Sample Report Paper on Student IDInternational Business Expansion by Pepsi Co.

 

Cultural Differences in International Business Expansion: The Case of
PepsiCo.

Abstract
PepsiCo has been able to intensify the market growth and presence of its beverages through
the development of the strategies that support integration of cross-cultural parameters. The
development and establishment of global trade has facilitated the brand in approaching the
markets at a global level with negligible interference from the government’s end. PepsiCo
(2016) has highlighted that the inclusion of strategic approach for international expansion has
been its real growth catalyst. The company has been able to pay attention to its international
employees by developing an understanding about the cultural differences that have been
prominent. Through this report, it has been aimed that the understanding about the cross-
cultural differences that organisations face while development on an international level are
evaluated with special reference to PepsiCo. The report aims to highlight the barriers that the
variations in cultural backgrounds can bring forth and how these are handled with
consideration to the external business environment. In order to reach the objective, the report
uses secondary data to understand the situation of the industry and then analyses the situation
of the brand. Through PESTLE and SWOT analysis it becomes clear that PepsiCo has a clear
advantage over its competitors. Finally, the cultural differences and the ways incorporated to
overcome the challenges that they pose have been discussed with few recommendations
alongside.

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Table of Contents
Abstract 2
List of Figures 5
1.0 Research Introduction 6
1.1 Introduction 6
1.2 Aims and Objectives 7
1.2.1 Aim 7
1.2.2 Objectives 7
1.3 Dissertation Structure 8
1.3.1 Research Introduction 8
1.3.2 Literature Review 9
1.3.3 Research and Methodology 9
1.3.4 Results and Analysis 10
1.5 Summary 10
2.0 Literature Review 11
2.1 Introduction 11
2.2 Definition of Key Terms 12
2.3 Theoretical Frameworks 14
2.4 Cultural Differences and International Expansion 15
2.5 International Market and Cross-Cultural Concerns 17
2.6 Consumer Goods Industry 18
2.7 Introduction of Pepsi Co. as an International Business Corporation 19
2.8 Understanding Culture for Better Business 20
2.9 Culture and Conflict: Strategic Initiatives and Managerial Implications 21

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2.10 Ethical Issues and Organisational Challenges 21
2.11 Summary 22
3.0 Methodology 24
3.1 Introduction 24
3.2 Research Process 24
3.3 Research Approach 25
3.4 Choice of Research Design 26
3.5 Method Construction 27
3.6 Limitations 30
3.7 Summary 30
4.0 Results & Analysis 32
4.1 Data Analysis 32
4.2 Industry Situational Analysis 33
4.3 Pepsi Co.’s Situational Analysis 39
4.3.1 Macro Environment Analysis 42
4.3.2 Micro Environment Analysis 48
4.4 Implications 54
5.0 Conclusion and Recommendations 56
5.1 Conclusions 56
5.2 Recommendations 57
5.3 Future Scope of Study 58
References 60
Appendix 65

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List of Figures

Figure 1: Global Market Share of Beverages and Snacks (Source: Market Realist, 2015) 32
Figure 2: Soda Market Sales Forecast (Source: Industry Reports, 2012) 33
Figure 3: Trends Developing Beverage Market (Source: Coca-Cola, 2015) 34
Figure 4: Company Shares on a Global Scale (PepsiCo, 2015) 35
Figure 5: Industry Presence of Different Brands (Source: US Beverage Reports, 2015) 35
Figure 6: Food and Beverage Industry inside US and outside the country (Source: US
Beverage Industry, 2015) 36
Figure 7: Revenue Generation (Source: Market Realist, 2015) 37
Figure 8: International Expansion Statistics of PepsiCo (Source: PepsiCo, 2015) 38
Figure 9: PepsiCo Revenue Based on Segments (Source: PepsiCo, 2015) 39
Figure 10: Revenue Segmentation on Regional Basis (Source: Market Realist, 2015) 40
Figure 11: Comparative Analysis of Revenue Generation (Source: Market Realist, 2015) 41
Figure 12: PepsiCo Global Operations (Source: PepsiCo International, 2016) 42
Figure 13: PepsiCo Domains (Source: PepsiCo, 2015) 48
Figure 14: Comparative Standards between PepsiCo and Coca-Cola (Source: Market Reports,
2016) 51
Figure 15: PepsiCo and US Beverage Market (Source: Euromonitor, 2014) 52
Figure 16: Market Share of different Brands (Source: Market Reports, 2015) 53

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1.0 Research Introduction
1.1 Introduction
The market world has seen a lot of changes since the technological advancements have come
up and the expansion of business on international level is one of them. In the works of
Clarke, Tamaschke and Liesch (2012), it has been described and observed that the expansion
of business on international level has become a part of business these days. International
expansion is beneficial as it helps in expansion of business market and also allows reaching
the untapped group of people and places. It becomes important for the companies to
understand the cultural differences that exist internationally and then these points are taken in
consideration before efforts for expanding business can be done. Vaara, Sarala, Stahl and
Bjorkman (2010) have stated that the impact of organisational and national cultural
differences on international acquisitions is such that the knowledge and social conflicts can
face hindrance. Thus, international business expansion is not limited to the ability of the
business concepts and firms to be able to expand easily across the boundaries but also
understand the cultural differences and their impact through expansion process.

Moreover, the researchers have found that the international expansion of business is directly
related to the economic development and market expansion. Also, international business
would require rapid development process and hence the cultural differences should be
acknowledged and resolved. It has been observed by Kutty and Kutty (2014) that when a
business decides to move to a new location with a diverse cultural background and also a
difference in the language, which in turn, makes it difficult for the company to adjust and can
lead to stressful working environment. Thus, now we know why developing an understanding
about the cultural beliefs and other parameters associated with it are important to study.

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Furthermore, the report has aimed to obtain a judgement on the current strategies that the
organizations are using to overcome the cultural differences that they come across in the
international business. This can help the organizations and business as it would study the
methods already tried and help in the expansion of business. The report would also help the
business, as it would analyse the risks that are associated with the expansion of business and
also how the cultural challenges associated with them can be overcome. Lastly, the report
would also help to suggest some strategies that the organizations can employ that face
cultural challenges and also it would help in avoiding such cultural differences in future
endeavours.
1.2 Aims and Objectives
1.2.1 Aim
The aim of this project is to carry out research on the cultural differences that might pose a
threat or challenge in the international expansion process of any organization. The research is
based on PepsiCo and the issues that it faced when the company used certain strategies to
make a mark on the international level have been studies and analysed.
The main overarching research question for the proposed study is the challenge faced by
PepsiCo due to cultural differences when it came to integrating business expansion strategies
at an international level.
1.2.2 Objectives
Therefore, research question can be divided into the following objectives:

 To analyse the cross-cultural challenges being faced by organisations at present
during their international expansion

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This will help the researchers to identify the impact that cultural differences have on the
business that they plan to expand or entering into foreign nations. It would also allow
building up the process that will help n the successful completion of the strategies. Thus this
objective aims to identify the factors that the business associates should keep in mind when
they develop the plan of marking their entry in the new country.
 To critically evaluate the literature on international market and cross-cultural
differences
The in-depth analysis of the literature that is concerned with the practices related to the
international expansion of business, the organization would be benefitted. The analysis would
help the in understanding the perspective of the scholars and also help in understanding the
views that already exist in terms of international expansion of business. Also, the data would
help to assess the cross-cultural issues that may limit the business expansion practices.
 To recommend strategies that can be employed by the organisations facing cultural
challenge at present and also the ways in which it can be avoided by future
establishments.

