Pepsi 2013 Annual Report Download - page 36

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acquisitions, the following also pose potential risks: our ability to successfully combine our businesses with
the business of the acquired company, including integrating the manufacturing, distribution, sales and
administrative support activities and information technology systems between us and the acquired company
and our ability to successfully operate in new categories or territories; motivating, recruiting and retaining
executives and key employees; conforming standards, controls (including internal control over financial
reporting, environmental compliance and health and safety compliance), procedures and policies, business
cultures and compensation structures between us and the acquired company; consolidating and streamlining
corporate and administrative infrastructures; consolidating sales and marketing operations; retaining existing
customers and attracting new customers; identifying and eliminating redundant and underperforming
operations and assets; coordinating geographically dispersed organizations; and managing tax costs or
inefficiencies associated with integrating our operations following completion of the acquisitions. With
respect to joint ventures, we share ownership and management responsibility with one or more parties who
may or may not have the same goals, strategies, priorities or resources as we do and joint ventures are intended
to be operated for the benefit of all co-owners, rather than for our exclusive benefit. In addition, acquisitions
and joint ventures outside of the United States increase our exposure to risks associated with operations
outside of the United States, including fluctuations in exchange rates and compliance with the Foreign Corrupt
Practices Act and other anti-corruption and anti-bribery laws, and laws and regulations outside the United
States. With respect to divestitures and refranchisings, we may not be able to complete such transactions on
terms commercially favorable to us or at all. Further, as divestitures and refranchisings may reduce our direct
control over certain aspects of our business, any failure to maintain good relations with divested or
refranchised businesses in our supply or sales chain may adversely impact sales or business performance. If
an acquisition or joint venture is not successfully completed or integrated into our existing operations, or if
a divestiture or refranchising is not successfully completed or managed or does not result in the benefits we
expect, our business, financial condition and results of operations could be adversely impacted.
If we are unable to hire or retain key employees or a highly skilled and diverse workforce, it could have
a negative impact on our business.
Our continued growth requires us to hire, retain and develop our leadership bench and a highly skilled and
diverse workforce. We compete to hire new employees and then must train them and develop their skills and
competencies. Any unplanned turnover or our failure to develop an adequate succession plan to backfill
current leadership positions, including our Chief Executive Officer, or to hire and retain a diverse workforce
could deplete our institutional knowledge base and erode our competitive advantage. In addition, our operating
results could be adversely affected by increased costs due to increased competition for employees, higher
employee turnover or increased employee benefit costs.
Trade consolidation or the loss of any key customer could adversely affect our financial performance.
We must maintain mutually beneficial relationships with our key customers, including Wal-Mart, as well as
other retailers, to effectively compete. The loss of any of our key customers, including Wal-Mart, could have
an adverse effect on our financial performance. In addition, our industry has been affected by increasing
concentration of retail ownership, particularly in North America and Europe, which may impact our ability
to compete as such retailers may demand lower pricing and increased promotional programs. Further, should
larger retailers increase utilization of their own distribution networks and private label brands, the competitive
advantages we derive from our go-to-market systems and brand equity may be eroded. Failure to appropriately
respond to any such actions or to offer effective sales incentives and marketing programs to our customers
could reduce our ability to secure adequate shelf space at our retailers and adversely affect our financial
performance.