Strategic ManagementStrategic Management

Tsang Hoi KiChan Ho YinFung Tsun WaiChan Ka PoYuen Sze WingChan Tai Hoi Yan Yue Kan

(200826001H, FNE) (200826002H, FNE) (200826004H, FNE) (200826019H, FNE) (200826020H, FNE) (200826027H, FNE) (200926024E, FNE)

ObjectivesObjectives

Assess the current situation ofAssess the current situation of

Coca-Cola and the industry.Coca-Cola and the industry.

Evaluate the existing resources.Evaluate the existing resources.

Provide strategic recommendations.Provide strategic recommendations.

ContentsContents Section 1: Company Background.Section 1: Company Background.

Section 2: Internal Analysis of strengths and Section 2: Internal Analysis of strengths and weaknesses.weaknesses.

Section 3: General trends affecting the industry.Section 3: General trends affecting the industry.

Section 4: External Analysis by usingSection 4: External Analysis by using

Porter’s Five Forces.Porter’s Five Forces.

Section 5: Key future challenges and Section 5: Key future challenges and recommendations.recommendations.

Section 1Section 1

CompanyCompany

BackgroundBackground

Missions & ObjectivesMissions & ObjectivesIt declares the purpose It declares the purpose as a company and as a company and serves as the standard serves as the standard against actions and against actions and decisions. decisions.

To refresh the world…To refresh the world…To inspire moments of To inspire moments of optimism and optimism and happiness…happiness…To create value and To create value and make a difference.make a difference.

Missions & ObjectivesMissions & ObjectivesVision-6Ps:Vision-6Ps:PPeople:eople: Be a great place to work where Be a great place to work where people are inspired to be the best they can people are inspired to be the best they can be.be.

PPortfolio:ortfolio: Bring to the world a portfolio of Bring to the world a portfolio of quality beverage brands that anticipate and quality beverage brands that anticipate and satisfy people's desires and needs.satisfy people's desires and needs.

PPartners:artners: Nurture a winning network of Nurture a winning network of customers and suppliers, together we create customers and suppliers, together we create mutual, enduring value.mutual, enduring value.

Missions & ObjectivesMissions & ObjectivesVision-6Ps:Vision-6Ps:PPlanet: lanet: Be a responsible citizen that makes Be a responsible citizen that makes a difference by helping build and support a difference by helping build and support sustainable communities.sustainable communities.

PProfit: rofit: Maximize long-term return to Maximize long-term return to shareowners while being mindful of our shareowners while being mindful of our overall responsibilities.overall responsibilities. PProductivity: roductivity: Be a highly effective, lean Be a highly effective, lean and fast-moving organization.and fast-moving organization.

Past and Present Past and Present

1894 … A modest start for a bold idea1894 … A modest start for a bold ideaA store's owner, Joseph A. Biedenharn, A store's owner, Joseph A. Biedenharn, began began bottling Coca-Cola to sell, using a common bottling Coca-Cola to sell, using a common glass bottle called a Hutchinsonglass bottle called a Hutchinson

1899 … The first bottling agreement1899 … The first bottling agreementIn a meeting with Candler, Benjamin F. Thomas In a meeting with Candler, Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive rights and Joseph B. Whitehead obtained exclusive rights to bottle Coca-Cola across most of the United to bottle Coca-Cola across most of the United States (specifically excluding Vicksburg) -- for the States (specifically excluding Vicksburg) -- for the sum of one dollar. sum of one dollar.

Past and Present Past and Present 1900-1909 … Rapid growth1900-1909 … Rapid growth

TheThe three pioneer bottlers three pioneer bottlers divided the country into divided the country into territories and sold bottling rights to local entrepreneurs. territories and sold bottling rights to local entrepreneurs. By 1909, nearly 400 Coca-Cola bottling plants were By 1909, nearly 400 Coca-Cola bottling plants were operating, most of them family-owned businessesoperating, most of them family-owned businesses. . Some were open only during hot-weather months when Some were open only during hot-weather months when demand was high.demand was high.

1916 … Birth of the contour bottle1916 … Birth of the contour bottleA group representing the Company and bottlers asked glass A group representing the Company and bottlers asked glass manufacturers to offer ideas for a distinctive bottle. manufacturers to offer ideas for a distinctive bottle. The The contour bottle became one of the few packages ever contour bottle became one of the few packages ever granted trademark status by the U.S. Patent Office. granted trademark status by the U.S. Patent Office. Today, it's one of the most recognized icons in the Today, it's one of the most recognized icons in the world - even in the dark!world - even in the dark!

