Question: First off, thanks for your post. One thing I found out about Taco Bell is that with fast food outlets accounting for more than 90% of Taco Bell's revenues, the company uses minimal diversification strategies. Taco Bell, as far as I'm aware, has diversified through the expansion of its menu items, maximizing the economies of scope provided by having readily reconfigurable commodities and palatable flavors, allowing them to offer a wide range of options without unduly complicating the needs of their supply chain. In the end, even while the benefits of vertical integration did manifest, expanding into the restaurant sector, where there was room for expansion, also exposed PepsiCo to significant financial risk. What are your thoughts on when Taco Bell experimented with the Cantina Menu?
My Post: Companies always strive to create value for workers, clients, investors, and owners. One of the ways to increase value for the stakeholders is through implementing diversification strategies or vertical integration. Vertical integration is when a company advances its value chain. For example, automobile companies can produce and sell vehicles directly to their clients. Moreover, diversification is where companies decide to expand the products it offers to the market. Companies can choose to follow diversification or vertical integration under three main categories. The first category is opportunity relating to the company's market of operation, which might significantly impact their choice of diversity. An example of a company that implemented a market-related is Taco Bell. It decided to expand its offerings by introducing breakfast, which it did not initially offer its clients (Molina, 2021). It successfully introduced breakfast for its customers through recognition and following the market-related opportunity. Another category is management-related opportunities. In this situation, the company expands in production of products and services unrelated to the initial services or goods they produced. For example, Walmart used only to operate a chain of hypermarkets, grocery stores, and discount department stores. However, it has entered into banking in the services it provides to its customers. The expansion into banking has significantly helped Walmart to keep its clients and boost its retail position (Schwab, 2021). Opportunities related to primary operations are another avenue of integration or diversification. An example of a company that utilized the operation-related opportunity is Microsoft company. Microsoft company started by producing hardware devices such as the Xbox gaming console. Microsoft also started producing software services used by other companies to manufacture computers. Later, Microsoft Inc. realized an operation-related opportunity and began producing computers it sells to its customers.