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Pepsico Acquires Quaker Oats

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Submitted By krysten
Words 2009
Pages 9
PepsiCo Acquires Quaker Oats

The Company
PepsiCo is the second largest beverage company in the world. They are internationally known for mostly their snacks and beverages. Being almost one hundred years in the business, they were incorporated in 1919. PepsiCo sells, distributes and markets a large range of these products to more than two hundred territories and countries. They are the top seller of many famous brand names such as Doritos, Lay’s, Pepsi, as well as Gatorade which came about by an acquisition of Quaker Oats in 2011. While the acquisition of Quaker Oats was not only for their beverage products but their food as well, we will be focusing on the beverage industry.
The Industry
The beverage industry overall does not have a huge threat of new entrants. The capital requirements to enter into this industry are very large in order to compete with the distribution levels and production lines that the biggest companies have already mastered. Not only are these factors present but the cost to purchase the materials such as machinery and modes of transportation are immense. Also the economy of scales that companies like PepsiCo have established in terms of marketing, purchasing and R&D, leave little from for new businesses to compete effectively. Furthermore the fact that to be successful in this industry means in many cases you need to be internationally sold is a huge barrier to entry since government regulation and distribution may be impossible for a smaller company to wrap their hands around. The bargaining power of suppliers within this industry is rather low, due to the fact that in this industry most of the companies have their own manufacturer and promoters that receive royalties from their partnership. They own much of the supply chain leaving very low bargaining power. Due to the high availability of substitute products, the costs to

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