Category: Pepsi

Coca-Cola is an American multinational company and the world’s largest beverage manufacturer. More than five hundred brands of non-alcoholic beverages are directly attributable to Coca-Cola through direct ownership, licensing, and marketing (Coca-Cola, 2021). Some of the company’s main products include Coca-Cola Classic, Diet Coke, Fanta, Sprite, Minute Maid, and others. The company’s products get to consumers through a vast network of company-owned or controlled bottling and distributors, partners, wholesalers, and retailers.

The sale of Coca-Cocal’s non-alcoholic ready-to-drink beverages is affected by seasons with the last two quarters of a calendar year accounting for the highest percent of yearly sales. In addition, the beverages industry is highly competitive with competitors ranging from small companies to large multinationals. Pepsi Co. is Coca-Cola’s primary competitor in all the markets where Coca-Cola does business. Other significant competitors include Nestle, Keurig Dr. Pepper, The Kraft Heinz Company, Unilever, and several others (Coca-Cola, 2021).

Pepsi Co.

Pepsi is another multinational food and beverage company headquartered in the United States but with subsidiaries in multiple countries globally. Some of Pepsi’s main products include Pepsi Cola, Mountain Dew, Diet Pepsi, Tropicana, and many others. It was registered in 1919 in Delaware and since then it has built a portfolio of hundreds of food and beverages brands that are enjoyed in more than 200 countries (Pepsi, 2021). Pepsi’s products get to the customers through three major channels, direct store delivery, distributor network, and customer warehouse.

Pepsi’s business is also affected by seasonal variations whereby the sale of beverages is higher in warmer months while the sale of some dairy and food products is higher in cooler months. Beverage sales are generally higher in the third quarter primarily because of seasonal and holiday-related patterns. In addition, Pepsi faces intense competition from other food and beverage manufacturers with Coca-Cola being its primary competitor. Other significant competitors include Kellog Company, Nestle S.A, Monster Beverage Corporation, and several others (Pepsi, 2021).

Keurig Dr. Pepper

Keurig Dr. Pepper Inc is among the leading beverage manufacturers in the United States with its portfolio comprising carbonated soft drinks, non-carbonated soft drinks, and specialty coffee. The company’s main products include 7 Up, A&W Root Beer, A&W soda, and others. In 2018, Dr. Pepper Snapple Group, Inc. and Keurig Green Mountain, Inc. merged to form Keurig Dr. Pepper bringing together iconic companies that could challenge the dominant powers of Coca-Cola and Pepsi (Keurig Dr. Pepper, 2021). The consolidated company’s products are sold in the United States, Canada, Mexico, Europe, and Asia.

As a relatively smaller company compared with Pepsi and Coca-Cola, Keurig Dr. Pepper faces intense competition from these giants and other companies such as Reb Bull, Monster Energy, The Kraft Heinz Company, and The J.M. Smucker Company, among others. Beverage sales by the company are also affected by seasonality whereby cooler beverages’ sales are higher during warm seasons and vice versa.

Current Ratio

The current ratio is calculated by diving current assets with current liabilities (Mbona & Yusheng, 2019). Coca-Cola, Pepsi, and Keurig Dr. Pepper’s current ratios are 1.13, 0.83, and 0.47 respectively. The current ratio is an important liquidity indicator because it shows the number of times current assets can cover existing current liabilities. Ideally, current assets should double current liabilities. From the results of both current and quick ratios below, Coca-Cola is better positioned in terms of liquidity compared with Pepsi and Keurig Dr. Pepper. However, no company has the ideal current ratio of 2 indicating a need to boost liquidity by all three companies. With current liabilities above current assets, Pepsi and Keurig DR. Pepper may be forced to seek external financing if a serious need arises to clear the outstanding current liabilities. Further, only Coca-Cola has a net positive working capital (22,545 – 19,950) emphasizing the tight liquidity spot that Pepsi and Keurig Dr. Pepper are in. Finally, there are no other factors erroneously influencing the results of both ratios because the latest information from SEC 10K Form filings is used to calculate them.

Quick Ratio

The quick ratio is an improved current ratio calculated by dividing the difference between current assets and prepaid expenses by current liabilities (Mbona & Yusheng, 2019). The quick ratio for Coca-Cola, Pepsi, and Keurig Dr. Pepper are 0.98, 0.79, and 0.40 respectively. It is preferred by investors because it estimates liquidity conservatively. Additionally, the higher the ratio, the better for a company.

Gross Profit Percentage

The gross profit percentage ratio is calculated by diving gross profit by total revenues. It measures how efficiently a company makes money by selling its goods and services (Mbona & Yusheng, 2019). The gross profit percentage for Coca-Cola, Pepsi, and Keurig Dr. Pepper is 60.27%, 53.35%, and 55.01 % respectively.

Inventory Turnover

Average inventory is calculated by diving net sales by the average inventory (Mbona & Yusheng, 2019). This ratio is important because it shows the number of times a business has sold inventory. The inventories turnover for Coca-Cola, Pepsi, and Keurig Dr. Pepper are 11.57, 18.66, and 15.31 respectively.

Asset Turnover

This ratio is calculated by diving net sales by average total assets. The ratio shows how efficiently a company is utilizing assets to generate revenues (Mbona & Yusheng, 2019). The asset turnover of the three companies is shown in the table below.

Accounts Receivable Turnover

It is calculated by diving net credit sales with the average accounts receivable (Mbona & Yusheng, 2019). The ratio shows the number of times a company collects its accounts receivables. Below is the inventory turnover for the three companies.

Comparison of Accounting Methods

Accounts Receivables

The allowance method anticipates that a certain percentage of goods sold on credit will not be paid while direct write-off advocates writing off debt only after a creditor fails to honor payment (Mbona & Yusheng, 2019). All three companies use the allowance method to account for unrecoverable debt. The allowance amount is determined by a company after assessing customers’ credit history, economic trends, market segmentation, and other information.

Depreciation

The straight-line depreciation method reduces the value of an asset with equal amounts over its useful life. In contrast, the double-declining balance method is an accelerated depreciation method as opposed to equal amounts in straight-line depreciation. The unit of production method on the other hand relies exclusively on physical output and assigns an equal amount of depreciation for every unit produced (Mbona & Yusheng, 2019). Keurig Dr. Pepper, Pepsi, and Coca-Cola use the straight-line depreciation method.

LIFO and FIFO

LIFO is an acronym meaning Last In First Out (LIFO) which means the stock that comes in last is sold first. FIFO (First In First Out) means the stock that comes in first is sold first (Mbona & Yusheng, 2019). Pepsi uses LIFO primarily and FIFO in very limited instances, Coca-Cola and Keurig Dr. Pepper use FIFO.

Intangible Assets

The various categories of intangible assets include copyrights and patents, leasehold interest, contractual agreements, customer relationships, and the company brand. For Coca-Cola, Pepsi, and Keurig Dr. Pepper, intangible assets are recorded at fair value and tested regularly for impairment.

Recommendation

I would recommend that one invests in Coca-Cola, Pepsi, and Keurig Dr. Pepper. This recommendation is informed by the analysis of the companies’ financial ratios. In particular, their liquidity is not severely strained with Coca-Cola’s current ratio being 1.13 which is enough to cover current liabilities. Further, Pepsi has an asset turnover of 0.86 indicating a particularly high level of efficiency. For a smaller company, Keurig Dr. Pepper has a particularly high gross profit percentage indicating an efficiency in product sales by the company. The other ratios also depict a positive trend as the companies show effective usage of assets to generate profits and a more than 50 percent gross profit percentage. Notably, none of the companies analyzed recorded a loss during the fiscal year. Some of the strengths apparent during this analysis are the existence of universally recognizable products and higher efficiency in selling products and earning profits from those sales. However, there is a risk of seasonality in sales and risks associated with hostile legislation that could limit the sale of some products.

References

Coca-Cola. (2021). Coca-Cola – Form 10 – K. Coca-Cola. Web.

Keurig Dr. Pepper. (2021). Keurig Dr. Pepper – Form 10 – K. Keurig Dr. Pepper. Web.

Mbona, R. M., & Yusheng, K. (2019). Financial statement analysis. Asian Journal of Accounting Research, 4(2), 233–245. Web.

Pepsi. (2021). Pepsi – Form 10 – K. Pepsico. Web.

Appendix: Pepsi, Coca-Cola, and Keurig Dr. Pepper

Pepsi Financial Statements

Coca-Cola Financial Statements

Keurig Dr. Pepper Financial Statements

Introduction

Competitor Analysis is an integral part of corporate and market planning process and involves the assessment of the strengths and weaknesses of actual and potential business rivals (Murray, 2006). An analysis of competitors helps organizations to identify current gaps in satisfaction of customers as well as the potential threats posed by these competitors; it is therefore an important tool for organizations to acquire and sustain competitive advantage.

Competitor analysis does not limit itself to Companies often operating in the same market which targets customers with similar products but is wider and seeks to involve all those Companies that target the market segment in which the particular Company is interested in. The identification of both direct and indirect competitors is more effective than narrow definition of competitors that directly compete with a organization as commonly happens when undertaking competitor analysis.

Definition of Industry

This is the first place to start when undertaking the process of competitor analysis because one requires a broad definition of the industry the company operates in. The industry that Pepsi operates in is the non-alcoholic beverage industry that a consumer takes with at least one of the following objective; to quench thirst, for refreshment, for enjoyment or for health purposes.

These drinks include bottled water, carbonated drinks, canned drinks, fruit juices drinks, mineral water and milk products among others which would imply that any Company that is involves in production of any of these products or related products is actually a Competitor to Pepsi Company.

Competitors

The most significant competitors for Pepsi Company are Coca-Cola and Dr Pepper Snapple; there are other smaller competitors but which are insignificant compared to these two global competitors (Pepsi.com, 2011). But coca-cola is the most important competitor amongst all because of its huge asset base, suppliers and distributors networks, product portfolio, innovativeness and global product popularity that is very similar to that of Pepsi. In fact the global soft drink industry is defined by the activities of these two multinationals.

Market Segment and Success Factors

The market can be defined as any person who needs a pleasant tasting non-alcoholic refreshment to quench his or her thirst. The refreshment should not have adverse side effect or cause medical or health conditions. The key success factors in the beverage industry are innovation, flavor, market size, customer loyalty and price among others (Murray, 2006).

This means that Companies must keep on recognizing needs and adjusting themselves to meet those needs (Murray, 2006). New flavors are continually being developed and are essential for promoting market penetration. Another factor is the size of the organization and its ability to operate efficiently; a large market size enables the firm to take advantage of economies of scale while at the same time guaranteeing global reach.

Brand loyalty has been identified as a key factor in this industry as consumers tend to be fiercely loyal. Price is another important factor in this market; the price must be competitive and must relate to the perceived benefits. Presentation is also important in this sector and packaging, advertising and corporate image is always kept polished. Finally, there is convenience which is an important factor as it ensures that the product has to be present in as many places as possible.

Main Competitor Analysis Coca Cola

Coca Cola was founded in1892 and it is headquartered in Atlanta, Georgia in the USA and is a global company; its current CEO and chairperson is Muktar Kent (Coca-cola.com, 2011). Its products include its main brand Coca-Cola other carbonated sodas and soft drinks, bottled water, packed juices and amongst others (Coca-cola.com, 2011).

The Company’s revenue for 2010 was estimated at about 35 billion and has a total asset base that exceeds 70 billion dollars (Coca-cola.com, 2011). The company operates in more those 200 countries where it sells over 400 products with Coca-cola being the leading brand in the world (Coca-cola.com, 2011).

It is the dominant player in the soft drink industry with its products coke and diet coke occupying the first two positions (Coca-cola.com, 2011) ahead of its rival Pepsi who had once claimed first position for many years. Coca-Cola’s major products include Fanta, Sprite, Minute Maid, Powerade, Nestea, Fruitopre, Dasani water amongst others and these products closely match with those of Pepsis products (Coca-cola.com, 2011).

References

Coca-cola.com. (2011). Soft Drinks & Beverage Products. Retrieved from https://www.coca-cola.com/

Murray, B. (2006). Carbonated Water, Hoovers. Web.

Pepsi.com. (2011). Pepsi. Retrieved from https://www.pepsi.com/en-us/

Introduction

This paper is an analysis of the operations management of PepsiCo Company. Operations management is critical for the success of any company and in this paper the significance of operations management is brought out by focusing on PepsiCo Company.

Background of PepsiCo

PepsiCo is a large company dealing with food, snacks and beverages; it is approximated to be worth $39 billion and has employed 185, 000 employees. The company comprise of three main divisions located in Latin America, North America and its international subsidiaries. Operational management is an important aspect in the modern corporate world; it an important part of an organization and a strategic department in the organizational structure.

The company offers a wide variety of products in order to meet customer demands, needs and preference. They select product choices that promote healthy lifestyles. PepsiCo is headquartered in the city of New York. Operations management is the design, operations and the improvement of an organization’s systems that facilitate the creation and the delivery of a company’s products and services. The company deals in the production of beverage products:

Diet Pepsi, Gatorade mountain dew, thirst quencher, Tropicana and Aquafina bottled mineral water, the company also deals with savory food snacks like Fritos corn chips, cheetos and lay potato chips; other products of the company are food products which include cereals and cakes. (Scribd, 2011, p. 4)

Operations Management at PepsiCo

Operations management is defined as the planning, scheduling and controlling of all the activities that can transform organizational inputs into finished goods and services. Operations management focuses on effective planning in an organization and the control of manufacturing through the application of such concepts as engineering, quality management, production management, accounting and management system.

Operational management entails the making use of all the resources available to produce finished products or services and to meet customers’ needs in a cost-effective manner. Operations management places a lot of focus on the management of the processes involved in production and distribution of the products. The processes involved in operations management are the creation and distribution of products (Heizer, & Render, 2011).

Other activities that are related to operations management are the management of purchases, controlling of inventory, quality control, storage and overall logistics. All these can be realized through efficient and effective processes (Heizer, & Render, 2011). Conclusively, it can be said that operations management is the set of all the activities which enhance the creation of goods and services by transforming inputs into outputs (Scribd, 2011).

Supply Chain

The supply chain in a company is aimed at maximizing the value of products generated. Supply value chain is considered as the difference between the value final products and the costs incurred at the time of filing the customer’s request.

The supply chain at PepsiCo is determined by the location and capacity of production, warehousing facilities and the products to be manufactured, storage and transportation. A good supply chain should be well planned and a firm supply chain strategy should be implemented. In PepsiCo, an important decision is where the production plant should be situated. PepsiCo has ensured that the production process is automated for efficiency.

The company also manages the transportation for the delivery of their products and they also have arrangement for third party for product procurement. The shipping department of the company is responsible for orders while the transport department decides matters of delivery to ensure that goods reach safely. In the company, material sourcing and planning is also an important stage of supply chain.

Regarding the source and the supply of raw materials, PepsiCo has identified both local and foreign suppliers who can supply raw materials at negotiated prices. At the stage of raw material supply, capacity building is necessary since the forecasting of sales and the planning of production depends on the capacity of this stage. All supplies to the company are audited by the quality control section. Distribution rests with the company’s decision and it depends on the past performance of the distributor.

The alignment between the supply chain strategy and PepsiCo’s business strategy is achieved through proper utilization and the deployment of supply chain drivers. Managing the supply chain process involves overseeing the relationship between suppliers and customers, controlling inventories and forecasting demand as well as getting feedback concerning what is happening in whichever link of the chain (Scribd, 2011).

Competitive Strategy

PepsiCo operates in a competitive and a challenging environment and it achieves its competitive edge by providing customized products and services that meet the tastes and preferences of its consumers. Competitive strategy examines how a company strives to achieve competitive advantage; competitive advantage is that extra edge that a firm has over other industry peers. The company’s capability to manage its operations can only be transformed into their competitive advantage if they identify and tap their resources.

There are three main aspects that give PepsiCo a competitive advantage in order to favorably compete at the international market, these are: muscular brands, proven ability for innovation and their powerful market systems. The company has a mission to increase the value of the investment of its shareholders and it tries to achieve this through sales growth, control of costs and investment of resources wisely.