1920s … Bottling overtakes fountain sales1920s … Bottling overtakes fountain salesAs the 1920s dawned, more than 1,000 Coca-Cola As the 1920s dawned, more than 1,000 Coca-Cola bottlers were operating in the U.S. By the end of bottlers were operating in the U.S. By the end of the 1920s, bottle sales of Coca-Cola exceeded the 1920s, bottle sales of Coca-Cola exceeded fountain sales.fountain sales.

1920s and 30s … International expansion1920s and 30s … International expansionLed by longtime Company leader Robert W. Led by longtime Company leader Robert W. Woodruff, chief executive officer and chairman of Woodruff, chief executive officer and chairman of the Board, the Company began a major push to the Board, the Company began a major push to establish bottling operations outside the U.S. By establish bottling operations outside the U.S. By the time World War II began, Coca-Cola was being the time World War II began, Coca-Cola was being bottled in 44 countries.bottled in 44 countries.

Past and PresentPast and Present

1940s … Post-war growth1940s … Post-war growthDuring the war, 64 bottling plants were set up around During the war, 64 bottling plants were set up around the world to supply the troops. Many of these war-time the world to supply the troops. Many of these war-time plants were later converted to civilian use, plants were later converted to civilian use, permanently enlarging the bottling system and permanently enlarging the bottling system and accelerating the growth of the Company's worldwide accelerating the growth of the Company's worldwide business.business.

1950s … Packaging innovations1950s … Packaging innovationsFor the first time, consumers had choices of Coca-Cola For the first time, consumers had choices of Coca-Cola package size and type -- the traditional 6.5-ounce package size and type -- the traditional 6.5-ounce contour bottle, or larger servings including 10-, 12- and contour bottle, or larger servings including 10-, 12- and 26-ounce versions. Cans were also introduced, 26-ounce versions. Cans were also introduced, becoming generally available in 1960. becoming generally available in 1960.

Past and PresentPast and Present

Past and PresentPast and Present 1960s … New brands introduced1960s … New brands introduced

Following Fanta® in the 1950s, Sprite®, Minute Maid®, Following Fanta® in the 1950s, Sprite®, Minute Maid®,

Fresca® and TaB® joined brand Coca-Cola in the 1960s. Fresca® and TaB® joined brand Coca-Cola in the 1960s.

Mr. Pibb® and Mello Yello® were added in the 1970s. Mr. Pibb® and Mello Yello® were added in the 1970s.

The 1980s brought diet Coke® and Cherry Coke®, The 1980s brought diet Coke® and Cherry Coke®,

followed by POWERADE® and DASANI® in the 1990s. followed by POWERADE® and DASANI® in the 1990s.

1970s and 80s … Consolidation to serve customers1970s and 80s … Consolidation to serve customers

The Company encouraged and invested in a number of The Company encouraged and invested in a number of

bottler consolidations to assure that its largest bottling bottler consolidations to assure that its largest bottling

partners would have capacity to lead the system in partners would have capacity to lead the system in

working with global retailers.working with global retailers.

Past and Present Past and Present 1990s … New and growing markets1990s … New and growing markets

After the fall of the Berlin Wall, the Company After the fall of the Berlin Wall, the Company invested heavily to build plants in Eastern invested heavily to build plants in Eastern Europe. Europe. And as the century closed, more than $1.5 And as the century closed, more than $1.5 billion was committed to new bottling facilities in billion was committed to new bottling facilities in Africa.Africa.

2121stst Century … Century …The Coca-Cola bottling system grew up with roots The Coca-Cola bottling system grew up with roots deeply planted in local communities. This heritage deeply planted in local communities. This heritage serves the Company well today as people seek brands serves the Company well today as people seek brands that that honor local identity and the distinctiveness honor local identity and the distinctiveness of local markets. of local markets.

Products and Products and CompetencyCompetency

Originated as a soda foundation Originated as a soda foundation beverage in 1886 to one of the most beverage in 1886 to one of the most popular beverage over the world popular beverage over the world because:because:

Adoption of strong bottling system. Adoption of strong bottling system. Massive levels of penetration and Massive levels of penetration and

recognition.recognition. Distribution network.Distribution network.

