Question

In what ways does Pepsi incorporates diversification in achieving strategic objectives? What are some of their challenges with diversification, best practices and applications of diversification?

Answer 1

PepsiCo diversification strategy is a plan introduced by the company to include snacks and other beverages into existing products. It made a bold move in 2008, which saw the company launch differentiated beverages and snacks. The company diversification is classified in three dimensions-

1)"Fun for you" (including potato crisps and regular soda)

2)"Better for you" (diet and low-fat versions of snacks and beverages)

3)"Good for you"(Product like oatmeal)

Through this strategy, the company boasts the 3 key products including Pepsi cola beverages, Frito-lay brands, and quaker brands. Now Pepsi cola includes Pepsi mountain dew, sierra mist. Frito lay includes lay's potato chips, Cheetos chips, Doritos. Quaker includes quaker oats, quaker rice cakes, chewy granola bars,rice-a-Roni, syrups.

Pepsi enters into diversification because of the health issues of the public that is obesity. Another reason was the impact of the plunging consumption of CSD products in the beverages industry.

Challenges in the diversification of Pepsi

1)Revitalizing its North American beverages business.

2)Healthy products are in demand.

3)Penetrating the emerging countries' market.

4)Competition from the existing ones.