The company believes that its commercial successes and competitiveness rest with provision of quality and value for its customers. It provides products that are safe, economically efficient and healthy. PepsiCo strives to maintain its competitive strategy by ensuring sufficient production of their goods, selling of their goods at reasonable prices and also ensures that the products are much available in the market (Bachmeier, 2009).

With the boom experienced in the food and beverage market, PepsiCo has developed a strategic plan which will enable them to at the top of their competitors by selling their goods at affordable and friendly prices, providing more healthy meals options and great and quality services for their customers. Health and safe foods are necessary especially in this era where people are increasingly becoming health conscious. This will give PepsiCo an upper hand over its competitors.

PepsiCo operates in a competitive and a challenging environment; it achieves its competitive edge by providing customized products and services. Without strategies, a company can not withstand the competition at the market. To maintain its competitiveness, PepsiCo employs competitive strategies that enable it to compete with seasoned players in the market like Coca-Cola.

It can only achieve this through ensuring that its marketing strategy is effective, its pricing is fair and that there is efficiency and quality in its production. The company’s competitive and supply chain characteristics are demonstrated below.

(Scribd, 2011)

Marketing and Distribution Strategies

The central reason as to why companies do not perform well is due to the strategy that they apply. Marketing strategy is one of organizational characteristic and it is instrumental to the performance of the company. For a company to respond effectively to market competition, good marketing strategies are a necessity.

PepsiCo has a well designed and developed local and international programs for marketing, promotion and advertising programs which have the potential to support its various brands and to enhance their brand image. The company also has an effective quality control department which is responsible for ensuring that quality of the products is maintained.

The promotion of programs is also charged with the responsibility of packaging and coordination of selling efforts. PepsiCo’s competitive strategy exists to provide a lot of products quickly and consequently, their supply chain materializes the availability of these products. The company employs various marketing and promotional strategies so as to enhance its volume of sales. The company, for example, contracted Tiger Woods to run a promotion on a Gatorade brand called Gatorade tiger.

Other notable promotional strategies are: the Pepsi throwback campaign which involves offering a drink with a sugar content of the original product. They also run a promotion with the NFL and super Bowl particularly to market Pepsi and Doritos. One mega promotion by the PepsiCo was the running of a promotion dubbed Pepsi stuff promotion which involved accumulation of points by the customers upon the purchase of any Pepsi product (Scribd, 2011).

Distribution Strategies

Concerning distribution, PepsiCo utilizes two main distribution strategies: direct and indirect distribution channels.

Direct distribution: this concerns the handling of important accounts; these important accounts are the different wholesalers, the restaurants and hotels, for example, Pizza hut, metro and KFC which are critical points of sale. These accounts are fundamental in terms of competition. Direct distribution also involves export parties.

Indirect distribution: this is achieved though several base market distributors as well as outstation distributors. Before settling for a distributor, there are guiding principles which are adhered to in assessing the capability of any distributor. These criteria include the fleet of vehicles which are run by the distributor, the number of cases of empty bottles and cash deposit to be used as a security.

In product distribution and manufacturing, the company utilizes distribution channels from the bottling plants up to the truck lines. PepsiCo has attempted to develop a system of product differentiation so as to distinguish their products from that of coke. Its main target market was the American teenage market.

It has focused its efforts on developing campaigns that enhance the culture of soft drinks in schools. It has sought to achieve this by developing and building contracts with America schools. The company distributes its products by use of vending machines (Bachmeier, 2009).

Inventory Methodology

Inventory management is a critical operation in any organization. This is because it involves identifying and selecting the best method of inventory control. Before selecting an organization’s method of controlling inventory, it is imperative to factor in mind the product demand.

There are different modes that companies consider in selecting their inventory methods but the common denominator is that companies should ensure their mix of inventory types can satisfy the demands of the customer and that it should deliver the needed profit and cash flow (Bachmeier, 2009).

Since PepsiCo operates in the food industry, inventory controls can be quite challenging due to the perishable nature of the goods; improper handling may lead to food-borne disease, this makes it necessary to have food-services inventory controls that can tract the movement of the goods, raw materials and products.

The inventory should be in position to tract several products at a go and particularly an entire quantity of stock from their destination, the inventories can also be tracked in batches, this is necessary since batches can be assigned codes or numbers that will facilitate the keeping of relevant data regarding the production process.

Operational Policies

Managing PepsiCo is a heavy task and being in charge of its daily operations is enormous duty and quite challenging. To achieve and to manage PepsiCo successfully, it is imperative that there should be adequate infrastructure and up to date information and communication technology. Fruits availability is at the centre of PepsiCo company policies since it is its primary product. The company communicates its policies to all those in the supply chain including their animal welfare policy.

PepsiCo has very strict corporate standards which guide their operations and accountability of its employees. PepsiCo polices take care of areas like corporate governance, human, environmental and talent sustainability. Human sustainability policies, for example, are programs like food and safety, responsible marketing and healthcare reforms. The company has tight environmental policy that guides its agriculture and packaging programs (PepsiCo, 2011).

Technology and Operations at PepsiCo

PepsiCo Company also utilizes technology in its operations. The launch of Social Vending System which is an interactive vending technology has facilitated the company’s connection with the customers at the purchase terminus. This technology enables the customers of PepsiCo to make gifts to their friends through the internet connection.

The use of telemetry has reaped a lot of benefits for the company’s operation. It facilitates close management of levels of inventory by the customers which can enable them to deliver schedule via a remote station without having to travel (PepsiCo, 2011). The company also signed a three year contract with Combine Net to use its Truckload manager so as to advance its truckload transportation network and to enhance efficiency in transportation (CombineNet, 2007).

Organizational Structure

PepsiCo is considered the pioneer and the king in the production of beverages. It is well known all over the globe for its trademark drink Pepsi and other Quaker products. In the year 2007, the company changed its organizational structure from two to three units. The company before 2007 had two units PepsiCo North America and PepsiCo international. After the restructuring, the company added one unit and the three units were “Pepsi America Foods, PepsiCo America beverages and PepsiCo international” (Scribd, 2011, p. 1).

PepsiCo is considered an organization fit for adaptation. The company is in continuous exercise of improvement and innovation so as to ensure their products fit the demand of the customers and furthermore maintain relevance in the market.

The organizational structure of the company is a decentralized one and decisions regarding operations are executed by different business units but are guided by the company policies and corporate ethics. The company is headed by a Chief Executive Officer (CEO). Under the CEO are Vice presidents who are in charge of various departments and all are answerable to the chairman and the board. The expansion from two to three units was as result of its rapid growth.

The company also has Scientific Advisory Board which report on the company’s corporate social responsibility and undertakes research relating to the challenges facing the company. The company also has regional advisory boards in its operations outside US who guide the company’s health, safety, compliance and innovation. The overall Chief Executive Officer (CEO) also doubles as the chairman of the company (PepsiCo, 2011).

Conclusion

Operations management is an important function in an organization since it concerns the relationship with the organization’s strategy. Operations management plays a key role in the development of a company strategy hence enhancing competitive advantage of the company. An example is the planning process which assists the organization in minimizing costs while gaining advantage in competitiveness and cost.

It is therefore necessary for an organization to manage its operations as a measure of boosting its organizational strategy. From the analysis of PepsiCo operation strategy, it is evident that consistency in production, innovative products and the quality of products are order winners whereas speed, cost, efficiency and innovation are the order qualifiers. This has resulted in an enhanced market share and massive consumer buying power.

PepsiCo is a market leader and a household name in the food and beverage industry. It has strong marketing strategy covering all its subsidiaries which are placed under the supervision of the mother company. Its prices, quality of the products and marketing brand enhance its competitiveness. Due to the strong nature of competition in the industry and shrinking market, there is need for a firm to have well designed strategies so as to maintain its market position.

References

Bachmeier, K. (2009). Analysis of Marketing Strategies Used by PepsiCo Based on Ansoff’s Theory. New York, NY: GRIN Verlag.

CombineNet. (2007). PepsiCo Chooses CombineNet’s Advanced Sourcing Technologies for North American Transportation. Combine Net. Web.

Heizer, J., & Render, B. (2011). Operations management (10th ed.). Boston, MA: Prentice-Hall.

PepsiCo. (2011). PepsiCo Introduces Social Vending System, the Next Generation in Interactive Vend Technology. PepsiCo. Web.

Scribd. (2011). Operations management problem in Pepsi. Scribd. Web.

Introduction

• The Soft drinks industry has grown due to entrances of new players in the industry.
• Coca Cola and PepsiCo are the leaders in soft drinks market.
• Coca Cola’s headquarter is in Georgia and it operates over 200 companies world wide.
• PepsiCo manufactures carbonated drinks and has numerous brands of non-alcoholic soft drinks across the globe.

The soft drinks industry has grown immensely over the years as different industry players struggle to achieve market leadership and control over their competitors. The Coca Cola Company and PepsiCo are notably the global industry leaders as far as soft drinks are concerned. From high annual profits to huge expenditures in marketing activities and popular brands, Coca Cola and PepsiCo are undoubtedly the unbeatable leaders and players in this industry throughout the world. In their operations and business activities, nevertheless, the two companies have adopted different strategies to strengthen their market positions and activities.

Coca Cola is a multinational soft drink producing company headquartered in Georgia Atlanta (Dost, 2008). Presently, the company operates in 200 countries. Basically, the company manufactures highly concentrated syrup which is sold to various bottlers in different nations (Isdell, 2011).

On the other hand, Pepsi is a renowned manufacturer of a carbonated drink popularly known as Pepsi. The drink changed names to Pepsi Cola and later Pepsi during the great depression era. Currently, the company is operating in different nations with multiple brands of non-alcoholic soft drinks forming a list of widening products (Blanding, 2010).

Background Information about Coca Cola

• In 1886, John Pemberton mixed cola nut with coca leaf to get the modern Coca Cola ingredients.
• Initially, the ingredients comprised of fruit syrup and water, but later they replaced water with carbonated water.
• At the start, the company’s sales reached $50, which was less than $75 used to manufacture the drink.
• In 1894, Biedenharn became the first to bottle Coca Cola products.
• From 1905, the company embarked on advertisement and brand differentiation to mitigate competition .
• In 1916, the company opened overseas branches in Cuba, France, and Puerto Rico.
• World War II helped Coca Cola Company to expand into international market.
• In 1978, China allowed the company’s products into its local market.
• In 1985, Goizueta changed the Coca Cola taste for the first time.

Pharmacist John Pemberton in Atlanta, Georgia, accidentally formed Coca Cola in 1886 in his shop as he experimented on formulating a tonic that could cure headaches (Bodden, 2009). The resultant fruit syrup that is today’s Coca Cola ingredient was formed after mixing cola nut with coca leaf, among a collection of other ingredients. Pemberton and his business partner, Frank Robinson, introduced the mixture of fruit syrup and water into the market, with the latter suggesting the name ‘Coca Cola’ to be adopted as the brand name. The two business partners placed the first advertisement of the new product on the Atlanta Journal, with their original catch line being that the beverage was, ‘Delicious! Refreshing! Exhilarating! Invigorating!’ (Bodden, 2009).

The new beverage began selling in Atlanta’s largest drug store, Jacob’s Pharmacy, where it was sold to consumers as soda. Its main ingredients, however, included the fruit syrup and water only. However, it was at Jacob’s Pharmacy that carbonated water was used in the mixture, replacing plain water as an ingredient. Customers liked the new taste, a factor that saw the drink being sold as a carbonated beverage throughout Atlanta (Bodden, 2009). Initial sales only reached $50, which was less than the $75 cost that both Pemberton and Robinson had used in expenses (Bodden, 2009). Pemberton later sold his shares to partners in the business shortly before his death in 1888 following poor health. Asa G. Candler, a doctor and pharmacist based in Atlanta, later acquired the rest of the shares from Coca Cola’s shareholders, spending $ 2,300 in total. The Coca Cola Company was formed the next year under Candler’s watch (Bodden, 2009).

Joseph Biedenharn, a businessperson hailing from Mississippi, became the first one to bottle Coca Cola products in 1894. This set a very important business precedent for the company, which today relies heavily on independent bottlers for its business. Five years later, in 1899, two lawyers Joseph B. Whitehead and Benjamin F. Thomas won themselves exclusive rights to carry out bottling of the beverage and sell out to consumers. The period after 1905 particularly saw the company focus its attention on increased advertisement even as the problem of imitations in the market became imminent (Coca-Cola, 2011). Advertisement messages by the firm stressed on the need for consumers to ensure that they always bought and consumed genuine Coca Cola products and not substitutes. As a way of differentiating itself in the market, Coca Cola opted to introduce a new and distinct bottle shape in the market. The contour bottle, remains to be the signature shape associated with the Company, was first manufactured in 1916. These developments came at the same time when growth of the company was gaining strong momentum, with Coca Cola establishing presence in the international market for the first time in Cuba, Puerto Rico, as well as France (Coca-Cola, 2011).

Coca Cola changed ownership again in 1918 when Candler finally sold it out to Ernest Woodruff. This paved way for Robert Woodruff, Ernest’s son, to take over as the company’s president in 1923. Woodruff’s tenure mainly helped in marketing the brand into the international market. His tenure lasted for close to 60 years, during which Coca Cola built its partnership with the Olympics Games starting in 1928. The World War II was of great significance to Coca Cola, even as Woodruff ordered for a bottle of Coke to be sold at a subsidized price to all US soldiers. It was during the war that the company had the opportunity to expand further into the international market, establishing foreign operations in mainly Europe countries.

New brands were later introduced in the 1960s, with Sprite being established in 1961, while TAB and Fresca being established in 1963 and 1966 respectively. Advertisement also gained momentum in the 1970s when its marketing activities managed to fuse fun, playfulness, together with freedom, altogether. Another milestone by the company was achieved in 1978 when China allowed Coca Cola’s products into its local market as the only marketer of packaged cold drinks. The 1980s, however, saw the leadership at the firm change hands. Roberto C. Goizueta became the CEO in 1981, managing to overhaul the company completely with his ‘intelligent risk taking’ strategy. This saw the several bottling companies in the US form a new public company that was referred to as Coca Cola Enterprises, Inc. The Diet Coke, which has been successful in the market, was also introduced under Goizueta’s watch as the CEO (Coca-Cola, 2011).

The Coca Cola taste was also changed for the first time in 1985, another of Goizueta’s initiative. The focus on international cultures and tastes took center stage under Goizueta’s stewardship, a fact that saw the numbers of Coca Cola establishments in international markets grow to over 200 countries. Other brands that were introduced during this period include the Dasani bottled water in 1999 and Fridge Pack in 2001. Neville E. Isdell took charge of the company in 2004, continuing with the growth and development culture of the company (Coca-Cola, 2011). Additional products have continued to be introduced, including the Coke Zero in 2005, as well as new acquisitions that involved Glaceau in 2007, bringing on board such products as smart-water, fruit-water, and vitamin-water, among others (Coca-Cola, 2011).

Background Information about PepsiCo

• Caleb Bradham founded Pepsi in 1898 after mixing a number of formulas.
• The brand was initially referred to as ‘Brad’s Drink’, but the need for a better marketing name led to invention of the term ‘Pepsi’.
• Pepsi Cola became popular within a short span compelling Bradham to establish Pepsi Cola Company in 1900.
• Increased market demand for Pepsi Cola products led to the company bottling the products.
• Initial advertisements depicted the product as having numerous health benefits.
• Price controls and sugar shortage , during the First World War, led to the company falling bankrupt.
• Loft Candy Company purchased Pepsi in 1931, helping it to regain its influence in soft drink industry.

Another pharmacist, Caleb Bradham, founded Pepsi in 1898 (Stoddar, 2006). After mixing several formulas, Bradham invented the now famous Pepsi, although it was referred to as ‘Brad’s Drink’ at the time. Need for a better marketing name later emerged and the search for a more marketable name began. The name ‘Pepsi’ was coined from pepsin enzymes, which exist in the human digestion system and play a critical role in food digestion. Bradham had a belief that the new drink he had just created was capable of helping in digestion of food, just in the same way pepsin enzymes do. It is, however, not true that the Pepsi drink contained pepsin. ‘Cola’, on the other hand, is a representation of the invigorating and refreshing qualities that are part of the drink (Stoddar, 2006).

