para2).
Distribute the
finished
products to
grocery stores,
convenience
stores,
restaurant and
vending
machines
(Pg.74, Para6).

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Value Chain Flowchart
(Non-Alcoholic beverages Segment):

Products:

Received Raw
materials from
Supplier

Manufacturing

Serves non-alcoholic beverage markets: Pepsi-Cola,


Mountain Dew, Mug Root Beer, Sierra Mist, Slice, Aquafina,
Dola Juices and SoBe projectors, Gatorade, Tropicana juices
&bottled water

(concentrate and
syrups)

(The principal
ingredient is
water)

Marketing efforts: (Value Propositioning, brand development and


management, market development, Channel management).
Spent heavily on sales incentives, discounts, advertising and promotions.
Works closely with bottlers and retailers in promoting and advertising its products.
Creates memorable and catchy slogans to attract and hold consumers.

Service:
Customer liaison
Distributor liaison
Product and service liability

Customers/ Retailers

Distribution (Value Delivery):

(Its major customers are large


retailers Wall Mart)

PBG and PAS distribute nearly 75


percent of Pepsi drinks in the United
States, excluding Gatorade (Pg. 68,
Para5). Bottlers Distribute the finished
products to grocery stores, convenience
stores, restaurant and vending machines
(Pg.74, Para6).

Consumers

Reference:
Process Flow :
Information and Money
Flow

15 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

5.0 Strategy Formulation


5.1. SWOT Matrix
SWOT Matrix

Opportunities
1. Steady overall growth for
the last five years of around 9
percent with sports drinks,
bottled water, and energy
drinks showing the largest
growth (Pg.74, Para 4).

2. Growth in the carbonated


drink market was largest in
Asia and Europe (Pg74, Para
4).

3. The market for these


products requires
manufactures to constantly
develop new products to meet
those changing demands (Pg74,
Para 6)

Strengths
1. Doubled the size of its bottle to 12
ounces, charging one nickel, when the
standard was 6ounces. This low- cost
differentiation strategy proved very
successful and become a major player in
Cola industry (Pg.69, Para 2)

2. Pepsi seems to be developing synergy


between product categories with breakfast
foods, and non alcoholic beverage
markets and at the same time moving into
the
water
and
sport
beverage
market.(Pg69,
Para3).
These
combinations and promotions allow
PepsiCos bottlers enhanced ability to
gain retail shelf space (Pg. 78, Para 4).
3. Pepsi continues to expand its markets
in beverage through market penetration,
mergers and acquisitions (Pg. 69, Para6).
Acquired Amacoco Nordeste Ltda and
Amacoco Sudeste Ltda, Brazil largest
makers of packaged coconut water
drinks and is expanding its presence in
South Americas largest nation (Pg. 78,
Para 6).

16 | P a g e

SO Matches

SO1 : Utilize Total Quality


Management Practice aiming for
high quality of end products by
simultaneously driving down cost
(S1, O1,03)

SO2: Develop Innovative


Customer-Oriented Product by
relying on well-research
customer needs to respond
towards the growing demand of
sports drinks, bottled water
and energy drinks (S3,O1,03)

Threats
1. The downturn in the
economy has also affected the
sales of colas and water as
some consumers have
switched to store brands and
tap water as cheaper
alternatives to the national
brands (Pg.74, Para 6).
2. Consumer taste continues
to change, and Pepsi must also
continue to change (Pg 69,
Para 3). In United States, the
carbonated soft drinks market
has shown a decline of 0.4
percent as consumers shifted
from soft drinks to bottled
water and sports drinks (Pg.
74, Para).
3. Fought the Cola wars, Coca
Cola holds the largest share of
the U.S cola market at 41
percent (Pg74, Para 5). Coca
Cola is the largest producer
and distributor in the world
and is PepsiCos major
competitor (Pg. 76, Para 1).
ST Matches
ST1: Innovate product line by
offering healthier alternatives
in order to differentiate
PepsiCo from Coca Cola
(S1,T3)

ST2: Satisfy the buyer's


requirements by offering more
promotions and discounts to
prevent sales from decreasing
(S2,T1)

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Weaknesses
1. This company highly dependent on
supplies of clean water (Pg.74, Para 6).

2. Cost of sales has increased as would


be expected, net income has decreased,
return on assets has dropped , inventory
turnover has decreased and long term
debt has increased. The trends might
indicate future problem areas.(Pg.73,
Para1).

WO Matches
Improve business sales by
responding towards increasing
demands for sports drinks,
bottled water and energy drinks
(W2,O1)
Increase presence in the
International market and
expand Pepsi Soda product in
Asia and Europe in order to
improve financial stability
(W2,O2)

WT Matches
Forecast the trends by relying
on marketing intelligence and
Research & Development to
distinctively different from the
rest of the market.(W1,W3,T3)
Adjust production of bottlers
with downturn in economy by
utilising flexible manufacturing
system to create differentiated
products at low cost
(W2,W3,T1)

3. Force PepsiCo to innovate new


products and at the same time reevaluate current product offerings
(Pg.78, Para4).

SWOT conclusion:
Based on the SWOT analysis the corporate level and business level strategies are as follows:
Corporate Level Strategy
No

1.

Type of strategy
Cost Leadership
(Type 2)

SO1 : Utilize Total Quality Management Practice aiming for


high quality of end products by simultaneously driving down cost
(S1, O1,03)

Business Level Strategy


No

Type of strategy

1.
Product
Development

SO2: Develop Innovative Customer-Oriented Product by relying


on well-research customer needs to respond towards the growing
demand of sports drinks, bottled water and energy drinks
(S3,O1,03)

*IE matrix will be used in the analysis in order to support the company strategy chosen
from SWOT analysis.

17 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

5.2 IE Matrix
The IFE Total Weighted Score
Strong

Average

Weak

The EFE Total Weighted Score

1.0
4.0
High

3.0

2.0
Grow and Build

3.0
Medium

2.0
Low

1.0

EFE

IFE

3.38

2.70

The division falls into cell II which can be described as grow and build. Intensive strategies
such as product development can be most appropriate for this division.

5.3 Strategy Formulation Conclusion


IE matrix results, shows that PepsiCo should Grow and Build its position. This means
intensive and aggressive tactical strategies should be done. Therefore, related strategies with
grow and build (market penetration, market development, and product development) will be
extracted from S/O strategies (SWOT Matrix). These alternative strategies:

18 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Original Sentences:
Business Level Strategy Cost Leadership (Type 2): SO1 : Utilize Total Quality
Management Practice aiming for high quality of end products by simultaneously driving
down cost (S1, O1,03)
Corporate Level Strategy Product Development: SO2: Develop Innovative CustomerOriented Product by relying on well-research customer needs to respond towards the growing
demand of sports drinks, bottled water and energy drinks (S3,O1,03)

6.0 Strategy Implementation


6.1 Operation Management Process
The theme of Operational Management Processes:
Implement TQM practice for lowering the costs of production with better quality of
produced products
Produce new healthier drinks and sports drinks from well-research customer needs

6.1.1 Supply Management Process


Define the objectives in Supply Processes
Reduce the cost of ownership for raw materials of sports drinks, bottled water and
energy drinks
Achieve Just-In-Time supplier capability
Implement efficient supplier quality management

19 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Objective

Balance Scorecard (BSC)

Reduce the cost of ownership


for raw materials of sports
drinks, bottled water and
energy drinks

Measure

Target

Price/cost of product,
customer profitability

10% reduction target


5% Increase in terms of customer
profitability (compare to
competitor selling price)

Achieve Just-In-Time
supplier capability

Quick response time,


On-time delivery, correct quantity,
Percent of late orders
flexibility to respond to unexpected
demand changes, willingness to
participate in PepsiCo new product
development

5 % Increase in terms of speeding


up customer response while
minimizing inventories (compare
to year before)

Implement efficient supplier


quality management

Supplier feedback survey, supplier


performance survey, quality level,
presence of certification/ other
documentation
Percent of perfect order received,
percent of supplier qualified to
deliver without incoming
inspection

Zero defect production

Linkage to Production
Operation Management Processes (Supply)

Production

Objectives

Reduce the cost of ownership for


raw materials of sports drinks,
bottled water and energy drinks
Achieve Just-In-Time supplier
capability

Implement efficient supplier


quality management

LPCSDBW&ED

LPCSDBW&ED

EQCNPL

Note:

1. LPCSDBW&ED = Lower Production Costs of Sports Drinks, Bottled Water &


Energy Drinks
2. EQFNPL = Ensure Quality Control for New Production Line

20 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Risk Management

Operation Management Processes (Supply)

Risk Management

Objectives

Reduce the cost of ownership for raw


materials of sports drinks, bottled
water and energy drinks
MSR, MTR1

Achieve Just-In-Time supplier


capability

MQR1,
MOR1

Implement efficient supplier quality


management

Note
MQR1 = Manage Quality Risk
MTR1= Manage Technological Risk
MOR1 = Manage Operational Risk
MSR = Manage Supplier Risk

(Supply)

Linkage to Customer Perspective

Operation Management
Processes (Supply)
Price

Customer Perspective
(Customer Value Proposition)
Quality Availability
Selection

Brand

OLPV

IPA

FOPSC

ICS

EQ

IPA

FOQSC

ERBI*

EQ

IPR

FOQSC

ERBI*

Objectives

Reduce the cost of


ownership for raw
materials of sports
drinks, bottled water
and energy drinks
Achieve Just-In-Time
supplier capability

Implement efficient
supplier quality
21 | P a g e

LPC

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


management

Note:

(CVP)

OLPV, IPA, FOPSC, ICS = Offer lower price with Value, Increase
Product Availability, Focus on Price Sensitive Customer, Increase
Customer Satisfaction
LPC = Lower Production Costs
FOQSC = Focus On Quality Sensitive Customer
ERBI* = Enhance Reputation on Brand Image
IPV = Increase Product Variety
IPR = Increase product Reliability
EQ = Enhance Quality
*indirect objective through Customer Management processes

Linkage to Financial Perspective

Operation Management Processes


(Supply)

