Pepsi 2013 Annual Report Download - page 34

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16
can result in increased volatility in our net earnings in any given period due to changes in the spot prices of
the underlying commodities. See also “Changes in the legal and regulatory environment could limit our
business activities, increase our operating costs, reduce demand for our products or result in litigation.”,
“Unfavorable economic conditions may have an adverse impact on our business results or financial
condition.”, “Climate change, or legal, regulatory or market measures to address climate change, may
negatively affect our business and operations.” and “Market Risks” contained in “Item 7. Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and Note 10 to our consolidated
financial statements.
Failure to realize anticipated benefits from our productivity initiatives or global operating model could
have an adverse impact on our business, financial condition and results of operations.
Our productivity initiatives help fund our growth initiatives and contribute to our results of operations. We
are implementing strategic plans that we believe will position our business for future success and growth by
allowing us to achieve a lower cost structure and operate more efficiently in the highly competitive food,
snack and beverage industries. In order to capitalize on our cost reduction efforts, it will be necessary to
make certain investments in our business, which may be limited due to capital constraints. In addition, it is
critical that we have the appropriate personnel in place to continue to lead and execute our plans. Our future
success and earnings growth depends in part on our ability to reduce costs and improve efficiencies. If we
are unable to successfully implement our productivity initiatives, fail to implement these initiatives as timely
as we anticipate or fail to identify and implement additional productivity opportunities in the future, our
business, financial condition and results of operations could be adversely impacted. In addition, we continue
to implement our global operating model to improve efficiency, decision making, innovation and brand
management across the global PepsiCo organization. If we are unable to implement this model effectively,
it may have a negative impact on our ability to deliver sustained or breakthrough innovation or to otherwise
compete effectively.
Disruption of our supply chain could have an adverse impact on our business, financial condition and
results of operations.
Our ability, and that of our suppliers, third parties, including our independent bottlers, contract manufacturers,
joint venture partners, independent distributors and retailers, to make, manufacture, distribute and sell
products is critical to our success. Damage or disruption to our or their manufacturing or transportation and
distribution capabilities due to any of the following could impair the ability to make, manufacture, transport,
distribute or sell our products: adverse weather conditions or natural disaster, such as a hurricane, earthquake
or flooding; government action; fire; terrorism; outbreak or escalation of armed hostilities; pandemic;
industrial accidents or other occupational health and safety issues; strikes and other labor disputes; or other
reasons beyond our control or the control of our suppliers and business partners. Failure to take adequate
steps to mitigate the likelihood or potential impact of such events, or to effectively manage such events if
they occur, could adversely affect our business, financial condition and results of operations, as well as require
additional resources to restore our supply chain.
Any damage to our reputation could have a material adverse effect on our business, financial condition
and results of operations.
Maintaining a good reputation globally is critical to selling our branded products. Product contamination or
tampering, the failure to maintain high standards for product quality, safety and integrity, including with
respect to raw materials and ingredients obtained from suppliers, or allegations of product quality issues,
mislabeling, misbranding, spoilage, allergens or contamination, even if untrue, may reduce demand for our
products or cause production and delivery disruptions. If any of our products are mislabeled or become unfit
for consumption, causes injury, illness or death, we may have to engage in a product recall and/or be subject