Pepsi Cola grew in popularity within a short period, prompting its founder, Bradham, to start the Pepsi Cola Company in 1900 (Stoddar, 2006). Initially, the company only concentrated on selling the Pepsi Cola syrup stores that sold drugs within the eastern areas of North Carolina. The sale of Pepsi Cola in bottles began in 1905 following increased market demand for the product. Franchise agreements between the company and bottling companies were entered to facilitate easy marketing of the product (Stoddar, 2006).

By 1910, up to 240 bottling franchises that involved Pepsi existed, leading to the debut bottler’s convention of the company during the same year. Initial advertisements of the brand highlighted its health benefits to consumers, which went as far as claiming that it helped children grow healthier. With increased sales throughout the years, the company recorded its net income as $31,346 by 1915 (Stoddar, 2006). Its market also widened and covered Virginia, North and South Carolina, Georgia, Alabama, as well as Florida and Tennessee. With the beginning of the First World War in 1914, however, the success of Pepsi was immediately overtaken by tough times. The company suffered losses because of price controls and sugar shortages. Sugar prices increased soon after the war, leading to Pepsi struggling in its business. A pound of sugar retailed for 28 cents, up from 3 cents prior to the beginning of the World War. Bradham, out of fears that the prices would continue rising, bought a huge stock of sugar at 28 cents, only for the prices to fall and retail at the pre-war prices (Stoddar, 2006).

The fluctuations in sugar prices finally led to Pepsi’s bankruptcy. Attempts to revive the company fell flat as Pepsi was eventually certified as bankrupt in May 1923. Pepsi underwent subsequent losses for five years, with different companies attempting with minimal success to revive Pepsi. The Loft Candy Company acquired Pepsi in 1931, with Charles G. Guth, its president, assuming command of the beverage manufacturer. Pepsi gradually regained its strong footing in sales, increasing the number of its franchises in 1936. Introduction of new brands under the Pepsi flagship, as well as expansion of the international market has continued throughout the years as Pepsi has grown to become an internationally renowned beverage brand (Stoddar, 2006).

Literature Review

Use of Renowned Celebrities

• Modern marketing is adopting the use of famous celebrities in marketing campaigns.
• Coca Cola has initiated a program dubbed ‘Perfect Harmony’ that helps to popularize upcoming artists.
• The company targets millions of hip-hop and R&B music fans across the globe.
• In 2011, Coca Cola used Natasha Bedingfield, a popular R&B artist to market its products.

According to Hsu and McDonald (2002), modern marketing methods have continuously adopted the use of famed celebrities in their advertisement and marketing campaigns. This idea is particularly preferred because celebrities can turn out to be successful spokespersons, both for the company as a whole or its specific brands in particular. Coca Cola has even initiated a whole program dubbed ‘Perfect Harmony’ music platform, which seeks to provide young and upcoming artists an opportunity to launch into stardom (The Coca-Cola, n.d.). The artists compete on popular TV shows in their bid to outshine each other and win the coveted prices. The Coca Cola has traditionally looked at music as a perfect way of creating market awareness for its products not only in America, but also throughout the world.

In the ‘Perfect Harmony’ initiative by the soft drinks manufacturer, a partnership with 106 & Park television show provides the artists with a worldwide viewership and audience. The show is a flagship of the BET AWARDS, which is also shown on cable television (The Coca-Cola, n.d.). The millions of hip-hop, as well as R&B music fans both in America and throughout the world, who follow these programs are the target market for Coca Cola. Because these fans have a passion for music and possibly for their favorite contestants, it is easier for them to connect with Coca Cola as a brand because of the sponsorship program. Cable TVs are a new phenomenon that has revolutionized the entire TV industry and market. Viewers, supported by the internet, are able to watch their favorite programs without necessarily being curtailed by physical distance and location, which are factors that determine the outreach of traditional TV.

In November 2011, Coca Cola tapped the services of Natasha Bedingfield, a famous R&B artist, to help in its marketing campaign. The “Shake Up Christmas” rendition was sung by the artist in six different languages to highlight Coca Cola’s key message for Christmas. To highlight how global the company is, Coca Cola relied on Bedingfield’s flair of languages, which saw her record the holiday anthem in English, Swahili, French, Ukranian, Spanish, and Filipino. This was part of Coca Cola’s ‘Open Happiness’ marketing campaign that spread across the globe to cover up to 90 countries (The Coca-Cola, 2012).

Non-Celebrity and Lifestyle issues Campaign

• PepsiCo uses a different approach to market its products.
• Initially, the company used celebrities in its marketing campaigns, but it changed the strategy in 2003.
• The company seeks to position its products as the main hero, thus creating the perception that it manufactures perfect products.
• PepsiCo used a marketing campaign that was full of stars, humor, jingles and other effects between 1999 and 2003.
• The company used celebrities to create market awareness and attract customers.

The PepsiCo advertisement has taken a different approach from the use of celebrities and lifestyles as has been synonymous with Coca Cola. Although PepsiCo, like its rival Coca Cola, previously used different celebrities in their marketing campaigns, a different strategy has been adopted since 2003. The change of strategy, according to the company, seeks to portray PepsiCo products as the hero and not something or somebody else (Elliott, 2003). Additionally, the idea of leaving out celebrities and focusing on building the products as the main hero aims at presenting Pepsi as a perfect accomplishment that users must consider for their snack chips, pizzas, and hot dogs (Elliott, 2003).

For a long period, between 1999 and 2003, PepsiCo had embarked on an aggressive marketing campaign that saw its advertizing message and material fill up with stars, jingles, humor, and other special effects. ‘The joy of cola’ marketing theme used in 1999 and which later changed in 2001 to ‘The joy of Pepsi’ focused on celebrities as the main way to create market awareness and attract customers (Elliott, 2003). Pepsi’s senior vice president, also doubling up as chief marketing officer, David Burwick, explained the main reason why the company was changing their strategy at the time. There was need for Pepsi to highlight the fact that it greatly matched with food and social occasions (Elliott, 2003).

Market Positioning/source

• Coca Cola and PepsiCo value market positioning.
• Both companies started focusing on market positioning in 1980.
• Coca Cola uses market positioning to strengthen its brand .
• PepsiCo uses market positioning strategy to position its products as ‘substitute products’.
• PepsiCo’s focus is based on global and international view.
• Coca Cola focuses on establishing a long-term influence in the soft drinks industry.

Historically, Coca Cola and PepsiCo have been known to pay a lot of attention to the question of market positioning for their respective brands. The frequent changing of marketing themes for both companies highlights their different strategies and approaches to marketing. A focus on the recent days and times explains how the two companies have been using different approaches, using their marketing themes.

According to Moraru (2010), the period beginning 1980 represents what is known as ‘The Corporate Era’ in the inner circles of both Coca Cola Company and PepsiCo Inc. This is a period where the brands are establishing their positioning even as competition maintains its prolific stance. Both companies put a lot of emphasis on the policy of management that they adopt, as well as working out on their international image (Moraru, 2010). A series of the different marketing themes used by Coca Cola and Pepsi during the corporate era also highlight the different marketing strategies pursued by both companies. They underline the focus by both companies on their market positioning.

Moraru (2010) proceeds to deduce the exact positioning for both companies by analyzing the themes adopted. Coca Cola, for instance, uses its themes to insist on the image that is traditionally associated with it. The positioning emphasis is based on time, particularly with the 1993 theme, ‘Always Coca-Cola’ (Moraru, 2010). The brand also adopts a market position that puts more emphasis on lifestyles, owing to the double meaning of taste, which is the quality of the product and the social aspect. The Coca Cola theme of 2009 attempts to introduce another new feeling, that of happiness, which implies a market positioning that is founded on surprise expectations (Moraru, 2010). The Coca Cola commercial known as, ‘Happiness Factory’ clearly highlights this reasoning, with its main purpose being to formulate the mechanical instrument through which the ideal in life can be attained (Moraru, 2010).

Although both brands use ‘taste’ in their different themes, the approach by Pepsi is very different. The implied meaning of the company refers to living life as a challenge, where the feeling of ‘forever being young’ is actually tasted (Moraru, 2010). The emphasis of Pepsi is to position itself as a ‘substitute product’, most definitely for Coke (Dupont, 1999), and as a replacement for virtually everything. The mention and comparison made to sex seeks to cement the reasoning that no pleasure on earth can actually replace that of Pepsi. Both brands, however, focus on their consumers being happy, which displays their interest in the spirit of the consumer. An in-depth analysis of the themes used by the companies, including those adopted in the early days of their competition in 1900, points at the fact that Coke only refreshed consumers.

On the other hand, Pepsi focused on covering the whole world, a factor that helped Pepsi acquire the autocracy sign in the market (Moraru, 2010). Pepsi appears to have adopted the old opposition strategy previously used by Coke by seeking to identify itself as the original Cola in the market. The theme adopted, ‘Pepsi. It’s the Cola’, emphasized the fact that the brand is the only deserving Cola in the market, despite the fact that Cola is actually part of Coca Cola (Moraru, 2010). Additionally, Pepsi’s focus is based more on international and global view, where it attempts to offer something unique for everyone. This is particularly informed by the multicultural world, which requires that products should always consider breaking their initial border. The same, however, cannot be said of Coca Cola, whose focus is on fighting for time’s authority strongly. Coca Cola is seeking to achieve the tag of constantly being ‘the real thing,’ particularly because it has been, for years, relatively successful in earning the international status (Moratu, 2010).

Analysis of Results

Social Media Marketing Strategy of Coca-cola and PepsiCo

• The Cola war between PepsiCo and Coca Cola has taken a new dimension in modern information technology epoch.
• The companies use technology to outdo one another in the soft drinks industry.
• The companies cannot expand their soft drinks market in many countries, and thus, they use social media to maintain their market share.
• In 2010, PepsiCo invested heavily in social media advertisement gaining brand disclosure.
• Coca Cola did not manage to capture the market through social media advertisement.

Liu & Smit (2012, p.1) pointed out the Cola War between Coca-cola and PepsiCo has gained a new shape in the modern information technology era, the tradition battle of brand competition sustained over their distribution channels, advertising media, retail outlets, and sports event organizing, but now it has gained a new media to continue their fighting through social media. The battlefield of Coca-cola and PepsiCo war has evidenced in the USA and China that pointed to the insights of the companies how ugly their fighting are they have engaged to identify new way of competition in the social media platform by engaging huge investment to assemble a reliable and logical brand image by damaging one another online. Although the adoption of social media strategy of the both companies is very different, but the aim and objectives are same, both of the companies intend to gain long-term and short-term returns from the investment in this new media with the changing dimension of beverage market globally. The reason behind their irrevocable competition and investing in the social media marketing is that the fortunate time to expand the carbonated beverage market has possibly ended; in the highly consumed countries like USA, it has evidenced negative growth from the starting of this millennium. Moreover, the lower consumed countries has little growth but not in a satisfactory level for instance, it was predicted that from 2005 to 2010 the growth would be 7%, but it actually gained less than 1% with a per capita consumption of one twentieth of the US market (Liu & Smit 2012, p.1).

In 2010, the PepsiCo reduced 50% of its traditional branding budget and moved that investment to the social media to promote ‘Pepsi Refresh Project’ that urged people to explain their views to ‘refresh’ the society where the company would make financial contribute to encourage the highest voted idea. At the same, time Coca-Cola explored 206 social media campaign in different platform to promote ‘optimistic and happy’ for a year where the highest voted concept would get ticket for Olympic Games 2010 and facilitate them to participate in the new cast from the game fielding Shanghai. In that social media campaign, PepsiCo has gained more extended brand disclosure through its ‘refresh the world’ and was capable to create a center of attention for particular consume group while the social media campaign of Coca-Cola has gained very poor attention of the customers where very unsatisfactory figure of fans and followers integrated their options in the campaign.

Brand promotion and pricing strategies of Coca-Cola and PepsiCo

• In 2013, PepsiCo sponsored the Indian Premier League to help it in promoting its brand image in the Indian Market.
• Coca Cola has come up with reduced pricing strategy to counter PepsiCo in the Indian market.
• Coca Cola Company sets its prices based on those of the competitors.
• Coca Cola lowers its prices to capture new markets.
• Both Coca Cola and PepsiCo use Pricing discrimination strategies.
• The companies sell their products at different prices in the various countries.

Bhushan (2013) pointed of that PepsiCo was aggressive to be the title sponsor of the IPL(1) 2013 and purchased the sponsorship for the next five years for Rs 4 billion at the rate Rs 800 million per year, the company further spent RS 600 million to be one of the two presenting sponsor with TV channel. The channel SET Max has allows maximum airtime channel for PepsiCo at the time of IPL broadcast, the company also became drinking partner of the tournament for RS 100 million with the aim to promote its brand image in Indian market while the brand experts in India have identified it as a bulk investment for brand promotion. To encounter such bulky branding strategy, Coca-Cola presented a reduced pricing strategy during the IPL tournament and conducted the advertising campaign “Refreshment at Rs 8” with the believe that customers would positively drive to the low price offer without looking to the sponsorship deals of the rival PepsiCo. Coca-Cola explained that the company has taken into account of the market reality of summer season while the market demand goes higher and its communication strategy has aimed to demonstrate that the company is giving a tremendous cost saving opportunity for consumers that would supersede the heavy invested barding strategy of PepsiCo. In the Indian market, brand promotion strategies of the two companies have evidenced that PepsiCo has aligned with high investment intensive branding strategy while the Coca-cola followed the lower pricing strategy to encounter its rival in the Indian market.

The CEO, management team, and board of directors of Coca Cola have decided that they will set price considering the competitors price, but it must be affordable to the customers (Lin 2012; and Fourni 2012). According to the annual report 2012 of Coca cola, it is truly a global company, which is successfully carrying on business for more than a century; however, pricing strategy plays a vital role to experience tremendous accomplishment. At the time of global recession, the marketers had analyzed the global market condition to many pricing decisions with intent to maximize shareholder value and to grab market share; however, it is important to notice that the decision-makers of this company decreased the price of the some products (like reduce price of 200ml container), but not all products (Fourni 2012). At the same time, this company uses lower price to enter new markets, which are particularly sensitive to price to meet the competitive forces and to increase brand awareness among the target customers; moreover, it focuses on the brand-positioning map, moment of joy & happiness, and other cultural factors (Fourni 2012).

Carbonated Soft Drinks industry in the global market is mature enough due to large population growth and the amount of promotional activities; however, these companies have resorted to pricing discrimination strategies to exploit the value of customer demand (Angelkov, Black & Green 2003; Rappeport 2011 and Golan, Karp & Perloff 1999). Furthermore, direct price discrimination is one of the most common pricing strategies to Pepsi and Coca Cola; however, the companies like to apply this strategy to set price of the products because the price structure under this system based on the location and purchasing power of the customers (Angelkov et al. 2003, p.5). The price of Carbonated Soft Drinks of different companies in Mexico, Bangladesh, India, China and other Asian countries are lower than prices in the US even though the manufacturing cost is almost same; however, it also depends on distribution channel and supply chain management (Angelkov et al. 2003, p.5; and Golan et al.1999). Furthermore, the management and marketers of these two companies have concentrated on several factors related with costs in the supply chain, unit base pricing system, and so on (Angelkov et al. 2003; Rappeport 2011 and Golan et al. 1999).

Market Expansion Strategy

• Coca Cola aims at increasing the number of its customers by two billion by 2020.
• Coca Cola targets middle class people in rural areas.
• It intends to invest US$30 billion in the global market to help it double its current revenue.
• PepsiCo intends to invest in advertising and marketing strategies.
• PepsiCo also aims at implementing a multi-year productivity scheme to help in reduction of operations costs.
• The company intends to expand its Chinese market.
• PepsiCo aims at using both horizontal and vertical expansion strategies to gain competitive advantage in the global market.

