Strategic Management Pepsico 2008 Case Study
Strategic Management PepsiCo 2008 Case Study
Introduction
This project aims to analyse the diversification strategy of PepsiCo in 2008. PepsiCo is the second largest food and beverage business in the world. The benefits of PepsiCo’s diversification strategies are identified. The business strategy is analysed to determine its efficacy across PepsiCo’s consumer business segments and product portfolio. The value chain match ups are determined and analysed to ascertain their relevance to the success of PepsiCo’s strategy. The competitive strengths of PepsiCo’s three structural divisions and six reporting segments are assessed and related to relevant theories and strategy tools.
Question 1
The diversification path utilised by PepsiCo is by related business acquisitions. PepsiCo has a “...valuable cross business relationship...” opportunity, utilising their core focus in the food and beverage industry business (Thompson, A, Strickland, A, Gamble, J 2010). PepsiCo utilisied multiple related diversification strategies including research and development, to manufacture innovative products, effective distribution management, expansion through strategic acquisitions and expansion into international markets (Thompson, et.al, 2010). PepsiCo successfully diversified into North America and planned to further diversify into international markets.
The major benefit to PepsiCo of diversification in a related business is the ability to leverage the cross business and gain plus maintain competitive advantage, which also manifests into increased shareholder value and company performance. Figure 1.1 explains the benefits of diversification strategy options in related and unrelated businesses.
Benefit 1 research and development:
Research and development of PepsiCo remains within their core business focus of food and beverage product lines; this enables the sharing of research and development technology and advances in technical knowledge. The organisation is also able
Introduction
This project aims to analyse the diversification strategy of PepsiCo in 2008. PepsiCo is the second largest food and beverage business in the world. The benefits of PepsiCo’s diversification strategies are identified. The business strategy is analysed to determine its efficacy across PepsiCo’s consumer business segments and product portfolio. The value chain match ups are determined and analysed to ascertain their relevance to the success of PepsiCo’s strategy. The competitive strengths of PepsiCo’s three structural divisions and six reporting segments are assessed and related to relevant theories and strategy tools.
Question 1
The diversification path utilised by PepsiCo is by related business acquisitions. PepsiCo has a “...valuable cross business relationship...” opportunity, utilising their core focus in the food and beverage industry business (Thompson, A, Strickland, A, Gamble, J 2010). PepsiCo utilisied multiple related diversification strategies including research and development, to manufacture innovative products, effective distribution management, expansion through strategic acquisitions and expansion into international markets (Thompson, et.al, 2010). PepsiCo successfully diversified into North America and planned to further diversify into international markets.
The major benefit to PepsiCo of diversification in a related business is the ability to leverage the cross business and gain plus maintain competitive advantage, which also manifests into increased shareholder value and company performance. Figure 1.1 explains the benefits of diversification strategy options in related and unrelated businesses.
Benefit 1 research and development:
Research and development of PepsiCo remains within their core business focus of food and beverage product lines; this enables the sharing of research and development technology and advances in technical knowledge. The organisation is also able
References: Faranda, B 2012, Strategic Management, 6th edn, Southern Cross University, NSW. PepsiCo 2010, PepsiCo – Health and Wellness http://www.youtube.com/watch?v=RFksC PepsiCo 2010, PepsiCo – 500 Million spent in India http://www.youtube.com/watch?v=RFksC Thompson, A, Strickland, AJ & Gamble, JE 2010, Crafting and executing strategy: The quest for competitive advantage, 17th edn, McGraw Hill/Irwin, New York.