Products and Products and CompetencyCompetencyProductsProducts

Three business units-sparkling Three business units-sparkling beverages, still beverages and beverages, still beverages and emerging brands will define emerging brands will define Coca-Cola’s focus in the North Coca-Cola’s focus in the North America market, where it faces America market, where it faces stiff competition from rival stiff competition from rival PepsiCo Inc and makers of PepsiCo Inc and makers of healthier beverages such as healthier beverages such as juices.juices.

Fanta® in the 1950s, Sprite®, Fanta® in the 1950s, Sprite®, Minute Maid®, Fresca® and Minute Maid®, Fresca® and TaB® joined brand Coca-Cola in TaB® joined brand Coca-Cola in the 1960s. Mr. Pibb® and Mello the 1960s. Mr. Pibb® and Mello Yello® were added in the Yello® were added in the 1970s. The 1980s brought diet 1970s. The 1980s brought diet Coke® and Cherry Coke®, Coke® and Cherry Coke®, followed by POWERADE® and followed by POWERADE® and DASANI® in the 1990s. Today DASANI® in the 1990s. Today hundreds of other brands are hundreds of other brands are offered to meet consumer offered to meet consumer preferences in local markets preferences in local markets around the world.around the world.

Section 2Section 2

Internal AnalysisInternal Analysis (Strengths and(Strengths and

Weaknesses)Weaknesses)

The world's largest The world's largest manufacturer, distributor, manufacturer, distributor, and marketer of and marketer of nonalcoholic beverage nonalcoholic beverage concentrate and syrups .concentrate and syrups .

Strong brand recognition Strong brand recognition

across the globe .across the globe .

→ → Best global brands Best global brands ranking in 2009 and ranking in 2009 and 2010 .2010 .

World Leader in Soft World Leader in Soft Drink IndustryDrink Industry

Owns a large portfolio of product Owns a large portfolio of product brandsbrands →→ Owns or licenses more than 500 Owns or licenses more than 500

brands, with a portfolio of morebrands, with a portfolio of morethan 3,500 beverages. than 3,500 beverages.

→ →Products include diet and regular Products include diet and regular

sparkling beverages, 100% fruit sparkling beverages, 100% fruit juices, fruit drinks, water, sportsjuices, fruit drinks, water, sportsand energy drinks, teas and and energy drinks, teas and

coffees, and milk-andcoffees, and milk-andsoy-based product.soy-based product.

Sells finished beverage Sells finished beverage products more than 200 products more than 200 countries.countries.

Has 7 operating Has 7 operating leadership groups leadership groups worldwide: Eurasia & worldwide: Eurasia & Africa Group, Europe Africa Group, Europe Group, Latin America Group, Latin America Group, North America Group, North America Group, Pacific Group, Group, Pacific Group, Bottling Investments Bottling Investments Group and McDonald's Group and McDonald's Division.Division.

Wide Geographic Wide Geographic CoverageCoverage

There were 23 countries having the average There were 23 countries having the average number of consumption over 100 bottles, e.g. number of consumption over 100 bottles, e.g. Australia, South Africa, Japan, Spain, Australia, South Africa, Japan, Spain, Argentina, Canada.Argentina, Canada.

In Mexico, each person drank 675 bottles in In Mexico, each person drank 675 bottles in 2010.2010.

In 2010, its net operating revenue reaches In 2010, its net operating revenue reaches

US$35 billion, with an approximate 13% US$35 billion, with an approximate 13% growth. growth.

Driven by a wide array of global markets, Driven by a wide array of global markets,

including 37% in Russia, 20% in Turkey, including 37% in Russia, 20% in Turkey,

10% in India, 8% in Brazil, 7% in South Africa, 10% in India, 8% in Brazil, 7% in South Africa,

5% in Japan, 5% in Mexico and 2% in France. 5% in Japan, 5% in Mexico and 2% in France.

Strong Financial Strong Financial PerformancePerformance

In 2003, it was revealed that In 2003, it was revealed that several midlevel employees several midlevel employees had rigged a marketing test had rigged a marketing test for Frozen Coke done three for Frozen Coke done three years earlier at Burger King years earlier at Burger King Restaurants in Virginia. Restaurants in Virginia.

Led to the departure of the Led to the departure of the head of Coke's fountain head of Coke's fountain division, and the company division, and the company issued an apology to Burger issued an apology to Burger King and its franchisees and King and its franchisees and offered to pay them US$21 offered to pay them US$21 million. million.

Negative PublicityNegative Publicity

2004: the launch of the Dasani brand into 2004: the launch of the Dasani brand into the European market was cancelled when the European market was cancelled when bottles in Britain were found to contain bottles in Britain were found to contain elevated levels of bromate, a substance elevated levels of bromate, a substance that can cause cancer after long-term that can cause cancer after long-term exposure.exposure.