Stafford (2013, p.1) pointed out that the market expansion strategy of Coca-Cola has aimed to add new 2 billion customer by 2020 all over the world and it has targeted the middle class people in the rural area as well as farming neighborhoods to the big cities where the products are not yet expanded. To implementing such high ambitious market expansion strategy, the company proclaimed that it will investment further US$ 30 billion in the global market within the next five years, the motivation of such big target has empowered by its vision 2020 that aimed make its revenue twice over than the 2010 which was 100 billion. The market expansion strategy has aimed to emphasis on the market of India and China where Coca-Cola products are not yet reached due hazardous communication, transportation and electricity supplies, but the area have more population density in the remote rural areas. The company thinks that within a decade, by eradicating poverty and corruption the rural areas of those market would gain an infrastructural development especially road communication and electricity which is the top priority of those governments and the people of those areas would be interested to spend money for carbonated beverages.

On the other hand, PepsiCo (2012) announced its market expansion strategy arguing that it would boost advertising and marketing efforts in the global market by investing additional US$ 500 to US$ 600 million during 2012 with special attention to the US market where it is accelerating in a smooth way, the company expects that it would result higher revenues growth. At the same time, PepsiCo aimed to implement Multi-year productivity scheme intended to engender US$1.5 billion of cost savings within the year 2014 by reengineering the operational practices and implementing structural changes that would reduce around 8,700 of its working force, which is the 3% of its present global employees. Stafford (2013, p.1) added that PepsiCo also emphasized on the market expansion in China arguing it as the numbered one market next to the USA and planned to invest bottling project with a joint venture with local beverages company, the company would also expand food manufacturing plant in China and India.

According to the annual report 2012 of Pepsi, this company considers both horizontal and vertical expansion strategy to gain competitive advantage in the global market place, but it failed to manage company in different regions because of taxation policies of the governments, adverse economic condition and so on. As a result, the survey reports have not demonstrated the actual position of this company since secondary data sources explain that market expansion strategy is difficult to control for this company.

Business Level Strategy and Positioning of Product Line Extension

• Coca Cola uses differentiation strategy to maintain the uniqueness and specialty of its products.
• Its hard for rival companies to copy Coca Cola products.
• PepsiCo implements its differentiation strategy at business level.
• The company produces varied soft drinks recipes for different markets across the globe.
• Coca Cola and PepsiCo have numerous products that target remarkable market segments.
• Coca Cola’s Thumps Up and PepsiCo’s Mountain Dew target consumers who are adventurous.
• Both Coca Cola and PepsiCo have products that target consumers who are health conscious.

BenLud (2013) has engaged his effort to identify the business level strategy that Coca-Cola applies at its operation and pointed out that that the company engages to adopt differentiation strategy to uphold its uniqueness as well as specialty of its products over the other market players. By adopting differentiation strategy, Coca-Cola prepares its carbonated beverages along with services in a unique and valued way, which the competitors could not copy, the company provides huge non-priced attributes those customers get as a premium sanctioned by this global beverage giant. At the same time, the company differentiates operation through its dignified and unique marketing approach, exceptional advertising campaign, diverse bottle shapes, increasing customers satisfaction and strong brand loyalty that there is none competitor to encounter with the higher degree of differentiation that Coca-Cola put into practice. Another remarkable differentiation strategy of the Coca-Cola is its ‘Freestyle machine’ that facilitates the customers to mix up the traditional beverages with numerous special flavors, the company also continues its research and development project to engage with further differentiation in order to continue its dignity superior than other competitors in the market

Karanis (2013, p.1) explored that the corporate level strategy of PepsiCo has been providing its customers a diverse range of products and services with strong brand gratitude that generating from the company’s business level strategy strongly aligned with differentiation, while its rival Coca-Cola practice the business level strategy at its global operation. The company always keeps its efforts to bring newer product range in the market in order to deliver competitive advantage for PepsiCo, in every business units of the company in the food and beverage sector including its Asian, American, European, and African operation it has engaged same degree of business level strategy. The business level strategy of differentiation at relevant geographical regions of PepsiCo guides the functional level strategies to emphasis on innovation in order to generate new recipes from different elements like enzyme pepsin that assist people to meet the requirement of digest and to boost necessary energy level. At the same time, the business level strategy of PepsiCo has amalgamated with the lower cost differentiation that generates economic scale of advantage in the course of its mass production of different products with dissimilar variety of test and flavor from the competitors.

Mittal (2010, p.27) pointed out that both the companies PepsiCo and Coca-Cola have a variety of products into their basket those are targeted to unusual market segments where they feel difficulties with regular items and the positioning are completed in that way where the brand gain attributes to address any segment of the society of localization smell for consumers. For instance Coca-Cola’s Thums Up of and the Mountain Dew of PepsiCo have targeted to address the exploratory as well as energetic individuals who are paying attention to adventurous events and devoted to encounter with risk to bring success, the advertising theme of the both brands have tried to position consumer’s mind that they are taking ‘strong’ soft drink. PepsiCo’s product ‘Gatorade’ has aimed to position at the mind of sporting people and the company introduced it as a sports drink and gained tremendous success in the market, but unfortunately its promotion has mostly constrained in the sporting events due to propagate it as a sports drink. The ‘Minute Maid’ of Coca-cola and PepsiCo’s’ Tropicana’ have developed to meet the demand of health conscious customers and introduced them as health drink that contains natural energy, both the drinks introduced within the class of fruit juices with the intention to divert customers from another segment who aligned with fruit juice producers.

Sponsorship/ new product development

• Sponsorship is a commercial activity that enhances brand awareness and increases sales revenue.
• Coca Cola and PepsiCo sponsor different sporting events to popularize their products.
• Coca Cola carries out research and development to help in manufacturing quality products that can withstand competition.
• The company keeps on introducing new products into the market that target different market segments.
• PepsiCo established a research laboratory to help in producing healthy products.
• It works in collaboration with Yale School of Medicine to equip its employees with skills in nutrition.

Many researchers have pointed out that sponsorship is mainly a commercial activity where the sponsoring company gets right to promote groups with the sponsored object intended to get benefits; it is the underwriting of a particular event to support business goals by enhancing commercial image, growing brand awareness, inspiring the customer and increasing sales revenue (Andersson, Arvidsson & Lindström 2006). At the same time, there are many issues involved to generate profits, so, the multinational companies concentrate on the sponsorship activities, such as, development of brand awareness along with brand image, and corporate image; however, the companies also using numerous advertising techniques which planned to expose the sponsoring brands to attract potential customers (Andersson et al. 2006). On the other hand, event sponsorship (sports, music, and festival related event) has become extremely popular; however, sports sponsorship is the most common sponsorship activity to Pepsi and Coca Cola (Andersson et al. 2006).

Coca-Cola (2012) reported that the company is always eager to changing the elements of its bulk production of carbonated beverages with a complex progression through vast research and development in order to overcome associated challenges process, the special attention has given to reduce the level of sugar and calorie contented into soft drinks for great taste and health safety. From 2007 up to now, it has reduced the calories of different products from 30% to 56%, the eighty years old brand ‘Fanta’ has evidenced with almost ninety different tastes and flavor, and in 1997 it launched “Diet Fanta Orange” as a sugar free edition of the beverage. In 2004, with an improves taste the same brand came in the market in the name “Fanta Orange Zero” that gained higher customers preference, the process of new product development is an ongoing process for Coca-Cola and it is now working to improve Fanta like “sweet-tasting orange” for the customers of the UK market. The company also keeping its continuous efforts to substitute the sugar with an improved organic ingredient Stevia produced from the leafs of plants that contains zero calories, instead artificial colors the company is very careful to replace them with natural color from carrot and pumpkin, the combination of such organic elements would assist to enhance its health conscious customer base.

PepsiCo Inc. (2012) announced that the company has established a state of the earth research laboratory in order to develop new products extremely healthier than its competitors in the carbonated beverage, and packaged food market, at the same time the company introduced graduation fellowship course at Yale School of Medicine in order to support its research and development. The company would like to be the pioneer of nutritional science research and implication other than its competitors that would generate enhanced competitive advantage for PepsiCo in long run in order to shift to the healthier assortment of new products in the foods and beverages industry. The new product development attributes of PepsiCo has evidenced with reduction of 70% fat and utilization of fresh premium orange juices along with reduced amount of preservative for its product line that would enhance the health conscious people to choice its brand.

Cultural factors/ Supply chain management

• Brand positioning influences consumers’ decisions.
• Brand positioning has helped Coca Cola and PepsiCo to capture market in the Kingdom of Saudi Arabia.
• Mecca Cola, a Saudi Arabian company depicts Coca Cola and PepsiCo as anti-Muslim to overcome them in the market.
• Despite Coca Cola and PepsiCo using somewhat similar pricing strategies, Coca Cola performs better than PepsiCo.
• Coca Cola products are sold in many food outlets and retail stores.

Mittal (2010, p.29) also added that positioning assist to generate a particular space into the consumers mind, if a company could able to position its products at the exact attention of customer would deliver very interesting outcomes, in the soft drink market there are huge scenario of multination are being localized. For instance, Coca-Cola and PepsiCo are both have long historical entry in the KSA where Mecca cola is another local soft drinks with littlie market share and was unable to position in the market by struggling with Coca-Cola and PepsiCo who have large market domination , due to their marketing performance the sales of Mecca cola was decreasing. Suddenly Mecca Cola started to propagate that both Coca-Cola and PepsiCo are the US originated company and the companies are enemy of Muslim, thus they called for boycott their soft drinks. By generating anti American sentiment and radical Islamic approach, the Mecca Cola was capable to position itself as soft drink for Muslims and gained a remarkable market share by passing back Coca-Cola and PepsiCo far apart.

Lin (2012) stated that taste and pricing of the products of Coca Cola and Pepsi are almost similar, but the position of these companies is not same in the global market, for instance, sales revenue of Coca Cola is five to six times greater than Pepsi in the whole market. Most interesting, in the time of present global financial crisis, Pepsi faced enormous challenges for liquidity crisis though it responds appropriately on time; in addition, in the past the great depression, Pepsi went into bankruptcy twice (Lin 2012).

However, Coke is available everywhere compared to Pepsi, such as, in every food outlets of McDonalds, Starbucks, KFC, and other fast food stores; however, Coke is widely available within a smaller radius for which the people of both rural and urban areas can purchase Coca Cola products (Lin 2012). In addition, the purchasers of soft drinks not bother about their drinks, but they want to save time and effort; considering this benefit, a consumer would purchase Coca Cola products more often though many other issues that make it dominant over Pepsi for example its pricing strategies, marketing policy, packaging and so on (Lin 2012).

Findings, Conclusions, and Recommendations

Summary of Findings

• Past study focused on consumer preference, cultural and marketing factors, and diversity management.
• This study focuses on the marketing strategies used by Coca Cola and PepsiCo companies.
• The study evaluates how marketing strategies help Coca Cola and PepsiCo to position themselves in the global market.
• The study suggests that PepsiCo performs poorer relative to Coca Cola due to its late entrance into the market.

Previous research on the carbonated soft drinks industry mainly concentrated on the different factors related with consumer preferences, effectiveness of advertising campaigns, estimating pricing strategies of Coke and Pepsi, cultural factors to operate business in different countries, diversity management system, and financial analysis and so on. However, this research paper contributes to the body of scholarly knowledge by providing new findings about the different strategies used in Coca Cola and Pepsi while the researcher considered the standpoint of consumers and workforce of these two companies. There research question was the extent to which business level strategy, pricing strategy, brand promotion strategy, NPD and market expansion strategy are effectual to manage Coca-Cola and Pepsi in the global market; however, hypothesis based on Pepsi’s late introduction into the market, relative to its competitor Coca Cola, is the main reason behind its comparatively dismal performance in the market.

Limitations

• Data collection was a major limitation in this study.
• Collecting data from a single country could give misleading conclusions and recommendations.
• It was hard for researchers to cater for reliability and validity of the study.
• Researchers did away with some of the questionnaires.
• Researchers could not cover the entire topic of study.
• Some participants were reluctant to share crucial information.
• The research findings cannot be generalized.

Collection of data from extensive target group was a limitation of this study while it was difficult to focus on the different areas of the research at a time. Both Coca Cola and Pepsi have a great presence in the global market for which to collect data from any particular country or region could mislead the research objectives, which influence on the findings and the recommendations for the future research. At the same time, data from any particular place could raise question on the reliability and validity of the research for getting different perspective in the conclusion from the survey report. One of the potential factors was maintaining schedule to coordinate entire research because of the unwillingness or fatigue of the target participants while they seem that it is worthless function for them.

However, the questionnaire of this study have also included some open ended questions for which the participants got the opportunity to provide their views without concerning the research aim and objectives; therefore, the researcher had to reject some of the questionnaire considering general norms of research formulation. Topic of this study (different Strategies of Coca-Cola and Pepsi) covers a vast area; therefore, findings cannot be generalized to the broader population due to the geographic limitation of one area, like, the presence of Coca Cola in Saudi Arabia is not outstanding due to ethical dilemmas in the promotional activities, but this is not true picture for other nations. Simultaneously, Pepsi faced severe challenge to sustain in the Chinese market and r Middle East; as a result, the feedback of the target participants cannot be assumed to represent other regions for the both companies.

On the other hand, the survey populations particularly the managers of Pepsi and Coca Cola were extremely reluctant to communicate with the researcher regarding follow-up surveys for which the researcher of this study relied on the viewpoint of the employees and customers these two companies.

Implications/ recommendations

• The study will help the companies to formulate their future marketing strategies.
• The companies’ decision-makers should focus on corporate social responsibility and public health issues.
• PepsiCo should improve its supply chain.
• Both companies should increase their sponsorships to attract more customers.
• PepsiCo should conduct market research to assist it in decision making.

This study has presented comparative analysis of the strategies of Coca-Cola and PepsiCo, the findings of this research would assist both the companies to formulate their future strategy and would implicate the favorable features of this study that they feels more effective to conquer the strategic fights among the two. At the same time, academia and researcher working with corporate strategy would be interested to the implication of this research to engage for further research in this area.

The management, board of directors and other decision-makers of both Coca-Cola and Pepsi should concentrate on the corporate social responsibility and public health issues more carefully because the consumption of carbonated soft drinks has declined considerably because of the development of the health awareness. To increase market share in the global market, it is essential for these companies to create value for the customers in stead of maximizing profit margin because the people of developing countries like India have faced health due to consuming products of Coca-Cola and the consumers of developed countries have suffered problems because of over consumption of soft drinks.

Above discussion demonstrates that both Coca-Cola and Pepsi used similar pricing strategies, but the position of Pepsi is not suitable enough; in this context, the management should increase budget for the market research to restructure pricing strategy for different area; however, this recommendation has derived from survey reports. At the same time, the management, and board of directors of Pepsi should concentrate on the supply chain management and distribution channel to increase sales revenue because the products of Coca Cola is available in everywhere but the purchasers have to provide more effort if they like Pepsi and this scenario is common in rural areas. In addition, Coca Cola gained competitive advantage over Pepsi use advance promotional strategies, for instance, Coca Cola has long tradition to sponsor large event; therefore, the marketers of Pepsi should try to use sponsorship strategy more effectively, for instance, it should target large event like American Idol, World Cup Football, or Olympic games and so on.

The management of Pepsi should conduct more research to take effective strategic decision and implement this plan as well though it has strong presence in the global market; at the same time, this study will help the future researchers to find out loophole regarding Pepsi’s strategy and conduct research.

Conclusion

• Coca Cola and PepsiCo continue competing to expand their market share.
• Pepsi continues to establish itself in areas that Coca Cola dominates.
• Health concerns among the customers have affected the soft drinks market.
• The ‘Cola War’ is not likely to end soon as every company tries to increase its sales volume.

The two giant of the carbonated beverage industry has been continuing strategic fight to conquer one over another in order to attain enhanced market share for about a century where the Coca-Cola enjoys more ‘competitive advantage’ for its earlier entry but there is no reason undermine the role of PepsiCo. PepsiCo has ensured its strong presence in every market of the Cola-Cola and gained a remarkable market share allover the globe. The raising health consciousness among the people has seriously affected the soft drinks market, but it does not mean the ‘Cola-War’ would be ended, both the companies engaged to remove the associated health risk by reducing fat, calories, artificial color and preservative and their strategic fight would be continued to gain enhanced market share.

