strategic-management

EXHIBIT 6 World Demand for the Nonalcoholic Beverage Market
In millions US$
$160,000.00
$140,000.00
$120,000.00
$100,000.00
$80,000.00
$60,000.00
$40,000.00
$20,000.00
$0.00
2003 2004 2005 2006 2007 2008
Source: Euromonitor International (2008).
Sports drinks
Carbonates
Fruit/vegetable juice
Bottled water
Energy drinks
Concentrates
RTD tea
over $35 billion in 2006 to over $43 billion in 2008, a closer look reveals some negative trends.
On the income statement, cost of sales has increased as would be expected. However, these
costs have increased from 41.32 percent of sales to 43.43 percent of sales and net income has
decreased from $5.6 billion to $5.1 billion. Also during this time 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 (24.45 percent of common equity)
in 2007 to $7.858 in 2008 (65.13 percent of common equity). None of the changes necessarily
indicate a company in trouble. However, the trends might indicate future problem areas. It
should also be noted that in 2008 some $543 million was charged to net income in conjunction
with the “Productivity for Growth” program, which included closing six plants, upgrading the
product portfolio, and creating a more streamlined organization structure.
Divisional financial results for the years 2006–2008 show the importance of snack
and breakfast foods as well as the decline in carbonated beverages. Also shown is the
increase in international revenues.
Mission
The following is PepsiCo’s mission and vision as taken directly from their Web site
(PepsiCo Mission and Vision, March 2009):
Our Mission
Our mission is to be the world’s premier consumer products company focused on convenient
foods 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 which we operate. And in everything we do, we strive for
honesty, fairness and integrity.
Our Vision
PepsiCo’s 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 benefit society, and a commitment to build shareholder value by
making PepsiCo a truly sustainable company.
Performance with Purpose
At PepsiCo, we’re committed to achieving business and financial success while leaving
a positive imprint on society–delivering what we call Performance with Purpose.
CASE 24 • PEPSICO — 2009 237