2006: Coca-Cola was accused by the 2006: Coca-Cola was accused by the Center for Science and Environment (CSE) Center for Science and Environment (CSE) in India of selling products containing in India of selling products containing hazardous pesticide residues. These hazardous pesticide residues. These pesticides included chemicals which could pesticides included chemicals which could cause cancers, damage the nervous and cause cancers, damage the nervous and reproductive systems and reduce bone reproductive systems and reduce bone mineral density.mineral density.

Negative PublicityNegative Publicity

Coca-Cola’s products areCoca-Cola’s products are

always labeled as “junk food”.always labeled as “junk food”. People criticize Coca-Cola’sPeople criticize Coca-Cola’s

beverage contain too muchbeverage contain too much

sugar and high is calories.sugar and high is calories. One of the important factors of causing One of the important factors of causing

high obesity rate in developed countries.high obesity rate in developed countries.

→ Negative publicity badly affects brand Negative publicity badly affects brand image and the demand for Coca-Cola image and the demand for Coca-Cola products. products.

→ Badly affect the company’s growth Badly affect the company’s growth prospects in the international markets.prospects in the international markets.

Negative PublicityNegative Publicity

In North America, the sale In North America, the sale volume recorded falls volume recorded falls between 2006 and 2009.between 2006 and 2009.

Unit case retail volume in Unit case retail volume in North America decreased 1% North America decreased 1% primarily 2006.primarily 2006.

In early 2009, the domestic In early 2009, the domestic sales volume dropped 2% in a sales volume dropped 2% in a quarter.quarter.

Sluggish Performance Sluggish Performance in North Americain North America

Most of the brands are various kinds of beverages.Most of the brands are various kinds of beverages.

PepsiCo, has a better diversification. PepsiCo’s PepsiCo, has a better diversification. PepsiCo’s product mix (up to 2009) consists of 63% food, and product mix (up to 2009) consists of 63% food, and 37% beverages.37% beverages.

→ Lack of diversification will affect Coca-Cola’s sales Lack of diversification will affect Coca-Cola’s sales seriously if the demand for beverages decreases.seriously if the demand for beverages decreases.

Lack of DiversificationLack of Diversification

Section 3Section 3

GeneralGeneral

EnvironmentEnvironment

AnalysisAnalysis

Growth of use of Internet and other electronic technologies Growth of use of Internet and other electronic technologies — allow firms to collaborate with domestic market and — allow firms to collaborate with domestic market and expand into world markets.expand into world markets.

Research by Just-Drinks — a global beverage industry Research by Just-Drinks — a global beverage industry research institution.research institution.

Between 2009 and 2014, the compound annual growth rate Between 2009 and 2014, the compound annual growth rate (CAGR) of global functional soft drink value sales will (CAGR) of global functional soft drink value sales will increase from 5.07% (2001-2008) to 5.84% (2009-2014). The increase from 5.07% (2001-2008) to 5.84% (2009-2014). The global soft drinks market is estimated to reach a value of at global soft drinks market is estimated to reach a value of at least US$484 billion by 2014.least US$484 billion by 2014.

GlobalizationGlobalization

Soft drinks have been introduced for more than a century. Soft drinks have been introduced for more than a century. Buyers want innovation with the products they buy. Buyers want innovation with the products they buy.

Increasing concerns on healthy lifestyle, especially in Increasing concerns on healthy lifestyle, especially in developed countries. Consumer awareness of health developed countries. Consumer awareness of health problems arising from obesity and inactive lifestyles problems arising from obesity and inactive lifestyles represent a serious risk of the carbonated drinks sector.represent a serious risk of the carbonated drinks sector.

→ Lead Coca-Cola to differentiate its products in order to Lead Coca-Cola to differentiate its products in order to increase sales in a stagnant market.increase sales in a stagnant market.

Increasing Concerns on Increasing Concerns on Health IssueHealth Issue

Section 4Section 4

External AnalysisExternal Analysis (Porter’s Five Forces)(Porter’s Five Forces)

Low in the soft-drink industry. Low in the soft-drink industry. High fixed costs. High fixed costs. Limited bottlers , new entrants , build Limited bottlers , new entrants , build

their bottling plants. their bottling plants. High capital requirement , 1998 - US$75 High capital requirement , 1998 - US$75

million. million. Advertising and marketing expenditure in Advertising and marketing expenditure in

the industry , 2000 - around the industry , 2000 - around US$2.6billion (mainly by Coca-Cola, Pepsi US$2.6billion (mainly by Coca-Cola, Pepsi and their bottlers ).and their bottlers ).

