Marketing Decisions When it comes to the roles of gaining knowledge within the soft drinks and snack companies, PepsiCo analyzes the worldwide market to pick up on emerging trends. PepsiCo formed in 1965 when there was a merger between Pepsi-Cola and Frito-Lay. After the merger, PepsiCo had the soft drink and snack industry at a different angle; it was a duel market that had enormous growth potential. Several products were already on the market and new ideas of snacks and sodas continued in the United States. In 1966 PepsiCo entered the market in Japan and Eastern Europe and by 1973 plans were made to distribute its products internationally.
Developed markets slowdown The company gets a majority of revenues from the developed markets. However developed region like USA, Japan, and Europe are experiencing a GDP slowdown which is badly affecting most consumer goods players. 4. Competition is growing from new entrants Pepsi and Coca Cola form a duopoly that dominates the global soda market. However, Pepsi is facing threats from entry of new players into this markets which threaten its fat margins.
Overall, both companies seem to be improving which can be seen from the Horizontal Analysis and Vertical Analysis. When determining which company has the most to offer it is necessary to look at each set of numbers from several different views. We will be covering vertical and horizontal analysis, profitability, solvency, and liquidity ratios to two of the biggest beverage companies today. Explaining how each set of results play into the decision making of which company would be best to invest. Comparing both companies numbers we are able to collect data to give us a better calculated decision.
THE BEVERAGE BATTLEFIELD In 2007, the President and CEO of Coca-Cola asserted that Cokehas had a rather rough run in India; but now it seems to be gettingits positioning right. Similarly, PepsiCo’s Asia chief asserted thatIndia is the beverage battleﬁeld for this decade and beyond.Even though the government had opened its doors wide to for-eign companies, the experience of the world’s two giant soft drinkscompanies in India during the 1990s and the beginning of the newmillennium was not a happy one. Both companies experienced arange of unexpected problems and difﬁcult situations that led themto recognize that competing in India requires special knowledge,skills, and local expertise. In many ways, Coke and Pepsi manag-ers had to learn the hard way that “what works here” does notalways “work there.” “The environment in India is challenging, butwe’re learning how to crack it,” says an industry leader. THE INDIAN SOFT DRINKSINDUSTRY In India, over 45 percent of the soft drinks industry in 1993 con-sisted of small manufacturers.
Analysis of the Problem 1. Aggressive Growth: Once Krispy Kreme went public, there was enormous pressure for public companies to grow and sustain growth quarter after quarter. KKD was growing 20% year and went from 144 stores to 427 stores in 45 states and four foreign countries, from 2000-2004. Krispy Kreme focused on growing revenues and profits at the parent level, while it outlets struggled. This was evident in their business model/ revenue breakdown.
Strong market position allows the company to launch new products and also increases its bargaining power in the market. However, the high transportation cost resulting from the higher oil prices has increased PepsiCo’s shipping and handling cost from $4.1 billion in 2005 to $5.1 billion in 2007. Given the intense competition in the market, the company may not be able to pass on increases in operating costs to its customers. High oil prices would adversely affect the margins of the company. Page 1 of 2 PepsiCo SWOT Analysis Strengths, Weaknesses, Opportunities and Threats (SWOT) Location of Factor TYPE OF FACTOR Favorable Internal Strengths Unfavorable Weaknesses Strong market
However, PepsiCo uses assets more efficiently and the return on stockholders’ equity is higher than Coca-Cola. We thank you for affording us the opportunity to work with you on this project. We will be glad to discuss any questions you may have at our meeting next week. Sincerely Learning Team A A REPORT OF COCA-COLA COMPANY AND PEPSICO, INC. Submitted: May 27, 2014 Prepared by: L. BELFORT R. ARNOLD E. WATSON V. ROBINSON Executive Summary Assigned to the task of comparing financial analysis of two companies; The Coca-Cola Company and PepsiCo, Inc., team A calculated three sets of ratios to test and compare liquidity, solvency, and profitability.
He started producing the ﬂavoring syrup in his basement and shipping it out to other drugstores in the region. By 1902 the formula was so successful that he decided to ﬁle incorporation papers to expand into Virginia, Maryland, Pennsylvania, and New York. Now, more than a hundred years later, PepsiCo has developed into a global giant with sales in the range of $21 billion per year and a global sales force of 63,000 people. The current corporate entity of PepsiCo truly began in 1965 when Pepsi-Cola, under the leadership of Donald Kendall, and Frito-Lay, under the direction of Herman W. Lay, merged their companies to
Explain. Answer: The strategically relevant components of the global and U.S. beverage industry macro-environment are: Global beverage companies such as Coca Cola and PepsiCo have relied on alternative beverages to sustain in volume growth in mature markets where consumers were reducing their consumption of carbonated soft drinks. Coca-Cola, PepsiCo, and other beverage companies have made various attempts at increasing the size of the market for alternative beverages by extending existing product lines and developing altogether new products internationally. The primary concern of most producers of alternative beverages was how to best improve their competitive standing in the market place. The global beverage industry was projected to grow from $1.58 trillion in 2009 to nearly $1.78 trillion in 2014.
Although both kings of carbonated drinks have made and continue to make outstanding inconceivable amounts of profit every year; over this past century, both have tried to outdo each other; Pepsi Cola, by investing in teas, bottled water, and even snacks, and Coca Cola by reinvesting in other flavored carbonated drinks. Adding more to their product lines, these two companies are in constant need of investors, and this paper intends to analyze, compare, and come to a decision as to which company, would be a wise choice for investment over the other. This Analysis will comprise of a vertical analysis,