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How Does It Take Pepsi Go To Gatorade?

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The history of the current issue is that PepsiCo, Inc, and the Quaker Oats

Company issued a joint press release about the decision to merge. The merge says that

Pepsi would get Quaker Oats in a stock for stock deal valuing Quaker at around 14

million dollars. After this announcement observers saw this merge as another set back for

Coca-Cola. If Pepsi gets this deal on then it would be gaining control of 83.6 percent of

the soft drinks. This is really a good deal to Pepsi and it will open the opportunity to its

other product like Gatorade. PepsiCo has already gained control tremendously well-built

brands in the noncarbonated-beverages sector. Some of the drinks that have gained

control are Aquafina, Tropicana, and Lipton, it would consolidate on Gatorade.

Some …show more content…

The difference between horizontal and vertical integrations is that vertical

integration typically expands into another product stage rather than merging or acquiring

the company in the same production stage. For example a company is vertically

integrating if it expands from manufacturing industry to retailing industry. In the other

hand Horizontal Integration would mean buying other firms in the same manufacturing

industry.

Advantages of horizontal integration are lower cost, in a large company like

Quaker and PepsiCo that produces more products world wide. The higher output leads to

better economies of amount and higher competence. It also add to differentiation, once

products are joint there is more to offer in terms of product features, customers have a

wide range of choice. It also increases the market power; the larger company has more

power over its suppliers, distributors, and consumers. Competition is bargained, this is

because the companies that were on the same level contribution same kind of products

have consolidated and are working together, and this lessens the intense competition

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