Objectives

Financial Perspective
Improve
Cost
Structure

Increase
Assets
Utilization

LPC

Expand
Revenue
Opportunities

Enhance
Customer
Value

IBV

DCC

Reduce the cost of ownership


for raw materials of sports
drinks, bottled water and
energy drinks
Achieve Just-In-Time supplier
capability

Implement efficient supplier


quality management

22 | P a g e

MIC

TD,MROI

GHS, IOM

RDC,
RCSE

EQIM

IRG

LTRLT,
OCC,
PQP

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Note
LPC = Lower Production Costs
IBV = Increase Business Volume
DCC = Decrease Customer Costs
ISPSC = Increase Satisfaction Among Price Sensitive Customers
GHS, IOM = Generate Higher Sell, Increase Operating Margin
MIC = Minimum Inventory Cost
TD = Timely Delivery
OCC = Offer Customers Convenience
PQP = Provide Quality Product
MROI = Maximize Return on Investment
RDC, RCSE = Reduce Defect Cost, Reduce the Cost of Supplier Errors
LTR-LT = Long Term Relationship-Loyalty and Trust
MSCQ = Maximize supply Chain Quality
RWC= Reduce Waste Cost
IRG = Increase revenue Growth

(Supply)

Those objectives should later be carried out to the Financial Pers. accumulatively

Linkage to Learning & Growth

Operation Management Processes (Supply)

Learning & Growth

Objectives

Human
Capital

Information
Capital

Organizational
Capital

Reduce the cost of ownership for raw


materials of sports drinks, bottled
water and energy drinks

LPST,ACBMSC

DTFPI

IFS

Achieve Just-In-Time supplier


capability

LPST,ACBMSC

DTFPI

ECA , IFS,FQC

DSK,DSM

DFC,DPC,QPC

IQMS,IFS, FQC

Implement efficient supplier quality


management

23 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Note:
LPST,ACBMSC =Learning the Principles, Skills and Technologies ,
Adequate Communications between the Members of Supply Chain
ECA,IFS, FQC = Enhance Completive Advantage, Improve Finance Situation, Foster
Quality Culture
DTFPI = Develop Technology for Process Improvement
ESCE,QPC = Enhance Supply chain Effectiveness, Quality Policies Conformity
QFD,QPC = Quality Function Deployment, Quality Policy Conformity
ECA = Enhance Completive Advantage
DSK,DSM = Develop Self-Knowledge, Develop Self-Motion
DFC,DPC,QPC= Develop Fishbone Chart, Develop Pareto Chart, Quality Policies &
Conformity
IQMS,IFS,FQC,ICS = Improve Quality Management System, Improve Finance Situation,
Foster Quality Culture

24 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


6.1.2 Production Management Process
Define the objectives in Production Processes
Lower Production Costs of Sports Drinks, Bottled Water & Energy Drinks (Linkage
from Supply Process)
Ensure Quality of Finished Product (Linkage from Supply Process)
Produce Innovative products based on well-research customer needs (New
Objectives)
Objective
Lower Production Costs of
Sports Drinks, Bottled
Water & Energy Drinks
Ensure Quality of Finished
Product

Produce Innovative
products based on wellresearch customer needs

Balance Scorecard (BSC)


Measure
Cost per unit of Output,
Percent of operating income,
Percent of cash flow improvement

Target
Increase 15% of company
profitability (compared to
year before)

Percent of defect reduction


Number of customer complains,
Survey of customer satisfaction,
Percent of shipments returned due
to poor quality
Percent of sales obtained from new
products,
Number of New Product Launches,
Measure of how well the company
identifies the customers future
need

Zero defect

Increase sales from new


products,
customer needs met,
customer satisfaction
customer retention

Linkage to Distribution
Operation Management Processes
(Production)

Distribution

Objectives

Lower Production Costs of Sports


Drinks, Bottled Water & Energy Drinks
Ensure Quality of Finished Product

LCS
PSDBWEDMQE

Produce Innovative products based on


well-research customer needs
Note:
LCS=lower Cost to Serve
PSDBWEDMQE = Production of Sports Drinks, Bottled Water and Energy Drinks Meet Quality
Expectation

25 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Risk Management

Operation Management Processes


(Production)
Objectives

Lower Production Costs of Sports


Drinks, Bottled Water & Energy Drinks
Ensure Quality of Finished Product
Produce Innovative products based on
well-research customer needs
Note
MOR2 = Manage Operational Risk
MTR2= Manage Technological Risk
MFCR = Manage Forecast Cost Risk
MQR2 = Manage Quality Risk

26 | P a g e

Risk Management

MOR2
MQR2
MFCR

MTR2

(Production)

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Customer Perspective

Operation Management Processes


(Production)

Customer Perspective
(Customer Value Proposition)

Objectives

Price
Lower Production Costs of
Sports Drinks, Bottled Water
& Energy Drinks
Ensure Quality of Finished
Product
Produce Innovative products
based on well-research
customer needs

Quality

LCC

Availability Selection
HPA

FOPSC

EBV

EBV,
LTRCL&T
EBV,
LTRCL&T

ORP

EQP

HPA,DOT

FOQSC

ORP

ICL

RRCP

FOCHL

Note:
LCC =Lower customers cost
ORP = Offer Reasonable Price
FOPSC = Focus on Price Sensitive Customers
FOQSC = Focus on Quality Sensitive Customers
FOCHL = Focus on Consumers Healthy Lifestyle
EQP = Excellence Quality Product
EBV = Enhance Brand Value
DOT = Deliver on Time
HPA = High Product Availability
ICL = Increase Customer Loyalty
RRCP = Rapid Respond to consumer Preferences
LTR-CL&T = Long Term Relationship Customer Loyalty & Trust

* Those objectives should later be carried out to Customer Pers. Accumulatively.

27 | P a g e

Brand

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Financial Perspective

Operation Management
Processes (Production)
Objectives

Financial Perspective

Improve Cost
Structure
Lower Production Costs of
Sports Drinks, Bottled
Water & Energy Drinks
Ensure Quality of Finished
Product
Produce Innovative
products based on wellresearch customer needs

DPC,RIC,
RWC, IOI

Increase
Assets
Utilization
MROI,
IPE&P

Expand
Revenue
Opportunities
ISG,
IRFNPS

Enhance
Customer
Value

IRMCE

ICP, ICS

IRRRCP,
IRCPI

ICS

ICP

MFAU

RD, RWC

Note
DPC, RIC, RWC, IOI = Decrease Production Costs , Reduce Incurred Cost, Increase Operating
Income
RD, RWC = Reduce Defects, Reduce Waste Costs
MROI, IPE&P = Maximizing Return on Investment, Increase Process Efficiency
&Productivity
ISG = Increase Sales Growth
IRMCE = Increase Revenue for Meeting Customer Expectation
IRCPI = Increase Revenue for continual Product Improvement
IRRRCP = Increase Revenue for Rapidly Respond to Consumer Preferences
ICP = Increase Customer Profitability
ICS = Increase Customer Satisfaction
MFAU = Maximize fixed asset utilization
IRFNPS = Increase Revenue From Number of Product Sold
*Those objectives should later be carried out to the Financial Pers. Accumulatively

28 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Learning & Growth Perspective

Operation Management Processes


(Production)

Learning & Growth

Objectives

Lower Production Costs of Sports


Drinks, Bottled Water & Energy Drinks
Ensure Quality of Finished Product

Produce Innovative products based on


well-research customer needs

Human
Capital

Information
Capital

Organizational
Capital

ISTQM,CEPI,
ETITQME
ETIQA,
DSK,DSM,
PHACCPTP,
PGMPTP
DCS

IABC

DTQMC,IOE,
IFS
IQC,
IQMS,GCA

ICPI, ICSL,
GMP,HACCP

ICSL, ITFPI

DP, FIC,
CCII&C,
DC-OC

Note:
ISTQM, CEPI, ETITQME= Improve Skills in Total Quality Management, Competence Employee in
Process Improvement, Employees Training in TQM Environment
IABC = Implement Activity-Based Costing
DTQMC, IOE, IFS = Improve Operational Efficiency, Improve Finance Situation, Develop TQM
Culture
ITFPI = Improve Technology that Facilitates Product Improvement
DP, FIC, CCII&C, DC-OC = Develop Patent, Foster Innovation Culture, Culture of Continuous
Improvement, Innovation and Creativity, Develop Customer-Oriented Culture
ETIQA, DSK, DSM = Employees Training in Quality Assurance, Develop Self-Knowledge, Develop SelfMotion
ICPI, ICSL = Improve Customer Preferences Information , Improve Customer Satisfaction
Level
IQC, IQMS, GCA = Improve Quality Culture, Improve Quality Management System, Gain
Competitive Advantage
DCS = Develop Creativity Skills
ICSL, ITFPI = Improve Customer Satisfaction Level, Improve Technology that Facilitates
Product Improvement
PHACCPTP = Provide Hazards Analysis Critical Control Points Training Program
PGMPTP = Provide Good Manufacturing Practice Training Program
GMP = Good Manufacturing Practices
HACCP = Hazard Analysis Critical Control Points

*Those Objectives should be carried out to the Learning &Growth Perspective accumulatively

29 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

6.1.3 Distribution Process


Define the objectives in Distribution Processes
Lower Cost to Serve (Linkage from Production)
Production of Sports Drinks, Bottled Water and Energy Drinks Meet Quality
Expectation (Linkage from Production)
Responsively Delivery Capability (New Objective)

Objective
Lower Cost to Serve

Production of Sports Drinks,


Bottled Water and Energy
Drinks Meet Quality
Expectation
Responsively Delivery
Capability

Balance Scorecard (BSC)


Measure
*ABC cost of storage and delivery
to customers,
Cycle Time
Percentage of shipments returned
Due to poor quality, Number of
items reworked

Target
15 % Increase in Sales
Growth, Decrease Cycle
Time
5 % decrease of shipment
returned, Increase quality

Percent of Delivery On-Time


Number of overdue deliveries,
Customer Response Time

Increase On-Time Delivery

Linkage to Risk Management


Operation Management Processes
(Distribution)
Objectives
Lower Cost to Serve
Production of Sports Drinks, Bottled Water
and Energy Drinks Meet Quality
Expectation
Responsively Delivery Capability
Note
MTR3 = Manage Technology Risk
MOR3= Manage Operational Risk
MDR = Manage Distribution Risk
MQR3 =Manage Quality Risk

Risk Management

MOR3
MQR3

MDR,MTR3

(Distribution)

Those objectives should later be carried out to the Risk Management as


accumulative Objectives.

