Strategic management

In the modern times multinationals do not reply upon single product or service, rather they go for diversification. Pepsi Co and Coca Cola have also undertaken the same course in last few decades. The question of diversification often brings along the challenge of keeping them as a single unit.
For example in case of Pepsi co the beverage is suggested to keep separate from the snacks (Lay’s, Fritos, Doritos) and many more.
The diversification in case of Pepsi-Co has paid dividends in multiple forms. Owning to its global recognition and acceptance, in Russia investors showed their interest with regard to investing capital of over 1 billion dollars (abcnews, 2015) over a phased process of two to three years.
Coca Cola itself has stated growth rates with the gradual diversification policy. According to its reports for the year 2013 and third quarter, the overall sales rose by a figure of 2 percent and this was largely attributed to the policies in context of diversification (Trefis, 2013). This in turn brought about a balance to the company’s standing and performance with regard to the previous quarter’s performance..
Question 1:
What theoretical issues does your scrapbook raise?
Diversification is a process when the given company changes its focus from one particular product or item to multiple items and services. This brings along various considerations, challenges and questions with regard to future trends, policies, and actions along with marketing patterns that are needed to be kept intact. This scrapbook looks into these dimensions in case of two globally recognized brands of beverages namely Pepsi Co and Coca Cola. Each has over period of time moved from single item to diversified product and service delivery. Coca Cola’s diversification plan and products delivery came about in the form of Coke Diet, Fanta, Sprite, Mineral water and various other side products that have given Coca Cola an impetus in the market in terms of sales (Volkman, 2014)
The scrapbook also looks in to the question of whether working as a single unit and diversified or working in as two separate companies would serve the purpose of Pepsi-Co.
Question 2: where directly or indirectly the issues appear in strategic management?
Such a process of diversification brings along strategic management principles and actions with itself. These include the concept of layout, feasibility against the new product and the communication, promotion and marketing strategy against the given items that are aimed at for expansion. Coca Cola’s diversification plan and products delivery came about in the form of Coke Diet, Fanta, Sprite, Mineral water and various other side products that have given Coca Cola an impetus in the market in terms of sales (Volkman, 2014)
The process of diversification opens with itself the new horizons of expanded market. The expanded market in turn leads to increased demand, expanded supply chain network and insuring the timely delivery of products and services. These all come in the scope of strategic management and the top management ensures for taking the necessary steps towards the fulfillment of a global practice and global service delivery.
Strategic differences:
Coca Cola has an edge in terms of the marketing policies. Further Coca Cola enjoys large market share in terms of beverages and this comes as an edge over Pepsi Co. The marketing policies are different too (Ferrell & Fraedrich, 2006). With one largely focusing on “Fun and young” policy, the other focusing on human emotion and sentiments.
Related diversification and its benefits:
The advantage with diversified items and products offer is increase in sales and increase in the customers market. Pepsi co has seen similar trends and according to its Chairman and Chief Executive Officer, the company has seen increased performance and sales in a diversified sales oriented working and marketing policies.
Unrelated Diversification:
Pepsi co towards 2013 was lagging behind Coca-Cola. This is largely attributed to its excessive reliance and expenditure in the side products and snacks that the company invests in. From strategic investment and marketing view point, this is seen as a potential point where the diversification is seen as unrelated or not paying the returns accordingly.
References:
Abcnews, 2015. Pepsi to invest $1B in Russia. [Online]
Available at: http://abcnews.go.com/Business/story?id=8014445
[Accessed 5 March 2015
Ferrell, O. C. & Fraedrich, J., 2006. Business Ethics: Ethical Decision Making and Cases. s.l.:Cengage Learning
Trefis, 2013. Coca-Cola Delivers Balanced Growth From Its Diversified Portfolio. [Online]
Available at: http://www.nasdaq.com/article/cocacola-delivers-balanced-growth-from-its-diversified-portfolio-cm288778
[Accessed 4 March 2015]
Volkman, E., 2014. How Coca-Cola Built Up Its Business Way Beyond Soda. [Online]
Available at: http://www.dailyfinance.com/2014/08/30/coca-cola-business-diversification/
[Accessed 1 March 2015]