Business Fast Food Globalization Globalization is a worldwide scale of growth, an ongoing process where economies, cultures and societies are being increasingly integrated.
The unsuccessful venture into La Petite Boulangerie suggested that although PepsiCo managers were gifted and could be easily moved across divisions; the moves would not always guarantees a successful business expansion. This is in light of the fact that PepsiCo believes it has a competitive advantage in the skillfulness of its managers that was not borne out in the unsuccessful La Petite Boulangerie bakery endeavor.
Recommendations PepsiCo can be categorized as a related diversifier. The restaurant business is cyclical. Some restaurants will be profitable, while some will not be profitable.
Furthermore, it is not an appropriate strategy for PepsiCo management to over-diversify to protect their personal wealth. Most shareholders would rather hold shares in a small profitable company, not a big unprofitable company. As a shareholder, there is only a benefit if PepsiCo makes a profit.
Currently PepsiCo is making a profit. Although managers benefit from growth regardless of profit or lossgrowth for the sake of growth is not an appropriate reason to diversify. Even thought PepsiCo has the capability of doing this an individual shareholder can do this for himself.
The counterargument would be that PepsiCo managers can do a better job balancing cash flow than shareholders because the corporation can be more tax efficient than the individual shareholder.
But this alone is not a sufficient reason to diversify. PepsiCo already has a Pizza segment i. Pizza Hut and does not have experience in the mobile food cart segment. Diversifying into these two market segments will not produce corporate synergy where the whole is greater than the sum of the parts.
PepsiCo is currently saving money because they are competing in several different industries ie. Soft drinks, snack foods, and restaurants. These business units share the support structure and therefore the reduced costs. If PepsiCo were to sell two or more different products simultaneously that would be beneficial by creating an economy of scope.
The uniqueness would make it very difficult for competitors to imitate and would be a reason to diversify.
PepsiCo already has multiple business units that buy from the same set of suppliers and sell to same set of customers. They have used this to gain market power. Although the Colorado Carts are unique, they can be duplicated by the competition e. Therefore, PepsiCo will not be exploiting its core competence and should not diversify.
The management teams of both companies appear to be performing well. The overall scope of PepsiCo is on convenient foods and beverages. However, PepsiCo does not have experience in the placement of mobile food carts and therefore PepsiCo would be at a disadvantage to those more experienced in the mobile cart business.
PepsiCo already owns Pizza Hut and therefore has a place in the dine-in and take-out pizza business. It currently operates only 25 restaurants in eight states PepsiCo case, pg. The offbeat pizzas may not sell well across the United States and internationally.
How does PepsiCo compete? PepsiCo can place a Cart outside a shopping mall on the street selling food. How does PepsiCo execute? PepsiCo, although a very large corporate office, has an execution strategy in which they let the managers go at their own pace.
PepsiCo managers are rewarded on a two-phase system; reporting performance first to direct managers then to upper level managers. And in everything they do, to strive for honesty, fairness and integrity.
HBS How to cite this page Choose cite format:Food, Inc., By Eric Schlosser - Over the past 50 years, there has been a major change in the food production industry. Unlike many years ago when people used to get their food right from the farm; fresh and purely organic, nowadays most people in America rely on processed industrial food, but do these consumers know the truth behind the processed food.
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In the case study, PepsiCo is considering in Carts of Colorado and/or California Pizza Kitchen. Senior Management is faced with the question of whether the necessary capital investment in order to purchase one or both of the businesses can be profitable for each of the acquired businesses, but must also take into consideration that the additional business units will not hinder the.
Free Essay: PepsiCo’s Restaurants Definition of Problem Senior Management of PepsiCo is evaluating the potential acquisition of two companies – Carts of. Count is a San Francisco based producer who has been involved in just about every aspect of the music business.
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