The content is compiled and analysed and this would further help in the recommendation of
new strategies and also the shortcomings of the existing strategies would be overcome. Thus,
this would assist in handling the new establishments and expansions in a better manner.
1.3 Dissertation Structure
1.3.1 Research Introduction
Through this report, it is aimed that the cross-cultural challenges that are faced by the
organisation currently and the ones that it overcame during international expansion are
discussed in detail and further critically analysed. Additionally, the report aims to derive a

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detailed understanding about some of the common aspects revolving around the branding
strategies that help any brand to market its product and gain market share in existing and new
markets. The analysis of the company background and existing market situation has also been
performed through the use of various business marketing models like PESTLE and SWOT
analysis.
1.3.2 Literature Review
The content available has to be analysed and then the organization would be able to develop
new strategies as the shortcomings of the existing strategies would be overcome and thus this
would further allow the managers to handle the new expansions in a better and more
productive manner. This is possible through an extensive literature review, which allows
development of an understanding about the current data and also that of the gap that lies in
research that exists and the part that is missing. The report is structured so that the general
understanding about international expansion and branding strategies is developed with a
special reference to PepsiCo.
1.3.3 Research and Methodology
In order to satisfy the needs of the objectives, exploratory research was taken into
consideration. The aim was to identify the data that could lead to the understanding of how
the brand has been able to incorporate expansion strategies through the development of the
ways in which the cross-cultural barriers are being overcome by it. It has been verified
through the research methodology obtained that the strategies are implemented in a manner
that facilitate the understanding of the undertaken research work and also identify with the
objectives of the study conducted.

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1.3.4 Results and Analysis
Through the analysis of the available data and statistics, the report is aimed at finding the
presence of soda companies across the world and the place that is taken by PpesiCo. The
details of the number of brands that have expanded their operations across nations have ben
identified and so has been the growth in shares and profit margins. This helps in verifying the
existing market of PepsiCo. and it helps in developing an understanding about the ways in
which overcoming the cross-cultural differences can be fruitful.
1.5 Summary
Through the chapter, it is easy to verify that the main aim of this report is to bring forth an
understanding about the significance of cross-cultural adaptations in order to achieve a
successful business. The aims and objectives have been highlighted and similarly, the
structure of the dissertation has been discussed. This would be helpful for the reader to gain a
general idea about what the report has in the following chapters and how it has been
segregated.

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2.0 Literature Review
2.1 Introduction
The members of the world economy are faced with a challenge to identify the challenges and
understand the parameters of international business expansion. It is a noble necessity for all
the organisations to be able to include the parameters of adjusting to international business
environment so as to gain a competitive advantage. In addition to this, it has been understood
that the strategies used by various companies to expand their business revolve around their
ability to adapt the cultural differences and make the local and international employees feel
accustomed to the international policies and ways of dealing with business prospects. As
argued in the works of Rowley (2013) the expansion across boundaries calls for change
management and it is vital that the managers involved work for improvement of the services
and the development of the environment, which is helpful in keeping all the employees intact
and productive irrespective of their background and culture. This is also important for the
brand that the product needs to be publicised on an international front for better growth and
development of the business force and business model in application.
Through the literature reviewed, it is aimed that the various terms associated with cultural
conflicts and international expansion are discussed followed by the scenario of consumer
goods industry on an international level. Pepsi Co. has been selected as the company of
analysis and a detailed description of its international expansion strategy and challenges
faced by it has been given. It further aims to highlight the role played by strategic planning
and the importance of management in handling the organisational challenges that are obvious
in such situations. A discussion of ethical considerations in international expansion has also

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been included to identify the side of the organisation and the management in preventing the
conflicts and managing cross-borders business.
2.2 Definition of Key Terms
Firstly, some of the relevant terms have been explained as they are defined by the scholars.
The terms taken into consideration play an integral role in the research process and also help
in explaining the importance of certain concepts in international business and conflict
management.
International Business & Expansion: Kotabe and Aulak (2002) have described the process
of expansion of a business internationally as an overall opportunity to set one’s foot outside
the home region and also accessing the needs and requirements of different people belonging
to different regions. In the works of Kolk (2016), international business and expansion has
been referred to as the process wherein the approach of sustainability is observed and there is
a paradigm shift under observation for the businesses are going international and growing
through the process. On the other hand, it has been argued by Gloicic and Smith (2013) that
the process of international expansion and business establishment on a global level can prove
to be challenging as there is a need to incorporate sustainable practices while identifying and
bridging cultural differences.
Cultural Conflicts: Jassin, Sheikh, Obeid, Argo and Ginges (2013) have defined the concept
of cultural conflicts as the situation wherein the employees of an organisation or otherwise a
group of people who face issues due to difference in their cultural background but also as an
opportunity to learn a number of things and look at them through a wider range of
perspectives. Whereas, as has been defined by Kuntz, Kuntz, Elenkov and Nabirukhina
(2012), the cross-cultural investigation is suggestive of the fact that the individual differences
still exist after the managerial strategies of treating employees equally and helping them to
co-exists in an international and culturally diverse environment.

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Cross-Culture Management: It is important to manage the organisations where the cases of
cross-cultural conflicts are observed as the increase in the number of discriminatory activities
can lead to differences and also make room for bad quality of performance. As defined by
Ye, Zhang and Yuen (2013) the management process wherein the managers integrate
activities and training methods that help the employees to warm up to each other while cross-
cultural expansion is referred to as cross-cultural management. It has also been suggested that
the identification of differences and specific interest makes discriminations prominent, which
can only be controlled through effective planning and strategic implications.
Consumer Goods: The consumers rather than the manufacturers have defined consumer
goods as the final goods that are bought as the raw material for producing another good.
Saccani, Perona and Bacchetti (2016) have highlighted that the value of consumer goods is
dependent on their ability to satisfy the consumers all across the world and the targeted
markets and only through the consumer satisfaction can the total cost of the goods be
incurred. In international expansion, satisfaction of the consumers is integral and it is
essential that all the demands and requirements of the consumers are understood irrespective
of the boundaries and cultural differences.

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2.3 Theoretical Frameworks

(Self-Illustration)
In order to understand the implications of international trade, it is essential that the related
theories be taken into context. There are several trade theories that have been discussed by a
number of scholars with focus on absolute cost advantage (Adam Smith, 1776) and also
comparative cost advantage (David Ricardo, 1817).
Absolute Cost Advantage: This theory is implied to the understanding that a country should
indulge in production and manufacturing of any entity only if it is able to do so at a cost
lower than its competitor. This verifies that the manufacturer is at an absolute cost advantage.
Consumer Goods Industry
 What is the situation of
consumer goods industry
on a global level
 Changing trends in
consumer preferences

International Business Expansion
 Is there a rapid increase in
international expansion
 What makes the international
business expansion a tough
call

Cultural Differences and
Conflicts
 What are the cultural
conflicts that arise due to
differences
 What are the ways to
manage cross-cultural
expansion

Pepsi Co. & Expansion
 Why has the expansion been
integrated by Pepsi Co.
 How has the expansion
created challenges for the
organisation

AIM:
To strategically analyse
the challenges faced by
organisations during
international expansion
with special reference to
Pepsi Co.

