2. Chapter 9 Diversification

3. Snack Foods BeveragesFoods Frito-Lay North America Frito-Lay International Pepsi-Cola North America Gatorade/Tropicana North America PepsiCo Beverages International Quaker North America

4. Snack Foods Frito-Lay North America Lay’s Ruffles Doritos Santitas Fritos Cheetos Rold Gold Funyuns Sunchips Cracker Jack Chester’s popcorn Grandma’s cookies Munchos Smartfood Baken-ets fried pork skins Oberto meat snacks

5. Snack Foods Frito-Lay International Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickie’s potato chips Gamesa cookies Dippas Sonric’s sweet snacks

6. Snack Foods Frito-Lay International Bocabits wheat snacks Crujitos corn snacks Fandangos corn snacks Hamkas snacks Niknaks cheese sticks Quavers potato snacks Sabritas potato chips Twisties cheese snacks Walkers potato crisps Walkers Square potato snacks Walkers Monster Munch Corn snacks Miss Vickie’s potato chips Gamesa cookies Dippas Sonric’s sweet snacks

7. Beverages Pepsi-Cola North America Pepsi-Cola Mountain Dew Slice Mug Sierra Mist FruitWorks Lipton Dole Aquafina Frappuccino SoBe AMP

8. Beverages Gatorade/Tropicana North America Gatorade Propel Tropicana Dole juices

9. Beverages PepsiCo Beverages International Loóza juices and nectars Copella juices Frui’Vita juices Tropicana 100 juices

10. Foods Quaker North America Quaker Oats Cap’n Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mother’s cereal Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits

11. Foods Quaker North America Quaker Oats Cap’n Crunch cereal Life cereal Quisp cereal King Vitaman cereal Mother’s cereal Quaker rice cakes and granola bars Rice-A-Roni side dishes Near East couscous/pilafs Aunt Jemima mixes & syrups Quaker grits Business Level Strategies How are we going to compete and gain a competitive advantage in each of our businesses?

12. Snack FoodsBeveragesFoods Corporate Level Strategy 1) What businesses do we want to compete in? 2) How do manage effectively across businesses

13. Where did they go?

14. Goals of Corporate Strategy Moves to enter new businesses Boosting combined performance of the businesses Capturing synergies and turning them into competitive advantages Establishing investment priorities and steering resources into business units

15. 4 Conditions of Successful Diversification 1) Growing industries with complementary products and technologies 1) Growing industries with complementary products and technologies Apple IPhoneApple IPhone 2) Leverage existing capabilities which match the KSFs in other arenas 2) Leverage existing capabilities which match the KSFs in other arenas Disney Cruise LinesDisney Cruise Lines 3) Closely related moves which reduce costs 3) Closely related moves which reduce costs Kroger & Fred MeyerKroger & Fred Meyer 4) Powerful brand and reputation 4) Powerful brand and reputation Marguerittaville, NASCAR Café, or Emril’sMarguerittaville, NASCAR Café, or Emril’s

16. When/Why to Diversify? To create shareholder value Porter’s Three Point Test 1) Attractiveness Test 2) Cost of Entry Test 3) Better off Test Should pass all 3

19. Related Diversification at Disney Entertainment/Production Theme Parks Resorts Entertainment/Broadcasting Cruise Lines Retailing

20. Levels of Diversification Related Diversification - entering product markets that share some resource or capability requirements with the current business – horizontal relationships across businesses – synergies. Overlap in value chain activities. Advantages of related diversification include: ä Leveraging Core Competencies ä Sharing Activities ä Market Power