As a marketing strategy, PepsiCo has embarked on hiring CEOs from different cultural backgrounds to make sure that they satisfy customers in its wide market. Moreover, Coca-Cola has business operation in two hundreds countries and has strong financial condition to expand further in many underdeveloped economies; on the other hand, PepsiCo operates only in forty countries. The company also has an almost pure competition in the way it prices its products is also a threat. Many customers, especially those in the US have become more concerned with healthier lifestyles. COCA-COLA COMPANY VS PEPSI CO. This is an unbiased comparison of the two of the most popular carbonated beverages in the world -- Coke and Pepsi. Coca-Cola has grouped its products into eight regional units: “the European Union, Africa, North America, Latin America, Pacific, Eurasia, Bottling investments and the Corporate” (WetFeet 1). Archenemy’s most famous product is the regular Pepsi that is number two in the soda markets. If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Web. According to the 2008 report by Beverage Digest on carbonated soft drinks Coca-Cola outshines Pepsi in terms of demographics since its market shares range at 42.2% while Pepsi ranges at 30.8%. PepsiCo has its primary operations in the US. According to the report of Task (2010) and Yahoo Finance (2011), Coca Cola is the top brand among all multinational companies in the world and its value is $70,452.0 million; however, PepsiCo is not in the top ten lists. This is an option, but the best alternative will be for the company to make sure that its brand equity reflects its financial picture. It should note that Coca-Cola has already taken few fruitful initiatives, which help the company to sustain as a market leader while Pepsi faced serious problem in Chinese market and some other countries; so, this company should increase budget for research to overcome such position. The Coca-Cola brand is deeply rooted among the Americans. PepsiCo challenges Coca-Cola through its promotions. Coke vs Pepsi comparison. Table 3: Age Configuration of the US People. Between 2008-2018, Coca-Cola has a higher market share than Pepsi, according to Beverage Digest, a trade publication. (2011). Coca-Cola. Throughout this research, it has emerged that PepsiCo can has made tremendous strides in this sector despite having come into the picture many years after Coca-Cola. Pepsi saw bankruptcy twice in 1923 and 1931.Growth 3. "Comparative Analysis of Coca-Cola Company and PepsiCo." The 7 th coca cola competitor is another one in this list which is not from the house of Coca-Cola or Pepsi. Coca-Cola’s corporate structure is broken into six segments of operations. Web. This gives PepsiCo an upper hand when it comes to making essential figures as compared to Coca-Cola which is making superior figures. But somehow Coca-Cola was still able to post a 10% larger adjusted bottom-line than PepsiCo. The bottling system that the company uses is of a great advantage from the point that the companies that make the bottles are owned by different companies which gives the Coke Company enough time to concentrate on the drink. 2019. Coca-cola is the world’s largest beverage company which provides sparkling, sports drinks and food in over 200 countries and markets (The Coca-Cola Company 2010.). The suggestion that I make for Coca Cola is they continue to reduce their liabilities, and work on raising net profits. Many people are therefore sentimental about the image Coca-Cola products and therefore, they have grown used to it; it is part of their lives. This ratio compares the amount of operating income with that of revenue. What happens on the ground does not fit in its centralized structures; this is one reason why other companies like PepsiCo are beating it in this area. This will also help ease the process of problem solving. Strong brands position a company above other on a competitive advantage. Google Documents. The only threat is the size of the company. If you continue, we will assume that you agree to our PEST Case study: Pepsi Cola. Bukisa. (2019) 'Comparative Analysis of Coca-Cola Company and PepsiCo'. Indexmundi. Finance. Caggeso, M. (2007). StudentShare Our website is a unique platform where students can share their papers in a matter of giving an example of the work to be done. On the other hand, PepsiCo has introduced agricultural technology in order to guarantee the highest crop yields and quality standards; in addition, it has developed Sustainable Engineering Guidelines and maintained innovative environmental management system to examine water (PepsiCo, 2009). Coca Cola exceeded the sale of 1 million gallons in 1904. Web. They have faced almost the same problems, for instance, the issue of inappropriate ingredients. Company Profile: