Final Project

Submitted By

Aaqib Basir
Abudul Mannan

Pepsi

SP13-MBA-001
SP13-MBA002

Contents
HISTORY OF PEPSI COLA............................................................................................. 3
PEPSI COLA PAKISTAN................................................................................................. 3
COMPANY ANALYSIS.................................................................................................... 3
MISSION STATEMENT............................................................................................... 3
VISION STATEMENT.................................................................................................. 3
Hierarchy of Pepsi co Pakistan.................................................................................... 4
Products...................................................................................................................... 4
SWOT ANALYSIS.......................................................................................................... 5
Strengths................................................................................................................. 5
Weaknesses............................................................................................................. 5
Opportunities.......................................................................................................... 5
Threats.................................................................................................................... 5
EXTERNAL ENVIRONMENT.......................................................................................... 6
Demographic Factors:............................................................................................. 6
Age.......................................................................................................................... 6
Education................................................................................................................ 6
Population Distribution............................................................................................ 6
Population Density.................................................................................................. 6
ECONOMIC FACTORS:................................................................................................. 6
Income and Income per Capita................................................................................6
Inflation................................................................................................................... 7
Consumption Behavior............................................................................................ 7
Income Distribution................................................................................................. 7
Payment Mod........................................................................................................... 7
Economic Policies....................................................................................................... 7
Fiscal Policy............................................................................................................. 7
Monetary Policy....................................................................................................... 7
Price Policy.............................................................................................................. 7
Income Policy.......................................................................................................... 7
Pepsi

PHYSICAL FACTOR:...................................................................................................... 8
Region..................................................................................................................... 8
City Size.................................................................................................................. 8
Climate.................................................................................................................... 8
Infrastructure.......................................................................................................... 8
TECHNOLOGICAL FACTORS:........................................................................................ 8
Research and Development.................................................................................... 8
POLITICAL AND LEGAL FACTORS.................................................................................9
POLITICAL STABILITY:............................................................................................... 9
Mixed Economy....................................................................................................... 9
Laws Formulation.................................................................................................... 9
Social Responsibility................................................................................................ 9
SOCIAL AND CULTURAL FACTORS:.............................................................................. 9
Psychographic......................................................................................................... 9
Religious.................................................................................................................. 9
Social Status............................................................................................................ 9
Media.................................................................................................................... 10
Income Statement.................................................................................................... 10
Annual Income Statement (values in 000's)Get Quarterly Data.........................10
Ratio Analysis :......................................................................................................... 11
Profitability ratio:................................................................................................ 11
Gross profit:........................................................................................................... 11
Investor ratio:........................................................................................................ 11
CONCLUSION............................................................................................................ 12

Pepsi

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

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.
Consumers survey results explain the same outcome and Pepsi has been declared
as the most wanted soft drink of Pakistan

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.

Pepsi

To increase the value of their shareholders investment through sales growth, cost
control and wise investment of resources.

Hierarchy of Pepsi co Pakistan

EXECUTIVES
Board of Directors:
Mr. Akbar Akhtar Khan (Chairman)
Mr. Haroon Akhtar Khan (Chief Executive)
Mr. Gazi Akhtar Khan
Mst. Rasheeda Begum
Mrs. Mudina Akbar Khar
Mr. Saifullah Khan Paracha
Mr. Saeedullah Khan Paracha

Products

Pepsi
Diet Pepsi
Pepsi Twist
7 Up
Diet 7 Up
String
Miranda (Orange & Apple)
Mountain Dew
Aquafina

Pepsi

Pepsi

SWOT ANALYSIS
Strengths
The Pepsi image is displayed on T-shirt, Cap and Bat this extremely recognizable
branding is one of the greatest strengths. Pepsi bottling system is one of their
greatest strengths.

Weaknesses
Pepsi has recently reported some declines in unit case volume in Indonesia and
Thailand due to reduce the consumer Purchasing power. Pepsi has effects on the
teeth which is an issue for health care.

Opportunities
Packing Changes is effected sales and industry positioning but in general, the public
has tended not to be affected by new product. Pepsi's bottling system also allows
the company to take advantage of infinite growth opportunities around the world.

Threats
Consumer buying power is represents a key threats in the industry. The competition
between Pepsi and Coke has produce a very slow moving industry in which
management must continuously respond to the changing attitudes and demand for
their of face losing market share to competition, furthermore consumer can easily
switch to other beverage with a little cost

Pepsi

EXTERNAL ENVIRONMENT
The macro environment consists of the larger societal forces that affect the
microenvironment. The external factors are not under the control of the marketers;
they can just observe them and make strategies in light of these factors. Some of
these factors are given below:

Demographic Factors:
Age
The requirements of different age groups are different. Pepsi should target that age
group that consumes it the most and make promotional strategies according to their
behavior. So their main target is the young generation.

