PepsiCos diversification in the world market

PepsiCos diversification in the world merchandisePepsi-Cola came into universe in 1898, when Caleb D. Bradham, introduced Brads Drink, a blend of Peps-Cola, carbonated water and sugar. Bradham later renamed the sup Pepsi-Cola. The corporation Pepsi-Cola was launched in 1902 in the back room of the pharmacy of Bradham, as the business began to grow it was officially registered with the U.S. Patent Office on June 16, 1903 as Pepsi-Cola. (Pepsi Store History of the Birthplace of Pepsi). 1As time passed by Pepsi-Cola moved away from the low-price strategy and launched an extensive marketing campaign to encouragement the companys image. In 1950, Pepsi- Cola had the slogan,Be sociable, pay back a Pepsi.The go of chief executive officers, Presidents changed all all over time but the essence of the culture of Pepsi-Cola keeped intact, from Donald M. Kendall, chief operating officer in 1963 to Wayne Calloway. CEO in 1986, the company remained consistent with its emphasis on people, the company back people, not projects, in its resource allocation decisions, and these decisions were devise quickly.Wayne Calloway was resolute to bide in the strong tradition of the company and the previous CEO, of identifying investment opportunities, which had potential difference the potential to make the company grow. These opportunities would sluicetually lead to higher(prenominal) sales, higher earning growths and increase in companys value on the stock market.Over the old age PepsiCo has been able to build a dominant market sh be in the world as provider of snack foods or beverages, during the process PepsiCo has make key decisions, both positive and negative. To attain this position several acquisitions of disruptive food twines were made and precedinmg divestitures as swell. ( PepsiCos Diversification Strategy, oppapers.comHYPERLINK http//www.oppapers.com/essays/Pepsico-s-Diversification-Strategy/248234). 2)HYPERLINK http//www.oppapers.com/essays/Pepsico-s-Divers ification-Strategy/248234). 2.HYPERLINK http//www.oppapers.com/essays/Pepsico-s-Diversification-Strategy/248234). 2 HYPERLINK http//www.oppapers.com/essays/Pepsico-s-Diversification-Strategy/248234). 22PepsiCos diversification strategy can be viewed in triad full categoriesSoft DrinksSoft drinks represented 35% of PepsiCos sales and 39% of its in operation(p) profits in 1991.To make the figures so far better Pepsi Co build upd acquire several of its claimd bottlers, including some of its largest ones. It also acquired the international operations of Seven-Up, the third largest velvety drink operation pop outside the United States, for $246 million.Snack foodsPepsi-Cola acquired Frito-Lay in 1965 and with brands much(prenominal) as Doritos, Lays, Fritos, and Ruffles, Frito-Lays share of the $10 billion U.S. snack chips market was nigh half, and PepsiCo Foods International (PFI)s share of the $13 billion international snack chips market was about one-quarter. In 1989, PepsiC o purchased two U.K. snack companies-Smith Crisps, Ltd. and Walker Crisps, Ltd.-for $1.34 billion, fair the take snack food company in Europe.RestaurantsIn 1986, PepsiCo purchased Kentucky Fried Chicken. combine with pizza pie Hut and Taco bell, the purchase made PepsiCo the international draw in topic of restaurant units. In 1991, PepsiCos restaurant segment achieve the highest revenue of the companys trine segments, surpassing soft drinks for the first time.With troika light up line restaurants downstairs its charge, Pepsi Co was on its way to constructing a perceptible three-legged stool. The CEO Calloway, felt that the in the raw structure would bring the company success and costs would decrease significantly by transferring of s carry offs across the three chains.PepsiCos strategic planners believed that quick service restaurants would remain the largest segment over the by-line decade. They had identified several major industry trends. First, they believed that s implicity and convenience were becoming change magnitudely important as people worked longer hours and had less leisure time. Second, they thought that, due to economic arouseures and an overall decline in consumer divert in prestige and status, consumers would look for value. Third, they identified variety as a significant trend, remarking that growth in ethnic product categories tended to reflect the increasing diversity of the U.S. population. Finally, they believed that the health and nutrition trend that had begun in the 1980s would preserve as the population aged. Based on this analysis, PepsiCo thought the quick service, cursory dining and take-out segments would be attractive opportunities for investment.Why Should PepsiCo acquire Carts of Colorado (CoC) and calcium pizza Kitchens (CPK)?Carts of Colorado (CoC)Carts of Colorado (COC), is a Denver designer, manufacturer, and merchandiser of peregrine food carts and kiosks (Carts of Colorado,HYPERLINK http//www.cartsofcol orado.com/index.htm).3 INC).3Carts of Colorado was apparatus by two brothers, Stanley and Daniel Gallery from Denver, Colorado. both had previous experience of working in their mothers restaurant, they took credit card gold advance, and setup a cart .The business did good, they expanded and had 20 carts by 1984.The carts of Chicago-Style Sandwiches did not meet the standards of Federal Food Drug Administration (FDA), so Stan modified the cart and produced one that did more than meet the current standards. In 1984, the Gallery brothers established Carts of Colorado to manufacture carts.It would be extremely just for PepsiCo to acquire Carts of Colorado (CoC) for a number of reasons. Firstly CoC has clients ranging from Burger King, Coca-Cola Company, Dunkin Donuts, Mrs. Fields, and Disney, this acquisition would modify Pepsi Co to tap into a new market and become a supplier to these big companies. secondly CoC had a potential to grow into an even better and bigger company, as t he founders were willing to invest for the technological overture of the carts, such(prenominal) as radio telecommunications and computers. in the end the point which goes in regard of acquiring CoC is that they had they purchased their largest competitor, for $65,000 in 1990, so stapleally they were market leaders.California Pizza Kitchens (CPK)California Pizza Kitchen (CPK) was started by Larry Flax and Rick Rosenfield, both were assistant U.S. attorneys for the department of Justice both had a passion for cooking and the two setup their own restaurant. (California Pizza Chicken).4CPK targeted young, upscale singles and couples, families, and elderly retired people pursuit a moderately priced, yet comparable-quality alternative to fine