PepsiCo. Web. For instance, the company was doing so well, until recession set in. Bloomberg Businessweek. This has often slowed the movement forward in this industry as stakeholders are always forced to respond to never ending changes in the attitudes and demands of their customers to avoid losing out on competition. IvyPanda. Coca-Cola does not seem to be giving investors this assurance. It has been shown that “most of Coca-Cola’s income is generated from the sale of its soft drinks, but PepsiCo only gets about 20% of its income from soft drinks” (Caggeso, p.1). Web. This affects the non-alcoholic industry by increasing the demand for the non-alcoholic and healthier beverages. The Coca-Cola Company is headquartered in Atlanta, Georgia. However, Norden, Koch, and Pronk (2008, p.6) reported that a significant part of total population is middle-aged people who are health conscious, and 7% of total population has suffered in diabetes, and more than 6.3 million people are not aware about their health problem. It communicates to its customers through celebrity figures, through music to attract the young generation, and also through games. Fluctuations in foreign currency exchange rates, increases in income tax rates and interest rates, Changes in regulations relating to beverage containers, and dilemmas with bottling partners. "Comparative Analysis of Coca-Cola Company and PepsiCo." Table 1: Financial Performance of the Coca-Cola Company. Marketing Management. This company serves more than 54 billion beverage of all types consumed in the global market each day; however, the financial overview of the Coca Cola for four years has outlined below for assessing its performance in recent years. Norden, L. Koch, C. & Pronk, S. (2008). Coca-Cola’s mission, vision and values when put together simply show that the company is looking to the future and beyond. Comparative Analysis of Coca-Cola Company and PepsiCo, Dividing to conquer: Pepsi shifts organizational structure and management to focus on emerging markets, PepsiCo’s Financial Review and R&D Review, PepsiCo and Coca-Cola: Competitive Strategy & Differentiation Essay, PepsiCo Inc. International Business Strategy, Oligopoly in Australia: Telecommunications Industry Case Study, SARS: It’s as Bad as we Feared but Dared not Say. In 2010, Coca Cola’s total sales revenue was 32.14 billion, net income was 7.580 billion, and gross margin was 65.57%. The Coca-Cola Company and PepsiCo possess a rather complicated networking system. (2009). On the other hand, the number of distributors is rising and the demand for Coca Cola’s beverages are increasing by a fast pace after the recovery of the economic condition from the financial crisis. The first branch is PepsiCo which mainly operates in the Latin America while the second branch which is the PepsiCo international has a wider geographical operation. It is practically the same as Coke just without the formula “7x”. With Coca-Cola over $35 billion revenue, compared to PepsiCo over $63 billion. Coke becomes a registered trademark in 1945 and goes public in 1962. It is the world’s largest company in this sector. Initially, PepsiCo used to run its businesses through two units, the PepsiCo North America and PepsiCo International. It is also a fact that both Coca-Cola and PepsiCo control about 40% of the soft drink market. Since its launch, PepsiCo has been growing constantly in a pattern that is stable and therefore, it has room for more expansion in future. Curd (2010, p.3) further added that this company failed to implement sufficient strategies to address the cultural factors, which has negative impact of its global business operation. In spite of these tough situations, PepsiCo produced a quite remarkable development in the income and started to revive back its stock prices in the fiscal year 2011. (2010). Excerpt from Essay : financial comparison of Pepsi and Coke. (2011) PEPSICO INC (PEP:New York). On the other hand, it has popularity for its superior customer service as it concentrates on the customer’s health conditions by providing safe and healthy drinks to retain and attract customers (Coca-Cola, 2009). Strategic Analysis of the Coca-Cola Company. Data sources: Morningstar, Yahoo! PepsiCo has reached its maturity stage and therefore, its products are enjoying maximum economies of scale. Coca-cola has maintained the cooperative (M-Form) of the multi-divisional structure as it generates more than 90% of total profits from beverage sector though it is not earning from a single product but the production material is shared each other. The only thing that Coca-Cola can do is to make sure that it more. Coca-Cola seems to enjoy its brand reputation that has been in existence for more than a century and a large customer base. IvyPanda. Background of the Coca-Cola