Pepsi Co. Strategy

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Admin Issues and Policies (MBAM 613) Case Study – Pepsi Co. Submitted To: Prof: Dinesh Iyer On: 19th November, 2008 Submitted By: TEAM 6 - (Section A) Team Members: Abhijeet Gupta Astha Kumbhat Devika Prasad Kavitha Porwal Lakshmi Lukose Sandhya Lakshmi Ohio University – Christ College, Academy for Management Education Executive Summary: This case presents a scenario where PepsiCo, a company known for its successful acquisitions of food chains to expand its business, has to weigh its options whether or not to acquire Carts of Colorado, a merchandiser of mobile food carts and kiosks and California Pizza Kitchen, a big name in the casual dining segment. PepsiCo, established by Caleb D Bradham in 1907…show more content…
The timing of acquisition by PepsiCo was well planned because the target companies were losing their market share during that time period and the offer of an acquisition by PepsiCo was accepted with a hope to drift back into the market. Consistent with PepsiCo’s decentralized structure and the emphasis the firm placed on entrepreneurial management, Pizza Hut, Taco Bell, and KFC each operated with a great deal of autonomy. PepsiCo did not interfere in their businesses unless they thought that their interference was necessary for the strategic growth. How does Pepsi’s corporate strategy create a competitive advantage for them? Pepsi’s corporate strategy was to follow a Related Linked Diversification (mixed related and unrelated) because there are only limited links between businesses. They went ahead with expansion through acquiring other firms only when they believed that the product of the target firm was a complement to their product i.e. the soft drink. The acquisition of Frito Lay also took place because Pepsi believed that snack chips went well with soda. Similarly, this corporate relatedness and operational relatedness can be seen in the acquisitions of Pizza Hut, Taco Bell and KFC. Their practice of letting the managers navigating across the businesses holding different responsibilities worked well for PepsiCo. This way, transferring

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