Education
A company has to make promotional strategies keeping in view the customer level.
If the percentage of education is high in a country then through advertisements
people can be made well aware of their product and can convey their message
easily. Promotion and education has a direct relationship.

Population Distribution
Population distribution means how much [population lives I urban areas and rural
areas. In Pakistan 35 % population resides in urban areas and 65% population lives
in rural areas. Pepsi is focusing on urban areas as people there are more inclined
towards such beverage while people in rural areas are more inclined drinking lassi
and desi drinks.

Population Density
It means number of people in one square km per area. Karachi has the largest
population density and Islamabad has less population density in Pakistan. Pepsi
sales are more in Karachi as compared to the sales in Islamabad.

Pepsi

ECONOMIC FACTORS:
Income and Income per Capita
If the income level or per capita income of the people increases, it will have a
positive effect on the consumption of Pepsi.

Inflation
If the country faces inflationary trend in the market, the price of the Pepsi will
ultimately increase which will lower its demand.

Consumption Behavior
Pakistan is a consumption oriented society. Due to demonstration effect the people
are more inclined towards consumption than saving. So the people of Pakistan spent
heavily on food items. Hence Pepsi has a good market share in the present
circumstances.

Income Distribution
It means how much is in the hands of rich and poor class. In Pakistan 10% rich
people posses 93% of wealth and 90% people posses 7% of wealth. If there is
balanced distribution of income in the country, the consumption of the people will
increase hence increasing the sales of beverages as well.

Payment Mod
As the use of plastic money is increasing the consumption pattern of the people are
increasing. Although it will have a low effect on the consumption of Pepsi.

Economic Policies
Some of the economic policies which can affect the market of Pepsi are discussed
below:

Fiscal Policy
It is the policy of taxes. If heavy tax is levied on Pepsi then its price will rise having
negative affect on its consumption.

Monetary Policy
Monetary policy is made to restrict or increase the supply of money in the market. If
policies are made to restrict the flow of money in the market, inflation can be
Pepsi

controlled hence increasing the real income of the people which will ultimately
affect the consumption of Pepsi.

Price Policy
If price of Pepsi is increased its demand will decrease and vice versa.

Income Policy
If income of the people will increase their purchasing power will increase and hence
increasing the market share of Pepsi.

PHYSICAL FACTOR:
Region
Pakistan is divided into different geographical regions. Marketing and sales of Pepsi
is different in different geographical regions. In hot areas its demand is more.

City Size
The cities which are densely populated the consumption of Pepsi is more.

Climate
Pepsi is more suitable for humid or hot weathered countries like Pakistan. It is a
source of refreshment when a person is thirty due to the hot weather.

Infrastructure
Roads are the basic need for transportation of Pepsi from one place to another.
Pepsi cannot open factories in every city of Pakistan so it has to transport it to other
cities where Pepsi is demanded.
Electricity is the basic necessity for production of any product. Constant load
shedding slows down the process of production which leads to less production and
low market share.

TECHNOLOGICAL FACTORS:
Research and Development
Pepsi

10

Through research and development quality of the product can be improved or better
techniques or machinery can be developed which can increase the production.
When technology is advance the supply of the product increase hence the company
experiences growth in their business.

Pepsi

11

POLITICAL AND LEGAL FACTORS:

POLITICAL STABILITY:
Whenever the government is considered to be stable, the business will flourish. If
there is political stability in the country the policies and strategies made by Pepsi
can be consistent to be implemented. Foreign companies are also keen to invest in
those countries which are politically stable where they have no fear of decline in
their market share or shut down due to sudden change of government.

Mixed Economy
In mixed economy government and private sector both plays their role in
developing the economy of the country. Investment by foreign companies like Pepsi
is more likely to flourish in mixed economy.

Laws Formulation
Government has given copy rights to Pepsi so that another company cannot sell
their product by the name of Pepsi. The countries where laws are formulated, the
strategies and activities of the company are different.

Social Responsibility
Pepsi's social responsibility is to provide its customers with clean and hygienic
product so to do this they have increased the use of disposable bottles.

SOCIAL AND CULTURAL FACTORS:

Psychographic
It is a combination of demographic and psychological factors. Psychological
attributes mean how you perceive things. The company will focus on the behavior of
consumers and make different changes in their product quantity or quality and in
promoting their product so that they can attract the customers. Keeping in view that
the behavior of different consumers is not alike they have to make their marketing
strategies in accordance with their requirements so that they are convinced to buy
the product.

Religious

Pepsi

12

Religious factors can influence the market sales of Pepsi as it happened in 2003
when the U.S-led attack on Iraq, wide sections of society in Pakistan have banned
American multinationals Coke and Pepsi

Social Status
Pepsi is a well renowned brand. People who are brand conscious will not drink
beverages of lesser known brands such as Amrat cola. They will try to show their
status by drinking Pepsi which is known to all as a quality drink.

