аЯрЁБс > ўџ ; = ўџџџ : џџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџџьЅС #` №П #! bjbjЁЁ 4, У У # џџ џџ џџ Є $ $ $ $ $ $ $ 8 4 8 Ы Ж T T T T T / > m J L L L L L L $ h щ b p $ / / p $ $ T T л
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Colin Becker
Aditya Pullapantula
Michael McCormick
Busx301.009
September 25, 2007
DEVELOPMENTAL WRITING ASSIGNMENT #2
Pepsi increased revenue by 13.9% from 2005 to 2006. For the fiscal year of 2005, revenue was 11.8 billion dollars, and for the fiscal year of 2006 revenue was 12.7 billion dollars. Pepsi increased expenses by 7% from 2005 to 2006. In the fiscal year 2005, and expenses were 12.2 billion for the fiscal year of 2006. Pepsi increased net income by 12% from 2005 to 2006. Net income increased from 466 million dollars in the fiscal year of 2005 to 522 million dollars in 2006. Pepsi is a profitable company and its income is steadily increasing. One of Pepsis strategies is to distribute its product to as many places as possible. This has been Pepsis most successful strategies.
The non-alcoholic beverage market in the United States is highly competitive and diverse. Popularity of bottled water, sports drinks, and fruit juices, is growing but soda continues to have the highest sales among all non-alcoholic beverages. According to the American Beverage Association, carbonated soft drinks are the number one choice of Americans with 28.3% of the industry.
Financially, the beverage industry is a multi-billion dollar market world wide with three major companies dominating. Annual sales of Coca Cola is highest among major beverage providers, followed by Pepsi, and Cadbury Schweppes. In 2006, Coca Cola was leading the market with over $24 billion in revenue and an operating profit of over $6.3 billion worldwide. Pepsis beverage revenue in 2006 was over $9.5 billion with an operating profit over $2 billion. Finally, Cadbury Schweppes had estimated revenue of $14.9 billion and operating profit of $2.1 billion. The non-alcoholic beverage industry is increasing globally and the three major competitors are expanding with it.
As we said before, Pepsi is competing against two companies that offer similar products. Coca-Cola is competing with Coke, Sprite, Fanta and Fresca products and Cadbury Schweppes with the popular Dr. Pepper, Canada Dry and Snapple. Other competition comes from other products operating in the same product or service category like the growing popularity of different types of soft drinks which include, juices, new age beverages, bottled water, functional (energy/sports) drinks. Each of these categories has a number of different beverages within them that they also compete against. Soft drinks compete against all beverages in general. Finally, beverages themselves compete for the spending power for those who would buy food, candy and/or snacks that cost around the same amount as a soft drink.
In terms of product differentiation Pepsi has attempted to differentiate its products from Coke, but with little success. In an attempt to differentiate its products from Coke, Pepsi shifted its focus to the growing American teenage market in the 1990s, while Coke continued to target baby boomers. Pepsi targeted the teen market by forming exclusive contracts with American schools.
To increase volume in order to counter flat cola sales, Pepsi introduced Sierra Mist in 2002-2003 to take the place for generations between age 7 and up. Pepsi has also tried to boost volume by introducing products that appeal to specific target market segments for younger generation. Pepsi has introduced Code Red and Live Wire which are the new versions of Mountain Dew and Pepsi One. However, the success of Pepsis Mountain Dew Code Red launched in 2001 was the most successful soft drink innovation in 20 years and has spurred even more other products that were launched.
The major weaknesses of Pepsi are that it canned to detached fully. Neither the company nor the corporations have taken the time to talk about the balance sheet of Pepsi. Pepsi is a black drink which is not mixed with any juicy flavors and due to this there is a drawback in the market.
The major strengths of Pepsi are that it is a global brand Company and according to Business Source premiere Pepsi is one of the most valuable brands in the world. According to Google Pepsi brand figured at the 22nd position in the top 1global brand rankings of the business week. The Business week (2006) branded Pepsi value at $12,690 million. Pepsi own 17 mega brands which are popular around the world and also generates annual sales of over $ 1 million (Business source Premier, 2006). Its strength is that Pepsi is known for strong marketing tactics targeted at overtaking its closest Competitor Coca Cola. Pepsi has strong operations in Russias growing water bottle market (Ebcohost, 2006) and also is having tremendous profits in the USA.
According to Ebhost Pepsi has also has a strong market share in the global food and beverages industry. The company holds a 21% share of the total Us Convenient food market and a 26% share of the liquid refreshment. It is also the fastest growing sector of beverages like Water which is 14%, sport drinks 80% and bottle tea 35%.
The revenue growth is the UK is poor (Ebhost, 2006). The revenues recorded a low rate and increased by only 1% in 2006, over the previous year to reach $1,839 million. Pepsi Company invested good money to support the UK Operations. In 2006 (ebhost, 2006) Pepsi companys assets in the UK were valued to $ 1,995 million and represented 10.1% of the companys total investments in the long term assets United Kingdom generated only 5.2% of the companys revenue. The revenues in the Us also increased by only 4.3% in 2006 over 2005. But Pepsi received a bad feed back from India during September 2006. The Company was accused by the center of science and Environment for selling pesticide products. Pepsi sold products that could cause cancer and other damages to the human. Due to this the companys image and publicity went down in the Asian market
WORKS CITED
http://www.pepsico.com/PEP_Investors/AnnualReports/06/PepsiCo2006Annual.pdf
http://www.thecocacolacompany.com/investors/annualandotherreports/2006/financial_da ta.html
http://www.investis.com/cadburyschweppes/reports/sfs2006/sfs/cis.html
http://web.ebscohost.com.proxy-tu.researchport.umd.edu/ehost/pdf?vid=3&hid=14&sid=99bc4a
98-d35e-4214-94e8-cc6bb676afd1%40sessionmgr3
http://web.ebscohost.com/ehost/pdf?vid=4&hid=5&sid=c3943768-b790- 450d- ae9d-455b84e4fc71%40sessionmgr7.html
http://www.pepsi.com/corporate/company_info/index.php
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