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Similarly, when the competitor or trading partner is able to give out better product at a lower
cost, the original manufacturer is at an absolute disadvantage.
Comparative Cost Advantage: Another theory that promotes manufacturing and production
of goods is related to the comparative advantage that a firm has with respect to the other
organisations producing same products and/or delivering same services. Additionally, a
relative advantage of two firms with respect to the production process can be referred to as
the ideal situation wherein two firms can work in sync for a mutual benefit.
International Trade and Economic Theory: It has been verified that the expansion of a
business on an international scale is an indicator of the national economic welfare of a
country and also its development standards. This is suggestive of the fact that in order to keep
the economy prosper on a continuous note, it is essential that the firms expand at the
international platform and adopt to international trade standards for raising their gross
domestic production.
2.4 Cultural Differences and International Expansion
It is considered that if any organisation expands the business internationally then it is fully
aware of the culture of the country that the business will be expanded in. This is important for
even the simplest of gestures can pave way to the issues concerning the distinctions that arise
in the domain of cultural scenarios and that of the comfort level to be attained and
maintained. According to Samaha, Beck and Palmatier (2014) have stated in their article that
whenever any business is expanded on international level then a lot of issues concerned with
cultural aspects arise. During international expansion, all the challenges that the business
organisation faces come down to the cultural aspects that are variable across the world i.e. the
thought process and the religious as well as behavioural practices differ from region to
region. In the works of Kuntz et al. (2012) it has been highlighted that the inclusion of
cultural differences can last due to different identities and as explained, there can be several

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factors like legal issues and ethical issues that prevent co-existence on international
expansion. The data studied from professional samples collected from Russia and New
Zealand identifies that there exists strong effect of social culture that is related to ethical
climate and ethical leadership and proves to be an obstacle in effective management of
international expansion of business. When a leader aims at bringing together the different
cultures through the employees then there can be a peaceful co-existence with several ideas
that can be integrated for better economic progress.
Further, in the works of Riemer, Shavitt, Koo and Markus (2014) it has been discussed that
there are differences in the attitudes of the people across the world and thus the impact of
international expansion of organisations can be quite unpredictable. Some of the practices are
culturally ingrained and deeply enrooted, which in turn, can create differences and
misunderstandings leading to bitter terms among employees of the same company. The acts
like crossing the legs during meetings and sending informal mails as a response to official
mail can create disturbances leading to the loss of organisational detailing. It has been
suggested by Douglas and Craig (2013) that the relationship between employees from
different cultures is also an integral part of the business set up since there can be no selling
without the existence of harmonic relationships. In order to make the expansion of the
business a peaceful process it is suggested that the organisations and their management
should respect the distinction and differences between different cultures. Ye et al. (2013)
suggest that the cultural conflicts can be observed as the driving force behind the
incompatibility of the different regions, which in turn promotes insensitivity among managers
and the team of executives. The culture should instead be used as a cushion determining the
accumulation of overall scenario with vivid bonding among employees hailing from different
parts of the world. This can be a support to the plans that the organisation develops with
respect to the expansion of its services through the cross-boundaries.

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2.5 International Market and Cross-Cultural Concerns
Cross-cultural expansion is like a gamble as it can turn out to very simple for some and also
very complicated for the others. The main differences is in the communication style and the
same word may mean the exact opposite in two countries and this may lead to problems. As
mentioned by Kotabe and Aulakh (2002), that the numerous issues handled by the
organizations related to the international expansion of business lead them to gain experience
and thus they are able to modify the strategies of business taking in consideration the cultural
aspects of different nations. As has also been stated by Samohar, Porter and McDaniel
(2012), that it is important to make the customers feel valuable during the international
business expansion which can be achieved by intercultural communication of the different
nations. Moreover, when companies aim to expand on an international level, they need to
look for commercials that can point to the respect given to differences. Kotler and Armstrong
(2012) have suggested that international expansion needs to be integrated in a fashion that
serves the purpose of becoming a part of the process and it varies significantly with a number
of inclusions within the strategies that are being used. The strategic implications should be
able to promote the statistics of the concerned company and also should be able to bring out
the vague possibilities of non-acceptance of the project. Through a 360 degrees’ approach, it
is easier for firms to aim for a better market strategy and assimilate the feedback from the
different markets.
Cultural differences are discarded at a number of places and this low uncertainty helps in
regulating and establishing business to a better level. According to Ho (2016) the key of
making the strategies successful is the understanding of cultural differences and identification
of the rights words that should be used to hit the market. This was used with the parameters
that were identified as the key growth drivers for PepsiCo’s business on an international
scale. PepsiCo aimed at building its brand and network across the countries facilitated the

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establishment of an idea that supported the brand’s movement and easy integration in foreign
destinations. Additionally, during the research process, it has been highlighted that there are
several issues related to the messages that are being shared and at times it happens that the
messages are interpreted in a wrong manner leading to issues both legal and social. The
variety in the audience being approached brings forth an understanding that the message
integrated in advertisements and campaigns should be based on one-to-one approach rather
than a one-to-many approach. Luo (2016) has framed an understanding that the adaptation of
cross-cultural management plays a very important role in valuing the objectives of the firms
and also supports them through their establishment in a foreign nation. Further, it has been
found that the use of short sentences as brand statements can result in different meaning in
different countries. This is indicative of the fact that it is not difficult to arrange for
international expansion and this can be achieved easily through the process of effective
communication and a definitive understanding about the cultural differences.
2.6 Consumer Goods Industry
Consumer goods industry has been found as the fastest growing industry, and it has a number
of international extensions established all across the world irrespective of the cultural
differences and preferences. There are a number of well-developed and properly planned
strategies that help to achieve success in international market. Balley (2014) suggested that
implementation of practices that do best to the customers, helps the organisations get stronger
hold in foreign market and leads to better growth like we observed in the case of PepsiCo.
International business management managers need to work in sync if they want to beat the
challenges and thus, they are expected to have complete knowledge of the market that they
plan to enter. Myungsik (2012) has drawn our attention towards the points that the leaders
and managers of the company become very important when it comes to implementing
changes or strategies within the organisation, which are suitable for the consumers and the

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business in turn. It has been researched and analysed by Okazaki and Taylor (2013) that the
involvement of social media and including the scenario that is supportive of international
market plays important role in the consumer goods industry that is gaining popularity across
the world. The networking capabilities and the ability of the organisation to bring in the
element of image transferability and personal extensibility helps in establishing better
relations both at home and abroad. The consumer goods industry also comes across
challenges but there are several ways in which the challenges related to cultural differences
can be overcome thus leading to better and smoother expansion of the business.
2.7 Introduction of Pepsi Co. as an International Business Corporation
In a case study developed and studied by Chetty and Partanen (2014) a logical framework has
been applied for understanding the impacts of an international expansion to countries
inclusive of Denmark, Finland and New Zealand and it has been inferred that the viability
and reliability of the project is dependent on the ability of the entrepreneur and the
organisation to handle the changes and manage them through the expansion strategies that are
being integrated by any organisation. Bailey (2012) has suggested that for Pepsi Co.,
international expansion has been identified as the best decision for it has experienced growth
in its revenues and also the idea of manufacturing healthier drinks has helped in growth of
inclination of people towards Pepsi Co. and its products.
Douglas and Criag (2013) have highlighted in their works that the inclusion of dynamics of
architectural design of brands is essential in order to form a coherent international marketing
strategy by the brand. The aim of this project is to undertake the research that is based on
cultural differences, which pose challenge for the organisations in their activities related to
international expansion. The organisation taken into consideration is PepsiCo and the issues
that it has faced while making use of certain strategies to gain popularity at an international
level have been highlighted. It has been observed in case of PepsiCo. that the brand faced

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certain challenges initially while expanding on the international front, mostly due to language
barriers and cultural aspects. As suggested by Tmcorp.com (2016) PepsiCo has been able to
gain success on international expansion when it used the strategies that can support business
expansion through the integration of multi-cultural factors. This report aims to highlight the
various strategies that have been integrated by the brand to overcome the issues that are faced
on a regular basis by the firms when they are on their way to expand, internationally.
Achtenhagen, Melin and Naldi (2013) have discussed that it is the ability of the companies to
understand the changing business environment that they successfully create sustained
business policies and overcome the cultural differences if any, during their phase of
expansion. The business practices adopted by PepsiCo., helped it develop sustainable path to
achieve profits and gain market presence. It has been found in the opinion of Alon, Ni and
Wang (2012) that the hospitality industry and retail chains that expand globally undergo a
number of variations with a huge difference in their working style and unique characteristics,
depending on the location of establishment.
2.8 Understanding Culture for Better Business
It has been expressed in the works of Banalieva and Dhanaraj (2013) that there is a need to
keep the home-region orientation in the strategies that are employed for international
expansion so that the negative impacts of the boundary expansion technique are over
shadowed and the employees feel at ease.
Jassin et al. (2013) have highlighted in their works that the cultural differences can be kept
away by the employees but it has been observed that they consider their culture to be sacred
and thus, it creates difficulty in maintenance of harmony within the organisation that grows
internationally.
Arizpe (2015) has highlighted that the inclusion of cultural aspects in the business
proceedings dates back to the time wherein political loyalty and sentiments towards country

