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PEPSI CO - Diversification Corporate Strategy
Past Diversification:
In the decade between 1986 and 1996 innovative leadership created growth within PepsiCo adopted a policy of diversification by structuring itself into three major divisions: beverages, snack foods and restaurants. ... With this policy he put Pepsi Cola b-unit as the world’s second-largest manufacturer of soft drinks and Frito-Lays captured the 50% of the salty snack food market and grew faster than industry. ... The strategy was to acquire market leaders that had the biggest amount of the market share in the world or in the correspondant country and to acquire smaller ones but with a rapid period of growth. ... With this situation, the Pepsi-Cola fall behind Coca-Cola growing margin in domestic and international markets, the Wayne’s resign and the new leadership of Roger Enrico in late 1996, responsible for the prosper of the three Pepsico b-segments, it was time to change strategy. Enrico thought that the restaurant chain and its operating side of the business needed a restaurant culture and processes, that had nothing to do with Pepsi-Cola or Frito-Lay. ...
In terms of profitability the diversification strategy has represented the following percentages in sales and operations earnings:
Division net sales contribution:
Quaker Foods North America: 6%
Pepsico Beverages International: 8%
Gatorade-Tropicana North America: 15%
Pepsi-Cola North America: 14%
Frito-Lay International: 23%
Frito-Lay North America: 34%
Division operating profit contribution:
Pepsico Beverages International: 5%
Quaker Foods North America: 9%
Gatorade-Tropicana North America: 11%
Frito-Lay International: 15%
Frito-Lay North America: 42%
Threats, Strengths and Challenges
Threats
•Product Cannibalization
–Separate Distribution Channel
–Segmentation on the basis of
•Time of the day
•Consumer Age group
•Availability
•Different Appeal
–Operational Focus – Orgn.
Approximate Word count = 1211
Approximate Pages = 4.8
(250 words per page double spaced)
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