Operation Product Management

Project Report

Submitted to: Sir Muhammad Naveed

Submitted By: Fakhar ul HuqAbdul MananTallat Sultan

Touqeer shoukatDanish Khan

Naveed Asghar Jan

Table of ContentsACKNOWLEDGEMENT...........................................................................................................................4

EXECUTIVE SUMMARY.........................................................................................................................5

CHALLENGE.............................................................................................................................................6

New product category..............................................................................................................................6

Product line extension.............................................................................................................................6

Incremental Improvement........................................................................................................................6

INTRODUCTION TO THE COMPANY...................................................................................................7

SITUATION ANALYSIS...........................................................................................................................9

COMPANY ANALYSIS........................................................................................................................9

MISSION STATEMENT....................................................................................................................9

VISION STATEMENT.......................................................................................................................9

MARKET SHARE..............................................................................................................................9

COMPETITORS...................................................................................................................................10

COLLABORATORS.............................................................................................................................11

Literature Review:.....................................................................................................................................12

PRODUCTION PROCESS:..................................................................................................................12

Acquiring and Cleaning Bottles:........................................................................................................12

Water Processing:..............................................................................................................................12

Preparation of Syrup:.........................................................................................................................12

Filling of bottles:...............................................................................................................................13

Operational Problems................................................................................................................................14

ANALYSIS:..............................................................................................................................................14

Water Purification:................................................................................................................................14

Contamination Problem:........................................................................................................................14

Negligence of Workers:.........................................................................................................................15

Energy Crises:.......................................................................................................................................15

Recommendations:....................................................................................................................................15

Water Purification:................................................................................................................................15

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Contamination Problem:........................................................................................................................15

Negligence of Workers:.........................................................................................................................16

Energy Crises:.......................................................................................................................................16

Action plan:...............................................................................................................................................16

Conclusion:................................................................................................................................................17

BIBLIOGRAPHY...........................................................................................................................................17

REFERENCES..............................................................................................................................................17

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ACKNOWLEDGEMENT

　

We owe our gratitude to Allah Almighty whose shower of blessings and kindness has been on us

throughout the working on these pages. It is His help that we finally able to compile this

document.

We are indebted to our respected teacher Mr. Muhammad Naveed who’s indispensable and

intricate comments on various aspects conjoined with motivation made us come forth holding

such as project.

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EXECUTIVE SUMMARY

　

Purpose of this project is to study the strategies which Pepsi is

doing in Pakistani market for its product Pepsi cola. Pepsi

International is a world renowned brand. It is a very well organized

multinational company, which operates almost all over the world.

In Pakistan It also has proved itself to be the No.1 soft drink.

Now days Pepsi is recognized as Pakistanis National drink Pepsi's

greatest rival is Coca Cola. Coca Cola has an international

recognized brand. Coke’s basic strength is its brand name. But

Pepsi with its aggressive marketing planning and quick

diversification in creating and promoting new ideas and product

packaging, is successfully maintaining is No.1 position in Pakistan.

Pepsi is operating in Pakistan, through its 12 bottlers all over

Pakistan. These bottlers are Pepsi's strength. Pepsi has given

franchise to these bottlers. Bottlers, produce, distribute and help in

promoting the brand. Pepsi also launched its fast food chain KFC

i.e. "Kentucky Fried Chicken.”

We also did analysis of the soft drink industry in Pakistan and

worldwide. The soft drinks set to become world's leading beverage

sector. Global consumption of soft drinks is rising by 5% a year.

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CHALLENGE

Pepsi is doing new product development on frequent interval of times. The purpose of which is to refresh the brand. By new products and innovative ideas consumers can easily be attracted.

In following ways Pepsi is doing new product development.

New product category

Pepsi which is mainly a company of soft drinks after establishing a brand in Pakistan Pepsi came into several new product category. Lays, kurkuray and aqua fina, fast food restaurants are the examples of new product category.

Product line extension

Mountain dew is the most recent addition in the product line of soft drinks which is very popular especially among the youngsters.

However Pepsi launch its several variants with a minor difference on frequent interval of time. There have been many Pepsi variants produced over the years since 1903, including Diet Pepsi, Crystal Pepsi, Pepsi Twist, Pepsi Max, Pepsi Samba, Pepsi Blue, Pepsi Gold, Pepsi Holiday Spice, Pepsi Jazz, Pepsi X (available in Finland and Brazil), Pepsi Next (available in Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One, Pepsi Ice Cucumber and Pepsi White in Japan.