Introduction

Among the many techniques used to determine the market position of a business organization is SWOT analysis. SWOT analysis is used by to keep a close watch of the progress of a company and take remedial actions in case there is a need. This paper will carry out a detailed SWOT analysis of PepsiCo.

Background of the Company

Pepsi is the second largest food and beverage company in the world in market share; it was founded in the year 1965. The company is headquartered in the city of New York. The company deals with the manufacturing and marketing of several products, these products are salt, sweet and grain based snacks and carbonated and non-carbonated beverages.

The company aims at achieving growth and long term value in its operations by seeking to create competitive advantages which can be realized through product innovation. The company’s mainstream and trade mark product is Pepsi which is a carbonated soft drink manufactured by the Pepsi company. The company’s revenue is more than 39 million and it employs approximately 200, 000 employees.

The company is made up of Pepsi Company Americas Foods, Pepsi Co Americas Beverages and Pepsi Company International.

Pepsi Company Americas Foods is based in Latin America and encompasses food and snacks business including its operations in Mexico; Pepsi Company Beverages is based in North America and its beverage subsidiaries in Latin America beverages businesses while the Pepsi Company International includes all the operations in Asia, Europe, and Middle East.

The strategic and business affairs of the Pepsi Company are overseen by a Board of directors.

The company has been in existence for a very long time after being pioneered by Caleb Bradham, pharmacists who began to experiment with various soft drinks.

Pepsi cola developed as a soft drink in 1898 and since then the company has grown to be one of the most recognized in the world. Since then the company has had a positive growth strategy due to its impressive presence in USA and across the globe leading to health profits and an increased market share.

The company is broken into four major branches namely: Frito-lay North America, PepsiCo Beverages North America, PepsiCo International and the Quaker Foods North America. Using these markets, PepsiCo has had the largest foothold on the market.

The financial position of PepsiCo is a strong. It has boasted of impressive results in the net revenue, total operating profits, return on investment and return to the shareholders. The cash flow from the operations was approximately $6.1 billion and increased earnings per share.

The strong financial position is largely due to intense marketing undertaken by the company, product diversification and their unmatched strong presence in the USA which by itself is a large market. The company employs approximately 71, 000 employees in its international ventures and it engages in manufacturing, distribution, and the marketing of non–alcoholic beverages all over the world (PepsiCo 1).

SWOT Analysis of PepsiCo

SWOT stands for the strengths, weaknesses, opportunities and threats. It is one of the powerful ways of analyzing a current situation of a company. SWOT analysis examines the strong and weak areas of a company.

The strengths are those factors that serve to enhance the company’s competitive advantage while the weaknesses are those factors that may hinder it. Through SWOT analysis, a firm can utilize leverage from its strengths, learn from its weaknesses and correct them, utilize the opportunities and prevent devastating threats (PepsiCo 1).

Strengths of the Company

Pepsi Company has several strategies which has enhanced its growth to being the third largest food and beverage company in the world. Among its strengths are discussed below.

Diversification

Pepsi runs different lines of products; this diversification has enabled it to earn a lot of revenue, in this scenario, when one line of product fails in the market to gain some revenue, it can be balanced by the other divisions of the company. Pepsi has also realized a large market share as a result of its diversification and this is to the advantage of the company.

This was realized as strength when PepsiCo in the North America decreased in market share, still due to other operations in other countries its revenue still increased. The diversification of PepsiCo is evident from its 18 range of brands which when combined generate a volume of sales up to $1,000 million.

Their products include “ready to drink teas, juice drinks and bottled water; other products are breakfast cereals, cakes and cake mixes” (Craw, Merchan and Feng 12). The many products that the company has give it a big advantage because of diversification of risks.

Distribution Network

PepsiCo has a strong distribution network. This is strength since it enables customers to easily access the company products which in turn can lead to large volume of sales. Large distribution channel guarantees wide market for the products. PepsiCo channels its products directly to the points of sales.

This is a powerful strategy which includes “three pronged approach which also includes employees making direct store deliveries of snacks and beverages and the use of third party distribution services” (PepsiCo 5). Well planned distribution network has enhanced the competitive ability of PepsiCo.

To strengthen their distributive capability, PepsiCo acquired three restaurant chains namely Taco Bell, Kentucky Fried chicken and the Pizza hut. PepsiCo can sell three products along one distribution channel which helps to reduce costs, improve their efficiency and to smooth out fluctuations which might seasonally arise as a demand for a specific product falls (PepsiCo 5).

Quick Response to Emerging Trends and Issues

PepsiCo has a quick response mechanism to emerging issues in the market. These issues may include health and environmental issues and the development of Pepsi generation.

Penetration to the International Market

The company has expanded its operation to the untapped international market. PepsiCo and Quaker oats merged and this led to increased revenue and a better international market share.

PepsiCo have strong presence in snacks market in countries like Mexico, UK, Brazil, Australia, India and Russia and they are planning to enter an emerging market in China. This will lead to additional market and revenue for the company (Olidix Consultants 4).

Strategies

The company is driven by concise mission statement that it presents to its employees and shareholders so as to enable them understand what the company stands for. PepsiCo drives the local America market which they have used as leverage to expand into developing markets while still maintaining its strong market base in US. They also stress the importance of the relationship between the employees and the company.

The mission, objectives and strategies that are pursued by the company are a reflection of the company’s intention to enter into international markets (Olidix Consultants 8).

Enough Capital

The company does not suffer from capital constraints because they have large cash flow system. This has enhanced their great brands, distribution network and their innovative capabilities.

Branding

The conspicuous market brand of PepsiCo is Pepsi and it is one of the most recognizable and household brand in the world ranked as interbrand. In the year 2006, Pepsi was ranked as position 26^th in the list of top 100 brands in the world. Pepsi averagely makes $15 million from sales proceeds.

The Pepsi’s brand is joined by other PepsiCo brands like the diet Pepsi, thirst quencher, Lipton Teas and Gatorade Mountain Dew among others. The brand dominance facilitates product loyalty and enhances repetitive sales which can contribute to approximately $15 million in annual volume of sales (Craw, Merchan and Feng 3).

Better Marketing Strategy

Pepsi has one of the world’s best bottling systems. This has enhanced its reputation on the international scale hence enabling it to transact business at the global scale while on the other hand it maintains its local presence.

Implementation

The company has a strong implementation strategy. The success of the company is due to its enough revenue base and stable market. Their implementation strategy include how to enter into new markets, how to improve employee relations and contemplating on how to reduce expenditure while maximizing costs.

Services Quality

PepsiCo exercises great care so as to ensure that high standards are maintained every day. This is applied to their products, packaging, and marketing. The company always aims at achieving the best for their customers since, according to their policies, customers deserve better and quality services and products.

Consequently, this quality is manifested in their manufacturing and bottling process so as to meet manufacturing standards. They adhere to quality procedures in their manufacturing and packaging. This is realized by ensuring that each bottle is subjected to a process of testing and inspection.

This quality control measures are necessary to ensure that the integrity of PepsiCo and its products are maintained (Sparks, Meack, Hillstrom and Cervantes 4).

Weakness of the Company

Focus

Due to the diversified market, the company has tended to have divided concentration on each of its products unlike its competitors who only have focus in one line of goods. This has negatively affected the sales of the different products by the company.

PepsiCo has found it hard to inspire a direction and a vision for a large global economy. It is evident that majority of their products do not bear the names or the logo of the company (Olidix Consultants 8).

Overdependence on Wal-Mart

PepsiCo sales depend majorly on its sales to Wal-Mart. This sale represents approximately 12 percent of its overall net sales. Wal-Mart is undisputedly Pepsi’s largest customer; this implies that the business fortunes of Pepsi are influenced by the ways that Wal-Mart does business. The low price theme of Wal-Mart has the impact of forcing Pepsi to lower their prices (Olidix Consultants 6).

Overdependence on the US market

Although Pepsi has an international presence, it is estimated that almost more than 50 percent of its sales revenue are from the US market. This overreliance and concentration on the US market leaves PepsiCo at a susceptible position in the event of changing market conditions.

The economic recession that hit the US market in the year 2008 greatly affected the sales of PepsiCo. Consequently, the large US customer base has the effect of weakening PepsiCo bargaining power hence leading to decreased revenues (Craw, Merchan and Feng 7).

Low Productivity

By the year 2008, Pepsi company had close to 198, 000 employees. The revenue per employee totaled to $219, 439 which was comparably low when compared with that of its competitors which is an indication of low productivity. In the productivity volume, PepsiCo is far much behind Coca-Cola in the international market and hence they are unable to meet the elastic demand.

Image Damage

PepsiCo has suffered from image problems due to the recall of its products. In the year 2008, contamination by salmonella forced the company to call back some of its products which are already in the market; this followed another event of the explosion of its diet Pepsi cans in 2007.

Such eventualities damage the image of the company and subsequently reducing customer confidence in PepsiCo products. The company has also been blamed for presence of pesticide residues in one of their products in the Asian market.

Opportunities of the Company

Efforts to Penetrate Emerging Markets

The company has attempted to tap into the newly emerging international market through PepsiCo International. The company should strategize on ways to enter into new markets instead of wasting resources on the markets which are already captured.

This will give PepsiCo an upper hand over its competitors; “PepsiCo is in the process of rolling out $1billion investment in China and further $500 million investment in India” (Sparks, Meack, Hillstrom and Cervantes 1).

All these are initiatives to widen its international market and to reduce its dependence on the US market. The company has also plans to massively invest in Brazil and Mexico (Sparks, Meack, Hillstrom and Cervantes 1).

Introduction of Pepsi Generation Theme

The introduction of PEPSI generation theme for its products provided a perfect opportunity for PepsiCo. This is aimed at reaching the younger generations so as to endear them to be lifelong Pepsi drinkers and to nurture product loyalty. This opportunity of designing new trends can be endless but it serves to attract young people.

Surfacing Issues

PepsiCo finds opportunity in emerging issues like health and environment. They seize this opportunity by quickly responding to these concerns as they emanate. This appeals to the consumers and further enhances its share in the market. The company has prospects in this area because of its potential as a corporate body.

Broadening of its Product Base

The company seeks to address some of its problems and potential weaknesses. This includes moving away from dependence on the US market and the acquiring the leading juice company in Russia called Lebedyansky and also acquiring of V water in the UK.

The company has also “continued to broaden the base of its products through the introduction of True North Nut Snacks and increasing of its Lipton tea venture with the Unilever Company” (Sparks, Meack, Hillstrom and Cervantes 3). All these plans have widened the market share of PepsiCo and enabling the company to regulate into the dynamic ways of life of the clients.

Growing Snack and Bottled Water Market

It has been observed that the company has a huge potential in the snack and water market:

The company is in a better position to take advantage of the growing market of snacks and bottled water which has been projected to be worth approximately $24 million by the year 2012. The company’s products like the Aquafina and Propel are better established and are in a position to surge upwards in terms of market share and sales. (Sparks, Meack, Hillstrom and Cervantes 3)

Its large chains of snacks could also benefit from the growing savory snack market in the US which has been projected to reach 27 percent by the year 2013 which is a market growth of $28 million (Sparks, Meack, Hillstrom and Cervantes 3).

Increasing Trend towards Health Food

The world is experiencing an unprecedented trend for demand for health food. The ability of PepsiCo to adapt to these market trends towards health food could enhance its competitive advantage and will take its place as a socially responsible producer.

Since this requires a lot of money that can be unmet with the current economic climate. People have become health conscious and hence they have a passion and preference for health foods and drinks. There is a growing market for healthy food products which the company needs to tap into.

Internet Marketing

The surging opportunities on the internet provide an opportunity for online marketing and advertisement which could be placed on the boxes and shelves of chain stores so as to tap into a wide market. In this age of communication technology, internet advertising and online marketing is indispensable.

Internet promotion such as banners, adds and key words will increase the volume of sales. Their computerized manufacturing, ordering and packaging system will increase their efficiency.

Threats of the Company

Competitors

PepsiCo has many competitors in the US as well as outside the US. It has been observed that most of the competitors engage in one product range; this provides the competitors an advantage of handling one line of the product in the market.

Failure by PepsiCo to consider it a threat may result to its diminishing market share. Coca-Cola particularly is PepsiCo’s number one competitor in the market and products innovation, others are Kraft foods and Groupe Danone.

It is also observed that unhealthy competition may negatively affect the company. This was evidenced when Coca-Cola surpassed PepsiCo in juice sales. PepsiCo for example is far much behind Coca-Cola in the international penetration and market share, this has made it hard for it to compete substantially with Coca-Cola’s strong presence, strong brand identity and strong customers’ loyalty.

High level of competition might result into losing of market share in the event that other companies adapt to the business environment faster. The company also competes with Cadbury Schweppes and other competitor companies which have sound financial management and are well run.

This might stretch the resources of the company. In the mineral water segment, the company has to content with strong competition from Nestle. All these fierce competition is largely due to the fact that food and beverage industry has come of mature age (Craw, Merchan and Feng 7).

Emerging Environmental and Health Threats

These are new sources of threats to PepsiCo; more and more clients are adopting better eating methods whereby fast foods which PepsiCo among other companies offer.

Declining Carbonated Drink Sales

The sales of soft drinks have been predicted to decline by approximately 2.7 percent in the year 2012 which represents a drop of $63, 460 million in market value.

Government Regulation

Government regulation may affect the sales of PepsiCo: “It is anticipated that government initiatives related to environmental, health and safety may have the potential to negatively impact PepsiCo” (Sparks, Meack, Hillstrom and Cervantes 4). These government measures will likely alter the state of manufacturing, marketing and distribution of food products.

First round examination on the acrylamide have indicated that it may likely cause cancer when it is used in large quantities. Therefore, if the company has to comply with these government rules or regulations and measures, it will be prompted to add labels to its products or to where its products are sold, and these will likely have an impact on PepsiCo (Sparks, Meack, Hillstrom and Cervantes 4).

Potential Labor Unrest

Arguing from the past record, PepsiCo is prone labor disruptions. In the year 2008, for example, there was a massive strike by the employees of Indian operation which paralyzed operations for almost a month leading to disruption of the manufacturing and distribution network.

Recession and Economic Instabilities

The ongoing recession in majority of the countries and the unexpected currency dynamics have had a lot of impact on the operations of PepsiCo. The global economic recession that hit the US in 2008 and 2009 led to considerable decline of revenues for the company which highly depended on the US market.

The company sells its products at expensive prices than their competitors. This can limit the poor or the lower income people from purchasing PepsiCo products (Sparks, Meack, Hillstrom and Cervantes 5).

Works Cited

Craw, Ford, Merchan Jennifer, and Feng Park. Coke vs. Pepsi. Computer Lab Nevada, n.d. Web.

Olidix Consultants. The Pepsi-cola company competitive analysis. Slide Share, n.d. Web.

PepsiCo. History Overview. PepsiCo Website, n.d. Web.

Sparks, Aaron, Meack Cherokee, Hillstrom Elly, and Cervantes Sandra. PepsiCo Portfolio Marketing. PepsiCo Report, 2008. Web.

Introduction

PepsiCo is a multinational company that makes food and beverages. It markets and distributes snack foods, among others. The company was formed in merger between Frito-Lay and Pepsi-Cola. Over the years, it has expanded its operation with acquisition of other brands such as Tropicana, Gatorade and Quaker Oats. In addition, it is considered to be among the best in production of snacks, beverages and foods.

It employs more than 285000 workers all over the world. Moreover, it has received various awards for participation in business development. It is also quite important to note that it generates over $60 billion annually. This paper will explore PepsiCo, its background, problems, advantages and disadvantages (PepsiCo Inc., 2011, p. 1).

Background

This company began as Pepsi back in 1890s when its recipe was first made. This development was made by Caleb Bradham and New Bern. In 1898, it was named Pepsi-Cola and then registered in 1902. Later on, in 1919, it was incorporated in Delaware. Ownership of the business changed hands between 1920 and 1940.

