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Pepsi Case
Comm 491 Section 105
PepsiCo, Inc.: USA Division ? Case
PepsiCo, Inc. is one of the leading soft drink manufacturing companies in the world with market share of 30.8% in 1987, second only to the Coca-Cola Company who captured 39.9% of the market in that same year. PepsiCo Worldwide Beverages is separated into three functional business lines: Pepsi USA, Pepsi Bottling Group (PBG) and Fountain Bottling Group (FBG). Each company performs a separate, yet important role for the Pepsi Company. However, due to culture clashes and misaligned goals between the three companies, a reorganization of the company's business lines is required to ensure continued strong performance into the future.
Pepsi-USA, considered the flagship branch of PepsiCo, has an elitist attitude in regards to the other divisions of PepsiCo, which leads to an inefficient competitive environment and results in ineffective cost decisions. The overall company objectives have become secondary to the goals of the individual divisions. This competitive environment, however, also leads to increased efficiency and innovation which offsets some of the inefficiencies. The separation of PBG and bottlers at the local level also means that decisions must go up through the entire organizational chain of command, which leads to slow and unproductive decision-making.
We believe we need to find a good solution to the internal organizational structure, yet also be mindful of prevailing market conditions. Therefore, we will first analyze the present market conditions by using Porter's Five Forces Model. Next, we will look at vertical integration possibilities for concentrate producers and bottlers and why ...