Extremely difficult for an entrant. Extremely difficult for an entrant.

Five Forces Model Five Forces Model 1. Threat of New 1. Threat of New Entrants Entrants

Coca-Cola and PepsiCo :Coca-Cola and PepsiCo :

Agreements : prohibit bottlers from Agreements : prohibit bottlers from taking on new competing brands for taking on new competing brands for similar products.similar products.

Backward integration : buying significant Backward integration : buying significant percent of bottling companies. percent of bottling companies.

Five Forces Model Five Forces Model 1. Threat of New 1. Threat of New Entrants Entrants

Retailers enjoy significant margins : 15-Retailers enjoy significant margins : 15-20% on soft drinks. 20% on soft drinks.

Difficult for the new entrants : at a lower Difficult for the new entrants : at a lower margin. margin.

Heavy advertising. Heavy advertising.

Strong brand name. Strong brand name.

Loyal customers. Loyal customers.

Five Forces Model Five Forces Model 1. Threat of New 1. Threat of New Entrants Entrants

Strong.Strong. Many kinds of substitutes appear.Many kinds of substitutes appear.

(bottled water, sports drinks and coffee (bottled water, sports drinks and coffee etc)etc)

Increase of numbers and varieties of Increase of numbers and varieties of water and sports drinks. water and sports drinks.

Trend to healthier drinks. Trend to healthier drinks. Coffee and tea – caffeine. Coffee and tea – caffeine. Low switching costs. Low switching costs. Substitute products are quality and Substitute products are quality and

innovation.innovation.

Five Forces Model Five Forces Model 2. Threat of Substitutes 2. Threat of Substitutes

Low.Low.

Does not do any bottling itself. Does not do any bottling itself.

Done by independent bottlers. Done by independent bottlers.

Coca-Cola Enterprises. Coca-Cola Enterprises.

Coca-Cola integrated Coca-Cola Coca-Cola integrated Coca-Cola

Enterprises earlier in 2010. Enterprises earlier in 2010.

Better control distribution. Better control distribution.

Quicker to market with products. Quicker to market with products.

Five Forces Model Five Forces Model 3. Threat of Suppliers 3. Threat of Suppliers

Moderate.Moderate.

Buyers : Large grocers, convenience Buyers : Large grocers, convenience

stores, supermarkets, and restaurants. stores, supermarkets, and restaurants.

Buy large volumes - bargain a lower Buy large volumes - bargain a lower

price. price.

Decreased demand for unhealthy soft-Decreased demand for unhealthy soft-

drinks - larger bargaining power. drinks - larger bargaining power.

Five Forces Model Five Forces Model 4. 4. Bargaining Power of Bargaining Power of Buyers Buyers

Strong.Strong.

The competitive pressure from rival sellers The competitive pressure from rival sellers

is the greatest challenging faced by Coca-is the greatest challenging faced by Coca-

Cola. Cola.

Main competitor : PepsiCo - power struggle Main competitor : PepsiCo - power struggle Coca-Cola owns four of the top five soft Coca-Cola owns four of the top five soft

drink brands : Coca-Cola, Diet Coke, Fanta, drink brands : Coca-Cola, Diet Coke, Fanta, and Sprite. and Sprite.

North AmericaNorth America : PepsiCo: PepsiCo US$22billion US$22billion

Coca-ColaCoca-Cola US$7billion US$7billion

Global market : Coca-Cola has higher sales. Global market : Coca-Cola has higher sales.

Five Forces Model Five Forces Model 5. Competitive Rivalry 5. Competitive Rivalry

Brand name loyalty. Brand name loyalty.

The Brand Keys’ Customer Loyalty The Brand Keys’ Customer Loyalty

Leaders Survey (Brand Loyalty, 2010). Leaders Survey (Brand Loyalty, 2010).

Diet Pepsi ranked 258Diet Pepsi ranked 258thth (the highest (the highest

ranking of soft drink). ranking of soft drink).

Diet Coke ranked 336Diet Coke ranked 336thth (the highest (the highest

ranking of Coca-Cola’s product). ranking of Coca-Cola’s product).

