Pepsico

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Company Overview

PepsiCo was founded in 1965 through a merger with the snake food giant---Frito-Lay. Now it is one of the largest companies in convenient snacks and beverages all over the world with total assets of about 15.1 billion U.S. dollars and 28.5 million employees. Its brand camp are powerful, including as many as 19 international brands with over one billion U.S. dollars in revenue, such as Pepsi-Cola, Diet Pepsi, Mountain Dew, Lay’s potato chips, Tropicana Pure Premium, Doritos, Gatorade, Quaker, Ruffles, 7-UP, Cheetos, Mirinda, Aquafina, Tostitos, Sierra Mist, Walkers, Fritos and Lipton Teas. In 2009, PepsiCo was ranked 23rd out of 100 global brands by “Business Week” with 13.706 billion U.S. dollars brand value, 21st among annual “Global Most Admired Companies” and 171th of Fortune 500 list in 2010. (1)

Organizational Changes

Unrelated Diversification:

* Period: 1965---1992

* Activities:

---in 1965, Pepsi and Frito-Lay Company merged together to form PepsiCo Inc. with 19,000 employees. The main products of the new company are Pepsi carbonated soft drinks and Frito-Lay snack food series.

---In 1968, the large transportation company North American Van Lines in North America joined PepsiCo.

---Since 1977, PepsiCo entered into the fast food industry with the purchasing of Pizza Hut, Taco Bell and Kentucky Fried Chicken (KFC), reaching the peak of diversification.

---In 1992, the company formed a partnership with Lipton, launching a instant tea brand in North American Market---Lipton tea. (2)

Comments: In the process of diversification, PepsiCo experienced success with high sales revenue of 15.4 billion and enhanced brand awareness. Company was capable of transferring skills, capacity or technology from one business unit to another, or reducing costs by combining operations of different activities. This diversification helps PepsiCo to fully use internal strength for gaining competitive advantages. However, overtime, the huge...