PepsiCo’s Diversification Strategy in 2008

 Pepsi Cola( 1932 ): soft drink formulated carbonated drink  Frito-Lay (1961): salty snack Merger of Frito Corn chips and potato chips  MERGER PEPSI AND FRITO- LAY (1965)

 Mission: The world's premier consumer products company focused on convenient foods and beverages  Vision: "PepsiCo's responsibility is to continually improve all aspects of the world in which we operate - environment, social, economic - creating a better tomorrow than today."

Key Years 1965 Merger PEPSI & FERITO-LAY 1977 start to Acquisition with pizza hut 1978 TACO BELL 1986 Kentucky fried chicken 1992 California Pizza 1996 Spun-Off Restaurant 2000 Tuck in Acquisition 2001 Quaker Oats For $13.9 billion 2007 Strauss acquisition, best brand of humus in NA

Portfolio of products: Pepsi has a wide portfolio of products about 125 in US and 39 product in international market

Five Forces supplying water, bottle (especially by entering a cheap kind of aluminum), sugar is easy Even the sugar become expensive the Corn Syrup is a good substitute and it is available supplying water, bottle (especially by entering a cheap kind of aluminum), sugar is easy Even the sugar become expensive the Corn Syrup is a good substitute and it is available Coke is the main competitor The concentrate on Ads and promotion not the price Coke is the main competitor The concentrate on Ads and promotion not the price Economies of scale Access to Distribution network There are barriers such as government policy, high capital for new entrants, The brand image is so powerful Economies of scale Access to Distribution network There are barriers such as government policy, high capital for new entrants, The brand image is so powerful Brand Cost exchange is low but the flavor is more important Retailer and Fast foods Brand Cost exchange is low but the flavor is more important Retailer and Fast foods Bottle water Juice Beer Healthier snacks Bottle water Juice Beer Healthier snacks

Market share Percentage of volume change low High low Cadbury

Pepsi vs. Coke  In their history it is not clear which one was successful always, their competition is more on the promotion and Ads rather than price.  As the soft drink market is an oligopoly, actually because it has only these two main players it is duopoly market.

Corporate Level Strategy

Good For You Quaker, Tropicana, Naked Juice, and Gatorade Better For You Diet Pepsi, Pepsi Max, and Baked Lays, SoBe Life water, Propel Fun For You Pepsi, Doritos, Mountain Dew and Lays

Corporate Level Strategy

Propel Fitness (Functional Water)Frappuccino ( Ready To Drink TEA & COFFEE) Increase revenue $20 million $ million In 2000 In 2007 Increase revenue $20 million $ million In 2000 In 2007  strategic acquisition

STRATEGIC FIT ALONG VALUE CHAIN

Strategic fit along value chain

Diversification strategy options

Ranking Business Unit Performance and Assigning Resource Allocation Priorities

CHARACTRESTIC

ISSUE 1 More international expertise's Change tastes Based on Consumer Preference Focus on more international market such as focus on region with high GDP More International Marketing Activities More international expertise's Change tastes Based on Consumer Preference Focus on more international market such as focus on region with high GDP More International Marketing Activities

ISSUE 2 Restructure the lineup of snack and beverage businesses to improve overall profitability Pursue aggressive cost cutting company wide campaign Restructure the lineup of snack and beverage businesses to improve overall profitability Pursue aggressive cost cutting company wide campaign