...Managerial Economics Coke vs. Pepsi: An Economic Analysis Rebecca Simmons Managerial Economics Dr Sol Drescher December 4, 2012 Executive Summary In this case study we will do an economic analysis of two major competitors; Coke® and Pepsi®. We will look at the history of these to competitive giants and discuss how they have evolved over the years to become rivals in the 21st Century. In this case study we will also look at the supply and demand of each company’s products. Coke and Pepsi are not only in the beverage business they have branched out into other arenas to continue being the leaders in their market. Both companies do business all over the world; we will also look at how they size up internationally as well as nationally. We will look at production and cost in the short run and long run by analyzing each company economically. Each company has foreta where they will be financially in the 21st Century and in this analysis we will calculate if they have forecasted close to where they are today. Management is a big part of the success of large firms such as Coke and Pepsi so we will look at the management styles of each one. By looking at management will analyze the strategic decision making of each firm and note any issues they have had in the past or present with upper management. Finally strategic decisions in oligopoly markets with regards to profit maximization is vital to the...
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...5) How can Pepsi and Coke confront the issues of water use in the manufacture of their products? How can they defuse further boycotts or demonstrations against their products? How effective are activist groups like the one that launched the campaign in California? Should Coke address the group directly or just let the furor subside? Pepsi and Coke should have responded faster to the concerns of the general public. The companies formed committees within India and the United States to work on legal and public relations issues. They commissioned their own laboratories to conduct tests and waited until the results came through before commenting in detail. Their approaches backfired. Their reluctance to give details fanned consumer suspicion. If the companies acted faster to the situation when it first came to light, the could have spared a lot of grief. Pepsi and Coke can defuse further boycotts by speaking directly to the cause of the boycott/demonstration or by allowing demonstrators to investigate their product themselves. The activists groups have proven to be very effective in their efforts. Fear campaigns (like the ones assembled in California) can do a great deal of damage to the brand. They are even more effective when the people targeted are not in the country being referred to as in this case (America/India). They are unable to use their own judgement to dismiss the campaign. Moreover, Coke should address the group directly in order to sort out any misunderstandings as...
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...The purpose of this paper, prepared by Jessica Chan under the supervision of Robert F. Bruner is about analyzing the companies Coca Cola and Pepsi after Pepsi has announced a merger with Quaker Oats Company with a deal at around $14 billion. With this deal Pepsi would have access to 83.6% of the sport drink market and around 33% of the U.S. noncarbonated-beverage market, followed by Coke with 21%. The paper wants to answer the questions how the latest announcement of Pepsi has an effect on the two companies´ prospects for value creation by showing the company background of both companies, giving a briefly industry overview of the beverage market and competitive events and establishing a financial comparison, especially with ratio and economic profit analysis. In the world Coca Cola and Pepsi have towered as the two leading brands of beverages. In the year 2000, Coca Cola was the largest manufacturer, distributor, marketer of soft-drink concentrates and syrups in the world and its market value reached $110.01 billion. On the other side Pepsi was a $20 billion worth company in 2000, acting in the snack food, soft drink and noncarbonated beverage market. Both companies have reached worldwide expansion of their markets, which include a large product range of beverages, apparel and paraphernalia with their respective logos. Both have grown into longstanding global and social industry leaders. Coca Cola´s annual sales were $20.5 billion which were earned also through a variety of...
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...9/8/2015 PGDM/MBA Material: Case Study- Cola Wars Continue: Coke and Pepsi in the Twenty-First Century www.mbapgdmstuff.blogspot.com Home Human Resource Marketing Information system management Images You are visitor # Case Study- Cola Wars Continue: Coke and Pepsi in the Twenty-First Century 110,588 Search This Blog Translate Select Language ▼ Category Assignment Business Communication Business Environment Business Law Case Study Compensation MAnagement E- Business Summary: "Cola Wars Continue: Coke and Pepsi in the 21st Century” explains the economics of the soft drink industry and its relation with profits, taking into account all stages of the value chain of the soft drink industry. By focusing on the war between Coca‐Cola and PepsiCo as market leaders in this industry – with a 90% market share in carbonated beverages – the study analyses the different stages of the value chain (concentrate producers, bottlers, retail channels, suppliers) and the impact of the modern times and globalization on competition and interaction in the industry. Analysis: It is quite clear that there was a “war" between Coca‐Cola and PepsiCo: not only have they been rivals for entrepreneurship For your Information Formates Human Resource Management Human Resource Mangement Human resource Planning Indian Labour Law Industrial Relation Information system Management International Marketing ...
