In the industry attractiveness/business strength matrix diagram that follows, drag and drop each of PepsiCos business units to the appropriate circles. Note that the 9-cell matrix is based on the industry attractiveness and competitive strength ratings.

a. Most of the industries represented in PepsiCos portfolio are relatively unattractive. (Click to select) True False

b. The industries represented in PepsiCos portfolio are all relatively attractive. (Click to select) True False

c. Most of PepsiCos businesses have relatively weak competitive positions. (Click to select) True False

d. All of PepsiCos businesses except Gatorade have strong competitive positions. (Click to select) True False

e. None of PepsiCos business units should be considered as candidates for divestiture based on industry attractiveness. (Click to select) True False

f. Quaker Cereals business position is not strong or attractive, but they are growing in relation to other business units. (Click to select) True False

Students will choose from the following list of PepsiCos portfolio/business units and drag and drop into the correct circle according to long-term industry attractiveness and competitive strength/position: Aunt Jemima Quaker Oatmeal Tropicana/Dole/SoBe Lipton/SoBe Teas Pepsi-Cola Gatorade AquafinarLIFEWTR/Bubly Frito-Lay Rice-A-R

a. Substantial cost sharing and skills transfer opportunities exist between PepsiCos beverage brands and between its various snack brands, but there appear to be less strategic fit opportunities across business platforms. (Click to select) Yes No

b. There are few, if any, cost sharing and skill transfer opportunities between PepsiCos beverage brands and between its various snack brands. (Click to select) Yes No

c. The operating processes vary greatly between bottled water and functional beverage bottling, soft drink concentrate production, grain-based food products production, and snack food production, making it difficult to find any value-chain match-ups. (Click to select) Yes No

d. Beyond PepsiCos corporate-wide purchases for ingredients and packaging materials, it is unlikely that PepsiCo managers could find ways to share costs or transfer skills between businesses. (Click to select) Yes No

e. The companys research and development activities directed at creating BFY and GFY products are unlikely to benefit all businesses within a division. (Click to select) Yes No

f. PepsiCos transfer of best practices between 200 plants, 3,500 distribution systems, and 120,000 service routes around the world is another example of such strategic fit. (Click to select) Yes No

g. PepsiCo management shares market research and relies heavily on marketing innovations to position its brands in each market in which it competes; consumers in each of these markets have much in common and it should be expected that PepsiCo managers share skills and information in crafting and implementing the strategies of each of the businesses. (Click to select) Yes No

h. Consumers in each market in which PepsiCo competes have so little in common that sharing marketing research and marketing innovations is unlikely to be of any value. (Click to select) Yes No

i. The Power of One strategy allows products to be cross-marketed in retail locations and is an example of marketing-related strategic fit. (Click to select) Yes No

j. The Quaker Oats integration produced a number of noteworthy strategic fit successes, including $160 million in cost savings resulting from corporate wide procurement of product ingredients and packaging materials and an estimated $40 million in cost savings attributed to the joint distribution of Quaker snacks and Frito-Lay products. (Click to select) Yes No

The operations, sales and marketing, and advertising/promotion of Quakers hot and RTE cereals, flavored grains, and other breakfast products have much in common with value chain activities of PepsiCos convenience foods and beverages.

a. PepsiCos portfolio has very good resource fit, with the companys businesses generating free cash flows of $8.1 billion in 2015, $7.7 billion in 2016, and $7.2 billion in 2017. (Click to select) Yes No

b. In 2017, the Frito-Lay North American business segment had an estimated cash flow of $4.6 billion, which was highest among the six business segments. (Click to select) Yes No

c. In 2017, the North American Beverages business segment had an estimated cash flow of $2.3 billion, which was second highest among the six business segments. (Click to select) Yes No

d. In 2017, the Asia, Middle East, and North Africa business segment had an estimated cash flow of $1 billion, the third highest among the six business segments. (Click to select) Yes No

e. Latin Americas Operating profit in 2017 increased from $887 million to $908 million. (Click to select) Yes No

f. Frito Lay North America operating profit margins gradually increased from 2015 to 2017. (Click to select) Yes No

g. North America Beverage's operating profit margins increased by 10% between 2016 and 2017. (Click to select) Yes No

h. Asia, Middle East and North Africa business Unit reported the greatest increase in in operating profit margin (approx. 8%). (Click to select) Yes No

i. PepsiCos Frito-Lay North America and North America Beverage's business units generate the vast majority of cash flows. (Click to select) Yes No

j. With the exception of the Latin America business unit in 2015, all business units had very healthy positive cash flows in each year between 2015 and 2017. (Click to select) Yes No

k. Due to large annual capital expenditures, PepsiCo International has been unable to generate positive cash flows during the 2015 - 2017 timeframe. (Click to select) Yes No

l. The North American Beverage's unit has far lower operating profit margins relative to Frito-Lay North America and Quaker Foods North America but compares favorably with PepsiCos international business units. (Click to select) Yes No

m. Between 2015 and 2016 most of the business units reported either losses or very small gains in operating profits.

a. PepsiCos chief managers have been able to build a collection of food and beverage brands capable of providing shareholders with the opportunity for above-average market returns. (Click to select) Yes No

b. PepsiCos stock price performance has been unimpressive over the past four years (2015 2018) with a decrease of around 12%. (Click to select) Yes No

c. The companys shares have declined from a peak of $120 per share in January 2018 to about $105 in mid-2018 and have appreciated by only about half the rate of the S&P 500 since mid-2016. (Click to select) Yes No

d. The companys businesses all hold impressive positions in their respective industries and some have outstanding potential for growth. (Click to select) Yes No

e. It is likely that the sales of soft drinks and snack foods will grow quickly along with the current annual growth rates. (Click to select) Yes No

f. PepsiCo has the potential to increase Gatorades sales outside of the U.S. and Frito-Lays focus on developing BFY and GFY snacks is likely to contribute to revenue and volume gains in developed countries where health and fitness are growing concerns of consumers. (Click to select) Yes No

g. There is some question concerning the ability to gain synergistic benefits between some of Quakers food businesses and PepsiCos convenience food and beverage businesses, but the cash flow analysis and operating profit margins suggest that these businesses do have the ability to contribute to increased shareholder value through their impressive cash flows and stellar profit margins.