Further expansions in 1960s led to the merger with Fritos in 1965. This changed its name to PepsiCo. The company has acquired several companies during this period. These include Yum, Tropicana and Gatorade, among others (PepsiCo Inc., 2011, p. 1).

Discussion

PepsiCo employs the strategy of acquisition to its advantage. In addition, the company has expanded its lines of operations with involvement in food snacks, and beverages, foods, as well as soft drinks. This gives them the ability to serve a wider range of customers and hence improve profitability. This is quite evident in their recent revenues results, which surpassed that of Coca Cola. PepsiCo is now considered as one of the largest food industries in the globe (Heizer & Render, 2011, pp.).

Advantages

The company has instituted several activities aimed at giving back to society. These are community development initiatives such as PepsiCo foundation, among others. The foundation funds several initiatives. These include disaster response, associate programs and grants.

Others include funding of education, provision of safe water and community empowerment. Further developments include environmental awareness. PepsiCo values environmental sustainability. In this regard, it has initiated projects, which include preservation of water resources, minimization of land pollution, and reduction of carbon footprint, as well as responsible usage of natural resources (Heizer & Render, 2011, pp.).

Disadvantages

The company receives criticism over its environmental conservation plan. This is mainly because of the plastic bottles used in packaging their products. Further improvement on this is required for justification of claims. Moreover, management strategies have raised concern over its reaction to criticism on health and environmental issues.

Conclusion

PepsiCo is a multinational company that deals in snack food manufacturing and beverages, among others. It also markets and distributes these products. The company began as Pepsi back in 1890s when its recipe was first made. The founders of this recipe were Caleb Bradham and New Bern.

Further expansions in 1960s led to merger with Fritos in 1965. The company has acquired several companies during this period. These include Yum, Tropicana and Gatorade, among others. In essence, PepsiCo employs acquisitions to its advantage. The company funds initiatives such as education provision of safe water, and empowerment of community. However, it also receives criticism over actions in environmental awareness (PepsiCo Inc., 2011, p. 1).

Reference List

Heizer, J. & Render, B. (2011). Operations management (10th ed.). Boston, MA: Prentice-Hall.

PepsiCo Inc. (2011). PepsiCo Foundation. pepsico. Web.

The history of the corporate development of such brands as Coca-Cola and PepsiCo is associated with the prolonged market competition for the greatest share in the market and industry and for attracting more consumers. In spite of the fact that the products of Coca-Cola and PepsiCo are similar in taste and quality, both these companies take the leading positions within the market of soft non-alcohol drinks.

To understand the particular features of the companies’ competition, it is necessary to focus on differences in the corporate cultures. Coca-Cola and PepsiCo follow different competitive strategies and focus on various elements of the corporate culture in order to help consumers differentiate the brands and their missions along with the brands’ images.

Corporate culture is the complex notion according to which people working in the company share the same organizational values, visions, and norms. There are definite systems and principles basing on which the leaders organize the employees’ activities. Corporate culture also includes such concepts as corporate beliefs and ideals distributed in order to attract consumers to share these beliefs and values (Balmer & Gray, 2003).

John Stith Pemberton designed Coca-Cola as the specific mixture to treat depression and apathy in 1885 (Coca-Cola: Workplace culture, 2013). In 1898, a pharmacist Caleb Bradham designed a drink with the similar taste which becomes later known as Pepsi (PepsiCo Values & Philosophy, 2012). Focusing on similarities in the taste and quality of the products, it is important to note that differences in the corporate cultures are the main factors to create the effective brand image and compete successfully within the market.

In its corporate culture, Coca-Cola depends on the ideas of diversity and leadership along with creating the conditions for the fair working environment. From this point, the company leaders concentrate on maintaining the positive working atmosphere and accentuating the human dignity (Coca-Cola: Workplace culture, 2013).

PepsiCo operates the idea of motivation and empowerment. If Coca Cola accentuates the effective leadership, PepsiCo emphasizes the role of each worker in the process of production. The accent on the positive relationships and the focus on the team work of employees in Coca-Cola company is the opposite strategy to that one used in PepsiCo where the company’s leaders are inclined to rely on effective benefit programmes to motivate employees (Mitchell, 1996).

The above-mentioned differences are connected with the organizational norms and approaches to treating employees in order to establish the successful corporate structure and culture.

However, it is necessary to focus on three ways which the companies use to compete within the market and take the leading positions. While Coca-Cola determines entertainment, optimism, and passion as the main concepts to promote the product, PepsiCo focuses on the other segment of the target audience, emphasizing the idea of the healthy lifestyle and high-quality nutrition.

Thus, the two companies are inclined to promote different ideals and orient to different target audience (PepsiCo Values & Philosophy, 2012). Moreover, Coca-Cola proclaims that the companies depends on innovation and contributes to ‘refreshing the world’ when PepsiCo uses this approach to accentuate the role of the company in protecting the planet and promoting the healthy lifestyle (Coca-Cola: Workplace culture, 2013).

If Coca-Cola operates the principle of stability and high-quality with references to the company’s history, PepsiCo develops the idea of the company’s history focusing on the companies’ innovative and responsible approaches to the production (Garfield, 2000). From this point, the companies emphasize the differences in the corporate values in order to promote the products, and they can benefit from the competition while supporting the idea of differentiation.

Changes in Coca-Cola and PepsiCo’s corporate cultures can result in the further progress of this or that company. To continue to thrive in the future, Coca-Cola can use successfully the effects of such changes as the accentuation of the product’s quality with references to the ideas of trust and responsibility.

This approach should be relevant both for treating the employees and consumers. The changes in the organizational values can lead to affecting the traditional brand image negatively that is why it is important to operate the idea of combining tradition and innovation.

PepsiCo can continue to develop the corporate culture according to the principles of the global modern company respecting the world’s progress. Thus, more focus on diversity can help the company to achieve the higher position and improve the competitive strategy. PepsiCo effectively uses the concentration on short-term and long-term goals, guaranteeing the balance in the strategic development. References to the ideals of globalization and diversity can contribute to the company’s progress positively.

Corporate culture plays an important role in contributing to the company’s effective development and market competition. Competitive strategies which are used by Coca-Coal and PepsiCo are based on determining the differences between the companies, their approaches, and ideals in order to attract different segments of the target audience. The further accentuation of differences can guarantee the successful competition within the market and industry which is based on sharing various beliefs, norms, and values.

References

Balmer, J., & Gray, E. (2003). Corporate brands: What are they? What of them? European Journal of Marketing, 37(8), 972-976.

Coca-Cola: Workplace culture. (2013). Web.

Garfield, B. (2000). Pepsi may win challenge, but loses most crucial test. Advertising Age, 71(13), 73-74.

Mitchell, A. (1996). Pepsi still losing the cola wars. Marketing Week, 19(3), 26-28.

PepsiCo Values & Philosophy. (2012). Web.

Abstract

The focus of the paper is to carry out an investigation of fundamental risks that may lead to volatile situations in the Pepsi Company. Three main situations chosen are fraud and misconducts, water, and health and safety.

Methods of qualitative and quantitative measurement of these situations are proposed and discussed in the context of their impacts of the situation’s capacity to impact organizational goals, culture and more crucially, the Pepsi stakeholders. Recommendations to solutions for mitigation of the risks are then considered.

Executive summary

Many Asian countries have many operational beverage-manufacturing companies following the ease of the capacity of such companies to penetrate the market. Even with such ease, such companies face many risks ranging from availability of quality raw material, the process of production, as well as the management of the entire company. In the current paper, water stands out as an essential raw material accounting for about 75% of the raw materials used in the manufacturing of beverages.

Fraud, as well as health and safety are also other two additional volatile situations that may put beverage companies at risk. However, the paper focuses on the mechanisms of mitigating these risks particularly in Pepsi Company established in Philippines. In the first volatile situation, the products of the Pepsi Company are the subjects impacted by the event of utilization of polluted water for their manufacturing.

This event results from factors such as increased utilization of water that require treatment in the company, following the reduced quantity of fresh water because of the impacts of global warming. In the second volatile situation, shareholders are the main subjects while the event is the probability of occurrence of a fraudulent or misconduct within Pepsi company.

A subtle factor leading to this event is reluctance of fraud and misconducts of monitoring and control systems. Finally, under the health and safety volatile situation, the employees of Pepsi Company are the key subjects. The event is failure of a production or packaging machinery contributed by factors such as negligence of conducting preventive maintenance of the machineries.

Introduction

In the normal operational environment of any business, several risks are evident. Organizations have to address them to ensure their future presence. In the business planning process, it is crucial for management to incorporate concepts of risk management. This is necessary in the attempt to minimize organizational risks that may influence the performance of an organization negatively.

For the purposes of discussions of this paper, risk management is “a process for identifying, assessing, and prioritizing harmful conditions (risks) of different kinds” (Alexander and Sheedy 10). Depending on the nature and type of risk that an organization may anticipate to face, a number of strategies may come in handy to help in mitigating them.

Some of the risks that organizations endeavor to mitigate include undue lawsuits, theft, fraud financial markets uncertainties, credit risks, and confidential information leak risks amongst others. Proper management of these risks lowers the degree of vulnerability of an organizational.

Even though, it is crucial for organizations to concentrate on reducing financial risks, risk management has an important function towards aiding in protecting customers, public, and employees from negative impacts including fires and terrorism amongst others. It also entangles the protection of organizational physical assets, records, data, and other physical facilities.

From this perspective, the paper utilizes Pepsi Company to describe three volatile situations showing how one can apply risk management to resolve them. The situations are fraudulent activities, which may result into the shareholders losing their long-term investments, as well as health and safety risks for both workers and consumers of the organization. Since water is an important raw material in the manufacture of beverages, the paper treats the risks of water pollution as an additional risk to Pepsi Company.

Organizational Background

Pepsi Company limited is a Philippines-based soft drinks bottling company specializing in canned products. It manufactures, sells, and distributes soft drinks belonging to the non-carbonated (NCB) and carbonated soft drinks (CBDs) category. These comprise the main two business segments of the company.

The products of are distributed to wholesale, retail outlets, bars, and restaurants. With each segment of the products being manufactured by the company, varieties of product brands exist. In the CBDs’ segment, brands such as 7Up, Mug, Mountain Dew, Pepsi cola, and Merida exist. Pepsi Lipton, Gatorade, Propel Fitness Water, Twister, and sting energy drinks comprise the NCBs segment.

Given the wide range of products that the company produces, it is significant that the organization determines the most appropriate product mix in an attempt to attain optimal profitability. Achieving optimum profitability implies optimal mitigation of risks to investors (shareholder). This means that one of the plausible risks that Pepsi Company endeavors to mitigate is protection of the shareholder against encountering undue losses of the investment.

In this extent, Pepsi states categorically in its mission statement that it “seeks to produce financial rewards to investors providing opportunities for growth and enrichment to its employees, business partners, and the communities in which it operates” (PepsiCo Inc Para. 1).

Additionally, disability and risk managers within Pepsi Company have come up with strategies for mobilization of all resources with the organization over a long time to ensure that the organization improves its profitability continuously. Consequently, they have “discovered that respecting employees can have a positive impact on workers’ comp and disability costs” (Myshko 122).

It stands out that, equal treatment of employees; strict observance of justice coupled with inculcation of strong organizational ethics of integrity within the organization can hike the levels of accountability of all Pepsi workers right from those in the production floor to the top management officials.

Risks Context

In Pepsi Company, immense measures get plausible attention to ensure that the organizational goals and values articulate with anticipated stakeholders’ benefits. The values of the organization form the frameworks upon which specific goals cling. These include vision statements and objectives of all departments that must work collaboratively to deliver high quality beverage products, while not negating the overall corporate strategies coupled with managerial tactics.

In the quest to mitigate risks within any organization, organizations determine quantitatively or qualitatively the extent to which they have accomplished their visions, values, evening anticipating performance strategies. In the formulation of such values, attention goes to strategies and visions to ensure that the organization in question can reduce the degree of its susceptibility to risks.

For this purpose, before continuing with the analysis of risks facing Pepsi Company, a consideration goes to the scrutiny of Pepsi’s organizational goals and values. However, the scope of this paper does not warrant consideration of departmental objectives, goals, and/or how they contribute to the overall mechanisms of risks reduction with Pepsi Company.

Organizational Goals

Pepsi’s main goal is to ensure the fulfillment of its vision is realized of “put into action through programs and a focus on environmental stewardship, activities to benefit society, and a commitment to build shareholder value by making PepsiCo a truly sustainable company” (PepsiCo Inc Para 2). As stipulated in this goal, it is clear that Pepsi recognizes that its main reason of being in operation is to confer benefit to its owners (shareholders).

Therefore, any impediment to this goal is an immense organizational risk that needs mitigation by deploying concepts of risk management in its corporate governance strategies. Further, goals of the Pepsi Company are enumerated in its philosophy statement. The company endeavors to ensure that it grows sustainably by empowering people, acting in a responsible manner, and building investors’ trust.

To build trust, accountability is relevant, as it amounts to a critical organizational goal. In this extent, any event or act such as fraud that may erode the force of accountability constitutes an organizational risk that needs mitigation. In fact, incorporation of appropriate measures for mitigation of fraudulent activities within the organization constitutes one of the strategies that ensure the realization of sustained growth of the organization.

With sustained growth, more innovation can be done through research and design with a consequence of even more enhanced growth of both the employees and the company in terms of increased organizational performance. For Pepsi, empowering people is particularly critical since “freedom to act and think in ways that we feel will get the job done, while adhering to processes that ensure proper governance and being mindful of company needs beyond our own” (PepsiCo Inc Para 3) is realizable.

For Pepsi to realize its goals, as argued before, it is significant that the organization practices utmost responsibility coupled with retention of perceptions of trust among all its stakeholders. This is the foundation of healthy growth. For this reason, the company ensures that all its employees are personally and corporately accountable.

In this context, PepsiCo Inc informs, “by acting as good stewards of the resources entrusted to us, we strengthen that trust by walking the talk and following through on our commitment to succeeding together” (Para. 6). The company strives to achieve this endeavor by deploying six guiding principles enumerated as:-

• Care for consumers, customers and also the entire word where the company’s products are used
• Focusing on sales of products which can only make the company proud
• Speaking with both truth and candor
• Ensuring that long terms and short terms strategies are balanced
• Utilize the organization diversity coupled with inclusion in manner that would make the organization competitive
• Ensuring that people respects each other for them to succeed together

Organizational Values

Organizational values may be stipulated in a number of ways. One subtle way is to break the values into some weighted “triple bottom lines” (Kallman 23). This concept extends beyond the native bottom line, which only seeks to address fiscal issues to include environmental stewardships coupled with social justice.

Pepsi operates under foods and beverage industry. Therefore, consistent with this breakdown, the company has to comply with both environmental concerns in its production processes ensuring strict compliance with social issues such as health, supply chain, and safety in the development of new beverage products.

As a core value of Pepsi, the company appreciates that more fragmentation of supply chain impairs the organization’s capacity to control its production activities. Hence, myriad of challenges affiliated to its products’ safety levels and quality coupled with abuse of human rights are likely to arise. This perception makes it clear that Pepsi organization values extend beyond the deployment of organizational values pegged on fiscal issues in the quest to enhance and maintain long-term profitability of the organization.

Pepsi Company produces a wide variety of products, which have high consumerism across Philippines. It is significant to ensure that it produces products of high quality in order to induce product loyalty among its consumers. In the umbrella of social justice, health consideration comes first.

During the production process, workers operate with production and packaging equipments that may cause bodily injuries to them. Hence, safety is an imperative organizational value that every worker within the company must observe. Failure to do this may plunge the organization into hefty risks amongst them compensations for preventable accidents. Furthermore, environmental hazards are worth incorporating in the concerns of Pepsi organizational values.

For this reason, the company endeavors to ensure that it conducts its business, not only in a safe way to the employees, but also the surrounding communities. More important to note is that the company deploys proactive strategies to ensure that it protects natural environment to meet the organizational needs of every day without impairing the organization’s future capacity to meet ardently the needs of its clients.