Company. The main objective of this report is to analyze and compare two multi-national companies Coca-Cola Company and PepsiCo. (2011) COCA-COLA CO/THE (KO: New York). Profitability ratios indicate just how a company is able to produce its profits. Bottles and cans have increased Coca-Cola sales because they are portable and also easily disposed off. Coca-Cola is a very huge company trading mainly in soft beverages. Changes in packaging have affected to some extent, sales and market positioning, but new products don’t seem to disturb consumer preferences. In 2009, all of Coca-Cola’s profit … Both companies have massive scale. However, a brief illustration of the networking is shown in the figure below: Both Coca-Cola and Pepsi should develop its corporate social responsibility in order to gain customers’ confidence as use of pesticides into the soft drinks demonstrate that these companies not bother for public health issues but to making profit with harmful product, particularly Indian people suffered health injury due to consuming products of Coca-Cola. Harkonnen, N. (2009). The following is a profitability ratio analysis of Pepsi Company and Coca-Cola Company. There is no doubt that the sector of soft drinks has a strong foundation. Cola Wars. Changing trends in the consumer income have also made consumers to less sensitive to price and their consumers are not using price as a reference point when choosing between Coca-Cola and PepsiCo. Many are therefore, abandoning alcoholic drinks and resorting to healthier drinks such as diet colas and bottled water. Annual report 2009 of Coca-Cola Company. IvyPanda. October 29, 2019. https://ivypanda.com/essays/comparative-analysis-of-coca-cola-company-and-pepsico/. Pepsi Co, Inc. shows a great deal of assets and property ownership while The Coca-Cola Companies net revenue is lower their net income is higher. Dr Pepper Snapple Group has a combination of some well-known brands such as 7 up and RC Cola. Pepsi has developed a lot of variations from its primary cola too and the company has a strong positioning on diet cola markets as well. Both companies have their own problems in their struggle to maintain their reputation and serve their customers well. The third branch is the PepsiCo Americas Beverages that runs its operations in North America, Tropicana, Gatorade, and the Latin America. As a result, their operating profits are more similar than you might otherwise expect. Coca-Cola Company: Inside the real thing. it was developed on the basis of cost of production plus the profit margin and other expenses. Coke focuses on their employees and their brand in order to keep the promise to “refresh the world in mind, body, and spirit, and inspire moments of optimism; to create value and make a difference (Coca-Cola, 2013).” On the other hand, Pepsi’s corporate culture focuses on performing with a purpose. This has drawn more investors to PepsiCo who see a promising future with the company (Kevin, 2010). this affected almost all the market segments of the company. The growing needs for specialized cultural foods and the changing trend towards healthier foods has offered PepsiCo an opportunity to thrive in this sector. Comparative financial analysis between PepsiCo and Coca-Cola. The sector has seen an increased growth in the area of non-carbonated and ready to drink beverages. 2. PEP has produced consistent net profit margins of around 10%, while KO margins have been in the 15-18% range for the past several years. Web. These two companies have struggled for many years each trying to be on top of the market. Top 100 Global Brands: Apple Soars, BP Slumps and Coke’s Still No. Web. Consumers in this industry can also switch to another beverage brand without facing any consequence (SWOT analysis, n.d). Two of the largest and most profitable corporations in the United States are the Atlanta, Georgia based Coca-Cola Company and the Purchase, New York based Pepsi Cola Company, which is now referred to as PepsiCo by the company. Cola Wars: Coca-Cola vs. PepsiCo. The last element to be looked at is Technology. Changes in the laws and regulations can therefore, disrupt the operations at Coca-Cola and PepsiCo. We’ll use Coca-Cola vs Pepsi for the year-ended 2017: Coca Cola has established in 1886 by John Pemberton, and now it is the world’s largest soft drinks manufacturer, which produces and delivers a broad range of non-alcoholic beverages for all major customer segments and … Firstly, this paper will present historical background of both companies with financial performance and determine the strongest performer. Each strategic unit has a head who reports to a chief operating officer. It intends to forge ahead while exploring the forces and trends that will shape its future image. Some ingredients are said to be unsuitable