...| Coca-Cola Versus Pepsi | The Coke Wars Financial Analysis | | Accounting 557: Financial Accounting Sumadi, Mohammad | | 12/15/2012 | | Possibly one of the biggest rivals in Corporate America today, the battle between Coca-Cola (KO) and PepsiCo (PEP) continues to baffle not only consumers but investors as well in determining which product is a better buy. While both companies have had recent problems in emerging nations such as India by having their products be condemned for improper ingredients, a shakeup like this might be necessary to promote future growth for possibly undersold equities. Coca-Cola Company is the world's leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups, with world headquarters in Atlanta, Georgia. In May, 1886, Coca Cola was invented by Doctor John Pemberton a pharmacist from Atlanta, Georgia. John Pemberton concocted the Coca Cola formula in a three legged brass kettle in his backyard. The soft drink was first sold to the public at the soda fountain in Jacob's Pharmacy in Atlanta on May 8, 1886.About nine servings of the soft drink were sold each day. Sales for that first year added up to a total of about $50. The funny thing was that it cost John Pemberton over $70 in expanses, so the first year of sales were a loss...
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...Pepsi's ROE of 35% is higher than Coke's ROE of 28%. The number of shares outstanding for coke is higher than pepsi. The asset turnover for Pepsi is roughly 1.6 times that of Coke. The asset turnover of Coke is lower than pepsi resulting in a lower ROE. Coke has to increase their sales or sell assets. The impact of this is reflecting in the higher ROE. The impact of this also is reflecting in the higher ROE. The operating costs are also high in the case of Coke. In regard to the valuations of Coke and Pepsi, Pepsi is undervalued as compared to Coke as the P/E ratio is 15.6; if we consider Coke P/E ratio of 18.4 the expected market price of Pepsi should be ~$70. The acquisition of CCE requires Coke to assume more debt resulting in higher leverage for Coke and higher operating expenses from a bottling company will result in a lower EPS. It will increase interest expense and affect the ROE adversely. Estimating the rate of interest using the interest expense paid in 2009's for the long term debt on the books, the ROE is expected to reduce to 25%. The acquisition of the bottling company will require that Coke shows the consolidated figures of the bottling company in its financials. The assets of Coke will increase however, there is not enough information for us to evaluate. We believe that after the acquisition of the bottling company the comparison between Coke and Pepsi will be worse. -----------------------...
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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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...a pharmacist named Dr. John Pemberton carried a jug of Coca-Cola syrup to Jacobs’ Pharmacy in downtown Atlanta, where it was mixed with carbonated water and sold for five cents a glass. (Our Heritage, 2012) Three years later in the summer of 1898 a young pharmacist named Caleb Bradham began experimenting with combinations of spices, juices and syrups, trying to create a refreshing new drink to serve to his customers. His success came in the form of the beverage now known around the world as Pepsi-Cola. (Pepsi Legacy, 2005) And from that day forward the rivalry between Coca-Cola and Pepsi would become legendary. These two beverage companies are competing for the top spot in a massive global market. The cola and carbonated beverage industry reaches to nearly every corner of the planet, and the vast majority of the market share belongs to the two giants Coke and Pepsi. With such a huge market and enormous revenue potential in an industry such as this, it is no wonder that the Coke versus Pepsi competition is so fierce. So how does either of these companies create an advantage over the other? We will compare and contrast the business and marketing strategies of these businesses in...
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...Coke Versus Pepsi : Differences in Cultural History Rather than Taste Posted by Nicole Smith, Jan 16, 2012 Food And Drink No Comments Print For many years, Coca Cola and Pepsi have enjoyed the position as the two most enjoyed soft drinks in the USA, as they have maintained their popularity over the past several decades. One can divide soft drink fans into two major camps: Coke-lovers and Pepsi-lovers. Each of the camps substantiates its favoritism not only on flavor, but also on ideas, facts, and preferences that justify its choice and allow it to stay true to its selection. The following analysis of the history of Pepsi and Coca Cola explores Pepsi and Coke with an emphasis on advertising and cultural significance of these efforts, discovering what makes these soft drinks so popular and what differentiates them from each other. What emerges is that there is little in the way of differences between Coke and Pepsi outside of different cultural histories. There are many similarities between Coca Cola and Pepsi and the history of Coca Cola is nothing like the history of Pepsi outside of the fact that both companies were advertising soda. Both were intended to serve as recreational drinks associated with parties, fun, sex, and entertainment. The two drinks have just about the same color, the same amount of carbon dioxide, and have a similar taste. While in the past they both used different natural extracts from the coca nut, nowadays they both rely on artificial flavors and man-made...