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were the most valued and the developmental programs or the business aspects where the
employees had to travel and stay overseas were seen as a repelling factor towards the
organisation.
2.9 Culture and Conflict: Strategic Initiatives and Managerial Implications
Intercultural competence has been observed as a driving force behind the cross-cultural
conflicts that arise directly or indirectly in the organisations and the anticipated
discrimination is responsible for perceived discrimination and lack of harmony (Ye et al.,
2013).
Franks, Davis and Bebbington, Ali, Kemp and Scurrah (2014) have highlighted that the role
played by community in maintaining the possibilities of sustainable practices while
expanding globally and integrated different cultures is the most prominent cause of cultural
conflicts. This is because all the cultures have different values and there can be differences in
the ways different countries and cultures seek sustainability.
Okoro (2012) has expressed that the cross-cultural expansion can create issues in
communication with the employees and the customers alike and it is the responsibility of the
managers to imply strategies that can support and manage corporate expansion while keeping
everyone together and also their productivity intact, throughout the process.
2.10 Ethical Issues and Organisational Challenges
Morals have been considered as a convoluted issue and there are a few shrouded parameters
that characterize the objectives to be thought about while chipping away at the moral issues
(Boons and Kudeke-Freund, 2013). It is not only about the necessities and any semblance of
the individual in-control additionally the ethical commitments and the obligations that an
individual need to perform. Moral issues additionally should be worried about the
distinguishing proof of the character through the connections, weakness and sympathy that
exists. Al Ariss, Koall, Ozbilgin and Suutari (2012) have identified that the expansion of a

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firm on an international can prove to a beneficial factor for certain employees while others
can face challenges with the job position and the changes in the organisation structure which
in turn is a challenge for the organisation and proves to be an ethical issue.
Peng (2012) has expressed that in order to combat the ethical challenge of providing right
position and work to each employee during expansion process, a well-defined strategic
approach needs to be employed so that institutional force is not reduced and also the global
expansion challenge can be handled properly and effectively. It has been contended by
Slawinski and Bansal (2015) that the approach utilised as a part of economic improvement is
very extraordinary when hypothetically assessed and when it is utilised as a part of the
genuine and reasonable sense. It is proposed that the blast in any industry is the causative
operator for the shakiness in maintainable improvement and the issues worried with the
execution of the moral set of accepted rules are certain to emerge. Barnett and Lee (2012)
additionally propose that the utilization of option measures should be joined so as to keep the
improvement manageable and recognize the issues that can be comprehended through
straightforward insights. Advance, Zhang, Zhang, de Pablos and Sun (2014) trust that the
partners and financial specialists additionally should be included in guaranteeing
maintainable improvement and not confide in what the business people or associations are
depicting.
2.11 Summary
The fluctuated existing writing on beverage industry and the friendliness related moral
concerns have been examined basically and assessed for the provisos that still exist in
worldwide business rehearses. It is anything but difficult to presume that the examination
work achieved by different researchers’ spins around the administration business focuses
towards the potential outcomes of indecent practices that are conceivable or have been started
in the business so as to contend with the expanding rivalry and consideration of various

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players in the market. Through the point-by-point examination of the writing taken into study
and perception it is anything but difficult to recognize that exploitative practices frame a part
of the friendliness business prompting to the extent of dishonourable administrations with
coordination of government support or false claims. At long last, the writing has been ready
to highlight the difficulties that exist with the blasting business and falling economy. Keeping
in mind the end goal to clear up the perspectives, vital investigation of the international
expansion process of PepsiCo serves as a method for characterising the results conceivable
with regards to building up administrative measures and makes the business a supportable
one. The combination of audits from a few researchers help to support the thought and
complements the claim made by the researchers. Therefore, it is straightforward that moral
qualities are an essential part of the administrations business and should be investigated using
the moral set of principles. This is imperative of the fact that the cultural variations are an
integral part of the response generated by the expansion processes that a company might
undertake.

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3.0 Methodology
3.1 Introduction
As has been stated by Bryman and Bell (2011) the research methods used foe the work are
based on the foundation of research philosophy. The philosophy involved in research is
useful for obtaining information and in acquisition of knowledge related to the direction of
research work. The research philosophy also allows the researcher to analyse how to use the
data in best possible way in the given time. Interpretivism is the philosophy that states that
same concept is applied on the reality and the basis of the existence of the world and hence, it
has been used in this research work. Inductive procedure has been applied to interpretivism,
which involves qualitative analysis and has also been recognised by people as such. Thus, in
order to go ahead with the research, it has been aimed that the aspects of philosophy, which
are supportive of qualitative analysis would be helpful in gaining insight of what is to be
taken as important information in the study and what is to be eliminated. It would also be
helpful in working on the associated challenges and their validity in the research topic.
3.2 Research Process
Research process requires an intensive analysis of all dimensions of the study work taken
under consideration and through the identification of the situation; further processes could be
integrated for future study. Thus, in case of ethical considerations, which follow closely by
the expansion of PepsiCo on an international level, it is suggested that the identification of
background of the consumers from different countries and development of a knowledge of
the situation in consideration is done. Furthermore, the study process would try to identify the
ways by which the true situation of the aspects is investigated and related content is analysed
after the interviews are conducted for the required study. Therefore, it is anticipated to play

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out an exploratory examination where it may be investigated that whether PepsiCo has been
able to diversify its products and the services across cultural backdrops and differences.
3.3 Research Approach
Exploratory examination technique is considered to be one of the most apt methods in
understanding detailed statistics as it shows various issues. Despite this advantage, it is not
sure if they exist in genuine sense or if the condition is only genuine to a certain defined
extent. As has been propounded by Bray, Kelly, Hammer, Almeida, Dearing, King and
Buxton (2013) a great method of proceeding with an examination is by establishment of a
difference between the most effective approach bearing in mind the finish goal to meet up the
targets of the proposed plan. Brodie, Ilic, Juric and Hollebeek (2013) have proposed in their
works that there are different routes, which can be adopted under different scenarios wherein
the research procedures can undergo a blended usage of the methodologies. In perspectives of
Dörnyei (2007), subjective exploration methodology is connected to create the more
profound examination knowledge against this exploration setting. Adjacent to the quantitative
examination methodology is connected in studies, which requires an efficient exact
evaluation of applicable perception and exploration variables (Bernard, 2011).
As a substantial part of this study is the examination of the international expansion of
PepsiCo while taking in consideration the parameters adopted by the organisation to stand
through the cultural differences. The procedure adopted revolves around institutionalisation,
which forms the primary reason of evacuating the significant attributes that are also
distinctive in nature. In the works of Correll and Wittenbrink (2015) it has been highlighted
that the distinction caused by the process of institutionalisation is indicative of the fact that
there can be imperative contrasts, which can help in achieving better results. The key
exploration base can be built up using the examination and the understanding developed from
explorations that leads to subjectivity of the data obtained. As Kemp and Tenenbaum (2009)

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suggest, the inductive thinking process and its adaptation highlights the empowerment of the
advancement technique and how it can be used to reach the structure of investigation as
required by the research scholars.
3.4 Choice of Research Design
Research design forms an integral part of the research work, as it helps in the establishment
of the link between different theories and the research topic. The topic of study deals with
challenges related to international business expansion mainly due to cultural differences,
exploratory research would be the most suited. Of the different approaches that can be
implemented, it has been observed that the exploratory research method would be the most
appropriate one it has been analysed that exploratory research makes it easier to understand
the techniques. Also, it helps to select the technique to perform the research work. Further,
the use of exploratory work helps in gathering the information, that would be best suited as
well as initiates collection of relevant information in an easy and cautious manner.
Exploratory research method indicates a number of problems but it is not sure whether they
exist practically or not.
It has been suggested by Dumbach (2013) that the data collection process and upon
completion of data collection, its analysis should be in sync with the objectives of the
research process undertaken. Dumbach (2013) further claims that the procedure of data
collection and then its evaluation in a fashion that matches the targets and is effective in
creating an aim that is suggestive of the analysis under progress. As the comprehensive
research requires execution of the content analysis and interview, thus for content evaluation
the main element information has been accumulated from the scholarly publications and
articles, research paperwork, market reports, federal government data, files, details, etc. Thus,
this sorts the parameter of presenting supplementary research for the technology of idea in
regards to what is certainly going on in conditions of growth on an international level that the