Organizational Risk Position

An organization may take a valid position in the quest to ensure that it responds ardently to risks exposures. A means of responding to risks is critical since no organization is principally immune to risks (Borodzicz 115). However, before deriving such a means, it is necessary to qualify the organization’s capacity to tolerate risks.

This happens by determining the company’s position on either side (tolerance and appetite) of the neutral point of risks scale. “The objective value of an organization’s faith in a positive outcome is its risk appetite” (Borodzicz 128). On the other hand, tolerance is the extent to which a particular organization attempts to make transfers of its risks volatilities to external parties among them being the insurers.

Fundamentally, companies approach volatile situations that may result into exposure of the company to risks from the dimension that no negative impact may result. However, the volatility of the situation, depending on the degree of the volatility, may produce varying impacts to the organization- both positive and negative.

With incorporation of innovative strategies, Pepsi has always anticipated positive volatilities for some situations such as the likelihood of professional malpractices such as engagement of fraudulent activities, particularly with the overwhelming embracing of integrity as both organizational culture and value.

Arguably, for Pepsi to ensure that all its stakeholders are subtly protected from imminent risks, it is crucial that the organization prevents them from the action of all volatile situations. Unfortunately, this is widely improbable during the normal business practices. For instance, by merely starting the production process, workers are exposed to health and safety risks.

Additionally, for every product produced, some waste products are released into the environment, and may find its way to water sources. This increases the risks of using contaminated water in the company’s future production processes. Thus, it is crucial that the organization employs a strong culture of safety. The worst part is that probability of exposure to negative volatilities can never reduce to zero. Concepts of risks management can never be left out in the daily business activities of the company.

Risk Analysis

Water

Risk Identification

One can utilize various ways to determine various volatile situations that may truncate into risks that may cause undue outcomes. Through conducting an intensive research on beverages manufacturing processes, availability of clean water comes out conspicuously as an incredible risk that may pose enormous risks to the Pepsi’s normal line of business. Water is an essential ingredient in the manufacture of beverages.

It is also used in the cleaning and cooling during the manufacturing process of Pepsi beverage products. As Pepsi Company has its headquarters in Philippines though constituted in India. The perception that “India’s current water supply is approximately 740 billion m3, but it has been estimated that by 2030 demand for water in India will grow to almost 1.5 trillion m3” (Carmody 387) implies that water pollution is an incredible risk that Pepsi would get required to mitigate proactively to maintain its levels of profitability in future.

Similar argument may be extended to Philippines, china and even the entire Asian continent. In particular, change of weather patterns due to global warming increases the risks of clean water security for use in the beverage industry, which is a lucrative industry in Asia perhaps due ease of its market penetration.

With the declaration that about 75 percent of water flowing in the natural stream and rivers, which passes through urban centers across Asia, is unsafe for both fishing and drinking (Carmody 389), it is apparent that Pepsi faces risks of water security issues.

Description

In the quest to describe any volatile situation that may result into organizational risks, it is crucial to segregate it into its constituent components: subjects, a factor and events. Subject refers to the asset, stakeholder, a liability and even any other form of equity that is critical to the organization.

Since the focus here is the risk of clean water security, the subject at risk is the products produced using the water as an ingredient. Events are those things that produce variations in the values of the subject. The event described here is that of both intentional and unintentional pollution of water sources of the Pepsi Company. Factors are conditions, which have the power of affecting the probability of the event to truncate into change of subject’s value.

In this context, factors may function as drivers (results to positive volatility) or comprises the hazards (leads to negative volatility). Hypothetically, a possible factor would be reduction of water quantities due to global warming. Apparently, despite the narrow focus of this risk, it is clear that almost every stakeholder of the Pepsi Company is influenced by it and hence the risk is worth giving consideration.

Measurement

Every firm that is engaged in a manufacturing process measure the magnitude of its water requirements in terms of either gallons or m³ to produce a certain quantity of products. Further, one can express this quantity in terms of its sources. Stream water is the most readily available source of industrial water.

With the increase in pollution of this water, it is anticipated that the water obtained this way need to undergo intensive screening and purification process. The process is dependent on the source of the water as highly polluted water is anticipated to have the highest cost per unit.

Impacts

Evaluation of the overall effects of a volatile situation comprises one of the most essential strategies towards remaining vigilant for the volatile situation. In this particular scenario, it is release of polluted water into streams from where Pepsi Company obtains its water. Pollution as an environmental risk to Pepsi Company is critical in that, the beverage industry is open to water risks due to a number of reasons.

In the first place, to conduct its business, the industry demands to have large water supplies. Secondly, the largest proportion of this water needs being extremely pure for the organizations in the industry to produce products of high quality and which meets the requirements of foods and drinks safety standards.

Most importantly, the perception of risks of reduction of supplies of clean water to the company impacts it negatively in the sense that it has to consider improving its efficiency levels (utilizing less water quantities per product), increase and maintain accessibility to clean water and also deriving mechanisms of dealing with the waste water from its production processes. All these considerations have financial element tied within them. Consequently, the risk of dwindled company’s profitability becomes even more amplified.

Mitigating the Risk/Solution

To help deal with the risks of water pollution in future, Pepsi needs to derive strategic measures that would ensure that it becomes risk resilient. This starts by risk acceptance. After accepting that the risk is eminent, Pepsi should then adopt mechanisms of minimizing the severity of the risk.

Risk acceptance is inevitable since elimination of the risk in totality is a nightmare because factors beyond human control such as the harm already done on the ozone layer, and hence the global warming amplify the risks.

Attempts to reduce risks of using polluted water in the production process in the Pepsi’s beverage production process is so critical to the extent that, should such a situation occur, the organization’s long culture and goal of ensuring high quality products delivery to its consumers would get negatively impaired. A number of possible solutions exist to help the company mitigate or reduce the probability of its occurrence some time expressed in future time domain.

• Pepsi needs to consider and measure the extent to which its supply of water is dependent on risks associated with stream water pollution. In this endeavor, all stakeholders have to be consulted.
• The organizations water footprint is essential for measurement and scrutinizing ways in which process enhancement coupled with water related infrastructure may contribute in more effective and efficient water resources management.
• To mitigate the risks of utilization of contaminated water in the beverages production process, the company needs to put in place rigorous water monitoring and also testing equipments whose sensitivity levels depends on perceived risks of exposure.
• Pepsi Company needs to evaluate and rate its contribution to pollution of watercourses. Upon doing this, it needs to put in place mechanisms to reduce both the level of this form of pollution and other industrial effluents. When the company does its part and other companies’ follows suit, it is likely that the chances of exposure of the company to clean water insecurities in future would be reduced in multifold.

Fraud and Misconducts

Risk Identification

Many management scholars contend that fraud constitutes one of the most important ways in which the investors can get deprived off their right to reap the benefits of their investment optimally. This is why regulations have already been incorporated both in Philippines and across the globe to curtail internal corporate misconduct and fraud. Fraud is “broad concept that generally refers to an intentional act committed to secure an unfair or unlawful gain” (Garner 18).

It is important to note that no particular methodology of mitigating fraud risks fits ardently in all organizations. Thus, it is necessary to narrow down to the case in context: Pepsi Company. On the other hand, acts of misconduct in the context of organizational susceptibility to risks entangles violation of set out regulations, market anticipations, business conducts that are ethical and just, laws and internal policies of an organization.

The discussion of fraud as risk worth mitigation does not imply that Pepsi Company experiences or employees people who engage in fraudulent activities. The emphasis is that, fraud is undue risk that may occur within the organization and hence some mechanism of mitigating it is necessary if Pepsi is to develop resilience to fraud risks.

Description

In the occurrence of fraud, the main subject impacted by such a risk is the shareholder, who is also the owner of the organization. Several events may lead to surfacing of the risk of fraud within Pepsi Company. One of such events is occurrence of a financial reporting system intoxicated with fraud.

This entails assets overstatement, liabilities understatements and recognition of revenues in an improper way (KMPG 7). Another event is assets misappropriation including external theft, embezzlement, counterfeiting, payroll fraud, loyalty fraud and fraud in procurement process among others. The third event is gaining of assets and or revenues in an illegal manner. This entangles consumers overbilling, bogus revenues, deceptive behaviors while selling, and revenue acceleration.

An event of the case of liabilities and or expenses avoidance illegally through tax fraud and falsified information provided to law regulators and enforcers is also tantamount to exposure of the organization to fraud risks. In the context of Fraud risk, a factor would entail relaxation of the fraud monitoring system within Pepsi Company. This would create the chances of loopholes through which the fraudulence would take place.

Measurement/Risk Assessment

All organizations encounter some sort of risks associated with fraud and/or misconducts. Pepsi Company is not immune to this kind of risk.

It is thus vital for the company to conduct fraud risk assessment to help the “management understand the risks that are unique to its business, identify gaps or weakness in control to mitigate those risks and develop a practical plan for targeting the right resources and controls to reduce those risks” (KMPG 12). Therefore, the Pepsi Company should utilize the following procedure in assessing risks of fraud.

The process of assessing fraud risks

Source: (KMPG 10)

Impacts

For an organization to remain competitive, it needs to maintain its shareholders confidence and security of their invested funds. However, this is improbable without appropriate strategies of mitigating fraud risks. This is because incidences of fraud create a phenomenon favorable for loss of the Pepsi owners and other stakeholders’ levels of confidence to the performance of the organization both in short term and long term.

Mitigating the Risk/Solution

Since cases of fraud within Pepsi Company having not been reported on mega scale, it is important that risk management team of the company prevents their occurrence in the first place.

This noble duty is particularly the responsibility of the audit committee. Together, with the management, the board of directors has the responsibility of proactively mitigating acts of misconduct and fraud by deployment of appropriate fraud monitoring and control strategies.

This leads to establishment of “‘tone at the top’ and ensuring that institutional support is established at the highest level for ethical and responsible business practices” (KMPG 9). For this reason, Pepsi company has established an audit committee that has among other duties the following responsibilities:-

• Conducting a review and discussion of issues that come up during misconduct and fraud risk assessment
• Discussion and review of results obtained during the assessment of the company’s quality of various antifraud programs coupled with their controls with both external and internal auditors
• Establishment of the procedures that are appropriate for treatment coupled with receipt of queries emanating from matters of accounting audit

The above responsibilities are arguably an attempt to put in place a mechanism of fostering accountability. The fact that these responsibilities are coordinated by the top managements makes is possible to mitigate fraud. Indeed, “ a robust fraud strategy is one that is sponsored at the highest level within a firm and embedded within the organizational culture since fraud threats and fraudsters consistently develop new techniques to exploit the easiest target” (Robison 13).

Therefore, senior Pepsi fraud risks management and oversight committee needs to ensure that acts of fraud and misconduct are mitigated through

• Coordination of the Pepsi efforts of risk assessment
• Enactment of necessary standards for accepting preferred business practices
• Design and oversee the mechanisms of antifraud programs implementation and control
• Report to the audit committee and or the board on proceeds of the company’s activities of risk assessment

Health and safety risks

Risk identification and description

While employees interact with machinery in the Pepsi production floor, they are exposed to a variety of risks. By mere pressing of the start button of a machine, the risk of experiencing undue and harmful condition due to the operators’ perceived level of safety rises from zero. It increases with time in which the operators take control of the machinery.

Thus, it is vital to ensure that employees work both in healthy and safe environments since “all assets can be replaced, but the employees are one asset that an organization wants to retain for a long time” (Jones 91).

Additionally, increasing number of middle class people who have magnificent concerns over their health depicts that purity is an essential health risk that Pepsi Company needs to mitigate. In case of a volatile situation involving incidences of impurities in Pepsi products, the magnitude of consumption of the products may eventually reduce immensely.

Risk Measurement

Health and safety risks are measurable in a variety of ways. One way is direct observation of the myriads of conditions that are likely to cause injuries as people execute their tasks in the production floor. The second approach is examination and analysis of written records, reports and documents on instances and the number of injuries encountered in Pepsi Company.

From this analysis, a subtle strategy can be derived to help mitigate such risks in future. Thirdly, one may “talk to people to elicit facts and their experiences as well as gauging their views and opinions” (Health and Safety Executive 16). These approaches yield both quantitative and qualitative data.

Impacts

Philippines imposed strict liability on the manufacturing companies for the injuries caused on the employees while working. This infers that safety and health issues in the production floor and in products entangle an immense risk that Pepsi Company needs to mitigate.

Reduction of such risks also has a significant impact in increasing the profitability of the organization since the magnitude of compensations would reduce. Reduction in the number of health and safety risks is also necessary to avoid or reduce the number of legal suits, which may paint the image of the company negatively.

Solution

For Pepsi Company to ensure that it attains ‘no injuries outcome’ or a health risk affiliated to the work environment in the quest to satisfy its stakeholders, it is necessary to facilitate cute and effective control of safety and health risks. Effective and efficient health safety and health risks mitigation strategy has its premise on effective and efficient safety and health system management. This system is depicted below.

Effective Risk Control System

Source: (Health and Safety Executive 10)

In the endeavor to ensure that health and safety management system shown above translate into reduction of volatile situations; three key levels of control are critical for implementation at Pepsi Company. These are:

• Level one encompasses the crucial elements for safety and health management system. It entails management arrangements such as objectives and plans that are essential in the control, organization, design, monitoring, planning and implementation of various risks control management system (Health and Safety Executive 12).
• Level two is risks control system. It forms the fundamental base on which sufficient precautions of work place safety is provided and maintained.
• In level three, work place precautions are provided coupled with maintenance. The precautions aid in preventing harm to employees at the place of work or point of risk.

Conclusion

Every activity of an organization comes with some risks to the subjects. These risks are attributable to the existence of certain events, which give them some values. Moreover, certain factors must exist for a volatile situation (event) to take place. Combination of these three elements manifests themselves as risks, which organizations must endure and mitigate in the attempt to meet the needs of all the organizational stakeholders.

In the paper, three volatile situations were considered as presenting risks to Pepsi Company. Hence, the paper finds it vital to mitigate them. These are water; which comprise about 75% of the raw materials required in manufacture of beverages, health and safety, together with fraud and acts of misconduct.

Works Cited

Alexander, Carol, and Elizabeth Sheedy. The Professional Risk Managers’ Handbook: A Comprehensive Guide to Current Theory and Best Practices. New Jersey: PRMIA Publications, 2005. Print.

Borodzicz, Edward. Risk, Crisis and Security Management. New York: Wiley, 2005. Print.

Carmody, Lucy. “Key risks facing the Asian beverage industry”. Asian social corporate responsibility journal 1.1(1998):387-391. Print.

Garner, Bryan. Blacks law dictionary. New York: West Group, 2004. Print.

Health and Safety Executive. A Guide to Measure Health and Safety Performance. London: Health and Safety Executive, 2001. Print.

Jones, Paul. Health and safety measurement in the workplace. New Jersey: Pearson, 1991. Print.

Kallman, Johnston. Risk management process, Lecture presented at International School of Management. Paris, France, 2011, June 6. Print.

KMPG. “Developing a strategy for prevention, detection and response to fraud”. Fraud risk management 1.2 (2006): 1-32. Print.

Myshko, Denise. “The Pepsi Challenge: Succeeding With Employee Advocacy”. Journal of risk management, 2.3 (2001): 121-125.

PepsiCo Inc. Our Mission and Vision, 2009. Web.

Robison, Robert. Organizational Fraud in the Wake of Mega Scandals. London: financial services authority, 2006. Print.

The main aim of this report is to identify and analyze two major companies in the soft drinks industry and make a recommendation on which of them can be considered for investment purposes. The use of various stock valuation models will be applied to quantitatively analyze the financial stability of these companies and their common stock markets performance. All information about the companies is sourced from Edgar and other sites that provide financial information.

Ruback (1995) notes that “Coca-Cola and Pepsi have been rivals in the soft drink market for over a century and both companies enjoy a high degree of brand recognition globally whereby Coca-Cola is the largest manufacturer and distributor of non-alcoholic beverage concentrates and syrups in the world.”

