Background
PepsiCo was founded in 1898 with the sole purpose of manufacturing and distributing beverages, diversifying over the years into other sectors such as restaurants. In the period under review, the company underwent different growth strategies under different CEOs. Under this review, the company went through different growth strategies, with Steve focusing more on diversity and mergers and acquisitions, while Roger’s focused on streamlining the company’s growth to remain competitive. As it will be observed in later slides, the two stints, Steve and Rogers, showcase the different perspectives of management and how they affect the company’s growth.
PepsiCo Strategy before Roger Enrico
In early 2001, Steve stated, “growth is what PepsiCo is all about.” This view can be reflected in the overall company strategy during his reign, fueled by investors’ expectations. To achieve such growth, PepsiCo engaged in mergers and acquisitions that transformed the company into a convenience food and beverage company. Finally, the company had to adjust to the changing competitive landscape, resulting in international expansion to compete with other major brands. Hence the need to diversify its product portfolio and increase competitiveness on the global stage. Other than acquisitions, PepsiCo under Steve focused on innovation to drive growth. In one of his statements, Steve stated that “innovation is the single greatest driver of growth for PepsiCo and its product categories.” In this regard, the company had to convert the promised synergies between Pepsi and Quarker into tangible and innovative products for the global market (Venkataraman & Summers, 2002).
PepsiCo’s new corporate strategy under Enrico
In Rogers’s letter to shareholders in 1996, he noted that the company’s net income had fallen, the international beverage business was in complete chaos, operating profits in the restaurant segment were failing, and the company stock languished at around $25 per share. Following these shortcomings, Roger embarked on strategies aimed at putting PepsiCo in its right place. One such strategy was streamlining growth. In his view, Rogers saw it as a way of returning Pepsi to sustainable double-digit growth. Thus, the company focused on its core strengths, beverages, PepsiCo, and Frito-Lay, while dropping the restaurant business, commonly known as the bolts and nuts of Enrico’s comeback plan, which relentlessly focused on strengths, managing for strong cash flow, and investing aggressively in big opportunities. Pepsi’s concentration on growth reflected a company culture that favored activity and bustle over focus and direction, and favored marketing prowess over financial discipline. In the international business, PepsiCo overhauled the sector except for Canada, resulting in instant growth and further improving the financial performance of the company. In terms of big acquisitions, Pepsi merged with Quarker, which offered a stable of well-known healthy food products that complemented PepsiCo products (Venkataraman & Summers, 2002).
Implications of PepsiCo “New World View”
The restructuring of PepsiCo under Rogers greatly improved the company’s competitiveness. The PepsiCo brands were supported by sophisticated technology and manufacturing platforms. In order to remain competitive, other companies had to continue improving their manufacturing and distribution processes to retain the competitive edge. The acquisitions and mergers ensured the technology was replicated in new business sectors. Under the restructuring of the global business venture, PepsiCo, under the platform of growth, built a global footprint propelled by consumer goodwill (Venkataraman & Summers, 2002). The company revolutionized the market and distribution system by ensuring products were within easy reach of customers, resulting in other companies reinventing their distribution systems.
References
Venkataraman, S., & Summers, M. (2002). PepsiCo: The Challenge of Growth through Innovation. University of Virginia Darden School Foundation.