Position Paper: Pepsico’s Restaurants

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Position Paper: PepsiCo’s Restaurants
Pepsi Co’s Restaurants is a Harvard Business School Case which states PepsiCo’s large organization, its structure, its acquisitions and management approach. It also covers two companies, Carts of Colorado (COC) and California Pizza Kitchen (CPK) which are pursued from PepsiCo in 1991 to buy. In this position paper PepsiCo’s acquiring strategy and management approach will be evaluated to examine strengths and weaknesses of acquiring these two companies and possible solutions of other strategies. It will be also qualified whether it is a successful company in restaurant business. Pepsi’s acquiring strategy is diversified. First, it merged with Frito-Lay in 1965 and named PepsiCo. The case states the belief of Kendall that “snack chips went well with soda.” It was a product-extension merger. These two companies were selling different but related products in the same market. Snack foods and soft drinks are related. With the help of established distribution network and brand recognition the merge resulted higher growth and economies of scale. This synergy was the basis of further developments. After that PepsiCo. acquired restaurant chains, which was the third segment for the company. PepsiCo made market-extension and also product-extension with this purchase. It acquired the largest chains like Pizza Hut, Taco Bell at late 70’s and KFC in 1986. (Exhibit 1) With their economies of scale, it created market access for its own products and the restaurants could make cost reduction and cost efficiency with the growth of PepsiCo through soft drinks and also similar purchases. (PepsiCo Food Systems) Additionally, the acquirements of KFC with its franchises (Exhibit 5) was important because it helped PepsiCo to be internationally powerful. For this purpose, they used also a different strategy for their snack food segment and acquired Smith Crisps, Ltd from United Kingdom which was its competitor for European market. (horizontal...
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