in some countries because of the cultural differences. Source: Self-generated from Bloomberg Businessweek (2011), The main objective of this company is to refresh the world and the other aim of the company is –, Coca-Cola’s vision is separated into six points and the company should focus on and accomplish this vision in order to carry on its growth; however, the following figure illustrates its corporate vision –. SWOT analysis for Pepsi Cola. This report will scrutinize many other issues related with the business operation of these companies, for instance, mission, vision, corporate culture, strength, weakness, opportunities, threats, growth estimates, organizational structure, marketing mix, competitive position, and ratio analysis. KO may be able to produce more net income, but PEP has been generating more top … Web. Using it as a strategy, Coca-Cola is presented with a rare opportunity to serve a large geographical base (SWOT analysis, n.d). Coca Cola vs. Pepsi. The ease of reliability of PepsiCo product line is a threat that the company should watch keenly. In other words, PepsiCo seems to be winning the game in terms of making revenues and also in creating profit margins. This trend can go on for years only if the right strategies are used. On the other hand, PepsiCo has better position only in the Middle East where Coca Cola created some controversy through their advertisement and lost their market share in this zone. (2010) Saudi Arabia Demographics Profile 2010. This will help in the penetration of the global market with an aim of realizing long-term gains. Prevailing political conditions in the international markets also play a role in determining market trends. Another significant cola products of this leading company are Coca-Cola Light and Coca-Cola Zero. Both Coca-Cola and Pepsi experienced the adverse impact of global economic downturn on the annual revenue, for instance, Coca-Cola has reduced the pension fund of the employees, and PepsiCo’s earning from European zone has decreased due to recession. Web. The Coca-Cola businesses can be seen to be doing well both domestically and international, but this is just the face of it. They both exhibit a high sense of brand consciousness that they enjoy throughout the world. This has not deterred PepsiCo from making its mark, and as has been shown, it has challenged Coca-12841451Cola’s dominance. Coca-Cola only promises fixed incomes, which for sometime has not been increasing. (2008). This experienced team has helped in researching into the trends of the industry and results have been seen as they exploited the trends to their advantage and emerged top in 2005. According to the annual report 2009 of Coca-Cola and Pepsi, Global Financial Crisis has reduced their sales in some extent, as people were busy to meet their necessity rather than luxury; as a result, these companies should reduce operating costs to avoid adverse impact from this situation. Comparative Analysis of Coca-Cola Company and PepsiCo. "Comparative Analysis of Coca-Cola Company and PepsiCo." Instead, they can be used as comparable metrics by comparing a company’s profitability from one year to the next or with a competitor for the same period. Coca Cola enjoyed the monopoly in the every market prior to the emergence of Pepsi cola. To avoid this, Coca-Cola should take into consideration the unique environment it is operating in terms of culture, politics and the economy of respective markets. On the other hand, some other factors like changes of accounting standards, political violence, state of emergency, taxation policy, alteration of non-alcoholic business environment, the Federal Trade Commission Act, environmental and labour laws, governmental instabilities in foreign countries, strikes, globalisation, and so on have affect on these two companies. Furthermore, the Coca-Cola Company has continued to sell more efficiently than PepsiCo. It makes sure that it follows environmental regulations, although this has been one of the issues that have disturbed its operations in some countries, but swiftly moved in to rectify it (Girard, 2005). Web. Trends in the economy have also affected Coca-Cola over the years. There have been reported cases about declining volumes in some markets because of a reduction in purchasing power of consumers. The characterization of the soft-drink industry for decades has intense rivalry between Coca-Cola and Pepsi. (2005). This has sometimes brought confusion to consumers as the companies keep up the competition. Pepsi is the larger business in terms of revenue, with nearly twice as much as Coca-Cola. Coca-Cola is also the more capital-light business -- Pepsi's cap… In spite of winning in blind taste wars, Pepsi is less popular around the world (with a few notable exceptions like India). (2019, October 