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PepsiCo's Diversification in $2022$

This case is ideal for a module on corporate diversification strategies. The case teaches well because the majority of

students are likely to be regular consumers of PepsiCo's products. Class debate should center on whether PepsiCo's

diversification strategy has contributed to increased shareholder value. Analysis of the case data will lead students to

conclude that PepsiCo's top managers have built a fine collection of businesses capable of delivering impressive earnings

and cash flows. Students will recognize the success PepsiCo management has achieved in exploiting strategic fit

opportunities across business units, acquiring new businesses to strengthen the overall quality of its business line up$,$ and

increasing revenues and earnings in international markets. The issue in $2022$ is what further modifications to Pepsico's

corporate strategy are needed to increase shareholder value.

Before completing these exercises, be sure to read the Pepsico Case.

Does PepsiCo's portfolio exhibit good resource fit? What are the cash flow characteristics of each of PepsiCo's seven segments?

Which businesses are the strongest contributors to PepsiCo's free cash flows?

Select "yes" for those statements below that are accurate and choose $"$no$"$ for those that are not.

PepsiCo's portfolio has good resource fit with the company's businesses generating free cash flows of $$6\mathrm{.}4$ billion in $2020$ and nearly

$$7\mathrm{.}2$ billion in $2021.$

$]$

Frito$-$Lay North America and PepsiCo Beverages North America business units generate the vast majority of cash flows.

All business units produce ample cash flows with Europe and Latin America each contributing approximately $$1$ billion in free cash

flows in $2021.$

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PepsiCo Beverages North America unit has far lower operating profit margins relative to Frito$-$Lay North America and Quaker Foods

North America but compares favorably with PepsiCo's Europe business units.

Frito$-$Lay Latin America exhibits the strongest operating profit among Frito$-$Lay North America, Quaker Foods North America, and

Pepsico Beverages and international units.

All PepsiCo units are strong and contribute to shareholder value.

All international units generate the vast majority of cash flows.