Research Paper on PepsiCo， Inc.

张璐

Summary of the Business

Incorporated 1919 in Delaware and headquartered in New York， PepsiCo， Inc. is a leading company in the global food and beverage industry. The portfolio of brands owned by PepsiCo includes Frito-Lay， Pepsi-Cola， Gatorade， Quaker and Tropicana. The companys operations range from manufacturing， marketing to distributing convenient beverages and snacks to consumers. The most well-known products from PepsiCo are the Pepsi coke， 7-Up sprite， Lays chips and Tropicana orange juice. These products are currently being distributed to more than 200 countries and territories worldwide. The six reportable segments are divided by geographic location and brands： Frito-Lay North America， Quaker Foods North America， North America Beverages， Latin America， Europe Sub-Saharan Africa and Asia， Middle East and North Africa.

The food and beverage industry is highly competitive. Products compete primarily on brand recognition， taste， price， loyalty and ability to respond to consumer trends. For instance， there is an increasing trend in consumers awareness in healthy lifestyles. As a result， PepsiCo introduced Diet Pepsi which has zero calories and uses alternative sweetener to replace sugar. Due to high brand recognition， low prices， adequate advertising and strong ability to adapt to consumer preferences， PepsiCo has gained significant leadership positions in the food and beverage industry even in future. In 2016， it out-competed Coca-Cola， its largest competitor， by 4% on U.S. liquid refreshment beverage market share. However， Coca-Cola has significant share advantage compared to PepsiCo in many markets outside of U.S.

2-Year Financial Performance Overview

PepsiCo.s financial performance over the past 2 years was quite strong. Despite the normal day-to-day fluctuations， there was a general upward trend in PepsiCos stock price. On Jan 2， 2015， the stock price was $94.44 and on Dec 30th， 2016， the stock price increased to $104.63. According to the Income Statement， PepsiCo remained extremely profitable over the past few years， with a profit margin as high as 10.16% in 2016. Although 2016s revenue was $257 million lower than 2015， the net income increased by 16% from $5452mil in 2015 to $6329mil in 2016.

Financial Risks

There are several financial risks that could adversely affect PepsiCos results of operations. Economic conditions， such as recessions or economic slowdowns， could cause adverse changes in interest rates， high-inflationary economies， devaluation and volatile commodity markets. In more extreme cases， the financial institutions and investment banks may be exposed to the ratings downgrade， bankruptcy， and liquidity issues as a result of unfavorable economic conditions， which might limit the financial institutions willingness to enter financial transactions with PepsiCo.