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beverage industry and in particular PepsiCo is experiencing. All such resources have been
assessed and analysed in the framework of the study to derive key insights gratifying the
primary research aims (Bray, Kelly, Hammer, Almeida, Dearing, Buxton and King, 2013).
As the study requires the exploration of concerns that revolve around the areas of ethical
issues regarding the validity of the increase that appears to be happening in the beverage
industry. It has additionally been discovered that the increase, which identifies the
exponential development has been the consequence of the necessity and the demand of the
product by the consumers on a large scale.
3.5 Method Construction
Data would be collected using secondary data and the literature is also taken into
consideration. Thus, already existing data is reviewed so that a good base is developed using
the existing research and thus the problems related to international business expansion can be
identified. It has been stated by Bryman and Bell (2011) that the use of inductive approach
makes it easy to evaluate secondary data and also helps in proper identification of the detailed
information in the context. The secondary data is thereby researched and collected for the
purpose of extended analysis of the same for identification of cross-cultural differences and
the problems associated with the international business expansion scenario. A number of
journals, academic research papers, books, articles, news reports and other similar literature
would be identified and studied. This would help to bring forward the authentic data and the
details that define the challenges and help to understand the international business expansion
situation. Through these sources it would be easy to get insight about the details of
international market, how things work when there is international business expansion and
what challenges would be faced by the organisations. In the end, the entire data that has been
collected can be processed to correlate with the definitions given by the scholars and to study
the relationships that exist between past, present and future operations.

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Secondary research has been identified as the primary characteristic of the research and with
the help of the data collected it was easy to verify that the sale of soda across all the regions
has been gaining popularity. The data collected helps in verifying the extent of current
knowledge and the ways in which it can be extended through further research. Through the
integration of information from various sites like Google, Yahoo Finance and Mintel, it was
easy to verify the current status of the company and the growth that it has shown over past
few years. Furthermore, academic journals, peer reviewed articles and also other related data
from the newspapers and the Internet has been screened and understood to understand the
current potential of international expansion process and how the cross-cultural aspects are to
be managed. As has been highlighted by Bryman and Bell (2011), the academic journals are
useful in order to reach the objective from the various studies conducted and also the
limitations that have been found in the existing works.
It has been recommended by different researchers that in the midst of the movement of party
data, researcher should attempt to affirm the legitimacy of the information starting from the
Internet (Onwuegbuzie and Frels, 2013). Screenshots or another methodology for saving
basic destinations should be used for reference since the online data might be changed
without notice. For data, for instance, reports and estimations, the best way to deal with check
their credibility is to direct the file and references (Straub et al., 2004). Generally, it is
believed that the nittier the references, the more trustable the data. In solitude, repeating or
gathering information perceived by helper inquire about has no regard comparably as the
wander is concerned. Helper Research is of regard when information is taken a gander at and
explored, when the pro plays out a fundamental study of the data, and when the researcher
considers important disclosures to impel the wander (Onwuegbuzie and Frels, 2013).
Criteria Inclusion Exclusion
Time Period Articles: 2010 and above Articles dated before 2010

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Newspaper: 2012 and above
Academic Journals: 2000
and above

Newspaper dated before
2012
Academic Journals dated
before 2000
Language English Non-English
Location International context None
Author Credentials Reputable

Experience in related field

Authors not related to the
subject and lacking
experience

Content Relevance Key words:
Marketing
PepsiCo
International Expansion
Cross-Cultural Dimension

No Key words

Publisher Journal of Marketing
Mintel Reports
Yahoo Finance

Wikipedia
Blogs and other similar
resources

It has been further suggested that the secondary research and its main ideology, auxiliary
research can be induced at any phase throughout its indicative procedure. There are four
important phases of every secondary research inclusive of:
 Identifying the subject and understanding the places from where data can be obtained
 Collecting the data and screening it for relevant and existing information
 Comparing and contrasting the information from different sources
 Getting into the detailed analysis of the information

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3.6 Limitations
The biggest threat for the research work is the limited resources in context to the research
topic taken into consideration. It is anticipated that the information available over Internet
would be manipulated and there are doubts that true and detailed insights would not be
available. Thus, the information on the Internet cannot be trusted completely. The validity
and reliability of the information is in question. The research time is limited and thus it is
impossible to identify the generalisability and replicability of the material and this increases
the chances of incomplete information. Validity has been associated and defined by the
scholars as the analysis in which not just the findings but also their meaning is analysed along
with the facts stated as to what they are supposed to be. It is about giving a clear picture of
the facts as to whether the relationships that have been suggested by the researchers and
during the coursework actually exist or they are just random in nature. Further, another
important aspect i.e. reliability is concerned with the authenticity of the techniques and tools
which are commonly used for analysis and data interpretation of the literature reviewed.
Another important criterion is that the tools used in the underlying research should be useable
by other researchers. To keep the tools of research reusable, they should be transparent and
consistent in nature. Lastly, generalisability refers to the fact whether the results obtained are
general or not and also if they can successfully be applied to all other organisations or no.
3.7 Summary
With the aim of this research process being bringing out the best of the existing data with
reference to the international expansion concerning PepsiCo and verifying the cultural
adaptations it initiated to smoothen the process, exploratory research process has been
adopted. In order to verify the statistics and details of the project and the research work
associated data has been taken from authentic websites inclusive of Mintel, Market Realist,

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Euromonitor, Yahoo Finance and also Google. In addition to this, the secondary research
contained academic journals with a criterion of inclusion of works with keywords like
international expansion and cross-cultural differences. It has been verified through the
research methodology obtained that the strategies are implemented in a manner that facilitate
the understanding of the undertaken research work and also identify with the objectives of the
study conducted.

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4.0 Results & Analysis
4.1 Data Analysis
Information investigation is the way toward breaking down the information that is obtained
through the essential and optional research. There are a few stages that are incorporated into
the procedure of information examination and that include information accumulation,
information handling and furthermore determination of the information that is significant to
the exploration under process (Mack, 2010). The data would be accumulated using
discretionary data with the help of composing contemplated as far as the information got
through different subtle elements examined. In this way, the data that starting now exists
would be investigated so that a tolerable base is delivered using the present examination and
the issues related to overall business augmentation can be perceived (Muijs, 2010). It has
fought that using inductive procedure, it motivates easy to survey discretionary data; besides,
the unequivocal information in the association can be recognised honest to goodness. The
assistant data is in this way investigated and accumulated with the ultimate objective of
created examination of the same for recognising confirmation of socially assorted
differentiations and the issues associated with the all inclusive business augmentation
circumstance. With a particular true objective to manage conveying true blue data and the
purposes of intrigue that are related to the troubles and widespread business advancement
situation, different journals, insightful research papers, books, articles, news reports and other
similar written work would be recognised and mulled over (Noor, 2008). Through these
sources, it is definitely not hard to get information on what widespread business part look
like, how things work when there is worldwide business advancement and what troubles are
gone up against by the affiliations. Towards the end, the entire data accumulated can be
arranged and cleaned remembering the true objective to interface with the definitions given

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by the scientists and the associations that do exist between past, present and future
operations.
4.2 Industry Situational Analysis
The beverage industry has been found to have matured in nature and comprised of a number
of segments including the non-alcoholic market as well as the alcoholic market. Achtenhagen
et al. (2013) have highlighted in their works that the critical ability of the beverage industry
to adopt to the changing dimensions of the market has kept it steady and helped it earn huge
profits throughout. The industry provides its market players with huge profits and an
equivalently high dividend ratio. Two of the largest non-alcoholic beverage producers have
been Pepsi (PEP) and Coca Cola (KO) with a high market share in the international scenario
as well. It can be identified from the figure 1 that the global market share for sweet and
savory snacks and the drinks has been dominated by a variety of brands with PepsiCo taking
up the largest share.