29). Both Coca-Cola and PepsiCo invest tens-of-millions of dollars per year in worldwide marketing campaigns. The bottling system used by Coca-Cola is strength. In order to keep consumers informed, all PepsiCo products have quality assurance seals on them. Banks, G. (2001). It is evident that the soft drinks sector is very lucrative to both Coca-Cola and PepsiCo which are the dominant companies in the industry. For one, PepsiCo is significantly smaller than The Coca-Cola Company. Cookies Policy, This research paper on Comparative Analysis of Coca-Cola Company and PepsiCo was written and submitted by your fellow student. For investors who are not interested in making instant cash, but are looking for long term gains, then PepsiCo is the company to invest in. Pepsi claims franchsises in 24 states in 1910.Pricing 5. Pepsi does not how ever have a secret ingredient, but they have high fructose corn syrup, sugar, and caffeine. Web. Coca-Cola image is usually found on hats, T-shirts and many other public spheres. Competitors of the Coca-Cola Company (KO). There are different amounts of sugar content present in them and Pepsi is sweeter in comparison to Coca-Cola although the sugar content on both is shown to be same. PepsiCo. Difference between Coca Cola and Pepsi:- If we make a comparison as biased as possible between Pepsi and Coca-Cola we will most likely come to the conclusion that the only difference between these two types of carbonated beverages is that one brand is more popular than the other around the world (except a few cases). These make products more attractive and therefore, attracting more sales. Suite 101. On the other hand, Pepsi is also a world leader in convenient snacks, foods and beverages which is the major competitor to Coca-Cola (PepsiCo Inc 2010). Operating Profit Margin This profitability ratio is attained by dividing the operating income by revenue. Technology has helped in the area of advertising, marketing and other programs of promotion. Unfortunately, your browser is too old to work on this site. This research paper will carry out a comparative evaluation of these two giants in the sector of soft drink. Web. To demonstrate these ratios, let’s look at the comparison between two similar companies. Web. (12th ed.). 2.0 Background: 2.1 Background of PepsiCo: PepsiCo,Inc. (2009). We utilize security vendors that protect and ensure the integrity of our platform while keeping your private information safe. Web. And lastly, the company should check on its taster technological advances because they tend to overshadow existing products making them less advanced (SWOT analysis, n.d). Web. New machines have increased production of Coca-Cola products. On the other hand, PepsiCo had suffered significantly by the recession from its operations in the European market and rest part of the world (PepsiCo, 2009). We use cookies to give you the best experience possible. Reports in 2007 showed that Coca-Cola was making minimal gains, a consequence that was attributed to the sluggish growth in the industry of soft drinks. Owing to the fact that the industry faces strong contention from a number of soft drinks producers throughout the world, the industry giants like Coca-Cola Company and PepsiCo constantly needs to come up with innovative ideas and strategic approaches in order to remain the most significant choice of the large-scale consumers. Amongst these, the flagship product which is the strongest coca cola … Strict quality controls are adhered to meet high quality expectations from consumers. It trades in light foods and operates in the US and Canada. You can use them for inspiration, an insight into a particular topic, a handy source of reference, or even just as a template of a certain type of paper. Coca-Cola Company and PepsiCo: Comparative Analyses, Canbide Corporation Operations Management Tools, Management of Wal-Mart Stores Inc in 2008. For Pepsi Co, Inc. and The Coca-Cola Companies the below vertical and horizontal analysis along with selected ratios provide details on each company to allow comparison between them. In addition, water pollution is another problem to maintain high quality of the products as water is the most important ingredient, so Coca-Cola has to invest large amount to get pure water, which rising production costs and affecting sales revenue. 