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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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...or improve the one it has and this decision could be one of the biggest fail of marketing history. According to some marketing experts; the reason of the success of coke drink in the beverage industry is the advertisement competition and marketing war between PepsiCo and Coca-Cola since years ago. If there was not a PepsiCo in the industry, Coca-Cola could not make a billion bottles of daily sales. Both companies are in top of the list of most valuable brands list. They had many successes during their 120 years of rivalry but both of them also made high-cost mistakes during that time. The competition between the ‘Enemy Brothers’ is one of the good sample of rivalry which is based on a lot of interesting cases,different strategies and cultures. Differences between Coca-Cola and PepsiCo cultures and strategies was the main result announcer. In the middle of 1880’s, Coca-Cola was unrivaled in the industry. When the industrial war begun, was the time that PepsiCo showed up in the industry. There were failure signs of PepsiCo’s marketing strategy which has caused because of can’t changing the minds of people about the Pepsi's difference from Coca-Cola. When Coca-Cola was using the advantage of its generic name PepsiCo was trying to tell that the Pepsi was different than Coca-Cola and why people should choose Pepsi. But they failed. Coca-Cola choose the...
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...Wars Continued: Coke versus Pepsi in the Twenty-First Century Intro: Syllabus Page 16 The Soft Drink industry has been assigned as the vehicle for tackling the topic of industry analysis and competitive dynamics. The case covers developments in the soft drink industry through 1993. It describes how the industry evolved into its current structure largely following Coca-Cola’s leadership. What is particularly interesting is determining why the major competitors in the industry have been able to earn above normal returns for close to 100 years, and why the industry is organized the way it is. The case allows us to analyze how the actions and reactions of competitors over time work to create their own industry structure. The case also allows us to examine how prior strategic commitments to particular strategies create competitive positions, which in turn constrain the future competitive moves of firms. Since competitive positioning determines a firm’s long-run performance, we need to thoroughly grasp the essentials of what makes some competitive positions and competitive strategies more viable, and others not, and why. Discussion Questions: 1. 2. 3. Why has the soft drink industry been so profitable? a. Since 1970 consumption grew by an average of 3% b. From 1975 to 1995 both Coke and Pepsi achieve average annual growth of around 10% c. American’s drank more soda than any other beverage d. Head-to-Head Competition between both Coke and Pepsi reinforced brand ...
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...Summary of the Case On august 20, 2003 Sanjiv Gupta only six week in his new role as CEO of Coke India found himself in a contemplating event of sale drop 30-40% in two weeks. This crisis for the company took place just after the momentum gained from a highly successful two-year marketing campaign that had given Coca-Cola market leadership over Pepsi. This scenario takes back to august 5th when The Center for Science and Environment (CSE), an activist group in India focused on environmental sustainability issues press release stating: "12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues" According to PML (Pollution Monitoring Laboratory) of CSE from three sample of Pepsi and Coke found to contain pesticide residues surpassing global standards by 30-36 times including Toxic chemicals from which human body could suffer from cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system. In reaction the Govt. banned Coke and Pepsi products and took series of actions against them. As a result Coca-Cola Bottling Company lost its sock prices in New York in the six sessions following the August 5 disclosure, as did shares of Coca-Cola Enterprises (CCA). As a response to the problem immediately both Coke and Pepsi called the CSE allegations “baseless” and questioned the method of testing but the CSE claimed it had followed standard procedures documented by the US...
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...Are you a Coke or Pepsi drinker? Do you pull into McDonald's golden arches or prefer to "have it your way" at Burger King? When it comes to toothpaste, which flavor gets you brushing, Colgate or Crest? If you think it's just your taste buds that guide these preferences, you may be surprised by what neuroscientists are discovering when they peer inside the brain as it makes everyday choices like these. DEFINITION: Neuromarketing is the application of neuroscience to marketing, how a person’s brain responds to advertising and other brand-related messages. Neuromarketing includes the direct use of brain imaging, scanning, eye tracking, skin response or other brain activity measurement technology to measure a subject’s response to specific products, packaging, advertising, or other marketing elements. Neuromarketing will tell the marketer what the consumer reacts to, whether it was the color of the packaging, the sound the box makes when shaken, or the idea that they will have something their co-consumers do not to help in development of products and communications (4ps) as indicated by our brain's reactions to brand stimuli, marketers can design products and communications to better meet "unmet" market needs, connect and drive "the buy". "We can use brain imaging to gain insight into the mechanisms behind people's decisions in a way that is often difficult to get at simply by asking a person or watching their behavior," says Dr. Gregory Berns, a psychiatrist at Emory...
