COLA- WARS CONTINUE Harvard Case Solution & Analysis

COLA- WARS CONTINUE Case Solution 

Introduction

Coca-Cola Company and PepsiCo are two industry leaders in the carbonated soft drink industry. They are strong rivals of each other in the beverage market of the world. From 1975 to 1990s, both the company achieved a steady growth at the rate of 10% in terms of revenue. The situation became becoming intense when the CSD consumption started diminishing in the start of the 2000 century and reached to 46 gallons of CSD consumption per year in U.S. This was followed by different internal issues faced by both the companies. The situation of the market has changed significantly. Moreover, there are more verities of carbonated drinks along with many flavored drinks. There are also many different substitutes widely available in portable packaging. In addition to this, the profitability of both the countries started reducing as there were fluctuations that could be seen by the incomes generated in different years. As for Coca-Cola, the net profits are $6797, $11787 and $8584, all in millions, for the year 2009, 2010 and 2011 respectively. However, for Pepsi Co the profits were somewhat stable through the years. The new industry environment has created intense competition among the CSD businesses.In addition to this, new strategies need to be formulated and implemented to sustain in this highly competitive business environment.

Problem statement

The problem is that what should be done by CSD companies to maintain their sales, as the consumption of the CSD is declining and the increasing trend in the substitute products in the market. The factors that are to be considered and that changes that are incorporated need to have a sustainable business and growth. Moreover, another issue is that as both the companies are now engaging in the businesses that is other than Cold and CSD such as juices and flavored drinks and snacks, therefore the question arises as to how they can compete effectively in these market segments.

Internal Analysis

Financial positions

Coca-Cola’s profits keep fluctuating and this indicates that there are some issues faced by the company. On the other hand,Pepsi Co has steady profits and this might be the reason of effective management and decision making within the organization. However, this does not quite reflect the companies’ performance. The five year growth rate of revenues for Coca-Cola Company is 51.19% as compared to Pepsi Co’s 9.10%. Therefore,as per growth it could be concluded that Coca-Cola is operating successfully.

Strategic overview

Coca-Cola has been continuously making different strategic activities to have a sustainable business and to achieve growth it has restructured its value chain in order to reduce cost. Therefore, this will enable them to save up to $3 billion for the company. National production model was introduced and steps were taken to make decision making more efficient. The company is in the process to expand towards under-developed markets which will boost its revenues and international recognition. For Pepsi Co, the company has been restructured, which has significantly increased its business prospective. The company has been increasing its product range with more diet cola varieties. Furthermore, the company is focusing on healthy products in order to improve its.By following the trails of its rival, Coca-Cola, the company has set up a research department in China. The company is in snack business and it is one of its bigger business units....................

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