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.
The diversification path utilised by PepsiCo …show more content…
Cost savings by sharing of resources would have benefited the organisation’s multiple business divisions.
In 2008 the business divisions went from four divisions to a three division structure with six reporting segments. The combining of Latin America and North America beverage businesses appears to be a strategy to assist the international business segment in concentrating on the global international markets, which is more in line with the overall business strategy of global market leadership. This restructure is a wise move as the international business profit margin was low. The restructure may enable a focus on the international market and operations to identify further strategic fits for increased growth and profitability in this business division. Thompson et.al 2010, p. C-361 identifies that “…corporate strategy changes might also be required to improve the profitability of PepsiCo’s international operations and to help restore share price appreciation.” There is also an increased risk of operating in international markets, especially in third world countries such as India, where the snack and beverage industry may be inhibited by low cost pricing and preexisting strong local manufacturers and competitors such as Coco Cola. Due to the low profitability of the international market revenues achieved by