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Cola Wars Continue: Coke and Pepsi in 2006
Cola Wars Continue: Coke and Pepsi in 2006
Financial statement analysis of Coca-Cola
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The Coca-Cola Company is the largest non-alcoholic beverage company in the world who owns, sells and distributes more than 600 different non-alcoholic beverages in 200 countries and more. “The amount of product Coca-Cola sells equates to 1.9 billion or 3.2% of the total amount of non-alcoholic beverages served worldwide” (Jurevicius, 2017). Additionally, they have a large/dominant market share, enormous brand recognition and a huge advantage in the number of consumers they can reach. Not to mention the Coca-Cola Company also owns other reputable brands such as Sprite, Fanta, Minute Maid and even Powerade to name a few that combine to earn the company, approximately, an additional $1 billion dollars annually. Because Coca-Cola are a huge presence in this industry, the company has the ability to beat out its competitors by underpricing some of its items and can exercise market power over its suppliers. Like Coca-Cola, Snapple has a strong foothold in their diverse brands they offer as well. …show more content…
Some of the major weaknesses for Coca-Cola are; due to their dominance in the market share, it gives them very limited advantages over their competitors. Additionally, their overall heavy reliance on carbonated beverages, lack of diversification and the negative publicity they receive on the products all form weaknesses for Coca-Cola as a company. One of the obvious weaknesses for Snapple is the strong level of competition they are up against with globally established brands such as Coca-Cola and Pepsi. The fact that they have a limited share of many brands makes it even more difficult for the parent company to make decisions as well. Kraft’s lack of momentum as a newly formed entity and has caused a drop-in sale of 9% compared to last year. Profits slipped 4% to $0.44 a share. Without a new corporate vision and or sharper focus U.S. dollar will continue to take a toll on multinational
Therefore, the long-term brand of Coca cola and better pricing strategies would help in competing with Pepsi. Unlike, Pepsi, Coca cola had targeted entering into partnership and alliances with local distributors and firms. This helps to develop strong relationship within the domestic firms to reduce the domestic barriers and thus, enhance the company’s competitiveness (Thabet, 2015). Lastly, the Asian markets consist of related and supporting industries to the soft drink industry that helps the companies in gaining a strong competitive position in the markets. Based on the competitive advantage of nation’s model, Coca cola has more home based advantages to develop a competitive advantage in relation to other countries on a global
Analysis of the Coca-Cola Company The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of soft-drink concentrates and syrups. The Coca-Cola Company is the world's leading manufacturer, marketer and distributor of soft-drink concentrates and syrups. The Company markets many of the world's top soft drink brands, including Coca-Cola, Diet Coke, Sprite and Fanta. Through the world's largest and most pervasive distribution system, consumers in nearly 200 countries enjoy the Company's products at a rate of more than one billion serving a day.
CASE 1-3: Coke and Pepsi Learn To Compete in India The political environment in India proved critical in that their government was unfavorable to foreign investors. They prohibited the import of soft drinks since they felt it could be gotten anywhere. They also prohibited the foreign brand name and wanted the name Lehar Pepsi and Coca-Cola India, an indigenous name. These effects couldn’t have be anticipated prior to entering the market because the trade policies, rules and regulations of India were difficult and unpredictable.
Snapple was launched in 1972 in the Greenwich Village area of New York City with its founding product being an all-natural apple juice targeted to health conscious consumers. Over the next 15 years, Snapple grew slowly yet still managed to established markets on both the east and west coasts of the U.S. In the late 1980’s, with revenues reaching about $8 million in 1986, Snapple engaged a beverage industry sales and marketing veteran to professionally manage its next growth trajectory. Having established a $1 million advertising budget and a focus on strengthening its east coast independent distribution channels, Snapple revenues grew ten-fold to $80 million by 1989 and reached $231 million in 1992 when Snapple was then sold to the Thomas
Coke is in the secondary sector. If the primary sector was to cut sugarcane, collection the benzilate and other chemicals, get all the liquids together and send them to a second company to produce the drink "coke".
The cocacola crisis was triggered by a press release by CSE ( center for science and environment ), “Hard Truths about Soft Drinks,” on August 5, 2003. According to CSE “12 major cold drink brands sold in and around Delhi contain a deadly cocktail of pesticide residues”. The pesticides namely lindane, DDT, malathion and chlorpyrifos were found in the cold drinks. These pesticides were believed to have dire consequences on health causing cancer, damage to the nervous and reproductive systems, birth defects, and severe disruption of the immune system.
DPS focuses on the local oriented market strategy to capitalize on low per capital markets. This allows them to build great relationships with the local retail customers. DPS owns 6 of the top 10 non-cola drinks. With Snapple Brand growing gives them a competitive advantage in the non-cola market. With the company’s combination of brand ownership, bottling, and distribution, it inherently has more control over the value chain.
