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Pepsi Grows Potatoes in China  
Product Ref: 07/337C Company: Lay's
PepsiCo Inc.

Product Type: Case Industry: Packaged Foods

Related Product(s): Teaching Note
Authors: Jiangyong Lu   Zhigang Tao   Grace Loo
PepsiCo introduced Lays potato chips to China in 1997. As its chips business grew, it faced increasing difficulties in securing a reliable supply of quality potatoes. In the North American market, Pepsi relied on external suppliers for its potatoes, but in China, it ran into problems sourcing locally and also had trouble in getting its US supplier to grow potatoes on its behalf. The matter was further complicated by the fact that the Chinese government banned the import of potatoes. Faced with numerous obstacles in sourcing potatoes in China, how should Pepsi go about securing this critical input? Should it rely on external suppliers, given China¡¦s immature agribusiness industry, or should it integrate backwards to grow its own potatoes?
Functional Area : Production & Operations Management

Issues: Integration, Outsourcing
Length: Text: 10 pages
Exhibits: 1 pages
Country: China (People's Rep. of)

Pub. Year: 2008 Level of Difficulty: 1
This product type is available in the following language(s):      English
Related Information: Integration, Outourcing, Supply Chain
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