Pepsico-Strategy Diversificaion free essay sample

PepsiCo by having a well built distribution channel has been of great advantage to the company because the customers can access products easily so as to turn to sales. The ability of PepsiCo to respond to the emerging trends and issues quickly like the issue of environment and health and the development of Pepsi generation has made the company to remain as the leading consumer product company and have a greater market share and also its ability to penetrate the international market buy focusing more on the emerging market (Gitman J. L and McDaniel C, 2009). http://customwritingtips. com/component/k2/item/10725-pepsico. html Recomandations Pepsi Co is currently a strong worldwide leader in the food and beverage industry. Throughout its growth, it has stayed true to its mission and objectives, while becoming adominant force within the United States as well as abroad. Known throughout the worldfor quality products and customer care, Pepsi Co should make no major strategic changesto its plan. However, like in any business situation there are areas that Pepsi Co canimprove upon. Some of the recommendations are as follows: Continue to expand with their â€Å"Human Sustainability†. The healthy eatingmarket is a demographic that will continue to grow in the future, and will  provide generous profits if Pepsi Co is able to obtain a large market share. -Expand more into social benefits, especially for those in developing nations. Pepsi’s main competitor Coca Cola has implemented a water purification  program for African Villages, which provides a valuable need and at the sametime introducing their brand name where it was before unknown. If Pepsi followed this same ideology with food products and water purification it toowould significantly increase brand recognition-Capture more of the aging population’s market share. Pepsi is a companyfocused on a younger market hoping to repeat the worldwide success of CocaCola in regards to brand loyalty with the generations born after 1980;however, there is still a large market with the Baby boomer demographic thatthey could break into. -A minor yet still important change that needs to be made is to their website. After comparing it to competitors we feel that it needs to be simplified. Implementation Overall PepsiCo is a successful company with substantial revenue, and a largefootprint in the marketplace. PepsiCo should continue to expand their growth and takeadvantage of potential opportunities by continuing to improve on areas at the corporatetop level, in the markets that they currently are in, and in new markets and marketsegments that they wish to expand into. ? PepsiCo should expand into markets and market segments that they are currentlynot in, such as Asia, India, and South America, in order to expand their marketshare at the global level and to increase their overall revenue. ? PepsiCo should improve their employee relations in order to create employees allover the world that will promote the product both during their work day and intheir personal life in order to create â€Å"word of mouth marketing†. ? PepsiCo should look to cut some of their expenses as they currently have $10  billion more in revenue than the competition, but they have a similar Net Incomeof $5. billion. PepsiCo should continue its aggressive growth strategy, utilizing concentric diversification where possible in order to grow into emerging market segments and also to achieve meaningful expansion into international markets. In the North American market, PepsiCo should increase profit margins by means of a vertical integration strategy, acquiring bottlers and perhaps other key players in the value chain. In the future, the company can consider horizontal integration, in order to growth its overall dominance in the food and beverage industry. CONCENTRIC DIVERSIFICATION Continue actively acquiring new businesses and diversifying into new (but strategically related) market areas. Acquisition of an alcoholic beverage maker is a possibility. Aceasta ar mai putea apela si la : VERTICAL INTEGRATION Pursue a strategy of acquiring key players in the value chain, such as bottlers, agricultural producers, or biotechnology companies. HORIZONTAL INTEGRATION Move aggressively to buy Kraft Foods and become the new leader in the global market, overtaking Nestle. MARKET DEVELOPMENT Continue moving into international market, restructuring their organizational structure . Indra Nooyi and her team should focus on the aggressive expansion of the Pepsi brand internationally, aiming for market dominance in sodas in the international arena. In the US, the best strategy to compete with Coca-Cola in this market segment is to engage in vertical integration (in order to realize economies of scope) and also to build on the companys famously strong relationship with retailers. Furthermore, the company can strengthen its other soda brands, and perhaps introduce Miranda onto the US