30 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Customer Perspective

Operation Management
Processes (Distribution)
Objectives
Lower Cost to Serve
Production of Sports Drinks,
Bottled Water and Energy
Drinks Meet Quality
Expectation
Responsively Delivery
Capability

Customer Perspective (Customer Value Proposition)

Price

Quality

Availability

Selection

Brand

EQ

HPA
HPA

FOPSC
FOQSC,
FOCHL

EBI
ILTBN

EQ

DOT

DPP

ILTBN

Note:
HPA = High Product Availability
DOT = Deliver on Time
EQ = Excellence Quality
FOPSC = Focus on Price Sensitive Customers
FOQSC = Focus on Quality Sensitive Customers
FOCHL = Focus on Consumer Healthier Lifestyle
BPA = Broader Range of Products
ICT =Increase Customer Trust
EBI = Enhance Brand Image
ILTBN = Increase Loyalty to Brand Name
MPQ = Maintain Product Quality

Those objectives should later be carried out to Customer Pers. Cumulatively.

31 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Financial Perspective

Operation Management
Processes (Distribution)

Financial Perspective

Improve
Cost
Structure

Increase
Assets
Utilization

Expand
Revenue
Opportunities

Enhance
Customer
Value

ICF,IRPSC,ISG

ICP

Objectives
Lower Cost to Serve

EVA, DCGS

Production of Sports Drinks, Bottled


Water and Energy Drinks Meet
Quality Expectation
Responsively Delivery Capability

IRMCE, IRQSC

Note
EVA,DCGS = Economic Value Added, Decrease Cost of Goods Sold
ICF, IRPSC,DFG = Increase Cash Flow, Increase Revenue of Price Sensitive
Customers, Increase Sale Growth
IRQSC = Increase Revenue of Quality Sensitive Customers
IRMCE = Increase Revenue for Meeting Customer Expectation

IRQSC = Increase Revenue of Quality Sensitive Customers


ICP = Increase Customer Profitability
Those objectives should later be carried out to the Financial Pers. Cumulatively
Linkage to Learning & Growth Perspective
Operation Management Processes
(Distribution)

Human
Capital

Learning & Growth


Information Organizational
Capital
Capital

Objectives
Lower Cost to Serve
Production of Sports Drinks, Bottled Water
and Energy Drinks Meet Quality Expectation
Responsively Delivery Capability

MSC
CEIQC
CEDPI

IQAP, SOCS,
QPC
DTFPI

IFS
IQMS, FQC
IQMS

Note
CEDPI = Competence Employees in Distribution Process Improvement
IFS = Improve Finance Situation
MSC = Maintain Staff Competence
CEIQC = Competence Employees in Quality Control
IQAP, SOCS,QPC = Improvement on Quality Assurance Policies, Survey on
Customer Satisfaction, Quality Policy Conformity
DTFPI = Develop Technology for Process Improvement
IQMS, FQC = Improve Quality Management System, Foster Quality Culture
Those Objectives should be carried out to the Learning &Growth Perspective cumulatively.

32 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


6.1.4 Risk Management Process
Define the objectives in Risk Management Processes (Importing from previous
processes)
Note:
1.
2.
3.
4.

(Supply)
MQR1 = Manage Quality Risk
MOR1 = Manage Operational Risk
MTR1= Manage Technological Risk
MSR = Manage Supplier Risk

Note:
1.
2.
3.
4.

(Production)
MOR2 = Manage Operational Risk
MTR2= Manage Technological Risk
MFCR = Manage Forecast Cost Risk
MQR2 = Manage Quality Risk

Note:
1.
2.
3.
4.

(Distribution)
MTR3 = Manage Technology Risk
MOR3= Manage Operational Risk
MDR = Manage Distribution Risk
MQR3 = Manage Quality Risk

Define the objectives in Risk Management Processes (New)

MFR= Manage Financial Risk

33 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Define the objectives in Risk Management Processes
1. MOR1 = Manage Operational Risk from Supply
2. MOR2 Manage Operational Risk from Production
3. MOR3= Manage Operational Risk from Distribution
4. MQR1 = Manage Quality Risk from Supply
5. MQR2 = Manage Quality Risk from Production
6. MQR3 = Manage Quality Risk from Distribution
7. MTR1= Manage Technological Risk from Supply
8. MTR2= Manage Technological Risk from Production
9. MTR3 = Manage Technology Risk from Distribution
10. MSR = Manage Supplier Risk from Supply
11. MDR = Manage Distribution Risk from Distribution
12. MFCR = Manage Forecast Cost Risk from Production
13. MFR = Manage Financial Risk
Linkages to Customer Perspective
Operation
management
process
Objectives

Customer Perspective (Customer Value Proposition)

Price

Quality

Availability

Manage
Operational
Risk from

Selection

FOPSDB
WED

RRO
P

Service

Partnership

Brand

JVP
EBI

Supply
Manage
Operational

RRO
P

FOPSDB
WED

EBI

FOPSDB
WED

EBI

FOHQ
SDBWED

ICTL

Risk from
Production
Manage
Operational

RRO
P

EOTD

Risk from
Distribution
Manage

EPQ

Quality Risk
from Supply
Manage
Quality Risk

34 | P a g e

EPQ

FOHQ
SDBWED

ICTL

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


from
Production
Manage

FOHQ
SDBWED

EPQ

Quality Risk

ICTL

from
Distribution
Manage
Technological
Risk from

FOMTRR
PSDBWE
D

EBI

FOMTRP
SDBWED

EBI

FOMTRP
SDBWED

EBI

Supply
Manage
Technological
Risk from
Production
Manage
Technological
Risk from
Distribution
Manage

EOTD,
ESD

Supplier Risk

ASRMFPS
DBWED

JVP

EBI

OTDSDB
WED

JVP

ICTL

from Supply
Manage

EOTD,
ADR,
HPA

Distribution
Risk from
Distribution

FOCHL

EBI,
ICTL

FOPSC

EBI

Manage
Forecast Cost
Risk from
Production
Manage
Financial Risk

35 | P a g e

RCC

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Note
RROP =Reduce The Risk of Overpaying
FOHQSDBWED = Focus on High Quality Sports Drinks, Bottled
Water and Energy Drinks
FOPSDBWED = Focus on Production of Sports Drinks, Bottled Water
and Energy Drinks
FOMTRPSDBWED = Focus on Managing Technology Related to
Production of Sports Drinks, Bottled Water and
Energy Drinks
ASRMFPSDBWED = Adequate Supply of Raw Material for
Production of Sports Drinks, Bottled Water and
Energy Drinks
OTDSPBWED = On-Time Delivery of Sports Drinks, Bottled Water and
Energy Drinks
FOPSC = Focus on Price Sensitive Customers
FOCHL = Focus on Consumer Healthier Lifestyle

ESD = Ensure Secure Delivery


EOTD = Ensure On-Time Delivery
EBI = Enhance Brand Image
EPQ= Excellence Product Quality
ICTL = Increase Customer Trust and Loyalty
RCC = Reduce Customer Cost
HPA = High Product Availability
ADR = Avoid Delay Risk
JVP = Joint Venture Partners

Those objectives should later be carried out to Customer Pers. Accumulatively.

36 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Financial Perspective

Operation
management
process
Objectives

Manage Operational
Risk from Supply
Manage Operational
Risk from Production
Manage Operational
Risk from

Financial Perspective

Improve Cost
Structure

Increase
Assets
Utilization

Expand
Revenue
Opportunities

LIC, RSCC
DOCFPSDBWED
LIC, ROC,
DOCFPSDB,WED

Enhance
Customer Value
ICVTROC

MFAU

IBV, ICP
IMS

LIC,
DOCFPSDBWED

ICVTROC, SPSC
ICVTROC

Distribution

IRTHQP

ICSL, SQSC

IRTHQP

ICSL, SQSC

IRTHQP

ICSL, SQSC

LIC

IRTHTD

OCC

RSCC

IRFNC

Manage Quality Risk


from Supply
Manage Quality Risk
from Production
Manage Quality Risk
from Distribution
Manage

RSCC

Technological
Risk from Supply
Manage
Technological Risk
from Production
Manage
Technological Risk
from Distribution
Manage Supplier

LIC

Risk from Supply


Manage Distribution

LIC

OCC

Risk from
Distribution
Manage Forecast

IRFMCD

ICLL

IBV, IMS, ICP

SPSC

Cost Risk from


Production
Manage Financial
Risk

37 | P a g e

LIC, IROI

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Note:
LIC = Less Incurred Cost
ROC = Reduce Operating Costs
RSCC = Reduce Supply Chain Costs
MFAU = Maximize fixed asset utilization
ICP = Improve Company Profitability
IRTHTD = Increase Revenue through High Technology Distribution
ICVTROC = Improve Customer Value Through Reduction of Operational Cost
SPSC = Satisfy Price Sensitive Customers
SQSC = Satisfy Quality Sensitive Customers
IRTHQP = Increase Revenue Through High Quality Product
IRFMCD = Increase Revenue for Meeting Customer Demands
DOCFPSDBWED = Decrease Operational Costs from Production of Sports
Drinks, Bottled Water and Energy Drinks
IBV = Increase Business Volume
ICSL = Increase Customer Satisfaction Level
ICLL = Increase Customer Loyalty Level
OCC = Offer Customers Convenience
IMS = Increase Market Share
IROI = Increase Return On Investment