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...Coke vs. Pepsi Case Study Control of market share is the key issue in this case study. The situation is both Coke and Pepsi are trying to gain market share in this beverage market, which is valued at over $30 billion a year (98). Just how is this done in such a competitive market is the underlying issue. The facts are that each company is coming up with new products and ideas in order to increase their market share. The creativity and effectiveness of each company's marketing strategy will ultimately determine the winner with respect to sales, profits, and customer loyalty (98). Not only are these two companies constructing new ways to sell Coke and Pepsi, but they are also thinking of ways in which to increase market share in other beverage categories. Although the goals of both companies are exactly the same, the two companies rely on somewhat different marketing strategies (98). Pepsi has always taken the lead in developing new products, but Coke soon learned their lesson and started to do the same. Coke hired marketing executives with good track records (98). Coke also implemented cross training of managers so it would be more difficult for cliques to form within the company (98). On the other hand, Pepsi has always taken more risks, acted rapidly, and was always developing new advertising ideas. Both companies have also relied on finding new markets, especially in foreign countries. In the foreign markets, Coke has been more successful than Pepsi. For example, in Eastern...
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...CASE STUDY : COLA WARS CONTINUE : COKE AND PEPSI IN 2006 The case study “Cola Wars Continue: Coke and Pepsi in 2006” focuses on describing Coke and Pepsi within the CSD industry by providing detailed statements about the companies’ accounts and strategies to increase their market share. ‘ Cola war’ is the term used to describe the campaign of mutually targeted television advertisement & marketing campaigns between Coke & Pepsi. Furthermore, the case also focuses on the Coke vs. Pepsi goods which target similar groups of costumers, and how these companies have had and still have great reputation and continue to take risks due to their high capital. Both Coke & Pepsi have segmented the soft drink industry into two divisions, via – 1.Production of soft drink syrup. 2.Manufacturing & distribution of soft drinks at retail level. Coke & Pepsi have chosen to operate primarily on the production of soft drinks syrup,while leaving independent bottlers with more competitive segment of the industry.The purpose of this report is to gain insight into the possible strategies that can be applied, in order to expand the overall throat share in the future. History revealed that a highly competitive strategy that was utilized in the past by both companies resulted in cannibalization. Because of this, the report is described from the perspective of both Coca-Cola and Pepsi. This report focuses on increasing the overall share and finding new opportunities in the unrevealed...
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...TITLE A STUDY ON EFFECTIVENESS OF MARKETING COKE AND PEPSI IN IT CITY. OBJECTIVE 1. Finding the satisfaction of retailers towards the movement of Coke and Pepsi in terms of value addition and promotional strategies of Coke and Pepsi. 2. Products and quantities offered and the satisfaction different class of customers. Problem Statement Based on the promotional strategies, improvement of distribution efficiency and suggestions for the improvement in terms of the value addition towards the retailers by Coke and Pepsi distributors. Literature Review 1. Lemley, Mark & McKenna, Mark The article discusses market definition in terms of intellectual property (IP) and antitrust law in the U.S. as of August 2012. The carbonated soft drink products developed by the competitors Coca-Cola Co. and PepsiCo Inc. are used to address several IP and antitrust law issues, including fair use under copyright law and mark similarity under trademark law. A consideration of supply substitution under antitrust market definition is also mentioned. 2. Nair, Anil & Selover, David D (2012) The study of competitive dynamics has become a vibrant area of research within strategic management. We contribute to this research stream by examining the nature of competitive interaction between Coke and Pepsi. We found that while Coke''s and Pepsi''s strategies display interdependent relationships, the volatility of the interaction among strategies do not always attenuate over time, and Coke''s strategies...