Five Forces Model Five Forces Model 5. Competitive Rivalry 5. Competitive Rivalry

Section 5Section 5

Key FutureKey Future

Challenges and Challenges and

SStrategic trategic Recommendations Recommendations

William Pecoriello, a leading beverage William Pecoriello, a leading beverage industry analyst from Morgan Stanley & Co, industry analyst from Morgan Stanley & Co, maintain a forecast for a 1.5% annual volume maintain a forecast for a 1.5% annual volume decline for the carbonated soft drink segment.decline for the carbonated soft drink segment.

Declining Sales VolumeDeclining Sales Volume

YearVolume sale of carbonated

soft drink in US

2005 - 0.2%

2006 - 0.6%

2007 - 2.3%

2008 - 3.0%

2009 - 2.1%

2005 – 2009 - 8.2%

Recommendations:Recommendations:

Focus more on bottled water, Focus more on bottled water, noncarbonated drinks, and especially noncarbonated drinks, and especially energy drinks.energy drinks.

Growth of energy drink: 50% in 2006; Growth of energy drink: 50% in 2006; 10% in 2010.10% in 2010.

Energy drinks and healthy drinks: major Energy drinks and healthy drinks: major beverage needs of young consumers and beverage needs of young consumers and health conscious consumers.health conscious consumers.

Declining Sales VolumeDeclining Sales Volume

2001’s study: Daily serving sweetened 2001’s study: Daily serving sweetened soft drink increases the risk of becoming soft drink increases the risk of becoming obese. obese.

2004’s study: Discouraged obese 2004’s study: Discouraged obese children to take diet soft drinks since children to take diet soft drinks since they have no nutritive value.they have no nutritive value.

Health and Wellness Health and Wellness TrendTrend

Most soft drink consumers are slowly Most soft drink consumers are slowly shifting their consumption to products shifting their consumption to products that are healthier or have fewer that are healthier or have fewer negative side-effects.negative side-effects.

Elder consumers who concern about Elder consumers who concern about diabetes: Switch from high-calorie soft diabetes: Switch from high-calorie soft drink to water or low-calorie juice.drink to water or low-calorie juice.

Young working class: Energy drinks, Young working class: Energy drinks, sport drinks, fer organics and more sport drinks, fer organics and more “natural” beverage to lower the “natural” beverage to lower the consumption of negative chemicals.consumption of negative chemicals.

Health and Wellness Health and Wellness TrendTrend

Recommendations:Recommendations:

Provide industry leadership in the health Provide industry leadership in the health and wellness area.and wellness area.

Market different kinds of products for Market different kinds of products for different population segments :different population segments :

– Baby boomers’ market: Tea and water Baby boomers’ market: Tea and water beverage which contain less sodium and beverage which contain less sodium and sugar.sugar.

– Young generation market: Sport drink and Young generation market: Sport drink and energy drink, organic .energy drink, organic .

Health and Wellness Health and Wellness TrendTrend

PepsiCo overtook Coca-Cola in terms of its PepsiCo overtook Coca-Cola in terms of its market capitalization in December 2006: market capitalization in December 2006: Coca-Cola US$97.9 bn ; PepsiCo’s US$98.4 Coca-Cola US$97.9 bn ; PepsiCo’s US$98.4 bn. bn.

By the end of 2010, Pepsi Co has a higher By the end of 2010, Pepsi Co has a higher gross profit than Coca-Cola by US$8.8 gross profit than Coca-Cola by US$8.8 billion.billion.

→ PepsiCo can invest more capital on PepsiCo can invest more capital on research & development on beverage. research & development on beverage.

→ PepsiCo will remain a strong threat for PepsiCo will remain a strong threat for Coca-Cola.Coca-Cola.

Increased Competition Increased Competition from PepsiCofrom PepsiCo

Recommendations:Recommendations:

Within the products in PepsiCo, only 37% Within the products in PepsiCo, only 37% of products are beverages.of products are beverages.

→Vertical expansion of Coca-Cola vs Vertical expansion of Coca-Cola vs Horizontal expansion of PepsiCo .Horizontal expansion of PepsiCo .

→Focus on beverages business and related Focus on beverages business and related businesses, e.g. bottling, sugar plantation, businesses, e.g. bottling, sugar plantation, or even tin can and glass recycling or even tin can and glass recycling business.business.

Increased Competition Increased Competition from PepsiCofrom PepsiCo

Coca-Cola should be sensitive Coca-Cola should be sensitive of any new trend and position of any new trend and position

itself as a unique brand in itself as a unique brand in order to keep its competitive order to keep its competitive

advantage.advantage.