dining restaurants. science of CPK will prove to be profitable business for PepsiCo as CPK is a thriving and profitable business with potential to grow even further. Secondly their core competency, that is, constant put uping of new items in t he menu and the high level of service make it a well reputed restaurant in the market.Lastly the employees of CPK were committed to the company as it provided them job security and opportunities of moving up to the higher positions in the chain administration. This would be a welcome amplification in the task force of PepsiCo.Why shouldnt they acquire them?Carts of Colorado (CoC)Firstly, the Stanley brothers were not the best people to work with they wanted complete control over their own business. After selling 30% of their business to a casualty capital firm ,they eventually forced the new management out ,as the Gallery brothers were vary of the way the business was been run.Secondly CoC was not the net cost cart manufacturer in the market, as the Gallery brothers had made a number of modification to the carts, e.g. (smaller carts, while increasing their food reposition and cooking capacity) and invested in upgrading cart technology, they were not the cheapest option around.Ca lifornia Pizza Kitchens (CPK)Firstly the owners of CPK, Flax and Rosenfield had been hesitant to franchise the concept. Secondly Flax felt that it would be mordant to sell the company now after putting in so many years of hard work, he wanted to take it earlier and had decided to make the company public. As he saidIt would kill me to sell now for $100 million and sit on the sidelines and invite somebody else either destroy it or do great with it. (Michael Barrier, Nations Business, bound 1991, p. 14.) 5It would take long negotiating talks to convince Flax and Rosenfield to sell up the company.What do you recommend?According to my opinion PepsiCo should make very executable effort of acquiring Carts of Colorado (CoC) and California Pizza Kitchens (CPK). Since both the businesses are vibrant and progressive, making profits they would be a welcome extension to the food chain of PepsiCo. The other point which favors the acquisition is that both the businesses have the potential fo r growth, CoC is investing in technology which will make it even more cost efficient, where as on the other hand CPK has moderate its advertising to store openings, but it received an avalanche of free press because of its distinctive menu, its fast-paced growth, and the unusual backgrounds of its cofounders.If bought to whom they should report?PepsiCo has always focused on a decentralized structure and the emphasis the firm placed on entrepreneurial management, Pizza Hut, Taco gong, and KFC individually operated with a great argue of autonomy. One restaurant CEO remarked, Calloway really wants to know just three basic pieces of information from us (1) when we change the top people in our business, (2) when we change our strategy, and (3) what our capital expenditures are.Continuing in the PepsiCos tradition, if both the businesses were bought, all(prenominal) should be appointed with a separate CEO and that person should report to the CEO of PepsiCo. This would keep the roles of both the businesses separate instead of been lead by a single person.Does PepsiCo add value to its restaurant business?PepsiCo always has a strategic plan in place before acquiring a business or launching a new product in the market. Same is the case with the restaurant industry, PepsiCo had carefully planned out how they could add value to the businesses been acquired and how the business would help PepsiCo improve. PepsiCos strategic planners believed that quick service restaurants would remain the largest segment over the following decade. We can consider each of the three restaurants owned by PepsiCo separatelyPizza HutIn 1986 the phylogenesis and roll out of Pizza Hut delivery took place under the leadership of the then CEO of Pizza Hut .This was primarily through as Pizza Hut was facing competition from Dominos which focused in the first place of delivery. Pizza Hut was repositioned by PepsiCo into pizza distribution, this meant expansion into non-traditional locations, such as airports, amusement parks, stadiums, and school lunch rooms, using free-standing kiosks. A number of other measure were been considered to bring value to the Pizza Hut franchise such as concepts of,One in quick service iv. entree of new dishes6Casual diningPizza Hut CafTaco BellWhen PepsiCo bought Taco Bell in 1978, it was the countrys largest chain of quick service Mexican restaurants, selling tacos, tostadas and burritos. John Martin, CEO of Taco in 1983 took a number of steps to bring value to the Taco Bell restaurants, which mainly wereIntroducing new dishes for the first time in 10 yearsShift in focus, from production to customer serviceK-minus. (reduced the size of the average Taco Bell kitchen)MIS project, called TACO (Total Automation of Company Operations) introducedEmpowering employees at all levelsRevamping the compensation carcass to include more performance-based compensationSlashing of prices for a range of basic itemsKentucky Fried ChickenPepsiCo acquired KF C in 1986, as the largest chicken chain in the world. John Cranor III became president and CEO of Kentucky Fried Chicken in 1989, he took a number of steps to ring value to the franchise, mainly of those wereRestructuring US and international operationsRenovation course,New computer programTargeted college campusesMaking the products more health-consciousRoasted and barbecued chickens and chicken sandwiched introduced.The points above battle array that PepsiCo brings value to it restaurants business in every workable manner to make it more profitable and customer accommodative.Is PepsiCos current organization of its restaurants chains allot?PepsiCos organizational structure of its restaurant chains focuses on decentralization and with each chain given autonomy to conduct their operations. In this way each chain runs its business in its own way, while keeping a sense of loyalty across the di stacks. Senior management was of each chain was open to sharing of ideas, while keeping t he secrets of their own chain well guarded.In discussing coordination across the restaurant chains, senior corporate executives stressed that reefer activity should be initiated by divisions, not headquarters. Division presidents should have the exemption to decide whether or not a given division would move in any specific joint activity.This organizational structure makes it possible for PepsiCos restaurant chains to effectively conduct their business, without intervention and according to the vision they have in mind.