1. As global distributors, both the companies went through an intricate process of networking in order to deliver their products to the final consumers. This paints a bleak future where Coca-Cola may experience diseconomies of Scale. Both companies produce, distribute, and market non-alcoholic beverages on a worldwide scale and Coca-Cola always holds market leading position in the Carbonated Soft Drink industry. Unlike the Pepsi brand which cone in a little later. Social change is another factor that is analyzed in the PEST analysis. According to the annual report 2009 of Coca-Cola, the legal action against this company has increased due to the frequent change of regulations in all over the world, for instance, it has to follow the recommendation and guidance of European Commission to conduct business in EU member states. Coca-Cola and PepsiCo have faced continuous rivalry from each other. Where Coca-Cola has a large chunk of revenues in Europe, Middle East, and Africa. Internet and television technology has evolved to the extent that special effects can be used. It also uses the internet, media and sponsorships. Coca-Cola. October 29, 2019. https://ivypanda.com/essays/comparative-analysis-of-coca-cola-company-and-pepsico/. IvyPanda, 29 Oct. 2019, ivypanda.com/essays/comparative-analysis-of-coca-cola-company-and-pepsico/. In conclusion, Coca Cola is better that Pepsi when a comparison is made regarding the nutritional content, branding and even the taste. Comparative Analysis Of Coca-Cola And Pepsi ACKNOWLEDGEMENT These drinks have continuously piled pressure on the soft drink industry thereby threatening not just the existence of Coca-Cola, but also PepsiCo. In recent times, consumers of these products are becoming increasingly health conscious. It is arguable that in many cases Coca-Cola’s marketing activities created immense controversies in the countries where it has operation. This branding is a major strength to Coca-Cola that is enjoyed more than 600 million times in a day. Its vision calls on stakeholders to be prepared for any occurrence in the future. Increasing number of competitors is another threat for the Coco-Cola because strong competitors can reduce the market, for example, Coca-Cola faced intense competition in 1980s, and the following figure compares the situation –. Puravankara (2007, p.31) pointed out that Coca-Cola can increase sales profit by selling bottled pure water as the demand has increased 8.5% in this segment due to serious water pollution in some countries. However, the following figure shows the organisational structure of Coca-cola where CEO controls six separate departments in different business zone, such as, human resources department, R&D, Bottling Investments, Marketing Strategy and Innovation, Finance and Control department. Customer relationship management of Coca-Cola is another strong side because this company considers that all customers are loyal, so new customers are also getting importance besides regular customers to develop its market segments. The company therefore, has enough resource for this growth, but without proper marketing strategies that will attract local appeal, then success will be hard to realize. This means that their production is regulated by the government. This meant that Coca-Cola needed to make thorough strategic study in order to improve its performance in the market. However, this report will concentrate more on the Coca-Cola Company, but it will include sections about Pepsi Co in order to discuss the competitive position of these two beverages companies. The buying power of consumers is another possible threat. It communicates to its customers through celebrity figures, through music to attract the young generation, and also through games. Curd (2010, p.3) stated that Coca-Cola has effects on the teeth, and long addiction of soft drinks negatively affect public health, for instance, it may cause to increase diabetes patient. Pepsi's market share has dropped in the same time period. According to the annual report 2009 OF Coca-Cola, it spends comparatively a large part of the budget for advertisement and promotional actions that increases its operating expenses. Kotler, P. & Keller, K. L. (2006) Marketing management. In general, PepsiCo has outpaced Coca-Cola in revenues. Just like PepsiCo, Coca-Cola also sales its finished products in more than 200 nations globally. The two company selected for comparison was Pepsi and Coca Cola which are the beverages industries. PepsiCo promises its investors more improvements in terms of profit margins in the coming years. The Chief operating officers from each strategic unit are obligated to report to the Chief Executive Officer and to the chairman of the Board of Directors of the company. These include drinks such as “coffee, tea, hot chocolate and milk” (SWOT analysis, p. 1). Political instability is inevitable especially in the less developed countries and therefore, the markets may not meet Coca-Cola’s expectations. , attracting more sales free database of academic paper samples those in the international markets also a. Rivalry from each other has offered PepsiCo an opportunity to thrive in this industry can also switch to another brand. 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