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Chapter 9. Diversification. Beverages. Foods. Snack Foods. Frito-Lay North America Frito-Lay International. Quaker North America. Pepsi-Cola North America Gatorade/Tropicana North America PepsiCo Beverages International. Snack Foods. Frito-Lay North America. Funyuns Sunchips

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Chapter 9

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Chapter 9

Chapter 9

Diversification


Diversification

Beverages

Foods

Snack Foods

Frito-Lay North America

Frito-Lay International

Quaker North America

Pepsi-Cola North America

Gatorade/Tropicana North America

PepsiCo Beverages International


Diversification

Snack Foods

Frito-Lay North America

Funyuns

Sunchips

Cracker Jack

Chester’s popcorn

Grandma’s cookies

Munchos

Smartfood

Baken-ets fried pork skins

Oberto meat snacks

Lay’s

Ruffles

Doritos

Santitas

Fritos

Cheetos

Rold Gold


Diversification

Snack Foods

Frito-Lay International

Bocabits wheat snacks

Crujitos corn snacks

Fandangos corn snacks

Hamkas snacks

Niknaks cheese sticks

Quavers potato snacks

Sabritas potato chips

Twisties cheese snacks

Walkers potato crisps

Walkers Square potato snacks

Walkers Monster Munch Corn snacks

Miss Vickie’s potato chips

Gamesa cookies

Dippas

Sonric’s sweet snacks


Diversification

Snack Foods

Frito-Lay International

Bocabits wheat snacks

Crujitos corn snacks

Fandangos corn snacks

Hamkas snacks

Niknaks cheese sticks

Quavers potato snacks

Sabritas potato chips

Twisties cheese snacks

Walkers potato crisps

Walkers Square potato snacks

Walkers Monster Munch Corn snacks

Miss Vickie’s potato chips

Gamesa cookies

Dippas

Sonric’s sweet snacks


Diversification

Beverages

Pepsi-Cola North America

Pepsi-Cola

Mountain Dew

Slice

Mug

Sierra Mist

FruitWorks

Lipton

Dole

Aquafina

Frappuccino

SoBe

AMP


Diversification

Beverages

Gatorade/Tropicana North America

Gatorade

Propel

Tropicana

Dole juices


Diversification

Beverages

PepsiCo Beverages International

Loóza juices and nectars

Copella juices

Frui’Vita juices

Tropicana 100 juices


Diversification

Foods

Quaker North America

Quaker rice cakes and granola bars

Rice-A-Roni side dishes

Near East couscous/pilafs

Aunt Jemima mixes & syrups

Quaker grits

Quaker Oats

Cap’n Crunch cereal

Life cereal

Quisp cereal

King Vitaman cereal

Mother’s cereal


Diversification

How are we going to compete and

gain a competitive advantage in

each of our businesses?

Foods

Business Level

Strategies

Quaker North America

Quaker rice cakes and granola bars

Rice-A-Roni side dishes

Near East couscous/pilafs

Aunt Jemima mixes & syrups

Quaker grits

Quaker Oats

Cap’n Crunch cereal

Life cereal

Quisp cereal

King Vitaman cereal

Mother’s cereal


Diversification

Snack Foods

Beverages

Foods

Corporate Level Strategy

1) What businesses do we want to compete in?

2) How do manage effectively across businesses


Goals of corporate strategy

Goals of Corporate Strategy

Moves to enter new businesses

Boosting combined performance of the businesses

Capturing synergies and turning them into competitive advantages

Establishing investment priorities and steering resources into business units


4 conditions of successful diversification

4 Conditions of Successful Diversification

  • 1) Growing industries with complementary products and technologies

    • Apple IPhone

  • 2) Leverage existing capabilities which match the KSFs in other arenas

    • Disney Cruise Lines

  • 3) Closely related moves which reduce costs

    • Kroger & Fred Meyer

  • 4) Powerful brand and reputation

    • Marguerittaville, NASCAR Café, or Emril’s


When why to diversify

When/Why to Diversify?

To create shareholder value

Porter’s Three Point Test

1) Attractiveness Test

2) Cost of Entry Test

3) Better off Test

Should pass all 3


Diversification

Levels of Diversification

Related Diversification - entering product markets that share some resource or capability requirements with the current business – horizontal relationships across businesses – synergies. Overlap in value chain activities.

Advantages of related diversification include:

  • Leveraging Core Competencies

  • Sharing Activities

  • Market Power


Diversification

Levels of Diversification (cont.)

Unrelated Diversification - few similarities in the resources and capabilities required among the firm’s businesses

Conglomerate Diversification - no relatedness between businesses


Drawbacks for unrelated

Drawbacks for Unrelated

  • Demanding requirements

  • Limited to no opportunities to share advantages


Portfolio analysis

Portfolio analysis

  • BCG Growth-Share Matrix

    • question marks, dogs, cash cows, stars

  • GE- Nine Cell Matrix


Diversification

Boston Consulting Group Matrix

Relative Market Share

Question

Marks

Stars

Growth

Rate

Cash

Cows

Dogs


Diversification

BCG Matrix for PepsiCo - Early 1990s

Relative Market Share

High

Taco

Bell

Growth

Rate

Pizza

Hut

10%

Frito

Lay

Low

Soft

Drinks

KFC

Low

High

1.0


Diversification

BCG Matrix for PepsiCo - Early 1990s

Relative Market Share

Pizza

Hut

Taco

Bell

High

Growth

Rate

Frito

Lay

5%

KFC

Soft

Drinks

Low

Low

High

.75


Diversification

GE 9 Cell Matrix

Competitive Strengths

High

Low

High

Invest

Grow

Hold

Attractiveness

Harvest

Divest

Low


Diversification

GE 9 Cell Matrix for Pepsico

Competitive Strengths

High

Low

High

Snack Foods

Attractiveness

Soft Drinks

Low


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