Line Filling

Pepsi claims that they are doing mass marketing but there was an unfilled gap in the consumers. The diabetic patient can’t use the regular Pepsi because of the sugar. So Pepsi had introduced diet Pepsi to fill the gap in their drinks as of then onwards even diabetic people became their consumers.

Incremental Improvement

Pepsi jumbo is an example of incremental improvement made by Pepsi. It was 2.25 liter bottle introduced few years ago in Pakistan. The purpose of this packing is to offer the Pepsi to a family for one or two time meals. Price of this pack is also kept low so that is can be affordable easily by the consumers.

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INTRODUCTION TO THE COMPANY

Pepsi International is a world renowned brand. It is a very well organized multinational

company, which operates almost all over the world. They produce, one of best carbonated drinks

in the world. Pepsi is a symbol of hygiene, quality and service, all over the world. Pepsi is

producing Cola for more than 100 years and it has dominated the world market for a long time.

Its head office is in New York.

HISTORY OF PEPSI COLA

It was first introduced as "Brad's Drink" in New Bern, North Carolina in 1898 by Caleb

Bradham, who made it at his pharmacy where the drink was sold. It was later named Pepsi Cola,

possibly due to the digestive enzyme pepsin and kola nuts used in the recipe. Bradham sought to

create a fountain drink that was delicious and would aid in digestion and boost energy.

In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore to a rented warehouse.

That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in six-ounce

bottles, and sales increased to 19,848 gallons. In 1909, automobile race pioneer Barney Oldfield

was the first celebrity to endorse Pepsi-Cola, describing it as "A bully drink...refreshing,

invigorating, a fine bracer before a race". The advertising theme "Delicious and Healthful" was

then used over the next two decades. In 1926, Pepsi received its first logo redesign since the

original design of 1905. In the year 1929, the logo was changed again.

In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy - in

large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a

result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark. Eight

years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles

Guth, the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained

soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give

him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup

formula.

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During the Great Depression, Pepsi gained popularity following the introduction in 1936 of a 12-

ounce bottle. Initially priced at 10 cents, sales were slow, but when the price was slashed to five

cents, sales increased substantially. With a radio advertising campaign featuring the jingle

"Pepsi-Cola hits the spot / Twelve full ounces, that's a lot / Twice as much for a nickel, too /

Pepsi-Cola is the drink for you," arranged in such a way that the jingle never ends. Pepsi

encouraged price-watching consumers to switch, obliquely referring to the Coca-Cola standard

of six ounces per bottle for the price of five cents (a nickel), instead of the 12 ounces Pepsi sold

at the same price. Coming at a time of economic crisis, the campaign succeeded in boosting

Pepsi's status. In 1937 500,000,000 bottles of Pepsi were consumed. From 1936 to 1938, Pepsi-

Cola's profits doubled.

Pepsi's success under Guth came while the Loft Candy business was faltering. Since he had

initially used Loft's finances and facilities to establish the new Pepsi success, the near-bankrupt

Loft Company sued Guth for possession of the Pepsi-Cola company. A long legal battle, Guth v.

Loft, then ensued, with the case reaching the Delaware Supreme Court and ultimately ending in a

loss for Guth.

PEPSI COLA PAKISTAN

The market in Pakistan is surely dominated by Pepsi. It has proven itself to be the No.1 soft drink

in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of

Pepsi was constructed in Multan, and from there after Pepsi is going higher and higher. Pepsi is

the choice soft drink of every one. It is consumed by all age groups because of its distinctive

taste. Compared with other Cola in the market, it is a bit sweeter and it contributes greatly to its

liking by all. Consumer’s survey results explain the same outcome and Pepsi has been declared

as the most wanted soft drink of Pakistan.

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SITUATION ANALYSIS

COMPANY ANALYSIS

MISSION STATEMENT

“To be the world's premier consumer Products Company focused on convenient foods and

beverages. We seek to produce healthy financial rewards to investors as we provide opportunities

for growth and enrichment to our employees, our business partners and the communities in

which we operate. And in everything we do, we strive for honesty, fairness and integrity.”

VISION STATEMENT

“To be the world's best beverage company”. Being the best means providing outstanding

quality, service, cleanliness and value, so that their every customer is contented and happy with

their products.”

“To increase the value of their shareholder’s investment through sales growth, cost control and

wise investment of resources.”