Figure 1 : Global Market Share of Beverages and Snacks (Source: Market Realist, 2015)

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According to the consumer preferences and the ability of the brands to diversify their
products, a number of achievements have been reached at and there has been huge
development in the progress of the brands and their acquisitions (Arizpe, 2015). The
domestics and also the international markets have been supporting the consumption of
beverages and this has initiated a high rate of return for all the concerned brands (Figure 2).

Figure 2 : Soda Market Sales Forecast (Source: Industry Reports, 2012)
As explained by Al Ariss et al. (2012) the beverage industry has a multitude of options
ranging from a heavily priced product to a nominal ranging product, which could provide the
consumers with a flexibility to buy their desired quantity and quality of soda. It can be
observed in figure 2 that the forecast provided through the analysis of industry reports
supports the heightened expansion of soda industry in regions like Latin America and North

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America towards the end of 2018. However, a steady rise in the overall markets hare of the
soda industry can be observed through all different regions from 2013 themselves.

Figure 3 : Trends Developing Beverage Market (Source: Coca-Cola, 2015)
As can be observed in Figure 4 the company shares and their proportion has been undergoing
various changes with Coca-Cola being at the top with 26 percent of the weightage. Pepsi has
been facing issues since the beginning because of tough competition and even at the
international expansion level, there have been serious challenges for t he brand. As Bailley
(2014) has suggested, the need to approach the markets at international level requires the
brand to meet the specific demands of the consumers in those areas.

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Figure 4 : Company Shares on a Global Scale (PepsiCo, 2015)
Further, as can be seen in Figure 5, the data accumulated for the US refreshment industry
supports PepsiCo to have the largest beverage category share.

Figure 5 : Industry Presence of Different Brands (Source: US Beverage Reports, 2015)

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Figure 6 aims to highlight the percentage share of different beverage brands in and outside
the country (US). It can be clearly observed that the inclusion of beverages is higher than
food items but overall both the domains have equal contribution to the industry and its
development, not just within US but also outside.

Figure 6 : Food and Beverage Industry inside US and outside the country (Source: US
Beverage Industry, 2015)
Additionally, in order to analyse and evaluate the participation of the two popular brands
PepsiCo and Coca Cola, it can be identified that the annual growth and revenue of PepsiCo is
higher as compared to Coca Cola. The markets evaluated include the global market share and
it can be clearly observed that the international expansion strategies adopted by PepsiCo has
been favourable for the company (see figure 7).

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Figure 7 : Revenue Generation (Source: Market Realist, 2015)
The various international markets targeted by the brand have been different parts of America
and the revenue generation has only increased over past three years. As figure 8 presents, the
different regions have had similar turnover over the years but on an average there has been
increase in the popularity of the product.

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Figure 8 : International Expansion Statistics of PepsiCo (Source: PepsiCo, 2015)
4.3 Pepsi Co.’s Situational Analysis
In order to understand the position of the brand in a better manner, it is important to run a
situational analysis of the company in specific through the understanding of the internal and
the external environment. Banalieva and Dhanaraj (2013) suggest that all the potential giants
look for the ways in which they can build a better scope and develop higher potential of
entering the markets through the achievement of a competitive edge. The development rates
in creating and developing markets are relied upon to keep on surpassing the development in
created markets.
Developing populaces, rising dispensable wages, and higher expectations for everyday
comforts in rising economies are a portion of the positive elements that have been constantly
increasing the inclination of consumers towards refreshments and similar products. Yet, it has
been found that the utilisation of non-alcoholic refreshments is limited to only a certain
extent in developing countries (Clarke et al., 2012). For instance, the Asian countries, India
and China have a stark contrast with the Unites States, which provides a noteworthy
development open door for PepsiCo's refreshment business. Figure 9 is a clear representation
of what the brand has as it revenue segments and how it can identify the categories wherein
more investment and revenue generation is a possibility.

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Figure 9 : PepsiCo Revenue Based on Segments (Source: PepsiCo, 2015)
The revenue segmentation, as can be observed in figure 10 highlights that the brand has
experienced various ups and downs through the expansion process. It is believed that s the
brand developed a better connection with the people from different regions it could utilise the
gained knowledge to customise its products accordingly. As Balley (2014) suggest, it is
crucial to integrate cultural factors and bridge the gaps in order to receive a good and positive
feedback from eth consumers of the region in question.

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Figure 10 : Revenue Segmentation on Regional Basis (Source: Market Realist, 2015)
PepsiCo Inc. (Zip) has cooperated with a few elements to support offers of its sustenance and
refreshment organisations. The organisation has effectively extended its nearness in
nourishment benefit through some vital associations like the exceedingly fruitful association
with one of the US eatery network’s popularly known as Taco Bell (Douglas and Craig,
2013). The comparative analysis in figure 11 showcases that there has been a lot of
turbulence in the international expansion project of the brand but it has been able to soar
through the difficulties.

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Figure 11 : Comparative Analysis of Revenue Generation (Source: Market Realist, 2015)
4.3.1 Macro Environment Analysis
4.3.1.1 PESTLE Analysis
PESTLE analysis has been found as a potential measure that helps to develop an all around
detailed analysis of the environment that surrounds a business. It is also helpful in allowing
the business learn the potential areas that can create issues and the other areas that can be
filled with an opportunity to tap the market further. It has been recommended by Burt,
Wright, Bradfield, Cairns and van der Heijden (2014) that the incorporation of PESTLE
analysis is helpful for the marketing and also the sales department in order to verify the
potential their product holds. The hold of a brand on the market comes from all the different
departments working together and in sync with each other. As observed from Figure 12, the
brand has a number of departments that come together to formulate just the right strategy that
can take the organisation forward.

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Figure 12 : PepsiCo Global Operations (Source: PepsiCo International, 2016)
Political Factors
The first parameter to be discussed is the political air that surrounds the organisation. The
political force or the political factors that surround the organisation takes into consideration
the external components dominated by government and its policies. Balley (2014) has
suggested that the effect of administrative policies can have a serious impact on the
organisation’s environment and can also dictate the way an organisation intends to function.
PepsiCo should address the accompanying political elements listed below:
 An opportunity can be seen through the economies that are dependent on the political
moves of the government
 Another opportunity can be obtained through the collaborations on an
intergovernmental end that has been increasing over time
 The political factor that PepsiCo should be beware of is the policies and activities that
government is coming forward with against the carbonated beverages

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There are certain economies that are stable both economically and politically, for instance,
United States and Canada and they can provide opportunity to the brand for the purpose of
expansion. Furthermore, the participation from various governments and their ability to form
collaborations is also a factor that can provide easy international expansion opportunities.
But, there needs to be a regulation on the carbonated drinks for the government is strict about
it.
Keeping these factors in consideration, PepsiCo should aim for a variation in its items that
can cut down the risk associated with carbonated beverages.
Economic Factors
On the second side, there is economic consideration that is important for every brand in order
to facilitate the production and sale of their products. The monetary conditions of a country
or a place and their impact on the execution of sales of a company have been closely related.
PepsiCo's execution has been woven around the following economic denominators:
 Most of the nations that the brand has expanded to or intends to are economically
strong and thus, it is an opportunity for PepsiCo when the nation has monetary
strength
 The economies that are rapidly developing and have been facing improvisation in
their current structure also provide the brand with an opportunity to do better
 The possible risk that the brand faces is from the shaking economy of China for the
raw material and also the final product is dependent on the country
Through the identification of nations like United States and Asian countries and the
opportunity that their monetary strength presents, the brand has a good opportunity to expand
on a large basis. However, the dwindling economy of China poses a risk in front PepsiCo and
makes it crucial for the company to decide on the actions that need to be taken.