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...| 9/26/2014 | | | | | | | | | | | | Coke vs PepsiWeek 5 Case Study | | | | | | | | | | | | | | | | | | | | | | | | Artesia Stivison, Robert Higdem & Rocky Edmondson | Coke vs Pepsi Week 5 Case Study Question #1 Question #2 Question #3 Question #4 Can you make poor investment decisions and be profitable? What evidence do you see from the companies’ results that indicate how well they made investment decisions (capital budgeting). A company can make poor investment decisions and still remain profitable, but only for a time. A company cannot continually make poor investment decisions and remain profitable forever. When looking at the Coke vs Pepsi case study, we find that Doug Ivester, then CEO of Coke, made a bad investment decision when he chose to increase the rate charged for syrup to franchisers. As a result, bottlers raised prices to improve profitability, and in turn there was a decrease in overall sales volume. During the time Ivester was CEO, the net income for Coke fell 41% and he ended up without a job. Had this been a trend that continued, Coke would have been out of business, but they rebounded and remain profitable. This example shows that a company can make a bad decision and continue to be profitable in the long run. But, repeat bad investment decisions and a company will go broke. Question #5 How does WACC change over time? What do you think might drive the changes? WACC...
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...strategy of Coca-cola and Pepsi over 100 years of rivalry. New challenges of the 21st century included boosting flagging domestic cola sales and finding new revenue streams. Both firms also began to modify their bottling, pricing, and brand strategies. They looked to emerging international markets to fuel growth and broaden their brand portfolios to include noncarbonated beverages like tea, juice, sports drinks, and bottled water. For over a century, Coca-Cola and Pepsi-Cola had vied for the "throat share" of the world's beverage market. The most intense battles of the cola wars were fought over the $60 billion industry in the United States, where the average American consumes 53 gallons of carbonated soft drinks (CSD) per year. In a "carefully waged competitive struggle," from 1975 to 1995 both Coke and Pepsi had achieved average annual growth of around 10% as both U.S. and worldwide CSD consumption consistently rose. This cozy situation was threatened in the late 1990s, however, when U.S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. The case considers whether Coke's and Pepsi's era of sustained growth and profitability was coming to a close or whether this apparent slowdown was just another blip in the course of a century of enviable performance. A rewritten version of an earlier case by Michael E. Porter and David B. Yoffie. Essay: The case study “Cola Wars Continue: Coke and Pepsi in the Twenty-First Century”...
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...• Why businesses should utilize social media marketing along with traditional marketing practices? • What are the various applications of social media marketing for various companies functioning in the Indian market? What are the advantages and disadvantages of using social media marketing? • What are the social media marketing techniques followed by Coke and Pepsi in beverage industry? • What are the ways in which social media can more effectively be used by Coke and Pepsi for marketing their products? 2.4 Thesis Limitations Although the researcher has taken great efforts to ensure that this thesis is able to reflect good comparison of social media marketing techniques used by Coke and Pepsi but still there are some limitations of this study which are highlighted hereunder: 1. The first limitation of this thesis is that the results of the study are not generalisable and they apply in research settings only. 2. Secondly the scope of this study is limited to city of Delhi only as the data has been collected by the researcher in...
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...2007 Posted by goutham in case studies. trackback 1. Soft Drink Industry Five Forces Analysis: Soft drink industry is very profitable, more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this, using the five forces analysis we can clearly demonstrate how each force contributes the profitability of the industry. Barriers to Entry: The several factors that make it very difficult for the competition to enter the soft drink market include: * Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product. The other approach to try and build their bottling plants would be very capital-intensive effort with new efficient plant capital requirements in 1998 being $75 million. * Advertising Spend: The advertising and marketing spend (Case Exhibit 5 & 6) in the industry is in 2000 was around $ 2.6 billion (0.40 per case * 6.6 billion cases) mainly by Coke, Pepsi and their bottler’s. The...