Linkage to Learning &Growth Perspective


Operation
management
process
Objectives

Learning & Growth

Human Capital

Information Capital

Organizational
Capital

Manage

PETQMTR, DCE

ESC, IKS, ISCS

DTQMC ,IOE, IKM

PETQMTR, DCE,
PHACCPTP, PGMPTP

IKS, GMP, HACCP

DTQMC,IOE, IKM

PETQMTP ,DCE

IKS

DTQMC ,
IOE, IKM

DEKOQMS,
PETQMTP, PHACCPTP,
PGMPTP
DEKOQMS,
PETQMTP, PHACCPTP,
PGMPTP

ESC, IKS, GMP, HACCP

DTQMC ,
IKM

IKS, GMP, HACCP

DTQMC,
IKM

DEKOQMS,
PETQMTP, PHACCPTP,

IKS, IDP, GMP, HACCP

DTQMC,
IKM

Operational Risk
from Supply
Manage
Operational Risk
from Production
Manage
Operational Risk
from Distribution
Manage Quality
Risk from Supply
Manage Quality
Risk from
Production
Manage Quality
Risk from

38 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Distribution

PGMPTP

Manage

PETTMT

ESC, IKS

IKM

PETTMT

IKS

IKM

PETTMT

IKS, IDP

IDP, IKM

IKS, ISCS

IKM

IKS, IDP

IKM

DCE

RDTNP

DC-OC, IKM

RCE

IKMS

EPRBE

Technological
Risk from
Supply
Manage
Technological Risk
from Production
Manage
Technological Risk
from Distribution
Manage Supplier
Risk from Supply
Manage
Distribution Risk
from Distribution
Manage
Forecast Cost
Risk from
Production
Manage Financial
Risk

Note:
DEKOQMS = Develop Employees Knowledge on Quality Management System
PETQMTP = Provide Essential Total Quality Management Training Program
PETFTH = Provide Extensive Training to Manage Technology
PHACCPTP = Provide Hazards Analysis Critical Control Points Training Program
PGMPTP = Provide Good Manufacturing Practice Training Program
ESC = Enhance Supply Chain
DTQMC = Develop TQM Culture
DC-OC = Develop Customer Oriented Culture
IKS = Increase Knowledge Sharing
IKM = Improve Knowledge Management
IOE = Improve Operation Efficiency
IDP = Improve Distribution Process
RDTNP = Reduce Development Time of New Products
RCE = Retain Competence Employees
ISCS = Improve Supply Chain System
EPRBE = Enhance Performance Retain Better Employees
IKMS = Improve Knowledge Management System
GMP = Good Manufacturing Practice
HACCP = Hazard Analysis Critical Control Points

39 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Summarizing the objectives Operation Management Processes

No

Operation
Management
Processes

Objectives

Measure

Target

1
10% reduction
Reduce the cost of
ownership for raw
materials of sports
drinks, bottled water
and energy drinks

Price/cost of product,
Customer Profitability

target (ideal
standard)
5% Increase in
terms of
customer
profitability
(compare to
competitor selling

Supply

price)

Achieve Just-In-Time
supplier capability

Quick response time,


On-time delivery, correct
quantity,
Percent of late orders
flexibility to respond to
unexpected demand changes,
willingness to participate in
PepsiCo new product
development

5 % Increase in
terms of speeding
up customer
response while
minimizing
inventories
(compare to year
before)

Implement efficient
supplier quality
management
5
Lower Production Costs of
Sports Drinks, Bottled Water
& Energy Drinks
7

Operation
and
Production

Ensure Quality of Finished


Product

Supplier feedback survey,


supplier performance survey,
quality level, presence of
certification/ other documentation
Percent of perfect order received,
percent of supplier qualified to
deliver without incoming
inspection
Cost per unit of Output,
Percent of operating income,
Percent of cash flow improvement

Percent of defect reduction


Number of customer complains,
Survey of customer satisfaction,
Percent of shipments returned due
to poor quality

8
Produce Innovative products
based on well-research
customer needs

40 | P a g e

Percent of sales obtained from


new products,
Number of New Product
Launches,
Measure of how well the

Zero Defect
Production

Increase 15% of
company
profitability
(compared to year
before)
Zero defect

Increase sales from


new products,
customer needs
met,
customer
satisfaction

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Lower Cost to Serve

company identifies the customers


future need

customer retention

*ABC cost of storage and


delivery to customers,
Cycle Time

15 % Increase in
Sales Growth,
Decrease Cycle
Time
5 % decrease of
shipment returned,
Increase quality

Distribution
Production of Sports Drinks,
Bottled Water and Energy
Drinks Meet Quality
Expectation
Responsively Delivery
Capability

10

11

Percentage of shipments returned


Due to poor quality, Number of
items reworked
Percent of Delivery On-Time
Number of overdue deliveries,
Customer Response Time,
Customer loyalty level

Increase On-Time
Delivery ,
5 % Increase in
terms of customer
retention level
(compare to year
before

Summarizing the objectives Operation Management Processes Linkages

No

Processes

Objectives

Measure

Target

Percent of supply chain target


cost achieved

10% cost
reduction
target (ideal
standard)
15% increase
in terms of
PepsiCo
market share
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price
15% increase
in terms of
PepsiCo
market share

SUPPLY:
Lower Production Costs

Increase Business Volume

Company market share

Decrease Customer Costs

Customer cost ratio

Increase Satisfaction Among Price Sensitive


Customers

Customer profitability

Generate Higher Sell, Increase Operating


Margin

Customer growth,
Profitability

6
7

Minimum Inventory Cost


Timely Delivery

8
19

Offer Customers Convenience


Provide Quality Product

Financial
Perspective

PRODUCTION:

41 | P a g e

Ordering
Relative Response Time,
time-based measures
Customer feedback survey
Quality-oriented measure,
defect rates

Met
customers
Needs

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


10

Decrease Production Costs , Reduce Incurred


Cost, Increase Operating Income

Cost per unit of sport drinks


production,
Cost per unit of bottled water
production, cost per unit of
energy drinks production,
Non value-added costs
Percent of target cost
achieved,
Manufacturing cost,
warehousing cost,
Number of defect produced,
Supply Chain cost of
ownership
Quality-oriented measures

11

Reduce Defects, Reduce Waste Costs

12
13

Maximize supply Chain Quality


Maximizing Return on Investment, Increase
Process Efficiency &Productivity

14

Increase Sales Growth

Customer growth,
Profitability

15

Increase Revenue for Meeting Customer


Expectation

Customer growth,
Profitability

16

Increase Revenue for continual Product


Improvement

Customer growth,
Profitability

17

Increase Revenue for Rapidly Respond to


Consumer Preferences

Customer growth,
Profitability

18

Increase Customer Profitability

Customer profitability ratio

19

Increase Customer Satisfaction

Customer satisfaction Level,


CVR

20

Maximize fixed asset utilization

Return on supply chain assets

21

DISTRIBUTION:
Economic Value Added, Decrease Cost of
Goods Sold
Increase Cash Flow, Increase Revenue of

22
42 | P a g e

Profit margin, supply chain


cycle efficiency

Customer Value
Ratio, transportation cost,
Profit margin

10% cost
reduction
target (ideal
standard)

Zero defects

Customer
margins
earned should
increase as the
length of the
relationship
increase
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
Increase 15%
of company
profitability
(compared to
year before)
Increase 15%
of company
profitability
(compared to
year before)
Increase 15%
of company
profitability
(compared to
year before)
5 % Increase
in terms of
speeding up
customer
response while
minimizing
inventories
(compare to
year before)
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
10 % increase
in efficiently
use of its
assets

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Price Sensitive Customers
Increase Sales Growth

23

Customer growth for sports


drinks, bottled water and
energy drinks, Profitability

24

Increase Revenue
Customers

Sensitive

Customer growth,
Profitability

25

Increase Revenue for Meeting Customer


Expectation

Customer growth,
Profitability

26

Increase Revenue
Customers

Customer growth,
Profitability

27

SUPPLY:
Offer lower price with Value, Increase
Product Availability, Focus on Price Sensitive
Customer, Increase Customer Satisfaction

28

Lower Production Costs

of

of

Quality

Quality

Sensitive

Customer Value
Ratio,

Percent of target cost


achieved

Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
Each new
customers
added should
be profitable
Each new
customers
added should
be profitable
Each new
customers
added should
be profitable

5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
10% cost
reduction
target (ideal
standard)

29

Focus On Quality Sensitive Customer

30

Enhance Reputation on Brand Image

31
32
33

Customer
Perspective

Increase Product Variety


Increase product Reliability
Enhance Quality

34

PRODUCTION:
Lower customers cost

35

Offer Reasonable Price

36

Focus on Price Sensitive Customers

43 | P a g e

Measure of customer
satisfaction level on product
quality
Measure of customer
perception in terms of
Number of defect

Zero defects

Quality-oriented measures

Non value-added costs,


, cost per unit of production

Customer profitability ratio

Measure of consumer
satisfaction in terms of selling
price of energy drinks, bottled
water and sports drinks

5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


37

Focus on Quality Sensitive Customers

38

Focus on Consumers Healthy Lifestyle

39

Excellence Quality Product

40

Enhance Brand Value

41

Deliver on Time

42
43

High Product Availability


Increase Customer Loyalty

44

Rapid Respond to consumer Preferences

45

Long Term Relationship Customer Loyalty


& Trust

Measure of consumer
acceptance on quality of sport
drinks, bottled water and
energy drinks produced
Customer Perception of
Flexible Response,
Measure of consumer
acceptance on sports drinks,
bottled water and energy
drinks produced
Quality product checklist

5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)

Measure of customer
perception on PepsiCo brand
image of healthier drinks
Relative Customer Order
Response Time
Number of product delayed
Measure of customer loyalty
level
Customer Perception of
Flexible Response

Customer feels
free to make
customized
choices

Measure of customer loyalty


level

46

DISTRIBUTION :
High Product Availability

47

Deliver on Time

48

Excellence Quality

49

Focus on Price Sensitive Customers

50

Focus on Quality Sensitive Customers

Measure of quality survey

51

Focus on Consumer Healthier Lifestyle

Measure of consumer
acceptance on sport drinks,
bottled water and energy
drinks

52

Broader Range of Products

53

Increase Customer Trust

44 | P a g e

Customer feels
free to make
customized
choices

Number of Customer Contact


Points
On-Time Delivery as defined
by customers,
Relative Customer Order
Response Time
Quality survey , measure
customer retention level

