Pepsi Case

As notated earlier in my blogs, Pepsi definitely utilizes diversification strategies. Known as a highly competitive market leader today along with Coke, Pepsi is known for its vast variety of products that truly offer different things. One can start off by selecting from their various soft drinks, or one may look at their energy drinks. You could look for something to munch on and look at their snack foods they offer as well or even their coffee drinks. Nevertheless, Pepsi has done a great job of implementing a diversification strategy and making it work.

When trying to find a motivation for implementing a diversification strategy, reasons would vary across the board. However, in chapter 11, we learn many different reasons why a company may do so. This would include but is not limited to operational economies of scope including shared activities and core competencies; financial economies of scope including internal capital allocation, risk reduction and tax advantages,; anticompetitive economies of scope including multipoint competition and exploiting market power; and employee and stakeholder incentives for diversification including diversifying employees' human capital investments, diversifying the risk of nonemployee stakeholders and maximizing management compensation. When looking at Pepsi, reasons to diversify would be evident in a few of these instances. In particular, I would like to point out exploiting market power. Due to its increasing rivalry with Coca-Cola, Pepsi has been doing everything in its power to win the Cola Wars. This has been evident by their constant innovations including anything from expanding their operations to numerous countries to thinking of all kinds of different products to launch, whether it was a snack food, soft drink or something else.

One last thing that really stood out to me in this chapter is core competence. Core competence can be described as the collective learning in the