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Case Title:

PepsiCo in 2006

Publication Year : 2006

Authors: Sandhya Hotchandani, Joel Sarosh Thadamalla

Industry: Beverages

Region:USA

Case Code: COM0127A

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:

On December 12, 2005, for the first time in the rivalry of over a century, PepsiCo (Pepsi) surpassed its biggest foe Coca-Cola (Coke) in market capitalisation. It had much higher operating revenue than Coke. After having tough time in mid 1990s, Pepsi finally got increasing sales and cheering investors.

Ac cording to the analysts, the chief reason for Pepsi’s outstanding performance was its aggressive diversification. Though started as a beverage company, Pepsi now held No.1 position in snack food business with its Frito-Lay division and ranked No.3 in overall food & beverage industry. However, Coke still continued to sell more soft drink than Pepsi.

The case tracks the journey of Pepsi and compares its current position to that of 90s. It highlights the strategic moves of Pepsi, which led it to overcome cola trenches and outperform its biggest competitor Coke. Nevertheless, the success, would Pepsi be able to sustain its performance?

Pedagogical Objectives:

  • To highlight the first mover advantage enjoyed by PepsiCo by venturing in food business
  • To discuss the leader and challenger strategies
  • To discuss the competitive strategies and diversification strategies of PepsiCo.

Keywords : PepsiCo; Coca-Cola; Pepsi-Cola; Frito-Lay; Business Strategy; Strategic Management; Diversification; Brand Portfolio; Globalisation; Competitive strategy; Competitive Strategies Case Study; Business ethics; Snack food; growth; cola wars

Contents : 
Industry Overview
Doing Business with Ethics
Pepsi’s Consolidated Statement of Income
Coke’s Consolidated Statement of Income
List of Food & Beverages Companies by sales
Timeline of Pepsi
Diversified Brand Portfolio of Pepsi
Major Brands of Pepsi
Pepsi’s Smart Spot Product Portfolio

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