market in order to compete with Fanta. PepsiCo should increase international growth and profits by changing the organizational structure in a way that focuses on markets other than North America, and enables the company to ensure that new acquisitions are made profitable rapidly. PepsiCo should retain its strong focus on innovation and keep investing heavily in research and development, in order to keep ahead of the curve in this competitive industry. The aggressive diversification strategy is a major strength of PepsiCo. The company should continue along this path, but should also seek to specifically acquire companies that can offer it excellent strategic fit benefits, in order to capture efficiencies in the value chain. In terms of cash allocation, PepsiCo should seek to increase spending on Ramp;D , acquisitions of companies that are a good fit for its portfolio, and pay higher dividends to shareholders, thus having a positive impact on the companys share price. The company should reduce expenditure on share buybacks. ttp://onursaka. com/wp-content/uploads/2012/04/Case-Analysis-PepsiCo. pdf An opportunity exists for PepsiCo in the good-for-you and better-for-you markets that they are just starting to implement across their products. This change in consumer tastes worldwide provides an opportunity for PepsiCo to acquire a ‘health food’ company similarly to Sanitarium in Australia. Sanitarium would fit into the Peps iCo model of being a consumer foods company with a focus on ready to eat breakfast cereals and well as being a horizontal integration into the value chain as a related diversification. The added advantage is that Sanitatium would give PepsiCo more credibility in the GFU/BFU market and enable the company to take leadership on this issue. http://charmike4. hubpages. com/hub/Diversify_PepsiCo_Case_Study The first recommendation that I would make to PepsiCo is that they should focus more on creating products that can be considered healthy alternatives to their customers. People these days are looking for ways to eat better and stay healthy, and PepsiCo has barely tapped into that market potential. PepsiCo can go about this in two ways: 1. Creating new brands that provide healthy snacks or beverages, and 2. Making their existing products more healthy. Overall, this focus will give PepsiCo an edge in an environment where unhealthy snacks and beverages are starting to become less and less profitable every day. The second recommendation I would have for PepsiCo would be to expand their focus out of the US and into foreign markets. PepsiCo does already have a global presence, but by far the market that they emphasize the most is in the US. Foreign consumers, especially ones in developing countries, are looking for ways to improve their lives. The demand is there for American brands and products. By expanding their focus, PepsiCo would not be so susceptible to market fluctuations in the US. This will make PepsiCo a stronger company and give them that much more of an edge overall. Ultimately, PepsiCo is a great company. They have survived for nearly one hundred years by listening to consumers and providing products that they want. As long as they are able to maintain this strategy, they are likely to be a successful company for many years to come. Inceput PepsiCo Case Study A few years ago PepsiCo diversified. This is an interesting case study of what can be achieved with a related diversification that has a strategic fit and some future opportunities for PepsiCo. PepsiCo has used the related diversification corporate strategy as their basic approach to new businesses and acquisitions with a focus on beverages and consumer foods. Wherever possible PepsiCo has found related activities within the value chain between the various beverage and snack food brands to reduce costs and increase profits. Some of the elements of the value chain that are shared include: * Marketing Processing * Research and development This has enabled PepsiCo to find a good strategic fit in most of the businesses they have acquired. Concentration of resources on growth of businesses through internal growth andcarefully selected acquisitions PepsiCo has adopted a plan for growth by continuallyaddressing the opportunities and risks associated with the global marketplace. Thecorporations success reflects their continuing commitment to growth and a focus onthose businesses where they can drive their own growth and create opportunities. Contribute to the quality of life in communities. PepsiCo believes that as acorporate citizen, it is responsible to contribute to the quality of life in the communities itserves. This policy is implemented through support of social agencies, projects, and  programs. The company also supports employee volunteer activities throughcontributions of time, talent, and funds. Each PepsiCo division is responsible for its owngiving program with corporate giving focused on supporting employee volunteer  activities