Pepsi Co


FIN 370

July 22, 2010

PepsiCo's management monitors key indicators to evaluate the organization's business and financial conditions.   The variety of indicators include market share, net revenue, volume, operating profit, management operating cash flow, return on invested capital and earnings per share.   PepsiCo focuses on being the leading global food, beverage and snack Company.   As PepsiCo launches new products, decrease on demand could be significantly impacted thus affecting costs.   This would negatively affect consumer's perception of existing brands and would lead to inventory write-offs that would ultimately affect costs.   Increased operating costs would be on the increase with demand on new suppliers to manufacture new brands. However, management takes into concern the risks from adverse changes in commodity prices, affecting the cost of raw materials and energy.   Management takes into consideration that significant costs are expected to be incurred with mergers of other companies in connection to new product innovation.   The Company anticipates a significant portion of such cost to be incurred during the first year after completion of the mergers. The anticipated cost savings will adversely affect the value of the organization's commons stock and securities.
Product demand is driven by consumer preferences and tastes.   Therefore, the Company operates in a highly competitive market that relies on continued demand for products.   Company initiative focuses on changes that reduce demand on products and a decline in competitive and financial position.   PepsiCo hopes to create game-changing transactions that will enable them to grow and improve profitability, particularly in developing markets and in evolving categories (PepsiCo, 2009). The organization's inability to compete effectively may have an adverse impact in revenues and profit margins.   This will affect share of sales or gross margins in the global market.   Effective sales...