Pepsi-Co Diversification Case Study

1. Individual Oral Presentation
(PepsiCo)
Mahisha Fernando

2. PepsiCo
• The PepsiCo, Inc. was formed in the year of 1998 by merging two
companies, Pepsi-Cola and Frito-Lay.
• By the year of 2015 PepsiCo celebrates its 50th anniversary as a
combined food and beverage company (PepsiCo.com 2017).
• Mrs. Indra Nooyi (Chairperson and CEO)

3. QUESTION ONE

4. • Competition
• Health issues raised
on sodas and snack
• Change in consumer
taste
• Growing
market – New
product
• Expansion
• Targeting only the
younger group
• Health Issue
Concerns
• Brand Image
• Product
diversification
S W
TO

5. Strengths
Strengths
•Higher Brand value
- As of 2016
$19.4 Billion of Brand Value (Forbes 2016).
- Pepsi on Forbes Lists#29 world’s most valuable brand.
Strengths
• Product Port Folio
- Beverages, Snacks, Cereals (PepsiCo 2017).

6. Weaknesses
•Targeting only the younger age group
-Forbes reports that to reach younger consumers, Pepsi has
tapped many celebrities over the years, ranging from pop
stars to rap and hip-hop artists.
Weaknesses
• Highly depending on Walmart
Weaknesses

7. Opportunities
•Growing market – New product
- Come up with new health drinks(ADULT GROUP).
Opportunities
•Expansion
- Diversify and open up restaurants
Opportunities
PepsiCo Fast Foods

8. Threats
•Competition
Threats
•Increase trend in Health conscious product
- -fell by 8% between 2011-2014,
- decline - health and wellness concerns (Forbes
2015).
Threats
•Changes in consumer tastes
Source : Brandwatch.com (2015)
Threats

9. QUESTION TWO

10. Is the resources and capabilities?
Source: Rothaermel’s (2013)

11. VRIO Framework
Valuable Rare Costly to
imitate
Exploited by
organization
Brand
Recognition
yes No Yes Yes
Differentiation Yes Yes Yes Yes
Distribution
channel
Yes Yes Yes Yes
Resources Yes No No Yes
Source: Author Developed (2017)

12. Competitive Advantage ?
• Differentiation and Distribution
• Innovative line of products is one of the PepsiCo competitor
advantage
• it’s coming up with different tastes, different products, or even
different entities such as snack foods, Pepsi explores all of its options.
• Pepsi does all it can to differentiate its products so it can remain a
market leader and can continue to attempt to beat out Coke.
• Their ability to innovate is truly a competitive advantage to them.
Source: McGraw 2011

13. • Distribution Channel
-PepsiCo owns a couple large restaurant chains: Pizza Hut, Kentucky
fried Chicken and Taco Bell
-PepsiCo pays a lot of money to restaurants to stock Pepsi. Free fridges,
lower prices
Source: Dada (2016)

14. References
Forbes. (2016). 29 Pepsi. Available: http://www.forbes.com/companies/pepsi/ . Last accessed
12th January .
PepsiCo. (2017).Global Brands. Available: http://www.pepsico.com/Company/Our-History .
Last accessed 12th January 2017.
Forbes. (2015). How Can PepsiCo Derive Growth From North America Carbonated
Drinks?. Available: http://www.forbes.com/sites/greatspeculations/2014/11/26/how-can-
pepsico-derive-growth-from-north-america-carbonated-drinks/#598b9d3a7ff7 . Last accessed
12th January .
Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases. McGraw-Hill/Irwin, p.
91
McGraw,M.. (2011). Product Differentiation. Available:
https://mpmcgraw.wordpress.com/2011/02/21/product-differentiation/. Last accessed 13th
Januaray.
Dada,G.. (2016). What is Pepsi's competitive advantage?. Available:
https://www.quora.com/What-is-Pepsis-competitive-advantage. Last accessed 12th January .