MARKET SHARE

When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and lime

drinks, which was established during 1968, in Multan. Pepsi introduced its lemon and lime,

"Teem" to compete with 7up. It successfully, after some years, took over 7up, and this enhanced

Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys 70% of the market share

where as the coke just has 20% markets share.

Pepsi is operating in Pakistan, through its 12 bottlers all over Pakistan. These bottlers are Pepsi's

strength. Pepsi has given franchise to these bottlers. Bottlers, produce, distribute and help in

promoting the brand. Pepsi also launched its fast food chain KFC i.e. "Kentucky Fried Chicken.”

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COMPETITORS

Company who directly target your customers.

The marketing concept states that to be successful, a company must provide greater customer

value and satisfaction than its competitors do.

Pepsi has a tough competition with Coca Cola while it faces a little

competition with the local producers like RC Cola, Shandi Cola etc.

The local producers hardly affect the sales of Pepsi in the market.

There are different types of competitor in the market. Some of them in which our product lies are

discussed below:

　 Close Competitor

Pepsi and Coke are close competitors. It means that both have direct competition in the market,

their products are close substitutes for one another. Both the products can influence the market

share of one another through effective strategies made to cope up with their competitors.

Distant competitors

Pepsi cola and Nestle juice are distant competitors of one another. It means that their products

satisfy the same want but they are in indirect competition with one another.

Strong Vs Weak:

Coca Cola and Pepsi are strong competitors. In Pakistan Pepsi is the market leader and Coca

Cola is its competitor. The Pepsi makes defense strategies so that it can maintain its position in

the market. While Coca Cola is a challenger and it makes attack strategies so that it can become

the market leader.

Pepsi and Shandi Cola are weak competitors. Pepsi is the market leader and Shandi Cola is the

follower. Pepsi is not in direct competition with the Shandi Cola. It means that Shandi Cola has

little effect on the sales of Pepsi.

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COLLABORATORS

Pepsi Cola International has given franchises all over Pakistan. These companies have installed

their plants in different parts of Pakistan with these specified areas and names e.g.

City Name of Franchise

Karachi Pakistan Bottlers

Lahore Riaz Bottlers

Faisalabad Punjab Beverage

Multan Shamim & company

Pepsi Cola provides consumers place utility which is, where ever and whenever you want it, you

get it! Pepsi’s channel of distribution is very aggressive according to the consumers,

manufacturers and distributors. Pepsi has 12 different units in different areas of Pakistan, which

make the Pepsi easily available all over the country.

The cities in which the Pepsi units are:

Lahore

Sukkur

Karachi

Multan

Dera Ghazi Khan

Islamabad

Faisalabad

Quetta

Hyderabad

Sahiwal

Hattar

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Pepsi is an international brand so it also has other units in other countries of the world like

America, Europe, Afghanistan, Middle East and Central Asia. The big advantage for Pepsi in

Pakistan is that it distributes the product through bottlers. So bottlers’ effort also contributes in

the promotion of Pepsi.

Literature Review:

PRODUCTION PROCESS:

Acquiring and Cleaning Bottles:Pepsi operation began with the process of purchasing and washing of bottles. Mostly company use the bottles returned from market. In case the company needs more bottles then they are purchased from the glass company, Lahore. These bottles are place on conveyer and washed with help of automatic plant. Caustic soda and boiled water is used to clean the bottles returned from the market.

The empty bottles that come from the market are brought into the washing room of bottles were damaged bottles are screened out from the lot. Only the acceptable lot is allowed going towards the bottle washer machine. The bottles remain 45 minute in the washer machine, so that only the good quality bottles that are free from sludge and breakage can be passed to the filling room.

Water Processing:In this stage hardness is removed from the water, which is in raw form. Here raw water along with lime, FeSO4 is passed from coagulation tank in order to remove initial sludge than this water is transferred to buffer tank to stable it. Then this water is passed from sand filter, which contains sand and gravel bad and carbon filter, which contain carbon and gravel bed for more purification. After that it is moved to the Prefix Carbon Filter and then to the Spool Polisher in which the filter papers are used to remove the sludge and then to Water Polisher. After that Ultra Violet Filter are used in which Ultra Violet rays passes through the water in order to kill the future growth of bacteria. Finally, this treated water passed through the Thread Type Filter. After passing through this complex process water is completely free from sludge and bacteria and other hazardous waste. This soft water is now ready for syrup making.

