1. Strategic Analysis of PepsiCo
Dominant Logic
David Bright, Terra Christensen, Nicholas Papas,
Arc Sims, Derrick Smith

2. Introduction Growth opportunities and competition Acquisition Methods
Areas of concern
Growth opportunities and competition
Recommendations
Acquisition

3. Company Overview 2001 Total Revenue $27 Billion
Net Income $2.7 Billion
ROS 9.8%
ROE 32.8%

4. Company Overview Pepsi Frito-Lay Quaker Oats Three divisions
Quaker acquired in Include the Gatorade sports drink brand.
Analyzed only two of the 3 divisions. Pepsi in the non-dairy, non-alcoholic beverage industry and Frito-Lay in the salty grain-based snack food industry.

5. Beverages Industry Overview
Non-Dairy, Non-Alcoholic
Pressures from
Buyers
Competitors
Other information
Entrants

6. Snack Food Industry Overview
Salty, Grain-Based
Pressures from
Buyers
Substitutes
Competitors
Other information
Entrants

7. Competitive Positioning
Differentiation Strategy
Product packaging
Product manufacturing
Product innovations
Marketing
Examples such as coating both sides of the potato chip, special potato etc.

8. Core Competency Branding/Marketing Product Innovation
Resources include brand equity, celebrity endorsements, institutional knowledge, propretiary knowledge
Capablities special manufacturing process, keep and build brands.

9. Diversification Strategy
Recent efforts
Acquisitions
Divestitures
Joint Ventures
Sobe, Quaker Oats
Tricon
Starbucks, NFL, lipton, suntory, empersa polar

10. Strategic Conclusions
Current strategies are working
Areas of concern
Growth rates (domestic and abroad)
High competition
Over diversified

11. Alternatives
Divestiture
Acquisition
R&D

12. Divestiture Appears to be poor fit Acquired for Gatorade Quaker Oats
Ready-to-eat meal industry is competitive and PepsiCo does not have experience in it
Recall experience with TriCon
Need to monitor whether Quaker Oats meets financial performance metrics

13. Research and Development
Be innovator
Develop unique brand extensions
Lead development of unique preservatives, additives, and packaging technology
Olestra as a possible disruptive technology.
Pouring cans for doritos etc.

14. Acquisition Growing specialty, premium soda market niche
Jones Soda
Growing specialty, premium soda market niche
Fits with PepsiCo’s core competency
Can possibly be acquired for $10M
NPV of $19M, with potential for nearly $50M
Growing specialty, premium soda market niche
Existing brand recognition in select markets with loyal customer base
Product development and branding fits with PepsiCo’s core competency
Can be acquired for $10M
NPV of $19M, with potential for nearly $50M

15. Recommended Alternative
Acquire Interstate Bakeries Corporation
Portfolio of bread, bakery goods, and sugary snack foods,which uses many of the same distribution channels
Recognizable, segment leading brands with Hostess and Dolly Madison

16. Recommended Alternative—Financials

17. Thank you