Blog #2 (F. 19)

Blog #2 (Fall 2019): Internal Organizational Analysis and Developing Strategic Options

Like everyday people, most companies are (perhaps unsurprisingly) bad at self-reflection. Results-oriented strategy development requires near constant re-/evaluation, and deep assessment of a firm’s capabilities matched with its market positioning — what Leinwand and Mainardi refer to as coherence.¹ Misalignment in these two key factors can lead to disastrous decision-making. A closer look at the Quaker Oats Company’s acquisition of Snapple demonstrates how corporate incoherence can lead to a costly misstep.

False synergies are but one way that firms can miscalculate their coherence strategy. Encouraged by the success of its earlier Gatorade acquisition, Quaker Oats saw a new opportunity to expand its model in the beverage market by purchasing Snapple Corp. The synergies seemed clear — Quaker Oats gained experience with marketing a growingly popular sports-drink, which they could then leverage to sell Snapple’s line of juices and teas.² Yet the company failed to see the many areas in which the acquisition was not coherent with Quaker Oat’s current strengths or strategies. After twenty-seven months and a $1.7 billion price tag, Quaker Oats sold Snapple for a mere $300 million.³

A clash of systems, particularly in distribution, stifled the merger’s success. Whereas Gatorade and other Quaker Oats products were sold typically sold in supermarkets, Snapple bottles were sold individually in convenience stores. ⁴ Further diluting Snapple’s profitability was competition from substitute products developed at Coca-Cola and PepsiCo. The Snapple distribution model was largely incoherent with Quaker Oats’ positioning and capabilities.

Deeper introspection, research, and some strategic re-alignment might have prevented the massive losses for Quaker Oats. The brand had clearly been prepared to bet on itself — paying for Snapple what analysts believed was far above the beverage company’s value. A deeper assessment of the acquisition’s liabilities, advantages, and opportunity areas might have elucidated the drawbacks. Knowing that consensus is a dangerous term in high impact decision-making, the addition of a devil’s advocate might have brought valuable perspective prior to the acquisition.

Other examples of acquisition failures predate the Quaker Oats study of the late-1990s. Today’s strategy developers have more cases still as new instances of company incoherence add to the canon of business case disasters. These cases remind us the old adage remains true: Those who do not learn history are doomed to repeat it.


1. Leinwand, Paul, and Cesare Mainardi. “The Coherence Premium.” Harvard Business Review, June 1, 2010. https://hbr.org/2010/06/the-coherence-premium.
2. Peltz, James. “Quaker-Snapple: $1.4 Billion Is Down the Drain.” Los Angeles Times, March 28, 1997. https://www.latimes.com/archives/la-xpm-1997-03-28-fi-42931-story.html.
3. Carroll, Paul, and Chunka Mui. “Seven Ways to Fail Big.” Harvard Business Review, September 1, 2008. https://hbr.org/2008/09/seven-ways-to-fail-big.
4. Peltz, 1997.