Measure of customer
satisfaction level in terms of
selling price

Measure of customer
retention level,
Number of new products
produced

Measures for warranty,


defects and returns

5 % Increase
in terms of
customer
retention level
(compare to
year before
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before)
5 % Increase
in terms of
customer
satisfaction
level (compare
to year before
5 % Increase
in terms of
customer
retention level
(compare to
year before
5 % Increase
in terms of
customer
retention level

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

54

Enhance Brand Image

55

Increase Loyalty to Brand Name

56

SUPPLY:
Learning the Principles, Skills and
Technologies ,Adequate Communications
between the Members of Supply Chain

57

Enhance Completive Advantage, Improve


Finance Situation, Foster Quality Culture

Measure on customer
retention level for brand
image,
Measure of customer
perception on PepsiCo brand
image of healthier drinks.
Measure of customer loyalty
level

Percent of employees trained


supply chain management
techniques, The number of
shared data sets relative to
total data sets
Measure of financial
improvement

(compare to
year before
5 % Increase
in terms of
customer
retention level
(compare to
year before
5 % Increase
in terms of
customer
retention level
(compare to
year before

Zero defect,
reduce waste,
cut cost
10% cost
reduction
target (ideal
standard) ,

Learning &
Growth
perspective

cost-centric
culture

58

Develop Technology for Process


Improvement

Process improvement rate,


Efficiency Rate

59

Enhance Supply chain Effectiveness, Quality


Policies Conformity

Quality-oriented measures

60

Quality Function Deployment, Quality Policy


Conformity

Forecast errors

61

Enhance Completive Advantage

62

Develop Self-Knowledge, Develop SelfMotion

63

Develop Fishbone Chart, Develop Pareto


Chart, Quality Policies & Conformity

Forecast errors

64

Improve Quality Management System,


Improve Finance Situation, Foster Quality
Culture

Quality Control & Assurance


checklists, quality- Oriented
measure

65
66

PRODUCTION:
Improve Skills in Total Quality Management,
Competence Employee in Process
Improvement, Employees Training in TQM
Environment
Implement Activity-Based Costing

67

68

Improve Operational Efficiency, Improve


Finance Situation, Develop TQM Culture

69

Improve Technology that Facilitates Product


Improvement

70

Develop Patent, Foster Innovation Culture,


Culture of Continuous Improvement,

45 | P a g e

Quality Control & Assurance


checklists, quality- Oriented
measure
Self-Assessments

In house Training Hours,


Percent of employees trained
quality management
techniques, process
improvement rate
Activity-base-cost

Production Schedule
Percentage of sales from new
products, process
improvement rate
Product Finalization Point,
Product Category
Commitment Ratio, Demand

Continuous
Innovation &
learning
Continuous
Innovation &
learning
Continuous
Innovation &
learning
Met
Customers
Needs
Continuous
Innovation &
learning
Met
Customers
Needs
Continuous
Innovation &
learning

Continuous
Innovation &
learning

10% cost
reduction
target (ideal
standard),
cost-centric
culture
Continuous
Innovation &
learning
Continuous
Innovation &
learning
To push sports
drinks, bottled
water and

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

71
72
73
74

Innovation and Creativity, Develop


Customer-Oriented Culture

Forecast for Healthier drinks

Employees Training in Quality Assurance,


Develop Self-Knowledge, Develop SelfMotion
Improve Customer Preferences Information ,
Improve Customer Satisfaction Level

In house Training Hours,


Percent of employees trained
quality management
techniques
Forecast Errors, customers
survey

Improve Quality Culture, Improve Quality


Management System, Gain Competitive
Advantage
Develop Creativity Skills

Human resource management


measure, quality- Oriented
measure
Self-Assessment

75

Improve Customer Satisfaction Level,


Improve Technology that Facilitates Product
Improvement

76

Provide Hazards Analysis Critical Control


Points Training Program

In house Training Hours,


Percent of employees trained
HACCP procedures

77

Provide Good Manufacturing Practice


Training Program

78

Good Manufacturing Practices

In house Training Hours,


Percent of employees trained
GMP procedures
Certification

79
Hazard Analysis Critical Control Points

Performance trajectories of
competing Technologies

Certification

energy drinks
produced as
close to the
final customer
in an effort to
reduce
inventories
and minimize
the risk of
unsold
product.
Continuous
Innovation &
learning
Met
Customers
Needs
Continuous
Innovation &
learning
Continuous
Innovation &
learning
Assess which
emerging
technologies
may become a
threat to
PepsiCo
Operation
HACCP
Certification
for production
of energy
drinks, bottled
water and
sports drinks.

GMP
Certification
for production
of energy
drinks, bottled
water and
sports drinks
HACCP
Certification
for production
of energy
drinks, bottled
water and
sports drinks

DISTRIBUTION:

80
Economic Value Added, Decrease Cost of
Goods Sold

81

Increase Cash Flow, Increase Revenue of


Price Sensitive Customers, Increase Sale
Growth

82

Increase Revenue
Customers

46 | P a g e

of

Quality

Sensitive

Customer Value
Ratio , The number of shared
data sets relative to total data
sets

Point-of-sale data for sports


drinks, bottled water and
energy drinks
Customer growth,
Profitability

Zero
duplication,
zero waste &
respond
flexibly to
customers
Increase 15%
of company
profitability
(compared to
year before)
Each new
customers
added should
be profitable

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


83

Increase Revenue for Meeting Customer


Expectation

84

Increase Customer Profitability

Number of Advance shipping


Notices for sport drinks,
bottled water and energy
drinks.
Customer Profitability
Ratio

Met
Customers
Needs
5% Increase in
terms of
customer
profitability
(compare to
competitor
selling price)

6.2 Customer Management Process


The Theme of Customer Management Processes:

Focus on Managing Customer Relationship with Continuous Product Innovation by relying


on Well-Research Customer
Providing High Quality and Low Price Product Offering to Respond towards the Growing
Demand of Sports Drinks, Bottled Water and Energy Drinks

6.2.1 Customer Selection Process


Define the objectives in Customer Selection Processes
Understand Customer Segments
Screen unprofitable customers
Target High-Value Customers

Objective

Understand Customer
Segments

Balance Scorecard (BSC)


Measure

Target

Profit contribution by segment

Increase 15% of company


profitability (compared to year
before)

Screen unprofitable
customers
Target High-Value Customers

Percent of unprofitable customers


Number of Strategic accounts

20% reduce in screening


unprofitable customers
20% Increase in terms of strategic
accounts number

Allocate 10 percent marketing resources to active sports minded and health Conscious customer segments

47 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Customer Acquisition
Customer management processes
(Selection)
Objectives
Understand Customer Segments
Screen unprofitable customers
Target High-Value Customers

Customer Acquisition

CVPQSDBWEDP
CMMPSC,ASM&HCCS
ANC

Note:
CVPSDBWED = Communicate Value Proposition for a quality Sport Drinks, Bottled Water and
Energy Drinks Products
CMMPSC,ASM&HCCS = Customize Mass Marketing to Price Sensitive customers, Active Sports
Minded and Health Conscious Customer Segment
ANC = Acquire New Customers

Linkage to Customer Retention


Customer management processes
(Selection)
Objectives
Understand Customer Segments
Screen unprofitable customers
Target High-Value Customers

Customer Retention

PSE
CV-P

Note:
PPCS = Provide Excellence Service
CV-AP = Create value-added Partnership

Linkage to Customer Growth


Customer management processes
(Selection)
Objectives
Understand Customer Segments
Screen unprofitable customers
Target High-Value Customers

Note:
1.C-SC = Cross-Sell Customers
2. PWC = Partner with customers

48 | P a g e

Customer Growth

C-SC
PWC

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Financial Perspective
Customer management
processes (Selection)
Objectives
Understand Customer
Segments
Screen unprofitable
customers
Target High-Value Customers

Financial Perspective
Improve Cost
Structure
LCSPSC

Increase Assets
Utilization

IRFPC
IRPC
IRPC

Note:
LCSPSC = Lower Cost Satisfying Price Sensitive Customer
CNSRFNC = Create New Source of Revenue from New Customers
ICP = Increase Customer Profitability
IRFPC = Increase Revenue from Profitable Customers
IRFHVC = Increase Revenue from High Value customers
IRPC = Increase Revenue Per Customer

49 | P a g e

Expand
Revenue Opp
CNSRFNC

IRFHVC

Enhance
Cust Value
ICP

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Customer Perspective
Customer
management
processes
(Selection)
Objectives

Customer Perspective

Price

Quality

Availability

Selection

Functionality

Service

LPCC

EQ

HASDBWED

EFH&ED
C-OP

BONOTG

Screen
unprofitable
customers

EQ

HASDBWED

EFH&ED
C-OP

BONOTG

Target
High-Value
Customers

EQ

HASDBWED

HPSC,
FOQSC,
FOASM,
HCC
HPSC,
FOQSC,
FOASM,
HCC
HPSC,
FOQSC,
FOASM,
HCC

EFH&ED
C-OP

BONOTG

Understand
Customer
Segments

Partnership

IBI

DC-RP

Note:
LPCC = Lower Price Compare to Competitor
HPSC, FOQSC, FOASM,HCC = Highlight Price Sensitive Customers, Focus on
Quality Sensitive Customers, Focus on Active Sports Minded, Health Conscious
Customers
HASDBWED = High Availability of Sports Drinks, Bottled Water and Energy
Drinks Products
BONOTG = Based on needs of Target Group
EQ = Enhance Quality
EFH&ED, C-OP = Essential for health & Energetic Drinks, Customer-Oriented
Products
DZPDTC= Deliver Zero Product Defect to Customers
PAVP = Perform Attractive Value Proposition
IBI = Increase Brand Image
IBV = Increase Brand Value
DC-RP = Develop Community Researcher Partnership
IBV = Increase Brand Value
*As Customer Management Process has direct linkage with service, partnership and brand;
however, considering defines customer segments and customer value proposition, the other
factors of customer perspective would also have indirect linkage while customer selection .

