Pepsico's 'Focus' Strategy
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PepsiCo was formed in 1965 by the merger of Pepsi-Cola and Frito-Lay5 (#1 maker of snack chips in the world). The company's popular drink, Pepsi-Cola6 had been invented in 1898. In a bid to generate faster growth for the company, PepsiCo diversified into the restaurant business through a series of takeovers. It purchased Pizza Hut in 1977, Taco Bell in 1978 and Kentucky Fried Chicken in 1986. Soon, PepsiCo emerged as a world leader in the restaurant business.
The company also took up aggressive re-franchising to improve financial returns and restaurant operations. With revenues of $17.80 bn, in 1990, PepsiCo was ranked among the top 25 of the Fortune 500 companies. By 1995, PepsiCo's sales had crossed $30.42 bn, and with 480,000 employees, Pepsi had become the third largest employer in the world after Wal-Mart and GM.
5] Frito Lay's snack food operations started in 1932 when two separate events took place. In Texas, Elmer Doolin bought the recipe for an unknown product. The product was Fritos brand corn chips and his firm became the Frito Company. That same year in Nashville, Herman W. Lay started his own business distributing potato chips. Lay later bought the company that supplied him with the product and changed its name to HW Lay. The Frito Company and HW Lay merged in 1961 to become Frito-Lay.
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