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...Cola Wars Continue: Coke and Pepsi in 2010 Instructions - Read the case study and complete a full analysis by answering the questions below. Be sure to conduct a situational analysis by looking at both the external and internal environments when formulating your answers. Also consider other management disciplines and impacts (i.e. Human Resource Management, Marketing, and Finance). Some key considerations: 1. This is not a summary of the Case. Students are expected to apply relevant management principles, critical and analytical thinking when completing the case study 2. Output must be thorough, grammatically accurate and well written using APA format. 3. There is 10% penalty for late submission. Note: All responses will be used as part of the college’s assessment process for the masters’ program. Case Questions 1. Current Day Human Resources Analysis a) As Coke and Pepsi move forward from this point, are there any important human resource issues that should be considered as part of their corporate and business strategies? Fully Explain answer i. Current Day Competition Analysis, Discussion, Trends, including references. ii. Current Day Compensation Analysis, Discussion, Trends, including references. iii. Current Day Legislation Analysis, Discussion, Trends, including references. iv. Current Day Employee Relations Analysis, Discussion, Trends, including references. 2. Strategy Analysis ...
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...Based on the case “Cola Wars Continue: Coke and Pepsi in 2010,” use game theory approach/analysis to explain the competitive behavior of Coke and Pepsi making specific references to actions taken by each firm and the different “battlefields.” What conclusions can you draw about the competitive strategies pursued by both companies? At the time the Case was written was there a winner? Should both companies have acted differently? The game theory approach used between the two CSD giant Coke and Pepsi was at times very entertaining to see as a consumer. In the case study it explains the back and forth competition and in my point of view there still is no clear winner. Coke saw the importance of soda fountains and Pepsi was at times more “old fashioned” and felt bottle/retail sales were most critical. To counter Coke’s move, Pepsi entered the fast food market by purchasing Taco Bell, Pizza Hut, and Kentucky Fried Chicken. While the consumer became more informed with the ingredients used and the possible health issues caused by the artificial sweeteners, Pepsi and Coke began to battle to find the “healthiest” sweetener which ended up being Stevia. These battles branched out into the non-CSD drinks like, Vitamin Water, which was Coke’s largest purchase in their history. Even with that acquisition Coke was behind Pepsi on the U.S. non-carbs market share because of Pepsi’s advantage with the sales of Gatorade and Lipton tea. The game theory each used was basically who can be most...
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...preferences for food and beverages 1 Baylor Plaza are potentially modulated by an enormous number of Houston, Texas 77030 sensory variables, hedonic states, expectations, semantic priming, and social context. This assertion can be illustrated with a quote from Anderson and Sobel (2003) Summary profiling the work of Small et al. (2003) on taste intensity and pleasantness processing: Coca-Cola (Coke) and Pepsi are nearly identical in chemical composition, yet humans routinely display “A salad of perfectly grilled woodsy-flavored calastrong subjective preferences for one or the other. mari paired with subtly bitter pale green leaves of curly endive and succulent petals of tomato flesh in This simple observation raises the important question a deep, rich balsamic dressing. Delicate slices of of how cultural messages combine with content to pan-roasted duck breast saturated with an assertive, shape our perceptions; even to the point of modifying tart-sweet tamarind-infused marinade.” behavioral preferences for a primary reward like a sugared drink. We delivered Coke and Pepsi to human The text goes on further, but note that the sheer lushsubjects in...
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...The case study prepared by Archie B. Carroll entitled, “Coke and Pepsi in India: Issues, Ethics, and Crisis Management”, describes issues two major, well known multinational corporations (MNCs) have been facing in India over the past several years, since 2003. Coke and Pepsi are known competitors in the world of soft drinks, but have become allies given the situations they are facing in India. There are allegations of highly contaminated soft drinks, which claim to cause cancer and birth defects. An interest group in India, Center for Science and Environment (CSE) made the allegations and stated tests can verify the products contain high levels of pesticide residue (Carroll & Buchholtz, 2012, p. 649). Another special interest group, India Resource Center (IRC) raised concerns of an issue Coke experienced which is the claim of overconsumption and pollution of scarce water resources due to plant operations and production. This affected many cities and regions of the country, especially in the communities of Kerala and Mehdiganj (Carroll & Buchholtz, 2012, p. 649). In addition to the scarcity of water, there were also complaints of the water around the soft drink giant’s plants tasting and smelling bad. Donated waste to farmers for fertilizer tested positive for cadmium and lead creating toxic waste (Carroll & Buchholtz, 2012, p. 649). The allegations made by these groups were taken very seriously and believed valid because of the support of a very powerful and influential...
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