50 | P a g e

Brand

IBV

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Learning and Growth

Customer management
processes (Selection)
Objectives
Understand Customer
Segments
Screen unprofitable
customers
Target High-Value Customers

Learning and Growth


Human Capital
SSICS, RCE&N

PGSPHVC

Information Capital
MR,
DPCMI&DS
EECAM&CSATS
MR, IKS

Organization Capital
C-OC, PIC, CRM, RTIE

RVC, IKS, DSCRMP

PIC, CRM

CRM

Note:
SSICS, RCE&N = Strategic Skills In Customer Segmentation, Research
on Customer Expectation & Needs
MR, DPCMI&DS, EECAM&CSATS = Market Research, Develop Portfolio
of Customer Management Information & Data System, Establishing
Effective Communication among Marketing& Customer Service about the
Segmentation
CO-C, PIC,CRM, RTIE = Customer-Oriented Culture, Positive Internal
Culture , Customer Relationship Management, Respond to the Information
Effectively
MR, IKS, DSCRMP = Market Research, Increase Knowledge Sharing,

Develop Strategic CRM Portfolio


PGSPHVC = Particular Group Serve Particular High-Value Customers
RVC, IKS= Records of Valued Customers, Increase Knowledge Sharing,
PIC, CRM = Positive Internal Culture, Customer Relationship Management

51 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


6.2.2 Customer Acquisition Process
Define the objectives in Customer Acquisition Processes

Communicate Value Proposition for a quality Sport Drinks, Bottled Water and
Energy Drinks Products (linkage from Selection Process)
Customize Mass Marketing to Price Sensitive customers, Active Sports Minded and
Health Conscious Customer Segment (linkage from Selection Process)
Acquire New Customers (linkage from Selection Process)
Develop Relationship with Dealer/distributor (New Objective)

Objective

Communicate Value
Proposition for a quality
Sport Drinks, Bottled Water
and Energy Drinks Products
Customize Mass Marketing to
Price Sensitive customers,
Active Sports Minded and
Health Conscious Customer
Segment
Acquire New Customers

Develop Relationship with


Dealer/distributor

52 | P a g e

Balance Scorecard (BSC)


Measure
Target
Brand awareness for sports drinks,
bottled water and energy drinks
15 percent Increase in terms of
(survey)
Brand awareness

Customer respond rate to


campaigns, number of customer
using promotions to sample the
products
Market share, Cost per new
customer acquired, measure of
customer lifetime value of new
customers acquired
Dealer feedback, dealer
performance

Allocate 15 percent marketing


resources to active sports minded
and health Conscious customer
segments
15% increase in terms of PepsiCo
market share

5% Increase in terms of respond to


dealer feedback

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Customer Retention
Customer management processes
(Acquisition)
Objectives

Customer Retention

Communicate Value Proposition for a


quality Sport Drinks, Bottled Water
and Energy Drinks Products
Customize Mass Marketing to Price
Sensitive customers, Active Sports
Minded and Health Conscious
Customer Segment
Acquire New Customers
Develop Relationship with
Dealer/distributor

PPCSPCSDBWED

CHLC
CHLC

Note:
PPCSPCSDBWED = Provide Premium Customer Service For Premium Customer of Sports
Drinks, Bottled Water and Energy Drinks
CHLC = Create Highly Loyal Customers

Linkage to Customer Growth


Customer management processes
(Acquisition)
Objectives
Communicate Value Proposition for a
quality Sport Drinks, Bottled Water
and Energy Drinks Products
Customize Mass Marketing to Price
Sensitive customers, Active Sports
Minded and Health Conscious
Customer Segment
Acquire New Customers
Develop Relationship with
Dealer/distributor

Customer Growth

CI&H-IVP

Note:
CHI&H-IVP = Creating Innovative & High-Impact Value Propositions
MSRB = Premium Price Customer Service
ICSL = Increase Customer Satisfaction Level

53 | P a g e

PPCS

ICSL

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Financial Perspective
Customer management
processes (Acquisition)
Objectives
Communicate Value
Proposition for a quality Sport
Drinks, Bottled Water and
Energy Drinks Products
Customize Mass Marketing to
Price Sensitive customers,
Active Sports Minded and
Health Conscious Customer
Segment
Acquire New Customers
Develop Relationship with
Dealer/distributor

Financial Perspective
Improve Cost Structure
ISP

Expand
Revenue Opp.
CNSORFNP

Enhance
Cust. Value
ICP

ISP

CNSORFNP

ICP

ISP
ISP

CNSORFNC
IBV

CLTSV

Note:
CNSORFNC =Create New Sources Revenue from New Customer
CNSORFNP = Create New Sources of Revenue from New Products
ISP = Improve sales productivity
ICP = Increase Customer Profitability
IBV = Increased business volume
CLTSV = Creating Long Term Shareholder Value
*Customer management process (acquisition) is directly linked with expand revenue opportunity
and enhance customer value. However, considering communicating proposition value, customised
mass marketing, acquiring new customers , and developing relationship with dealer ; would also
have indirect link with Improve Cost Structure through reduction in operating costs.

54 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Customer Perspective

Customer
Customer Perspective
management
processes
(Acquisition)
Objectives
Price Quality
Availability
Selection
Service Partnership Brand
HPSC,
HASDBWED
Communicate
LPCC
EQ
ICA
IBA
FOQSC,
Value Proposition
FOASM,HCC
for a quality Sport
Drinks, Bottled
Water and Energy
Drinks Products
HPSC,
HASDBWED
Customize Mass
LPCC
EQ
ICA
IBA
FOQSC,
Marketing to Price
FOASM,HCC
Sensitive
customers, Active
Sports Minded and
Health Conscious
Customer
Segment
HPSC,
HASDBWED
Acquire New
EQ
DPM
ICA
IBA
FOQSC,
Customers
FOASM,HCC

Develop
Relationship with
Dealer/distributor

EQ

RRCF

DGU&EC

IBA

Note:
LPCC = Lower Price Compare to Competitor
HASDBWED = High Availability of Sports Drinks, Bottled Water and Energy Drinks Products
EQ = Excellence Quality
HPSC, FOQSC, FOASM,HCC = Highlight Price Sensitive Customers, Focus on Quality
Sensitive Customers, Focus on Active Sports Minded, Health Conscious Customers
RRCF = Rapidly Response to Customer Feedbacks
DPM = Direct Purchasing Method
ICA = Increase Customer Awareness
IBA = Increase Brand Awareness
DGU&EC = Demonstrate Great Understanding and Efficient Communication
*Customer management process (acquisition) is directly linked with service, partnership and
brand. However, considering Communicating Value Proposition, Customising Mass Marketing,
Acquiring New Customers and Developing Relationship with Customer ; from customer
perspective would also have indirect link with price, quality, availability and selection.

55 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Learning and Growth

Customer management
processes (Acquisition)
Objectives
Communicate Value
Proposition for a quality
Sport Drinks, Bottled Water
and Energy Drinks Products
Customize Mass Marketing
to Price Sensitive customers,
Active Sports Minded and
Health Conscious Customer
Segment
Acquire New Customers
Develop Relationship with
Dealer/distributor

Learning and Growth


Human Capital
DSC

Information Capital
CD&TK

Organization Capital
C-OC, PIC, CRM,

DMEL&TD

IKS

IKMC

DEM&T
ITPM&ST

DPCMI&DS
DPCMI&DS

CRM
PIC, CRM

Note:
DSC = Develop Strategi Competencies
DEL& TD= Develop Marketing Effective leader & Teamwork Depth

DEM&T =Develop Extensive Marketing & Sales Training


CD&TK = Continually Develop & Transfer Knowledge
C-OC, PIC,CRM = Customer-Oriented Culture, Positive Internal Culture, Customer

Relationship Management
DPCMI&DS = Develop Portfolio of Customer Management Information & Data System
ITPM&ST= Interactive training programs for Management and Sales Teams
IKS = Increase Knowledge Sharing
IKMC = Increase Knowledge Management Culture

56 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

6.2.3 Customer Retention Process


Define the objectives in Customer Retention Processes

Provide Premium Customer Service For Premium Customer of Sports Drinks, Bottled
Water and Energy Drinks (Linkage from Customer Acquisition Process)
Create Highly Loyal Customers (Linkage from Customer Acquisition Process)
Create Lifetime Customers (New Objectives)

Objective

Provide Premium Customer


Service For Premium Customer
of Sports Drinks, Bottled Water
and Energy Drinks
Create Highly Loyal Customers

Balance Scorecard (BSC)


Measure
Target
Number of Premium Customers,
quality rating from premium
20 percent increase of premium
customers
customers
Percent captured of customers
spending in sports drinks, Bottled
water and Energy Drinks

20 percent Increase in creating


Highly Loyal customers

Customer Lifetime Value

Increase 15 percent of company


profitability (compared to year before)

Create Lifetime Customers

Linkage to Customer Growth


Customer management processes
(Retention)
Objectives
Provide Premium Customer Service
For Premium Customer of Sports
Drinks, Bottled Water and Energy
Drinks
Create Highly Loyal Customers
Create Lifetime Customers

Note:
ROSP = Retention-Oriented Sales Promotion
C-SC = Cross-Sell Customers
PWC = Partner with Customers

57 | P a g e

Customer Growth

ROSP

C-SC
PWC

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Financial Perspective


Customer management
processes (Retention)
Objectives
Provide Premium Customer
Service For Premium
Customer of Sports Drinks,
Bottled Water and Energy
Drinks
Create Highly Loyal Customers
Create Lifetime Customers

Financial Perspective
Improve Cost
Structure
ISP

Increase Assets
Utilization
IASEC, MFAU

Expand
Revenue Opp.
LRTCOP

Enhance
Cust. Value
ICP

LCMCOT
LCMCOT

MFAU

IBV
PLTVTPFNP

ICP

Note:
LCMCOT = Lower Customer Management Cost Over Time
ISP = Improve sales Productivity
IASEC, MFAU = Increase Account Share with Existing Customers, Maximize Fixed Assets Utilisation
IBV = Increase Business Volume
LRTCOP = Less Responsive To Competitors Offered Price
PLTVTPFNP =Prediction of Lifetime Value to predict Future Net Profit
ICP, LCC = Increase Customer Profitability

