Use managerial economics to compare and contrast the value-generation potential of the following:
1. A soft drink company’s merger with a long-haul trucking company, described by the former’s CEO: “This is a great merger: the two products are unrelated, but their joint ownership will reduce our shipping costs; our earnings volatility will decrease as a result of the merger; and our management team is stronger than the former management team at the trucking company – thus, we will discover new ways to create and capture value within the trucking company.”
2. Pepsi’s production of Fritos corn chips and Lays potato chips in addition to its soft drink products.