Preparation of Syrup:In preparation of syrup sugar is weighted for different brands, because each brand has different requirement different quantity of sugar, then this weighted sugar is moved to the syrup storage room, where the sugar and water in equal quantity processed in Pasteurizer Tanks, and heated up to 85 C where Activated Carbon, Chlorine and TSP (Tri Sodium Phosphate) are used to remove

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the bacteria and smell and color of the sugar. After that this mixture of water and sugar is cooled down up to 20C in order to prevent from the further growth of bacteria, finally in this mixture Concentrate of each brand is added as per requirement.

Filling of bottles:

In the filling room the syrup and CO2 comes from syrup and CO2 room. From Carbon cooler syrup goes to the filler and from other side empty bottles and then crown cock or cap cocks are fixed on the bottles. Here operator looks after the production process.

Filled bottles are then passed thorough light room where bottles are checked again. Under filled or, over filled bottles or dirty bottles are separated from the lot. There are two light rooms and in each room one employee is placed to trace out the dirty bottles.

While passing through light room the code is printed on the bottles, which contain the manufacturing date, machine number and time of manufacturing and the batch number of the product.

After all this checking process bottles are placed in the crates. The whole process of production is automatic. Only supervision is required. Finally these crates are sent to the output warehouse.

The Pepsi is facing with number of problems. One of them is negligence of worker, Because of less educated and trained staff in the production department. Negligence is basically carelessness of workers in maintaining the set standards the company have to ensure. Because of lack of education and training they do not know the importance of maintaining required level of temperature and pressure, which results in poor quality product. Peps should try to reduce the negligence because it can cost the company like McDonald. They have paid compensation to the woman in US because of their negligence of using poor quality of tea cup. As Pepsi belongs to beverage industry and it is also more concerned to health, the negligence of the staff in production department can result in losing of license.

Consumers expect high-quality beverages with a long shelf-life, and products that preferably aced by consist of natural ingredients and few additives. Such requirements make products more vulnerable to contamination with microorganisms, which can lead to product spoilage or food poisoning. The problem related to contamination is also faced by the Pepsi. Because after manufacturing the Pepsi they do not store it in the hygienic and cold stores. Pepsi must take serious measures to over the problem of contamination. The problem was also faced by Coca-Cola in India, due to which it only not lose confidence but also was ban for some time.

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The energy crises in Pakistan have not only affects the beverage industry but almost whole industry is affect by this problem. Pepsi s operations are seriously affecting due shortage of gas and electricity which affects them in maintaining temperature and running the boilers.

Operational Problems Water purification plant Temperature and Carbonation Negligence of workers Energy Crises

ANALYSIS:

Water Purification:Although various high tech machines were used for water treatment, used in the production of Pepsi. If the investigation committee was established to discuss the reasons behind the establishment of pesticides in packaged cans of Pepsi, it was found put that the groundwater was found to be infected. Various water purifiers are available in the company "Pepsi" and they boost the use of high boiling vessels freely in the water. Indeed, the quality of the process of Pepsi says that not filtered, but distilled water is used for making soft drinks. If this process is actually followed in reality Pepsi would not have suffered huge losses and terminate the name and reputation of the organization. Thus it is clear that water treatment is an incorrect match, where Pepsi are not as stages assurance that simplifies working plan.

The company should also understand that when a product that the producer supplies, special attention should be paid to the hygienic and does not cause any health hazards. This is because a slight negligence on the part of the company's results could lead to serious health problems, but it can be fatal to the company's life, and may even end up losing license.

Contamination Problem:It is defined in the work plan of the organization that the factory where soft drinks to be produced are exempts from all kinds of temperature and humidity issues. Indeed, the organization has shown that many new and improved storage containers and rooms are specially designed so that after the production of soft drink it is placed in the better rooms before they are packaged. However, this process is not supported properly and was later concluded that the machines and stores that were made were not of sufficient quality. This makes the soft drink changes in their chemical composition in the high temperature differences in different areas. So

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thanks to theism have chemical reactions and microbes are able to breed in them and thus contaminate it. Although the company Pepsi says that they are hygienic and special ceils to store drinks for a long time until it is packaged and delivered, finally, they take appropriate measures to ensure that this happens in practice. It was clear that after Pepsi is manufactured, they are not stored in hygienic and cold stores. This change in temperature and unhygienic conditions of the theories has led to contamination of Pepsi.