Coke and Pepsi have been raging war for over a century now, turning their sodas into a multi-billion-dollar industry. Coke has been able to drive more earnings for its bottom line, and while Coke’s net income has been trending downward in recent years, it manages to stay ahead thanks to superior margins. Pepsi, on the other hand, has produced consistent net profit margins of around 10%, while Coke margins have been in the 15-18% range for the past several years (O’Brien). Every company has a Market Cap, which is basically a fancy way of saying how much the company is worth, and Coca-Cola’s market cap is a whopping $180 billion. Pepsi’s Market Cap is $150 billion, which may not seem like a big difference, but $30 billion is a lot of cheddar. Therefore, Coca-Cola owns 51% of the soft drink market, whereas Pepsi only owns 22% of it. Coke claims to own a total of 35 different brands, including Fanta, Sprite, Powerade, Vitaminwater, and many others. Pepsi owns 22 different brands, including 7up, Gatorade, and Mountain Dew “Coke (Coca-Cola) vs Pepsi - Soda
The public issue facing Coca-Cola in this case, is pollution of water. Water is a crucial essential of the manufacturer to produce their product, the short and long term damage to the surrounding areas was also in question in regards to depriving surrounding communities. When the “gap” widens between the stakeholder’s expectation’s and the actual results, term oil enflames. The stakeholders were now faced with boycotts occurring insinuating that Coca-Cola’s product contained pesticides. With this inference, business will be impacted and stakeholders backlash will follow (Lawrence and Weber, 2014).
Without a doubt, no beverage company compares to Coca-Cola’s social popularity or brand notoriety. Some people buy coke, not only because of its taste, but because it is also the most socially accepted brand. Another strength that is very important to Coca-Cola is customer loyalty. For instance, in a household where parents are avid Coke drinkers, this will be passed down to their children. Customers will continuously but Coke.
Soft drinks, more popularly known as sodas, are not exactly referred to as items of necessity. People can live without sodas. In fact, people might be safer if they don’t drink soft drinks so much. And yet, soft drinks somehow make it to the top of the list of items most bought by the average consumer. Why is this, exactly? Well, for one thing, sodas are delicious. They stand between liquor and juice. Those who are too young to drink beer but think fruit juice is too juvenile can order sodas. Those too old and are putting their health at risk by drinking hard drinks can enjoy soft drinks and no one would think any less of them. In short, sodas have a mass appeal. They carry an image with them; an image of a person with a comfortable lifestyle.
Coca-Cola is a company with sustainable competitive advantage. The company is innovative and has an extensive business model with boasts of a sustainable distribution network. The company was incorporated in the late 1800s to commence the production of a sweet fizzy beverage that has become the world's most known brand. Presently, the company is still on an upward trajectory as it remains one of the world's most sought-after stocks. The company's competitive advantage has shown resilience and sustainability over the years.
The Coca-Cola company was founded in 1886 by John Pemberton, a Civil War veteran and Atlanta pharmacist. He was inspired by his curiosity as he stirred up a fragrant, caramel-colored liquid that he brought down to a place called Jacobs’ Pharmacy. There he added carbonated water and let several customers sample the new concoction. Jacobs’ Pharmacy put it on sale for five cents a glass and named it Coca-Cola. This “inspired curiosity” has now grown to be the world’s leading manufacturer, marketer, and distributor of nonalcoholic beverage concentrates and syrups. In 1906 Coca-Cola opened bottling plants in Canada, Cuba, and Panama. Today they produce nearly 400 brands in over 200 countries. More than 70% of their income comes from outside the U.S. (1). This paper will focus on an analysis of operations of the statement of cash flow reports and a vertical and horizontal analysis of the consolidated balance sheets. Also an analysis of the global financial condition of the Coca-Cola Company and the value of goodwill and other intangible assets will be discussed.
...e and Pepsi’s already established image as producers of premium product is key to discouraging other companies from entering the soft drink industry. However, as the market in the U.S has leveled off, they should continue to invest globally in marketing and advertising for further profit growth, which will in turn positively influence their well established brands to further increase soft drink sales and profits.
As the world 's largest manufacturer and distributor of non-alcoholic beverages, Coca-Cola is certainly no stranger to global marketing. Established in the US, Coca-Cola initiated its global expansion in 1919 and now markets to more than 200 countries worldwide. It is one of the most recognizable brands on the planet and also owns a large portfolio of other soft drink brands including Schweppes, Oasis, 5 alive, Kea Oar, Fanta, Lilt, Dr Pepper, Sprite and PowerAde. Despite this, Coca-Cola often struggles to maintain its market share over its main rival PepsiCo in some overseas markets, particularly Asian countries.