58 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Customer Perspective


Customer
management
processes
(Retention)
Objectives
Provide
Premium
Customer
Service For
Premium
Customer of
Sports Drinks,
Bottled Water
and Energy
Drinks
Create Highly
Loyal
Customers

Create Lifetime
Customers

Customer Perspective

Price

Quality

Availability

Selection

Functionality

Service

Partnershi
p

Brand

EQ

HASDB
WED

PCO
SDBW
EDP

EFH&ED

FSR

ICS

IBI&R

LPCC

EQ

HASDB
WED

EFH&ED

ECPS,
ZDDTC

MER

ICL

LPCC

EQ

HASDB
WED

HPSC,
FOQS
C,
FOAS
M,HCC
HPSC,
FOQS
C,
FOAS
M,HCC

EFH&ED

ECPS,
ZDDTC

MER

IBI&R

Note:
LPCC = Lower Price Compare to Competitor
EQ = Excellence Quality
MER = Maintain Excellence Relationship
ICLT= Increase Customer Loyalty
IBI&R = Increase Brand Image & Reputation
EFH&ED = Essential for health & Energetic Drinks
HASDBWED = High Availability of Sports Drinks, Bottled Water and Energy Drinks Products
EQ = Excellence Quality
ZDDTC = Zero Defects Delivery to Customers
PCO SDBWEDP = Premium Customers of Drinks, Bottled Water and Energy Drinks Products
HPSC, FOQSC, FOASM,HCC = Highlight Price Sensitive Customers, Focus on Quality
Sensitive Customers, Focus on Active Sports Minded, Health Conscious Customers
FSR = Fast Service Responsiveness
ICS = Increase Customer Satisfaction
ECPS = Ensure of Constant Product Supply
*Customer management process (retention) is directly linked with service, partnership and
brand. However, providing premium customer service, creating loyal customers and creating
lifetime customers; would also have indirect link with price, quality, functionality, availability
and selection.

59 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Linkage to Learning and Growth


Customer management
processes (Retention)
Objectives

Learning and Growth


Human Capital

Provide Premium Customer


Service For Premium Customer of
Sports Drinks, Bottled Water and
Energy Drinks
Create Highly Loyal Customers
Create Lifetime Customers

PCE

CPGA
ARTT

Information Capital
RPC

CFOPI, IKS
CFIOI

Organization Capital
CC-FC

CRM,CIC, KMS,QMS
CC-FC

Note:
RVSC = Records of Premium Customers
CPGA = Create Personel Goal Alignment
PCE = Personnel Commitments and Efforts
ARTT = Attract and Retain Top Talent
CFOPI, IKS = Customer Feedback on Product Improvement, Increase Knowledge Sharing
CRM, CIC, KMS, QMS= Customer Relationship Management, Continuous Improvement Culture ,
Knowledge Management System, Quality Management System
CC-FC = Create Customer Focus - Culture

60 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

6.2.4 Customer Growth Process


Define the objectives in Customer Growth Processes
Retention-Oriented Sales Promotion (Linkage from Retention Process)
Cross-Sell Customers (Linkage from Retention Process)
Partner with Customers (Linkage from Retention Process)
Customer Education for Healthier and Energetic drinks (New Objective )
Objective

Retention-Oriented Sales
Promotion
Cross-Sell Customers
Partner with Customers

Balance Scorecard (BSC)


Measure
Target
Over
95
percent
of
the population use the
Number of promotion sample of
promotion sample
sports drinks, bottled water and
energy drinks used by customer
Number of products per customer
Target for sports drinks, bottled
water and energy drinks per
customer
Increase 15% of company profitability
Number or gain sharing agreement

Customer Education for


Healthier and Energetic drinks

Hours with customers

(compared to year before)


Allocate 2 hours per each new customer to
educate them understand the nutritious
value of PepsiCo healthier drinks

Linkage to Financial Perspective


Customer management
processes (Growth)
Objectives
Retention-Oriented Sales
Promotion
Cross-Sell Customers
Partner with Customers
Customer Education for
Healthier and Energetic drinks

Financial Perspective
Improve Cost
Structure
ISP

Increase Assets
Utilization
IASEC, MUEFA

Expand
Revenue Opp.
IRPC

Enhance
Cust. Value
ICP

LCMCOT
LCMCOT

IASEC, MUEFA

IBV
IBV
IRPC

DCC
PLCSTCP

IASEC

Note:
LCMCOT = Lower Customer Management Cost Over Time
IRPC = Increase Revenuer Per Customer
ISP = Improve Sales Productivity
IASEC, MUEFA = Increase Account Share with Existing Customers, Maximise Use of Existing Fixed
Assets
IBV = Increase Business Volume
ICP = Increase Customer Profitability
DCC =Decrease Customer Costs
PLCSTCP = Providing Lower Cost Solutions To Customers Problems

61 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Customer Perspective
Customer
management
processes
(Growth)
Objectives

Customer Perspective
Price

Quality

Availability

Selection

Functionality

Service

RetentionOriented Sales
Promotion
Cross-Sell
Customers

LPCC

EQ

HASDBWED

PCOSDBWEDP

EFH&ED

LCC

RIIBV

LPCC

EQ

HASDBWED

EFH&ED

HLCS

RIIBV

Partner with
Customers

LPCC

HPSC,
FOQSC,
FOASM,HCC
HPSC,
FOQSC,
FOASM,HCC
HPSC,
FOQSC,
FOASM,HCC

EFH&ED

HLCS

Customer
Education for
Healthier and
Energetic
drinks

HASDBWED

EFH&ED

HLCS

Partnership

Brand

RIIBV
MEC&R,
ICL
MEC&R

RIIBV

Note:
LPCC = Lower Price Compare to Competitor
EQ = Excellence Quality
RIIBV = Rapid Increase In Brand Value
LCC = Loyalty Club Card
HASDBWED = High Availability of Sports Drinks, Bottled Water and Energy Drinks Products
MEC&R ,ICL= Maintain Excellence Communication and Relationship , Increase Customer Loyalty
ECPS = Ensure of Constant Product Supply
PCOSDBWEDP = Premium Customers of Drinks, Bottled Water and Energy Drinks Products
HLCS = High Level of Customer Service
HPSC, FOQSC, FOASM,HCC = Highlight Price Sensitive Customers, Focus on Quality
Sensitive Customers, Focus on Active Sports Minded, Health Conscious Customers
EFH&ED = Essential for health & Energetic Drinks

62 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Linkage to Learning and Growth
Customer management
processes (Growth)
Objectives
Retention-Oriented Sales
Promotion
Cross-Sell Customers
Partner with Customers
Customer Education for
Healthier and Energetic drinks

Learning and Growth


Human Capital
DSCSP

Information Capital
RPCSDBWED

Organization Capital
CC-CC,

DSCSP , PCE
PCE
A&RTT

EUOKMS
EUKMS, CRMP
IKSFBP,EUKMS

ICRBI, HQ&HC
CC-CC, CRM
RSWP, KMS

Note:
DSCSP = Develop Strategic Competencies in Sales and Promotion
PCE = Personnel Commitments and Efforts
RPCSDBWED = Record of Premium Customer for Sports Drinks, Bottled Water and Energy Drinks
IKSFBP, EUKMS = Increase Knowledge Sharing for Best Practices, Extent Usage of Knowledge
Management System
EUKMS, CRMP = Extent Usage of Knowledge Management System, Customer Relationship
Management Portfolio
CC-CC, CRM = Create a Customer Centric Culture, Customer Relationship Management
ICRBI, HQ&HC = Improve Company Reputation and Brand Image, High Quality & Healthy Culture
A&RTT = Attract & Retain Top Talent
RSWP, KMS = Rewarding Staff with Performance, Knowledge Management Systems

63 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

Summarizing the objectives Customer Management Processes


No

Customer
Management
Processes

Objectives

Measure

Target

Profit contribution by segment

Increase 15% of

1
Understand Customer
Segments

company
profitability
(compared to year
before)

Selection

20% reduce in
screening
unprofitable
customers

Number of Strategic accounts

20% Increase in
terms of strategic
accounts number

Screen unprofitable
customers

3
Target High-Value
Customers
Communicate Value
Proposition for a quality
Sport Drinks, Bottled Water
and Energy Drinks Products

Percent of unprofitable customers

Brand awareness for sports


drinks, bottled water and energy
drinks (survey)

15 percent
Increase in terms
of Brand
awareness

Acquisition

Customize Mass Marketing


to Price Sensitive customers,
Active Sports Minded and
Health Conscious Customer
Segment

Acquire New Customers

Develop Relationship with


Dealer/distributor
7

Retention
8

64 | P a g e

Customer respond rate to


campaigns, number of customer
using promotions to sample the
products

Market share, Cost per new


customer acquired, measure of
customer lifetime value of new
customers acquired
Dealer feedback, dealer
performance

Provide Premium Customer


Service For Premium
Customer of Sports Drinks,
Bottled Water and Energy
Drinks

Number of Premium Customers,


quality rating from premium
customers

Create Highly Loyal


Customers

Percent captured of customers


spending in sports drinks, Bottled
water and Energy Drinks

Create Lifetime Customers

Allocate 15
percent marketing
resources to active
sports minded and
health Conscious
customer segments
15% increase in
terms of PepsiCo
market share
5% Increase in
terms of respond
to dealer feedback
20 percent increase
of premium
customers

