Pepsico: Analysis of Recent Acquisition

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Week 8 Assignment
ACC 401

PepsiCo: Analysis of Recent Acquisition 1


While mergers and acquisitions can benefit companies with economies of scale, there are many pros and cons for businesses to consider. Throughout this document, a discussion of
PepsiCo’s recent merger with Quaker Oats will be examined to ascertain what affects it will have on this oligopoly. A detailed analysis describing the current business structure, its competition, measurements regarding its position in the market, and arguments for and against the merger will be analyzed to determine the
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This merger is highly beneficial to both parties since them more or less substitutes for one another. Thirsty people will either go in for a carbonated sweet drink or a non-carbonated fruit drink. By supplying both the alternatives less than one banner the company is retaining both the customer bases. Further, Quaker is known for its Gatorade in the sports drink segment with almost 80% of the market share, which is nearing a monopoly in this segment. The tie up would boost the sales of PepsiCo’s other fast foods, since fast foods and drinks almost always supplement each other.
This would also give PepsiCo an upper hand in the pricing policy of the drinks market. Since it would be one of the major suppliers it could possibly regulate the prices to lead to an increase in

PepsiCo: Analysis of Recent Acquisition 4

its profits. Also when a customer tends to see the same company products everywhere and that too at a slightly elevate rate, and then the element of ‘Buyers illusion’ comes into the picture.
The customers tend to believe that the product is priced higher as it is superior in quality and better as compared to other similar products priced at a lower rate. Any company prefers to diversify and

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