Over the years, the beverage industry in the U.S. has grown at a rapid rate. The growth can be attributed to the high increase in the number of companies operating in this industry, as well as an increase in the country’s population. Gamble and Thompson state that, out of the world’s 1.58 trillion US dollars recorded in 2009 from the beverage industry, the U.S. market alone contributed a total of 17 billion US dollars. The chief market performers in this industry include Coca-Cola, PepsiCo, Living Energy, Rebbull, and Hansen Natural. PepsiCo is among the major players in the industry. Its growth can be attributed to its competitive advantage, large market share, brand loyalty and enhancement of customer confidence and loyalty. The company also has a variety of products that it provides to the U.S. market, an indication that it is a success and growth oriented Company.
PepsiCo Inc operates in an oligopoly market. A small number of firms dominating the market characterize an oligopoly market. The actions of any of the dominant firms affect the other companies. The major players in the beverage industry include PepsiCo, Coca-Cola, Rebbull, Living Energy and Hansen Natural Corporation. These companies dominate the beverage market and usually buy out other small enterprises that enter the market. All these firms sell identical and differentiated products.
The beverage industry has entry barriers. Although it is possible for new entrants to get into the beverage market in the US, as the legalities are favorable, the threat of arrival is high (Gamble and Thompson, 2013). It is hard for a new beverage company to maneuver in the industry in the presence of the well-established companies, which have been in the industry for a long time (BMC, 2013). The reason behind this argument is that the industry is very competitive. Any new entrant in this industry must be financially stable and have well-formulated strategies to help expand the market share and enhance competitiveness. This kind of situation is hard especially in the U.S. market, which is very unpredictable due to the high number of well-informed customers (BMC, 2013). The already existing companies have established brand loyalty, and this makes it hard for new entrants to develop and enjoy competitive advantage since the customers in this market are very sensitive, and they would rather buy a product that they know the manufacturer at a high price, rather than a new cheap product from a new manufacturer. A small number of dominant companies, differentiated goods and barriers to market industry are characteristics of an oligopoly market.
Every industry has regulatory issues that affect the decisions of the companies. These include mainly environmental and accounting regulations. Being in the beverage industry, PepsiCo Inc. has to follow the laws and regulations that govern the food and beverage industry. The Food Safety Modernization Act is the major regulation faced by the PepsiCo Inc. The act aims to enable the Food and Drug Administration (FDA) agency to protect the public against any foodborne diseases (Heckman et al, 2010). The FDA focuses more on safety rather than reacting to problems when they occur. They concentrate on preventing the problems from occurring.
PepsiCo Inc is required to write and implement a preventive control plan. This involves evaluating the hazards, specifying the controls, defining how the controls will be monitored, maintaining records routinely and specifying what steps are to be taken to correct problems, which arises. The FDA has established science-based procedures to be followed in the harvesting of fruits and vegetables. Fruits are a major ingredient used by PepsiCo Inc in the production of juices such as Tropicana. Other issues to be considered in the growth and harvesting of fruits according to FDA include soil amendments, hygiene, temperature controls, packaging and water.
PepsiCo Inc also has the mandate to monitor the environment. The company strives to be responsible regarding conserving the environment. To be socially responsible, the company is committed to using methods that are economically sound and scientifically based. The company engages in recycling and use of energy programs that promote clean water and air and reduced wastes. In broader terms, PepsiCo Inc is committed to following the environmental laws and regulations in the countries where they operate.
The Non-Alcoholic Beverages Sustainability Accounting Standard Board (SASB) sets the sustainability accounting standards to be used by the publicly listed companies in the beverage industry. PepsiCo Inc being publicly listed and in the beverage industry has to follow these guidelines. The SASB’s disclosure identifies and specifies the sustainability topics at an industry level (Heckman et al, 2010). Depending upon the specific operation context of a company, each company decides what is to be included in the periodic SEC filings. PepsiCo Inc has to follow the guidelines in the disclosure when filing the form 10-K, 8-K, and 10-Q.
In the using of estimates in reporting, PepsiCo Inc has to discuss in details the nature and basis of using such an estimate. In addition, the filings of different forms have to be done timely. The future trends and uncertainties of the company must also be discussed in its filling including those influenced by any external factor. In its decision-making, PepsiCo Inc has to consider the above environmental and accounting regulations as laid out.
In the conduct of its business, PepsiCo Inc has to consider the ethical issues that are likely to affect the business. A major ethical issue is the use of bioengineered food and ingredients. PepsiCo Inc has dedicated itself to producing high-quality food and beverage products by ensuring that they exceed the quality and safety standards. The company uses ingredients that have been approved by the appropriate authorities. PepsiCo Inc has a food and safety regulatory department that works in close collaboration with suppliers to ensure the safe and integrity use of bioengineered ingredients (Heckman et al, 2010). In addition, the scientific and regulatory department tracks any emerging issues in scientific reports, which are significant for the maintenance of high standards of food safety.
The world is becoming more health conscious in recent times. The products manufactured by PepsiCo Inc have caused health problems in the past (Dhanagom, 2012). People these days are considering food rich in low calories, natural items and low fat as opposed to processed salty and sugary foods. PepsiCo Inc fought back by producing drinks that are low in sugar content and calories. PepsiCo Inc is making big strides in addressing the heath issue with its products.
PepsiCo Inc also engages in the conservation of the environment. The company has developed plastic bottles that use less plastic to solve the waste issue. Plastic bottles are one of the main causes of landfills. PepsiCo Inc keenly observes issue that is unethical and improves on them accordingly (Dhanagom, 2012). When making decisions, ethical issues have to be considered.
Since its establishment in the 1890s, PepsiCo Inc has excelled in being globally recognized. This has been possible by its endeavors to be socially responsible for producing safe drinks and foods. Given that the company operates in an oligopoly market and among the biggest in the beverage industry, it means that the company has well-formulated strategies and is financially stable. In addition, the company endeavors to conserve the environment by participating in environmental conservation campaigns and use of recyclable materials.
Beverage Marketing Corporation (BMC), (2013). Press Release: The U.S. Liquid Refreshments Beverage Market Grew By 1.0% in 2012. Retrieved on 21st November, 2013, from http://www.beveragemarketing.com/news-detail.asp?id=255
Dhanagom, C. (2012, March 27). Pepsi named one of “world’s most ethical companies” despite exploitation of aborted babies. Retrieved March 20, 2016, from https://www.lifesitenews.com/news/pepsi-named-one-of-worlds-most-ethical-companies-despite-exploitation-of-ab
Gamble, J., & Thompson, A., (2013). Essentials of strategic management: The Quest for Competitive Advantage. New York: McGraw-Hill/Irwin.
Heckman, M. A., Sherry, K., Mejia, D., & Gonzalez, E. (2010). Energy drinks: An assessment of their market size, consumer demographics, ingredient profile, functionality, and regulations in the United States. Comprehensive Reviews in food science and food safety, 9(3), 303-317.
Penzkofer, A. (2007). The Market of Pepsi/PepsiCo. California: GRIN Verlag
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