Professional Documents
Culture Documents
Salma
Business Strategies
“ Better For You”
Diet Pepsi, Pepsi
Max, and Baked “ Good For You”
Quaker, Tropicana,
“Fun For You” Lays, SoBe life Naked juice, and
Pepsi, Doritos,
Mountain Dew and Water, Propel Gatorade
80 % Fun for You
Lays
Power of One Retailer and Better for You
Alliance Strategy Combined 20 %
•Product formulation based on Good for You
consumer demand
•How to get Consumers buy
more than one Pepsi product
per visit
•New product introduction
based on recommendations by
retailers.
Salma
I ndustry Attra ctiveness
PepsiCo PepsiCo
Measure Weight Frito-Lay Quaker Oats
North America International
Market Size and
growth rate
.1 10 10 8 8
Intensity of
Competition
.25 7 5 5 6
Emerging
Opportunities and .1 7 5 5 6
Threats
Cross-Industry
Strategic fits
.2 7 8 7 7
Resource
Requirements
.1 8 7 6 6
Seasonal and
Cyclical Influences
.05 10 9 5 5
Societal, Political,
Regulatory, and
Environmental
.05 4 5 6 5
Factors
Industry
Profitability
.1 9 9 7 8
Industry Uncertainty
and Business Risk
.05 7 7 6 7
Eric
Competitive Strength of PepsiCo’s
Marina
Competitive Strength Scores
for each SBU
Importance Pepsi Co PepsiCo
Competitive Strength/Market Position Weight Frito Lay Intl NA Quaker
Marina
9 Cell Matrix
9 Cell Matrix
PepsiCo North
America
Pepsi International
Quaker
Frito Lay
Industry Attractiveness
6.6
4.3
2
6.6 4.3 2
Competitive Strength
Marina
PepsiCo’s Strategic Fit &
Value Chain Match Up
• PepsiCo portfolio does exhibit good strategic fit
• The greater the strategic fit the greater the
competitive advantage
Rahim
Strategic Fits & Value Chain Match Ups
• Skills transfer
• Routinely shared valuable expertise for instance when
Pepsi Co acquired Quaker foods
• Technical and technological know how was shared
among 230 plants, 3600 distribution systems, and 120,
000 service routes
• Shared market research information during power of
one retailer strategy
Rahim
Strategic Fits &Value Chain Match Ups
• Cost savings
Achieved economies of scale by combining related
activities among the divisions.
Quaker Oats integration – $160 mill in cost savings
by sharing product ingredients and packaging
materials.
$40 mill. in cost saving by joint distribution of
Quaker snacks and Frito Lay products.
Rahim
Strategic Fits & Value Chain Match Ups
• Brand Sharing
• Global name brand recognition of PepsiCo helped
introduced its snacks business around the world
• Combination of Gatorade and Tropicana distribution
saved $ 120 million by 2005
Rahim
PepsiCo’s Portfolio:
Good Resource Fit
Resource Fit PepsiCo’s Characteristics
Traci
Strongest Contributor’s to PepsiCo’s Free
Cash Flows
●
36% company operating
●
“Power of One” strategy Internt.
d Beverage ●
Soft drink innovation
25% Quaker
Foods NA
Noncarbonat ●
Aquafina(15%)- MS
Tropicana #1 brand (2007)
ed Beverage ●
“Better for You” & “Good for You” bev.
=70% division revenue
(PepsiCo’s 2008 10K Report)
Traci
Strategic Issue #1
Issue:
Low profitability in International Markets
Recommendations:
Pursue structural and organizational changes
Divest businesses with low growth potential and
Salma
Strategic Issue #2
Issue:
How to reverse the recent downward trend in the
Recommendations:
Restructure the lineup of snack and beverage
campaign
Rahim
Strategic Issue #3
Issue:
PepsiCo’s overdependence on US market revenues
Recommendation:
Focus on more international market
Asia Pacific region GDP (China-9% & India-6.1%)
Lends to a rise in disposable income
FCF should be distributed sufficiently to increase
Traci
Strategic Actions
Make strategic acquisitions in global markets that
enhance profitability.
Eric