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...1 Choice experiment: Identifying “niche” versus “change-of-pace” brands Albert C. Bemmaor, December 23, 2011 March 30, 2012 October 12, 2012 The use of the “REIBST2_vaa.xls” data file is restricted to the course MKGM31203 (Q1, 2012-2013) at ESSEC Business School. “Niche” brands can be defined as brands that benefit from an abnormally high repeat rate whereas “change-of-pace” brands can be defined as brands with an abnormally low repeat rate for a given penetration level. Key notions Here are some basic notions you need be familiar with prior to carrying out this exercise: (i) (ii) (iii) (iv) (v) (vi) (vii) What a “variable” is. What a mean (expected value) is and how to compute it; What the notion of independence between two events means and how to test for it; What a correlation between two variables is and how to measure it; What a market share is and how to interpret it; What a penetration is and how to interpret it; What the duplication between two brands is and how to interpret it. Analysis as a scientific process Analyzing data consists of a three-step procedure: (i) (ii) (iii) Defining expectations: What do you expect to find and why? If you have “no idea” about your expectations, you need to develop these ideas by discussing with colleagues, “experts”, reading textbooks and/or using other supporting material; Running the analysis; Comparing your expectations with the findings. Do they match? Did you obtain any surprising result...
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...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 are driven by Pepsi in some...
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...ranked number one;may have been a good choice since my husband claims we should own stock with how much I shop there.However, I decided on number 92 on the Fortune 500, the Coca-Cola Company. "The Coca-Cola Company marketsfour of the world's top-five soft drink brands, including Diet Coke, Fanta and Sprite. " happento drink a lot of DietCoke. The company leads the soft drink industry with a 50 percent market share. For the purpose of thisassignment, I will discuss the Coca-Cola Company's competition and the how the Coca-Cola Company's marketingimpacts the company's financial objectives. But first, I will present the Coca-Cola's Company's mission.The Coca-Cola PromiseThe Coca-Cola Company's mission, also known as the Coca-Cola Promise is to "benefit and refresh everyone ittouches "and to "When we bring refreshment, value, joy and fun to our stakeholders, then we successfully nurtureand protect our brands, particularly Coca-Cola. " This blue chip company has remained a leading competitor in thesoft drink industry for 115 years because of its unwavering devotion to the Coca-Cola Promise. Except for that onetime, in 1985, when Coca-Cola imprudently decided to change the original formula of its leading brand Coke, thecompany has never changed its primary focus to provide consumers the highest quality beverage available in themarketplace. In case you don't recall, this ghastly miscalculation on The Coca-Cola Company's part resulted in a...
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...Financial Analysis of Coca Cola versus PepsiCo, Inc. Axia College of University of Phoenix Financial Analysis of Coca Cola versus PepsiCo, Inc. There are two major competing companies that manufacture beverages. They compete for the number one manufacturer and distributor spot for beverages worldwide. Both companies are immediately identifiable almost anywhere. They are PepsiCo and Coca-Cola. They have so thoroughly saturated the markets around the world that they enjoy universal recognition for their company and for their products. Historically, these are the major competitors in the “Cola wars”. They both produce flavored water, regular water, and soft soda drinks. Coca-Cola (Coke) and PepsiCo, Inc. (Pepsi) target all income brackets across the globe due to their ability to produce products which they have convinced millions of people are attractive and reasonably priced. This makes people buy them regardless of their income level. We will review these companies’ income statements and balance sheets to reveal the financial condition of the companies in relation to one another. After an introductory discussion of the companies, we will perform vertical and horizontal analyses from their annual report financial data and then will provide recommendations on each company. There are a wide variety of distributors in these markets, but Coke and Pepsi have stayed number one and two for decades. They have reached far beyond their...
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...Research | Module Leaders: Dr Aida Nakhla Ms Ahella El Saban Module Leaders: Dr Aida Nakhla Ms Ahella El Saban Table of Contents Introduction……………………………………………………………………… Section 1: Problem Recognition………………………………………….. 1.1-Problem Recognition…………………………………………………………… 1.2- New Coke Problem Recognition……………………………….……….. 1.3- Critical Analysis on New Coke…………………………………………… Section 2: Know the Approach……………………………………………….. 2.1- Research Approach…………………………………………………………… 2.2-New Coke Research Approach…………………………………………… 2.3- Critical Analysis on New Coke…………………………………………… Section 3: Research Design and Formulation………………………….. 3.1- Research Design and Formulation……………………………………... 3.2- New Coke Research Design………………………….………………….... 3.3- Critical Analysis on New Coke…………………………………………….. Section 4: Data Collection………………………………………………………. 4.1- Data Collection…….……………………………………………………………. 4.2- New Coke Data Collection..……………………………………………….. 4.3- Critical Analysis on New Coke…………………………………………….. Section 5: Analysis of Data……………………….………………………………. 5.1- Analysis of Data………………………………………………………………… 5.2- New Coke Analysis of Data………………..………………………………….. 5.3- Critical Analysis on New Coke………….…………………………………….. Bibliography………………………….………………………………………..……. Introduction The birth of Coca Cola all started out in 1889, when original founder of the formula John Pemberton had developed the first version of Coca Cola from Coca leaves and Kola nuts. It is a known fact that Coca...
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