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Social Factors
A hefty portion of PepsiCo’s customers takes after sociocultural patterns. The idea behind
inclusion of social factors dominates the fact that the society and the environment around the
business dominated by what people think and plan to do. As Balley (2014) suggests, it is the
reputation of the brand in societal terms that influences its international expansion and
effective existence in the society. The factors that are to be taken care of by the brand during
the international expansion process include:
 The growing awareness among people that can serve as a dangerous situation and also
as an opportunity for product expansion
 The fact that the life has become fast-paced can lead to better solutions for the
company as people become more inclined towards fast food joints and canned
beverages, proving this to be an opportunity for the brand
 Another door that can provide opportunity to the brand is the variety of understanding
that the people develop and the ability of different people to adopt the lifestyle
The fact that the people are gaining awareness and knowledge about the different aspects of
life and their ability to maintain their health and hygiene has gained momentum, it can be a
do or die situation for the brand. The fact that the health issues are a concern to be looked
into by the people and the increasing government regulations have attracted attention of the
people, PepsiCo can use the scenario as an opportunity to market better products.
Furthermore, the increasing pace of the daily life of the people has made it essential that the
brand comes up with a new concept that allows it to enter the markets with a positive outlook
for the people.
Technological
The technological changes are the extension of innovation process that is included by the
organisation in order to achieve better hold on the market through new discoveries. With the

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increasing awareness and inclination among people to healthy diet, technology plays a crucial
role in improving the existence of the brand in the market. The components that the brand has
paid attention to include:
 The opportunity that lies in the investments from government agencies in order to
come up with nutritional drinks and better composition of carbonated products for
healthy development
 The frameworks of the administration are being enhanced that contains an opportunity
for the brand in order to ensure long-term sustenance in the market
 Another opportunity that can be utilised by the brand is the process of mechanisation
of business wherein the competency can be achieved over other brands
It is easy to learn that the brand can go for technological innovations, which can support the
process of attainment of new processes and compositions leading to better inclusion of ideas
that can be helpful for even those who are health conscious. The process of development of
administrative frameworks that can regulate the establishments of new products has been
identified as an opportunity that can lead the brand to mark its presence felt within the
organisation.
Environmental Factors
The environmental factors also play an important role in defining the existence of a brand in
the market along with the ability that the brand holds in giving a push to the concerns it has.
PepsiCo has been able to support a meaningful picture presenting an environment of natural
patterns and keeping in the influence of the environmental concerns dominating the
functioning and production. The environmental issues that need to be considered in the case
of PepsiCo include:

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 The ability to maintain the business and take into picture the ways in which
concentration on business portals can be maintained has been highlighted as an
opportunity for the brand
 The opportunity can also be found in the domain that the people and the government
is making a shift towards the technology that considers cutting down waste and
PepsiCo can introduce production facilities, which keep a check on the possible waste
production
 The change in the climatic conditions and the danger lurking on the surroundings as a
result of the increase in production can be a danger for the brand but taking actions to
control the same can be an opportunity for it
Balley (2014) has found that there are environmental regulations that can be taken forward by
the company in facilitating the measures that can bring down waste production through the
use of recycling techniques. It has also been found that the change in environment and
climate can bring forth the possibilities of dangerous situations leading to loss of sales of the
company.
Legal Factors
PepsiCo needs to adapt to the legal regulations in addition to the other associated business
parameters. The legal issues and policies would be different in every pat of the world and
sometimes country too and in order to achieve successful global expansion, they need to be
integrated on a positive note. The legal aspects that present opportunities fro the brand
include:
 The uproar in the direction of the inclusion of GMOs, which can be taken advantage
of by the brand in order to deviate the attention of the people from the negative
impacts and attract them towards natural products being produced by it

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 The validity of security controls infused within the cultural aspects of the
developmental issues has also been identified as the opportunity to promote wellbeing
and secure ties with the international government boundaries
 The direct change being introduced in the administrative end of the production and
development has been identified as another opportunity wherein the brand can direct
its processes through the modification of the brand’s processes
Through the discussion on legal factors, it is easy to define that the brand has a number of
opportunities that can help it gather more market share and expand its presence in the market
throughout. The inclusion of the variable parameters that define the legal issues concerning
the development of the brand has been observed as an opportunity for future development.
4.3.2 Micro Environment Analysis
4.3.2.1 SWOT Analysis
The identification of the strengths, weaknesses, opportunities and threats of the organisation
can be used to identify the strategies that can be helpful for international expansion of the
brand. Ho (2016) has suggested in his works that the partnerships developed by the brand for
instance, the partnership with Tingyi Holding Corporation, has been identified as a positive
influence on the development of the key strategies with improvement of business in regions
like China. As can be observed from figure 13, PepsiCo branched into different streams
inclusive of snack foods, beverage and foods, which led to a better development of the brand
among different spheres of management and market expansion.

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Figure 13 : PepsiCo Domains (Source: PepsiCo, 2015)
The brand holds the position of being the second greatest in the world and through the
analysis of different parameters within the company’s management; an incompetent approach
can be developed for betterment of the firm and its existence.
Strengths
Some of the best qualities that hold the organisation together include the following:
 The recognition of the brand as a renowned and loved one across the globe
 The ability of the brand to incorporate different products has also been its strength
 The ability to of the brand to extend its operations to a greater range of the products
 The brand caters to the administrative extent of the procedures across the different
nations

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 The ability of the brand to use its recognition for attracting the consumers towards the
new items it brings to the market
Weaknesses
The global growth of the brand is limited due to the presence of its competitor to a serious
range of customers. The facts that act as the part of the weakness of the company include:
 The limited ability to expands the market outside America
 The improper management of the business and the limitations in the portfolio
 Poor use of market advertising in order to enhance the project or reach out to the
markets
Opportunities
There are various areas that can be utilised by the brand in order to reach the optimum
potential through the inclusion of various parameters and through the identification of the
right market.
 The growing awareness among people about the health and related aspects drives the
possibilities of broadening the business at local as well as at an international level
 The ability of the brand to look into environmental regulations can also support the
growth possibilities
 Partnerships and acquisitions can be another parameter using which the organisation
can aim at building better relationships and market expansion possibilities
Threats
The beverage industry has a number of players and serious competition from another brand
can pose a great challenge for the brands like PepsiCo. Furthermore, the legal restrictions can
also create possible difficulties for the company.
 The forceful attempts of creation of rivalry from the associated companies can create
serious conditions of threats

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 The change in the environmental conditions can create unfavourable conditions for
the company
 Similarly, it is a possibility that the changing governmental laws and regulations may
lead to varying possibilities of the brand to go out of control and lose the market
presence
4.3.2.2 Porter’s Five Forces Analysis
For further evaluation of the brand and its abilities to expand on an international level, it is
easy to perform analysis of the five forces as have been suggested by Porter. The five forces
have been identified to highlight the following:
 A positive drive that takes forth the rivalry among competitors as it has been found to
improve the performance of the companies in question
 The bargaining power of the buyers has also been found to have a positive effect on
the quality of the products produced
 The bargaining power of the suppliers is a constrain that can have a serious impact on
the functioning of any organisation
 There comes a danger from the fact that substitutes are readily available
 Risk of new participants or new section (direct constrain)
Competitive Rivalry
A strong competitive rivalry of the brand exists with Coca Cola and as can be observed from
figure 14, the market share of Coca Cola is much higher as compared to PepsiCo. This
highlights that fact that the company faces tough competition in the market. Luo (2016)
confirms that the cost of exchange is also low for the brand and PepsiCo undergoes high
challenge when it comes to market presence.

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Figure 14 : Comparative Standards between PepsiCo and Coca-Cola (Source: Market
Reports, 2016)
Bargaining Power of Buyers
Purchasers have been identified as the most important part in PepsiCo's statement of purpose.
The impact that the clients have on the company’s business surroundings has been identified
to as the low cost that the company has that leads to the development of the gap in the
revenue that is generated. Furthermore, as Ho (2016) has suggested, there are a large variety
of substitutes available that reel on the fact that the brand can undergo high loss.