It also has other small businesses under it like; bottling and canning operations. Anuar (2007) observed that “The company(coca Cola) is a multi-international and all its products are grouped into eight businesses to include: Africa, Eurasia, European Union, Latin America, North America, Pacific, Bottling Investments, and the Corporate.” The products are marketed and sold in more than 100 nations globally and consist of: Coca-Cola, Crush, Sprite, Fanta, Dasani water Fruitopia, Minute Maid juices.

Aswath, (2007) notes that “Pepsi is a leading global snack and beverage company; it manufactures, markets, and sells a variety of salty, convenient, sweet and grain-based snacks, carbonated and non-carbonated beverages and foods. The company operates in 200 countries outside the U.S. and Canada and gets revenues from four of its major businesses.”

Pepsi has also largely benefited from its merges with Frito-Lay and Quaker Oats, by acquiring its businesses ,the company revenues have shot upwards a factor that has also led to its stocks gaining value and hence investors can be recommended to invest in Pepsi.

“Coca-Cola’s stock was trading at an average valuation of $45.00 dollars per share in 2003, almost getting to $50.00 dollar, a very high value where it went ahead and shot further to $59.33 in the year 2008. But this can be considered as a drop compared to the $100.00 dollar price range in the 1990’s.” (Copeland & Koller, 2000).

This drop was caused by the change in consumer preference for carbonated drinks and flavored water. Hence this factor should be a key element for investors intending to invest in the company as it as not shown a significant change to healthier drinks like its counterpart has done.

Pepsi Company has taken a keen strategy on being diverse with their products and has seriously considered the issue of consumer health in production of their products and this has made them be ahead of Coca-Cola in the market for the first time in history (Rosenbaum, 2009).

Pepsi has changed its way of production by reducing production of sugary, fizzy soft drinks and snacks and now only a fifth of Pepsi’s sales now are from these products. The group’s sales growth was twice that of Coca-Cola in 2004, its shares have hit high records this year and have been trading consistently above its rival.

Valuation is a process involving use of several procedures to estimate the economic value of a certain interest in a business. Our major interest in this report is the common stock markets of these two companies but also the company as a whole will be considered. Stock valuation methods are methods used to value stocks, when planning to invest in stocks it advisable not only to know the stock price but also the value. A good model should have the following inputs of valuation so as to achieve the real value:

Income Statement- A standard income statement should contain revenues, expenses accounts and net income for each operating period of the company this is because dividends are paid from the net income.

Balance Sheet – The balance sheet contains assets and liabilities accounts, it shows the net worth, shareholders equity or the total assets for the business on the day the report is prepared.

Discounted Cash Flow Valuation – Also know as a DCF valuation, is the most important part of any professional business valuation model.

Cash flows are calculated by adding the net change in certain key balance sheet accounts to net income. They are then discounted by the company’s weighted average cost of capital. The present value of the cash flows (including the present value of the terminal value of the business) is divided by the total number of shares outstanding to arrive at a per share value of the equity of the business (Ross & Jaffe, 1990)

WACC Calculation – The WACC is the weighted average cost of capital for a firm which is then proportionately weighted.( Damodaran,1996) quotes that “All sources of capital for example; common stock, preferred stock, bonds and any other long-term debt – are put in a WACC calculation where the WACC of a firm increases as the beta and rate of return on equity increases, as an increase in WACC notes a decrease in valuation and hence a higher risk.”

Ratio Analysis – A comprehensive ratio analysis will give you a good summary of the financial stability a company. Some of the important rates are Price Earnings ratio Price Book ratio, Price EBIT ratio, asset turnover ratio, Earnings per share (EPS), Return on equity Debt to equity ratio Interest coverage ratio: Return on Sales Discounted Cash Flow and Discounted Future Earnings

Three of the many stock valuation models are the; discount cash flow model, the dividend discount model and the earnings growth model (Imam & Barker, 2008).

Discounted Cash Flow model

Generation of cash for shareholders is the core business of any company, and hence the more higher its value gets. Levengood (1998) quotes “Free cash flow is slightly different from the net profits that are reported on the income statement hence the need to calculate it by use of financial statements filed by public companies.”

The next step in this model is to estimate the total of future free cash flows from the company, which enables you to express what you think the company’s growth potential is over both the short and long term. The discounted free cash flows are then added all together, and then divided by the current number of outstanding shares to get the stock’s fair value estimate.

Free Cash Flow (FCF) = Cash from Operations – Capital Expenditures (Pablo, 1995).

The method involves converting future earnings to today’s money, and through this method we can get the time value of money and the risk premium.

The calculation done according to Pablo are;” future cash flows must be discounted in order to express their present values so as to know the value of a company as a whole, all future cash flows are estimated and discounted to give their present values (PVs) then the sum of all future cash flows, both incoming and outgoing, are subtracted to get the net present value (NPV), which is the value of the cash flow”. The main inputs in this model are cost of equity, cost of capital internal rate of return – IRR, intrinsic value, the operating income and the equity in earnings and the most essential one, a discounting rate.

The weighted average cost of capital is mainly the discounting rate that is used because it effectively shows the risks of the cash flows. The discount cash flow analysis shows changes in the in the long term growth rates have a big effect on share valuation it can also be used by investors to as a reality check instead of using a target price which is a complicated process.

It also provides a bonafide stock value, because it does not weigh all inputs used in the model. The weighted Average Cost of Capital of Pepsi is 5.24% lower than that of Coca-Cola which is 6.35%, this has resulted to the rise its stock value from $40.81 in 1998 to $68.20 while that of Coca-Cola has dropped from $78.38 to $58.7 (McKinsey & Goedhart, 2005).

The model however has its weaknesses such as; it is very mechanical and any minor change in the inputs can lead to major changes in the value .The method also is suited for long term investment and not short-term investing and also it is largely affected by changes in interests rates. This gives us the need to use other valuation methods so as to get an accurate value. Copeland, (Damodaran, 1996).

Dividend Discount model

Rosenbaum (2009) says that; the model is best for income investors because the objective is to project dividend distribution based on the average historical dividend payout ratio and discount it back to the present value; however the stocks must be strong in the market and not penny stocks.

The dividend discount model values stock on the basis of the stock is worth the discounted sum of all dividends in future. James (2006) explains that “The model requires making a lot of assumptions about companies’ dividend payments and growth patterns, as well as future interest rates”. The inputs of this model are current stock price, ratio of net income to total assets, return on equity, expected dividend, rate of return and the expected growth .Using these components, we get the cost of Capital and the growth rate in future dividends.

The argument used in this model is that; the value of a stock is worth of all the future cash flows expected to be achieved by the firm discounted by a risk rate because dividends are the cash flows returned to the shareholder in future and will include dividends and the sale price of the stock when it is sold. The model is best used for stocks that have high yields, and the dividends ought to be paid consecutively for ten years (Aswath, 2001).

Stakeholders invest to get profits hence the most essential quotient in this model is the relation of net income to general equity. This ratio can show us how Pepsi and Coca-Cola are fairing in financial terms: Coca-Cola’s return on equity is 27.0% and that of the industry is (30.7%) while in Pepsi (ROE) is 34.0%, above the industry.

Pepsi is not distributing to the stockholders because of its partnerships overseas while Coca-Cola is not offering as much worth to its stockholders. The other quotient is relation of net income to sum assets that value the return on sum assets after interest and levy fees.

Pepsi’s return on assets ratio in five years is 15.89% a little higher than the that of the industry, that of Coca-Cola is 16.37% once again higher than the indusrty’s14.70%.This is because Pepsi has a long term debt24% while it’s rival has a debt equal to 15.3% of its total liabilities and hence it is safer incase of war or recession than Pepsi. All this factors will assist in getting the dividend yield of these companies for Pepsi its 1.92 (2.90%) (Rosenbaum, 2009).

The Earnings Growth Model

Earnings growth is a measure of a company’ growth in net income over a specific financial period, it can be calculated using pas data or estimated data for future periods. The earnings growth model enables investors to establish the rate of growth of earnings from the stocks invested.

The rate is very important in stock valuation, and some of the inputs used in this model are; dividend pay out ratio, discount rate revenue growth rate, the price earning ratio, and the earning per share. In this model the Price/Earnings to Growth relation which determines the value of stocks while factoring in account earnings growth is established. James, (2006) observes that “The computation is: PEG=price/earnings ratio divided by Annual earnings per share growth.”

Levengood (1998) notes that “Earnings per share is the net income reported in the income statement for a particular period divided by the number of shares outstanding”. In addition, “The theory that is applied here is as the percentage goes above 100% the stock becomes more over valued, and as the ratio falls below 100% it becomes more undervalued. High yielding stocks will always have a higher price earnings ratio because earnings in future are expected to be more”(Rosenbaum, et al 2009).

Price/earnings (P/E) ratios are high for firms with strong increase forecasts, all other factors not considered but they are less for riskier organizations (Aswath, 1996).Pepsi company’s ratio is 19.7 times, lower than the industry’s which is (21.1) while that of Coca-Cola is, 22.1 times high which is well above the industry‘s (21.1) hence its stocks could increase in the future.

However, these companies are both in the soft drinks industry, which has drastically changed in the past decade due to the change of customer’s preferences to healthier drinks as mentioned earlier and hence, Pepsi has a higher probability of its revenues going up and not being affected by this factor, because of its healthier products and so is the growth of the earnings per share of its stocks unlike those of Coca-Cola although it has a higher ratio.

Conclusion

Pepsi appears to have a slight advantage over Coca-Cola because it has better operating margins better revenues and net income which is vital for growing companies. Coca-Cola on the other hand has higher figures but not very attractive margins. Lately Pepsi has also produced good earnings per share statements while coca cola has done the same ,they were at a smaller margin .

Coca-Cola has shown very minimal growth in the past five years but still has not it dropped, it is just stagnant a factor not very favorable if at all it intends to attract shareholders. Pepsi on the contrary has shown steady continued growth which is a very attractive factor for investors. Another factor is that both companies have had problems with the emerging markets of India but Pepsi has recently appointed a CEO with an Indian background hence may appear more favorable to the market (James, 2006).

According to my analysis both quantitatively and qualitatively I would consider Pepsi to be a better place to investment in, basing my decision more on the weighted Average Cost of Capital of both companies, the probability of growth of the earnings from their stocks, and the ever changing customers’ needs and preferences. Coca-Cola though should not be dismissed since it’s a sleeping giant that could wake up any time and get back to its position.

To be prepared Pepsi should consider increasing their markets to other regions that the company is not popular for example Africa .Coca-Cola is a strong brand and any investor would consider it for investment but at this point I would advise one to hold and wait maybe in the long term KO which is it’s stock market name may be a glamour stock once again but as for now Pepsi is the sure option.

Reference List

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Aswath, D. (2001). Investment Valuation: Tools and Techniques for Determining Value. Burr Ridge, IL: McGraw-Hill/Irwin.

Copeland, T. & Koller, M. (2000). Valuation: Measuring and Managing the Value of Companies. London: Oxford University.

Damodaran, Aswath (1996). Investment Valuation: Tools and Techniques for Determining the Value of Any Asset. New York: Wiley.

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James R. H. (2006). Financial Valuation: Applications and Models. New York: Wiley.

Levengood, A. L. (1998). Using Discounted Cash Flow Analysis in an International Setting: A Survey of Issues in Modeling the Cost of Capital. Journal of Applied Corporate Finance, 4(10), 82–99.

McKinsey, K. & Goedhart, W. (2005). Valuation: Measuring and Managing the Value of Companies. Hoboken: John Wiley & Sons.

Pablo, F. (1995). Equivalence of ten different discounted cash flow valuation methods. New York: Harvard University Press.

Rosenbaum, J. P. (2009). Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions. New York: Cengage Learning.

Ross, W. & Jaffe, I. (1990). Corporate Finance. Burr Ridge, IL: McGraw-Hill / Irwin.

Ruback, R. S. (1995). An Introduction to Cash Flow Valuation Methods. New York: Harvard University Press.

Introduction

The proposed event will be the launch of a new product in the market. Pepsi ltd is the hosting company and it will be launching a new energy drink in the market. The event will take place at the company’s regional headquarters in the country on 15/12/2010. 50 participants are expected to attend the event. The outline for the event is as follows. The event will start officially at 9.00am. The first item on the program will be opening remarks form the regional CEO.

This will be followed by three speeches by the company’s management staff. The company’s chairman will then officially launch the product in the market by giving a short description of the product and its benefits. This will be followed by food and beverages break. The guests will be entertained during the break. The event is expected to end at 2.00pm.

Objective

The vision statement of the event will be “to launch the new Pepsi energy drink in a stylish and informative manner”. The main objective of the event is to give the participants an overview of the product. This will include describing the product as well as highlighting the expected return on the capital invested in it (Kilkenny 54).

The main goal of the event is to inform the public of the official introduction of the product in the market. The event will also be used to inform the public of the benefits of the product. The venue options for the event include the hall at the company’s head office building and the open space outside the office building. The choice of the venue will depend on the expected weather on the day of the event.

Planning

Planning starts on 9/12/2010 by identifying and sending invitation massages to potential participants. Marketing the event will begin on 10/12/2010. The outside caterers and entertainment companies must be informed in advance so that they prepare in time (Allen 67). Thus they will also be contacted on 10/12/210.Confirmation of attendance and review of the event’s budget will be done on 11/12/2010. There will be a final meeting with the outside catering and entertainment companies on12/12/2010.

The venue will be decorated and equipped with the public address system on 13/12/2010. Communication between the planners and the participants will be done through emails. Participants will also be updated through social networks such as tweeter which are cheap and effective to use (Hedley 70). Phone calls will also be used to confirm attendance. The event will be marketed through print and electronic media since they can reach a large number of people (Piesiewiez 40).

This will involve informing the public about the launch of the new product and the expected benefits. The participants’ agenda will include highlighting the contents of the product and discussing the expected returns on the capital invested in the product.

The planner’s agenda will be to ensure that the program runs in line with the stipulated time without technical hitches. The planner will also identify the limitations of the plan and provide immediate solutions. The venue will be inspected at 8: 00 am on 15/ 12/ 2010 to ensure that it is decorated as planned and the public address system is functioning. The planer will ensure that all guests are sited by 9:00 am. The company’s CEO will officially open the event at 9: 15 am with a short speech.

Between 9: 30 am and 11: 00 am the sales manager, the finance manager and the production manager will present their reports on the new product. The company’s chairman will be invited by the CEO to officially launch the product at 11:30 am. The outside caterers will be contacted at the same time to confirm if the food and beverages are ready. The food and beverages will be served at 12: 30 pm. The guest will also be entertained at the same time. The CEO will be invited to close the event at 2: 00 pm.

Food and Beverages

Food and beverages will be supplied by Thyme Catering Events by Design ltd. This will include soft drinks, hot buffet and salads. The soft drinks will include fruit punch, iced tea, flavored water and Pepsi’s cola drinks. The hot buffet will include pork stroganoff, beef lasagna and roast vegetable.

Jacket potatoes and brown rice will also be served. The salads will include apples, cheese, bean sprout, tomatoes and celery. Entertainment will include music and live performance by artists form Independent Artist ltd. The guests will be entertained during the food and beverages break. Out sourcing these services is expected to reduce the overall cost (Allice 38).

Décor and Room Set Up Inclusion

The room decoration and set up will be done by the outside caterers. The planner will be consulted on the expected quality. The decoration and room set up will be done on 13/ 12/ 201.

The room will be decorated with flowers and ribbons. These will bare the company’s official colors, blue and white. There will be a dummy of the new drink that is expected to be launched. The front seats will be reserved for the company’s management team. The public address system will be set up on 13/ 12/ 2010 and tested before and on the day of the event.

Budget Outline

Works Cited

Allen, J. Event planning: the ultimate guide to successful meetings and corporate events. New York: John Wiley and Sons, 2005.Print.

Allice, B. “Planning an event to promise your business.” Home and Business 16 (2010): 38-39.

Hedley, L. “A step-by-step program for planning special company events.” Vision 23 (2010): 70-71.

Kilkenny, S. The complete guide to successful event planning. New York: Atlantic Publishing Company, 2007.Print.

Piesiewiez, J. “Event marketing atkes centre stage.” Communication World 27 (2009): 40-41.