Memo PepsiCo through the years has been able to successfully grow and expand as a company. One primary reason for this growth has been PepsiCo’s successful development of new products. The other primary reason for the growth of the company has been their innovation by acquisition strategy, which involves the acquisition of outside companies that have greatly added value to PepsiCo’s operations. However, because of the increased competition in the market and stagnated growth over the last year of the company, as evidenced by the .3% one year annual growth in net income versus the 18.7% average growth rate in net income over the last five years (Exhibit 3), PepsiCo must continue to expand. One method for expansion is the possible acquisitions of Carts of Colorado (CoC) and/or California Pizza Kitchen (CPK). PepsiCo must decide if these companies are strategically and financially a sound step for them to take. After analyzing both of these companies in terms of their strategic components and their financial standing, it would be in PepsiCo’s best interest to acquire both companies. Strategically, CoC and CPK can provide much value for PepsiCo’s future growth. Also, these companies offer convenience, value, and variety to PepsiCo. CoC offers PepsiCo a unique opportunity to integrate and connect PepsiCo’s existing businesses vertically. Because CoC would also provide a manufacturer of ‘outlets’ for the existing businesses, PepsiCo would benefit from being able to control their manufacturing costs and tailoring of Carts. Similar to CoC, CPK also has a value proposition that PepsiCo can greatly capitalize on. CPK is a restaurant radically different to those that PepsiCo already owns, providing variety to the company. To PepsiCo, CPK represents a new segment that is rapidly growing in the industry. The purchase of CoC by PepsiCo is the acquisition of a unique tool. Strategically CoC is very well positioned for the future, as evidenced by analyzing a SWOT analysis of...