Question

Identify and assess the ways that Pepsi incorporates diversification in achieving strategic objectives. Emphasize the challenges, best practices, and applications for Pepsi. If Pepsi does not appear to be involved in diversification, the emphasis of the presentation can be an analysis of ways that diversification could be an effective strategy for the company.

Answer 1

Pepsi incorporates diversification -

The strategic formulation of PepsiCo Inc. basically provides a clear set of recommendations, with supporting justification, that leads us to the mission and objectives of PepsiCo Inc., and it further supplies the strategies that the company has adopted in order to accomplish them.

1. Some point are as follows-
2. Pepsi, Lays and many more while keeping the other core businesses healthy, initiating turnaround efforts in weak-performing LOB’s with promise, and dropping LOB’s that are no longer attractive or don’t fit into the
3. Transferring and sharing related technology, procurement leverage, operating facilities, distribution channels, and customers.
4. PepsiCo Inc. is most extensively following the growth strategy among the three components( Directional strategy, parenting strategy,Portfolio strategy) level strategy over the years.

​​​Challenges-

1. Real-time marketing
2. Companies are not geared up structurally for digital marketing
3. Privacy is a big issue
4. Digital in-store will add a new layer to purchasing
5. The possibilities of gaming are almost endless

Strategy Analysis

Porters Five Forces

1. Threats of new entrants

​​​​​​The new entrant Pepsi’s huge entry shook the industry and Coke’s remarkable offers offered. Today, Cola-Wars between these two rivals Coke and Pepsi are leading to the point, that the new entrant threat is minimal in this sector.

2 Buyer Power

The main buyers for the Carbonated Soft Drink (CSD) industry are fast food fountain, vending machines, food stores, convenient stores, restaurants, college canteens and gas stations. These have different profitability ratios, which displays the bargaining power of the buyer to pay different prices based on their power to negotiate

3 Threat of Substitutes

The availability to end consumers is huge in CSD industry, as they have large numbers of substitutes like water, beer, wine, coffee, milk, tea, juices, low calorie drinks etc., available. The companies diversify business by offering substitutes to armor themselves from competition

4 Competitive rivalry

Pepsi Co and Coca Cola primarily are competing through distinction in their branding than on pricing, which always permitted higher profits in their businesses despite of intense competition

5 Supplier Power

the bargaining power of supplier is often low as there are many providers associated with the business. The industry often requires huge raw materials to make assorted flavors, caffeine and added substances, sweeteners and water. These are the fundamental goods that are accessible effortlessly. The makers have no power over the pricing and thus providers in this segment are powerless.