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Bargaining Power of Suppliers
This has been identified as a weak force for the incorporation of the brand’s activities. The
main reason behind the approach is the fact that there are almost similar prices available for
the raw materials at all the different brands and therefore, it is not possible for the suppliers to
make a switch by simple abandoning any of the brands that they supply to.
Threat of Substitutes
There are possibilities that the superior brands come into picture and replace PepsiCo as their
favourite company. This has therefore been identified as the strong force that can affect eth
market share and growth of the brand both at local and national level. Figure 15 highlighted
that the presence of the brand is almost as much as the presence obtained by Coca-Cola, its
biggest competitor. Through these aspects, it is inferred that an internal expansion approach
needs to be maintained throughout.

Figure 15 : PepsiCo and US Beverage Market (Source: Euromonitor, 2014)
Threat of New Entrants
The possibility of new entrants entering the beverage industry is moderate and hence PepsiCo
can survive the market growth and inflow of new entrants, even if there are few new

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competitors. The existence presence and brand recognition would be helpful in determining
the acknowledgement that the brand has from its consumers. As figure 16 suggests, there are
several companies and products that have a good presence in the market, which makes it
difficult for other brands to enter the market.

Figure 16 : Market Share of different Brands (Source: Market Reports, 2015)
4.4 Implications
PepsiCo Inc. (Liveliness) and its associates in the sustenance and refreshment industry are
actualising a few profitability measures to enhance their edges to balance the effect of a
drowsy request in created advertises and declining carbonated soda pop drink volumes.
Profitability activities incorporate assembling mechanisation, streamlining a worldwide
assembling impression, and reengineering the dissemination arrange (Balley, 2014). Through
the various results obtained from analysis of growth and development of the brand and its
international expansion, it can be understood that there are variations in the external and

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internal environment. The profits of the brand have been increasing against all odds and the
ability of the brand to raise its revenue from $900 million to $1 billion from year 2012-2014
to the years 2019 suggest that there is a huge share of the market held by PepsiCo (PepsiCo,
2016). Furthermore, it has been identified by Ho (2016) there have been extensive
associations of the brand with other nourishment companies that helped in the development
of the market volumes, leading to a positive attitude. Through the analysis of the business
environment using PESTLE, SWOT and Porter’s Five Forces, it is easy to validate the fact
that the brand needs to incorporate certain changes in the composition. The awareness among
consumers can prove to be a barrier in the growth of the market for the brand, which can
ultimately lead to a loss in the ability of the brand to generate revenue. Further, it has been
implied that the decline faced by PepsiCo in the year 2013 by 4.4 percent was due to the shift
of the attention of the management to international market and growth within (PepsiCo,
2016). Finally, the ability of the company to grow on a global stage can be confirmed through
the maintenance of the brand and its expansion with consumer preference in mind.

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5.0 Conclusion and Recommendations
5.1 Conclusions
PepsiCo has possessed the capacity to escalate the market development and nearness of its
refreshments through the advancement of the systems that bolster joining of diverse
parameters. The advancement and foundation of worldwide exchange has encouraged the
brand in moving toward the business sectors at a worldwide level with immaterial obstruction
from the administration's end. PepsiCo has highlighted that the incorporation of key approach
for global extension has been its genuine development impetus. The organisation has
possessed the capacity to focus on its universal representatives by building up a
comprehension about the social contrasts that have been unmistakable. Customers around the
globe are turning out to be more mindful of the calories in the items they are expending and
additionally the wellbeing effect of fixings in their sustenance and drinks. There has been a
move in customer inclination from carbonated soda pops to more beneficial alternatives, for
example, tea and water. Indeed, even in the sustenance class, inclinations for sound
nourishments, for example, oats and grains are on the ascent. Through this report, it has been
pointed that the comprehension about the culturally diverse contrasts that associations
confront while improvement on a universal level are assessed with unique reference to
PepsiCo. PepsiCo aimed at building its brand and network across the countries facilitated the
establishment of an idea that supported the brand’s movement and easy integration in foreign
destinations. The report has highlighted the hindrances that the varieties in social foundations
can deliver and how these are taken care of with thought to the outer business environment.
So as to achieve the goal, the report utilised optional information to comprehend the
circumstance of the business and after that examinations the circumstance of the brand.
Through PESTLE and SWOT examination it turns out to be obvious that PepsiCo has a

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reasonable favourable position over its rivals. PepsiCo is additionally attempting to enhance
the wellbeing remainder of its current snacks and drink items. At last, the social contrasts and
the routes consolidated to beat the difficulties that they posture have been talked about with
couple of suggestions close by.
The changed existing written work on drink industry and the cordiality related good concerns
have been analysed essentially and surveyed for the stipulations that still exist in overall
business practices. It is definitely not hard to assume that the examination work accomplished
by various specialists' twists around the organisation business centres towards the potential
results of obscene practices that are possible or have been begun in the business in order to
battle with the extending contention and thought of different players in the market. Through
the point-by-point examination of the written work taken into study and observation it is
definitely not hard to perceive that exploitative practices outline a part of the amicability
business inciting to the degree of shameful organisations with coordination of government
support or false claims. Finally, the composition has been prepared to highlight the troubles
that exist with the impacting business and falling economy. Remembering the ultimate
objective to clear up the viewpoints, imperative examination of the universal development
procedure of PepsiCo serves as a technique for describing the outcomes possible concerning
developing regulatory measures and makes the business a supportable one. The blend of
reviews from a couple of scientists bolster the idea and supplements the claim made by the
analysts. In this manner, it is clear that ethical qualities are a basic part of the organizations
business and ought to be explored utilizing the ethical arrangement of standards. This is basic
of the way that the social varieties are a vital part of the reaction created by the development
forms that an organisation may attempt.
5.2 Recommendations

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Amid worldwide extension, every one of the difficulties that the business association
confronts come down to the social viewpoints that are variable over the world i.e. the point of
view and the religious and additionally behavioral practices vary from locale to region. Some
of the practices are socially imbued and profoundly enrooted, which therefore, can make
contrasts and misconceptions prompting to biting terms among workers of a similar
organisation. The demonstrations like crossing the legs amid gatherings and sending casual
sends as a reaction to authority mail can make aggravations prompting to the loss of
authoritative enumerating. The way of life ought to rather be utilised as a pad deciding the
collection of general situation with clear holding among representatives hailing from various
parts of the world. This can be a support to the arrangements that the association creates as
for the extension of its administrations through the cross-limits. The vital ramifications ought
to have the capacity to advance the measurements of the concerned organization furthermore
ought to have the capacity to draw out the ambiguous conceivable outcomes of rejection of
the venture. Through a 360 degrees' approach, it is less demanding for firms to go for a
superior market methodology and acclimatise the criticism from the distinctive markets. It
has been further recommended that the brand aims for developing strategies fro international
expansion that support the ability to make itself stand out through the incorporation of the
consumers preferences and the difference in taste for cross-cultural expansion. Additionally,
the development of an understanding about the culture differences and adding respect for the
employees that hold certain cultural preferences can help in better facilitation of
developmental practices.
5.3 Future Scope of Study
The future parameters of the study revolve around developing an understanding about how
international expansion can be established without any compromise on the cultural grounds.
The strategic application of the parameters by different organisations can also be compared

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and contrasted in order to facilitate better understanding of the norms and procedures.
Furthermore, it can be researched as to how organisations can perform better with multi-
cultural work force without having nay uncertainties and issues regarding discrimination and
lack of incompatibility.

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Appendix

Certificate of Ethical Approval

Applicant: Zhiye Yang
Project Title:
Cultural Differences in International Business Expansion: The
Case of PepsiCo.

This is to certify that the above named applicant has completed
the Coventry University Ethical Approval process and their
project has been confirmed and approved as Low Risk
Date of approval:

05 December 2016

Project Reference Number:

P46366

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