Customer Lifetime Value

20 percent
Increase in
creating Highly
Loyal customers
Increase 15
percent of

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

10

Retention-Oriented Sales
Promotion

Number of promotion sample of


sports drinks, bottled water and
energy drinks used by customer

11

Cross-Sell Customers

Number of products per customer

Growth

12

Partner with Customers

Number or gain sharing


agreement

13

Customer Education for


Healthier and Energetic
drinks

Hours with customers

65 | P a g e

company
profitability
(compared to year
before)
Over 95 percent of
the population use
the promotion
sample
Target for sports
drinks, bottled
water and energy
drinks per
customer
Increase 15% of
company
profitability
(compared to year
before)
Allocate 2 hours
per each new
customer to
educate them
understand the
nutritious value of
PepsiCo healthier
drinks

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Summarizing the objectives Customer Management Processes Linkages

No

Processes

Objectives

Measure

Target

Cost of sales per product

10% cost
reduction target
(ideal standard

SELECTION :
Lower Cost Satisfying Price Sensitive
Customer

Increase Customer Profitability

Profits per customer


(activity-based costing)

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)

Increase Revenue from Profitable Customers

Revenue from profitable


customers

Increase Revenue from High Value


customers

Revenue from high value


customers

Increase Revenue Per Customer

15% increase in
terms of
PepsiCo market
share
15% increase in
terms of
PepsiCo market
share
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year

7
8

ACQUISITION:
Create New Sources Revenue from New
Customer

Revenue from new


customers

Create New Sources of Revenue from New


Products

Revenue from new


products

Financial
Perspective

Revenue per customer

Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year
10% cost
reduction target
(ideal standard

Improve sales productivity

Cost of sales per product

10

Increase Customer Profitability

Profits per customer


(activity-based costing)

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)

11

Increased business volume

revenue per product

Sales growth
Increase to
15%,

66 | P a g e

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


The sales for
any one
customer
should steadily
increase each
year

12
13
14
15

17

16
17
18

19
20
21

Creating Long Term Shareholder Value


RETENTION:
Lower Customer Management Cost Over
Time
Improve sales Productivity
Increase Account Share with Existing
Customers, Maximize Fixed Assets
Utilisation
Increase Business Volume

Increase Customer Profitability

GROWTH
Lower Customer Management Cost Over
Time
Increase Revenue Per Customer
Improve Sales Productivity

23

24

Increase Customer Profitability

67 | P a g e

10% cost
reduction target
(ideal standard

revenue per product

Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year

Profits per customer


(activity-based costing)

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)

Cost of sales

10% cost
reduction target
(ideal standard

Less Responsive To Competitors Offered


Price
Prediction of Lifetime Value to predict
Future Net Profit

Maximise Use of Existing Fixed Assets,


Increase Account Share with Existing
Customers,
Increase Business Volume

22

Cost of sales

Sales/asset ratio

revenue per product

Sales growth
Increase to
15%,
The sales for
any one
customer
should steadily
increase each
year

Profits per customer


(activity-based costing)

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling
price)

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


25

26
27

28

29
30
31
32
33

Customer
Perspective

Decrease Customer Costs

Cost per customer

Providing Lower Cost Solutions To


Customers Problems
SELECTION:
Lower Price Compare to Competitor
Highlight Price Sensitive Customers, Focus
on Quality Sensitive Customers, Focus on
Active Sports Minded, Health Conscious
Customers
High Availability of Sports Drinks, Bottled
Water and Energy Drinks Products

After sale service

Based on needs of Target Group


Enhance Quality
Essential for health & Energetic Drinks,
Customer-Oriented Products
Deliver Zero Product Defect to Customer
Perform Attractive Value Proposition

Cost per product


Point-of-sale data for sports
drinks, bottled water and
energy drinks

Point-of-sale data for sports


drinks, bottled water and
energy drinks

Number of defect produced,

Zero defects

Percentage of highly
satisfied customers

5 % Increase in
terms of
customer
satisfaction
level (compare
to year before)
15% increase in
terms of
PepsiCo market
share
15% increase in
terms of
PepsiCo market
share

Increase Brand Image

Market share

35

Increase Brand Value

Market share

36

Develop Community Researcher Partnership


ACQUISITION:
Lower Price Compare to Competitor
High Availability of Sports Drinks, Bottled
Water and Energy Drinks Products
Excellence Quality

39

41
42
43

Highlight Price Sensitive Customers, Focus


on Quality Sensitive Customers, Focus on
Active Sports Minded, Health Conscious
Customers
Rapidly Response to Customer Feedbacks
Direct Purchasing Method
Increase Customer Awareness

44

Increase Brand Awareness

40

68 | P a g e

Increase 15%
of company
profitability
(compared to
year before)
Increase 15%
of company
profitability
(compared to
year before)

Quality survey

34

37
38

5% Increase
in terms of
customer
profitability
(compare to
competitor
selling price

Quality survey , measure


customer retention level

Point-of-sale data for sports


drinks, bottled water and
energy drinks

5 % Increase in
terms of
customer
retention level
(compare to
year before)
Increase 15%
of company
profitability
(compared to
year before)

Response rate
Market share

Market share

15% increase in
terms of
PepsiCo market
share
15% increase in
terms of
PepsiCo market
share

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009

45

Demonstrate Great Understanding and


Efficient Communication.
RETENTION:
Lower Price Compare to Competitor

46

Excellence Quality

Quality survey , measure


customer retention level

47

Maintain Excellence Relationship

Percentage of highly
satisfied customers

48

Increase Customer Loyalty

Quality survey , measure


customer retention level

49

Increase Brand Image & Reputation

50
51
52

Essential for health & Energetic Drinks


High Availability of Sports Drinks, Bottled
Water and Energy Drinks Products
Excellence Quality

53

Zero Defects Delivery to Customers

54

Premium Customers of Drinks, Bottled Water and


Energy Drinks Products

55

GROWTH:
Lower Price Compare to Competitor

56

Excellence Quality

56

Rapid Increase In Brand Value

58

Loyalty Club Card

59

High Availability of Sports Drinks, Bottled


Water and Energy Drinks Products
Maintain Excellence Communication and
Relationship , Increase Customer Loyalty

60

61
62

69 | P a g e

Ensure of Constant Product Supply


Premium Customers of Drinks, Bottled

Cost per product produced

Market share

Quality survey , measure


customer retention level

Number of defect produced,

10% cost
reduction target
(ideal standard)
5 % Increase in
terms of
customer
retention level
(compare to
year before
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before)
5 % Increase in
terms of
customer
retention level
(compare to
year before
15% increase in
terms of
PepsiCo market
share

5 % Increase in
terms of
customer
retention level
(compare to
year before
Zero defects

Number of premium customers

Cost per product produced

Quality survey , measure


customer retention level

Market share

10% cost
reduction target
(ideal standard)
5 % Increase in
terms of
customer
retention level
(compare to
year before
15% increase in
terms of
PepsiCo market
share

Number of loyalty club


member

20 %
increase of
club
member

Percentage of highly
satisfied customers

5 % Increase in
terms of
customer
satisfaction
level (compare
to year before)

Number of late delivery


Number of premium

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


Water and Energy Drinks Products
SELECTION :
Strategic Skills In Customer Segmentation,
Research on Customer Expectation &
Needs

63

customers

Human capital readiness

Market Research, Develop Portfolio of


Customer Management Information & Data
System, Establishing Effective
Communication among Marketing&
Customer Service about the Segmentation

Application portfolio
readiness

65

Customer-Oriented Culture, Positive Internal


Culture , Customer Relationship
Management, Respond to the Information
Effectively

Customer survey

5 % Increase in
terms of
customer
satisfaction
level (compare
to year before

66

Market Research, Increase Knowledge


Sharing, Develop Strategic CRM Portfolio

100 percent
target

67

Particular Group Serve Particular HighValue Customers


Records of Valued Customers, Increase
Knowledge Sharing,

Number of customer hits


to knowledge
management system
Human capital readiness
Number of customer hits
to knowledge
management system

100 percent
target

64
Learning &
Growth
perspective

68

70
71
72
73
74

ACQUISITION:
Develop Strategic Competencies
Develop Marketing Effective leader &
Teamwork Depth
Develop Extensive Marketing & Sales
Training
Continually Develop & Transfer Knowledge

75

Customer-Oriented Culture, Positive


Internal Culture, Customer Relationship
Management

76

78

Develop Portfolio of Customer Management


Information & Data System
Interactive training programs for
Management and Sales Teams
Increase Knowledge Sharing

79

Increase Knowledge Management Culture

80

RETENTION:

81

Records of Premium Customers

82

Create Personel Goal Alignment

83
84

Personnel Commitments and Efforts


Attract and Retain Top Talent

77

70 | P a g e

Human capital readiness


Human capital readiness
Training hours
Number of customer hits
to knowledge
management system
Customer survey

100 percent
target
5 % Increase in
terms of
customer
satisfaction
level (compare
to year before

Application portfolio
readiness
Training hours
Number of customer hits
to knowledge
management system
Number of customer hits
to knowledge
management system

Number of premium
customers
Employee objectives
linked to BSC
Human capital readiness

100 percent
target
100 percent
target

[DESIGN STRATEGIC PLAN/SEM II/2012/2013] PepsiCo - 2009


85
86

87

88
89
90

Customer Feedback on Product


Improvement, Increase Knowledge Sharing
Create Customer Focus Culture

GROWTH:
Develop Strategic Competencies in Sales
and Promotion
Personnel Commitments and Efforts
Record of Premium Customer for Sports
Drinks, Bottled Water and Energy Drinks
Increase Knowledge Sharing for Best
Practices, Extent Usage of Knowledge
Management System

Response rate
Customer survey

Human capital readiness


from sales and
promotion department
Number of premium
customers
Number of customer hits
to knowledge
management system

91

Customer Relationship Management


Portfolio

Application portfolio
readiness

92

Create a Customer Centric Culture,


Customer Relationship Management

Customer survey

93

Improve Company Reputation and Brand


Image, High Quality & Healthy Culture

94
95

Attract & Retain Top Talent


Rewarding Staff with Performance,
Knowledge Management Systems

71 | P a g e

5 % Increase in
terms of
customer
satisfaction
level (compare
to year before

Market share

Mission, vision

100 percent
target

5 % Increase in
terms of
customer
satisfaction
level (compare
to year before
15% increase in
terms of
PepsiCo market
share

Mission
achieved