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Monday, 25 June 2012

SPACE Matrix for Pepsico


Pepsi is the world’s second largest beverage and food company based on net revenue. In North America it is first largest beverage and Food Company by net revenue. PepsiCo is a multinational Corporation, offering manufacturing, distribution and marketing of soft-drinks, beverages, grain-based snack foods and other products.

Pepsi company has diversify business units such as soft drinks (Pepsi, Slice, Mountain Dew), beverages (Tropicana Juices, Dole Juices, Lipton tea, Aquafina bottled water, Sport drinks, Tropicana Juices), Snacks (Rold Gold pretzels and Frito-Lay). In 2009, nineteen product lines of PepsiCo's achieved revenue of greater than $1 billion each, and its products are distributed more than 200 countries, by achieving annual $43.3 billion net revenue. As of 2010 it has more than 285,000 employees globally. Here is the SWOT analysis of PepsiCO.
                                               
The Strategic Position and Action Evaluation (SPACE) Matrix is one of the strategic management tool for analyzing the company and its environment to formulating the strategies. It is four-quadrant structure which specify whether aggressive, defensive competitive or conservative strategies are most suitable for a given organization, company or business.

The Strategic Position and Action Evaluation Matrix Analysis is most frequently in use during professional industry or market analysis of a company. The SPACE Matrix axis signify the 2 external proportions which are industry strength (IS) environmental stability (ES) and two internal dimensions of a competitive company which are competitive advantage (CA) and financial strength (FS). These 4 dimensions are the most significant determinants of a company's overall strategic position in the industry or marketplace.

A number of factors could frame worked each of the dimensions/quadrants characterized on the axis of SPACE matrix usually depend upon the nature of company its environment and industry. Variables that required to developing the SPACE matrix are found in the company’s Internal Factor Evaluation (IFE) and External Factor Evaluation (EFE) matrix.

SPACE matrix also contains the other significant factors that are used to its assessment are company’s financial performance for instance liquidity, cash flows, working capital and return on investment (ROI) generally are measured formative variables of an firm’s financial strength. Similar to the TOWS, the SPACE matrix would be modified to the exacting company being considered and based on realistic information derived from market data and industry data. 


Pepsi’s directional vector is positioned in the aggressive vector (upper-right quadrant) of the matrix, it shows that a firm is in an outstanding position to utilize its Internal Strengths (IS) to surmount internal weaknesses, obtain the advantage of external opportunities, and evade external threats. As a result, market development, market penetration, product development, forward, backward and horizontal integration, concentric, conglomerate and horizontal diversification or a mix of strategies can be employed, depending on the particular environment that the firm is practicing at the time.

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