Question

What type of corporate diversification does PepsiCo utilize? Provide an explanation for your conclusion with two specific examples of how the company does or doesn’t have synergy among business units.

Answer 1

The introduction of new but related products in the new markets is considered as concentric diversification strategy.

PEPSICO diversification strategy is a plan introduced by the company to include snacks and other various beverage brands into its already existing product range.Through PEPSI Company’s diversified portfolio, it has also been able to move towards supplying ‘healthier’ products, which it had not primarily focused on.

Through the strategy, the company now boasts of three key products, including Pepsi Cola Beverages, Frito-Lay Brands and Quaker brands. Under the umbrella of these three key products, PEPSI manufactures a wide range of beverages and snacks, each bearing a different brand.

For instance, the Pepsi Cola Beverages include Pepsi Mountain Dew, Sierra Mist, SoBoe, AMP Energy among others. Frito-Lay Brands on the other hand comprise of Lay’s Potato Chips, Dorritos Tortilla Chips, Cheetos Cheese Snacks among others. Some of the products under the Quaker Brands include Quaker Oats, Quaker Rice Cakes, Chewy Granola Bars, Rice-A-Roni, Aunt Jemima mixes and syrups.

In the beverages categories market, PEPSI holds a significant share considering that it deals in both juices, sports drinks and bottled water, some of those whose demands are fast rising across the globe.

The company’s beverages and snacks have generally been successful in the market despite the turbulence. In 2014, one of its brands, Doritos Locos Tacos surpassed $1 billion in sales since its launch in 2012.

Besides, the company’s winning of the Buffalo Wild Wings account in the same year is another demonstration of the success of PEPSICO diversification strategy.

Pepsi has also partnered with selected food stores, restaurants and theme parks, like Shanghai Disney China with the aim of promoting its beverages and snacks.

Some of the latest entries into PEPSI’s product portfolio include Spire, Doritos Loaded and Mtn Dew Solar Flare, Mtn Dew Baja Blast among others, launched in 2014.

The introduction of new but related products in the new markets is considered as concentric diversification strategy.The introduction of new but related products in the new markets is considered as concentric diversification strategy.