Negligence of Workers:Most of the problem that the quality of products due to the negligence of workers. The staff and the staff that were part of the production department were not well educated and well trained. As a result, they did not understand the importance of maintaining precise temperature and pressure. Nit been made to understand that minor changes in the levels of temperature and pressure, while the water purification, etc. can lead to drastic way for the Pepsi disasters.

Energy Crises:As there are energy crises in Pakistan, Pepsi also facing and effected due to it. As there is shortage of electricity and there is huge consumption of electricity to run the operations and maintaining temperatures in the factory while manufacturing, Pepsi is fulfilling it through generators which take their costs higher and reduces profit margins.

Same as there is the shortage of natural gas as well. Pepsi needs natural gas to run the boilers for the operations, due to the shortage of natural gas which is the cheapest mean of energy, Pepsi is now using alternate means like coal and oil, which are more expansive than the gas, to run their operations.

Recommendations:

Water Purification:Pepsi should use advance technologies, products, services and unmatched expertise, resulting in sustainable solution for water purification. As water is main ingredient in beverages that which syrup is to be dissolved. As underground water may contain insecticides and germs that could make the product hygienic and harmful for the lives, so it is to be purified and concentrated before it is used. It make sure that the machinery that is being used for the treatment should be of best quality and the water should be check after some time if it meeting the required standards or not.

Contamination Problem:It is necessary to improve the process lines, the composition of the materials and the hygiene in the plant, to increase the safety and shelf life of the product. It is not easy to meet the

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requirements and future goals for the manufacturer of beverages. There are two methods developed by TNO which are helpful in increasing the product safety and shelf life matters.

To take broad insights into the microbial hazards the system named Flora-linked Microbial Alert Systems for Hazards is used in production chain. And secondly to analyze the properties of specific microorganism Specific-Microbial Alert System for Hazards is used.

Both methods gave the quantitative data, which give quick results of test of large number of samples. It helps in making interventions and modification in the product which helps in increasing safety and shelf life of the product.

Negligence of Workers:Quality assurance is an important part of the operation process and workers perform an important part is maintaining as well as loosing the quality matters. So keep it up to date and best working, employees should be trained before they stand on the production line. Negligence of a single worker can affect the whole production line and may be the distortion of the company. So the worker should train enough and should be committed to their work. This is only possible if there is strict check and balance or supervisory during the production process or on the production line. Daily work plan should be define. There is the need of HR department to work efficiently for the organization.

Energy Crises:As there is shortage of electricity and gas and to full fill it, company has to use alternative solutions which causing the high in cost of the product and reduces the profits. So to overcome this issue, company’s marketing department should be effected and work fast. If it increases sales so the production could be on full capacity which causes in reducing fixed costs. As the production is more and more there will be less per unit cost on the product that could full fill the gap of the increased cost due to the use of alternative energy sources.

Action plan:The following are the action plains to the above recommendation.

In order to get pure water our action plan would be that we will retain good supplier of water and as water is main ingredient of Pepsi cola so, our focus would be on having our own wells of water this will help us in getting pure water and it will be in low cost because we have to incur cost only at time of digging. It can be happen that we may not get good quality of water at all places, in order to overcome this issue than we will look for suppliers or pipeline.

Our action plan to reduce the contamination problem is that we contact with companies providing software name Enterprise Quality Management Software. More and more

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companies are utilizing Enterprise Quality Management Software as a platform for communication and collaboration across the value chain. This platform enables organization to process data from a central point and reduces the resources needed to ensure the overall standard and processes. Using this technology will help food and beverage companies to optimize their process.

As we have recommended that we will provide training to employees and strict supervisory will help in running effective operations. Our action plan will be that we will provide training classes to the employees and strict supervisory will help us in knowing the deficiencies of the employees. As result we will arrange the training classes accordingly.

Conclusion:We have study Pepsi from operational view point. We also pointed out various operations related issues. As Pepsi is well known brand all over the world so, we recommended that the company should keep its product quality high and move towards automation in order to carry on effective operations.

BIBLIOGRAPHY

The following are the reference material where the information is collected.

i) Company website www.pepsico.comii) Project Outline

REFERENCES

The person from whom the information is collected:

Haideri Beverages, Kahuta Road, Islamabad.

i) Name Tousif-ur-Rahman Khanii) Designation/Position Business operation Manageriii) Cell No. 0302-8465226iv) Email Address tousif.rahman@haideribev.com.pk

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