- 1. What is PepsiCo’s corporate strategy?
In 2008, PepsiCo’s corporate strategy was a blend of few strategies which helped the company to increase its profitability and to control the decline in its monthly stock performance. PepsiCo used product innovation and diversification strategy to expand its product portfolio in beverage and snack industry, the strategy worked well for the brand. The company had a strong product portfolio in different categories of the food and beverages market however, due to a continuous change in the demands and behavior of customers it was important for Pepsi to revise its products. The business portfolio of PepsiCo in 2008 was comprised of Quaker Chewy granola bars, Frito-Lay salty snacks, Propel, Pepsi soft tea, Gatorade, Quaker Oatmeal, SoBe, Cap’n Crunch, Rice-A-Roni, Aquafina, Aunt Jemima Pancake mix and many other products that were consumed by customers on a regular basis. To further diversify these products and to expand its product portfolio, PepsiCo introduced two new products Funyuns and Doritos, it was gradually expanding its product line to capture a huge market share in different categories of beverages and snacks. For existing products, PepsiCo introduced new flavors and healthy versions of its products because of the increasing health concerns of people in developed countries.
PepsiCo used acquisition strategy for international expansion and it had acquired several businesses in the categories of beverages and snacks to strengthen its product portfolio. It had acquired Quaker Oat in 2001 which is its largest acquisition that made PepsiCo the number one brand of Oatmeal in the United States. Other well-known acquisitions included Duyvis Nuts (Netherlands), Izze carbonated beverages, Penelopa nuts and seeds (Bulgaria), Bluebird snacks (New Zealand), Star Foods (Poland), Stacy’s bagel and pita chips, Naked Juice fruit beverages, Sandora juices (Ukraine) and Lucky snacks (Brazil). Overall, PepsiCo used different strategies at different times to strengthen its position in the market and most of them were based on innovation, distribution allies, strategic acquisition, customer care and international expansion.
- 2. What is your assessment of the long-term attractiveness of the industries represented in PepsiCo’s business portfolio?
To assess the long-term attractiveness of the industries represented in PepsiCo’s business portfolio we will take help of the following table.
| Business Portfolio | Industry | Market Share | Growth | Opportunities |
| Frito-Lay North America | Salty Snacks Food Industry | 70% | Single Digit | Strong |
| PepsiCo Beverages North America | Liquid Refreshment | 26% | Double Digit | Very Strong |
| PepsiCo Carbonated Soft Drinks | CSD | 31.1% | Declined | Moderate |
| PepsiCo International | Salty Snacks | 90% | Double Digit | Extremely Strong |
| Soft Drinks | Above 75% | Triple Digit | Extremely Strong | |
| Quaker Oats Products | Oatmeal | 50% | Single Digit | Strong |
| Quaker Food North America | Oatmeal | 58% | Single Digit | Good |
On the basis of the information displayed in the table, my assessment of long-term attractiveness is very good for all the business portfolios whereas the strongest SBU’s for PepsiCo are Frito-Lay (both North America and International), Quakers and some types of soft drinks included ready to drink beverages, bottled water and energy drinks. These business units have more growth opportunities because people across the globe are increasingly opting for healthy snacks and soft drinks. The double and triple digit growth of international soft drink industry and salty snacks industry is representing strong growth opportunities because people in developing countries are also becoming increasingly health conscious and they are trying to increase the intake of healthy products to reduce health hazards and obesity.
- 3. What is your assessment of the competitive strength of PepsiCo’s different business units?
PepsiCo has six major business units to cater its diverse product portfolio. The key business units are Frito-Lay North America, PepsiCo Beverages North America, PepsiCo Carbonated Soft Drinks, PepsiCo International, Quaker Oats Products and Quaker Food North America. To assess the competitive strength of these major business units, we will use Porter’s Five Forces Model.
| Business Portfolio | Industry Rivalry | Buyers Bargaining Power | Supplier’s Power | Threat of Substitute | Threat of New Entrants |
| Frito-Lay North America | Moderate | Low | Low | Low | Low |
| PepsiCo Beverages North America | High | Moderate-to- High | Low | High | Moderate |
| PepsiCo Carbonated Soft Drinks | High | Moderate | Low | Low | Low |
| PepsiCo International | Moderate to High | Low-to-Moderate | Low | Low-to- Moderate | Low |
| Quaker Oats Products | Low | Moderate | Moderate | Moderate | Low |
| Quaker Food North America | Low | Low | Moderate | Low | Low |
In most of the categories, PepsiCo has..........
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