The implications and effects of PepsiCo’s corporate strategies and actions such as spin-offs of the fast-food chain division, property and business acquisitions, product innovations, portfolio restructuring programs and diversification on the decline of its shareholder values. Alternatives and Actions: To increase the value of the shareholders’ investment, PepsiCo must formulate extensive strategies and actions that would address this problem. Below are some alternatives that can adopted by the company to achieve this goal:
A continuous diversification of products though acquisition of business that would complement its existing products should be implemented to increase the sales volume of all the four divisions of the company. • Advantage: If the company will diversify and increase its complementary product lines, more needs and new markets will be served thereby resulting to an increase in the sales volume the four divisions of the company. • Disadvantage: A diversification and expansion program will increase the corporate risks exposure of the company.
A global expansion program will be created and implemented by PepsiCo to undertake the stiff competition threats posted by Coke. • Advantage: The global expansion will warrant an increase in worldwide sales and revenues. • Disadvantages: Expansion programs will increase expenses and risks assumption for the company. Cultural, demographic and behavioral metrics vary in each country therefore products must suit all these aspects. Recommendations: To increase the value of the shareholders investment, there must be an increase in the sales volume and effective cost controls must be enforced.
Therefore, I recommend both alternatives, however, as mentioned, the programs must be cost-effective. Before diversifying and expanding in different countries, a thorough and intensive research on the cultural, demographical, behavioral and economical aspects of the market must be done. Moreover, as practiced by the company, each division shares all research information and it has proven to be effective in identification of the right strategies or products to launch in every market.
Global expansion and product diversification is needed to anticipate the threats of competition. The beverage group must keep up with Coca-cola by expanding and creating new markets. Moreover, branding and packaging strategies must also be implemented to be globally competitive. Being the global market leader can definitely increase the sales volume and revenues thereby resulting to the growth and stability of the shareholders’ investments. Acquisition of products that would enhance and complement the existing products will also increase the sales volume.
Likewise, new markets and needs will be created which will result to the increase of the shareholders’ equity. Some of the company’s product lines can be strategically positioned to promote and establish the other products. A synergy can be developed among the product lines. With these alternatives, more jobs will be created and more needs will be met. However, focus on cost and expenses will be tightened to ensure the company’s expenditures are controlled and managed.