Media
It is a very important factor for marketing. Media these days is a very effective way
of inspiring people to buy a specific product. A good promotion can boast up sales
to a great extent.

PORTER FIVE FORCES MODEL:

The Michael porters five force model give the clear indication of the
competition in market for a company and existing threats which are present.
For Nestle the analysis is here below.

Threat of new entrants:

The food processing industry is very large and competitive. It is not
uncommon

for

firms

within

the

industry

to

do

quite

well. As a result, many companies enter into the market every year in an
attempt to gain a portion of the profitable market.
Luckily for Pepsi, the company has been around for over a century and
boasts a long history of quality products and consumer satisfaction, which
has allowed the company to obtain a considerable share of the market. As a
result, new entrants into the industry must attempt to seize a portion of
Pepsi market share in order to survive.

Threat of Substitute Goods:

Pepsi

13

Due to the nature of the industry, Pepsi is beset with the threat of substitute
goods. From bottled water to lean pockets, there are arrays of similar
products that compete directly with Nestl. It is vital to continuously find new
ways to improve its products because competition is so fierce. In recent
years, Pepsi has focused on the health and wellness aspects of its products
to maintain its competitive edge in the market.

Bargaining Power of Suppliers:

Pepsi prides itself on creating and maintaining positive relationships with its
suppliers all over the world. Due to the large purchasing power of Pepsi and
because the suppliers of agricultural commodities offer a product that is far
from

unique,

Nestl

holds

more

bargaining

power

than its suppliers. Aside from this, Nestl prefers to create and preserve
long-term relationships with its suppliers as this helps to ensure the quality
of the raw materials being purchased. In addition, Nestl also offers useful
advice to its suppliers on how to perform more efficiently to minimize
unnecessary costs.

Bargaining Power of Customers:

Customers have a large amount of bargaining power regarding their
consumption

of

Nestl

products. As stated previously, there

are

close

substitutes for Nestl products which allows for the preferences of the
customer to be very influential. Nestl understands the power of the
customer and has taken specific steps to meet the needs of its products
consumers. Specifically, Pepsi is incorporating health and wellness into the
creation of its products as society has started becoming more health
conscious.

Pepsi

14

Competitive Rivalry within the Industry:

Pepsi is a powerhouse in the Drinks processing industry. These companies,
among others, are in a constant and continuous battle to outperform one
another. Regarding advertising alone, these companies spend hundreds of
millions of dollars in an attempt to appear more desirable than the
competition. Rivalry is fierce in the food processing industry, and this is a
good thing for consumers. As long as these companies continue striving to
one

up

one

another,

consumers

will

continue to

enjoy

ever-

improving product line.

MODEL:
Bargaining Power of
Suppliers

Long term relationship

with suppliers
Suppliers have low

Threat of new
entrant

Substitutes
Industry Competitors

Threat of
new entrants
is moderate
Pepsi
Pepsi has a
major market
15
share and
brand image
as well

Competitors are
available
Competition is not that
much strong as Pepsi
has variety of products
those compete with

Pepsi has
competitive
edge in the
market
It produces
substitutes
for its own
products and
gain the
maximum

Bargaining power of buyers

Pepsi

16

Buyers have bargaining

power as substitutes are
available
Pepsi bring quality and
variety of products to
reduce buyer power

Income Statement

Annual Income Statement (values in 000's)Get Quarterly Data

Tren 12/26/20 12/27/20 12/28/20 12/29/20
Period Ending:
d
15
14
13
12
$63,056,0 $66,683,0 $66,415,0 $65,492,0
Total Revenue
00
00
00
00
$28,384,0 $30,884,0 $31,243,0 $31,291,0
Cost of Revenue
00
00
00
00
$34,672, $35,799, $35,172, $34,201,
Gross Profit
000
000
000
000
Operating Expenses
Research and Development
$0
$0
$0
$0
$24,885,0 $26,126,0 $25,357,0 $24,970,0
Sales, General and Admin.
00
00
00
00
$1,359,00
Non-Recurring Items
$0
$0
$0
0
Other Operating Items
Operating Income
Add'l income/expense items

$75,000

$92,000

$110,000 $119,000

$8,353,0 $9,581,0 $9,705,0 $9,112,0

00
00
00
00
$59,000

$85,000

$97,000

$91,000

Earnings Before Interest and Tax

$8,412,00 $9,666,00 $9,802,00 $9,203,00

0
0
0
0

Interest Expense

$970,000 $909,000 $911,000 $899,000

Earnings Before Tax

$7,442,00 $8,757,00 $8,891,00 $8,304,00

0
0
0
0

Pepsi

17

Period Ending:
Income Tax
Minority Interest
Equity Earnings/Loss Unconsolidated
Subsidiary
Net Income-Cont. Operations
Net Income
Net Income Applicable to Common
Shareholders

Tren 12/26/20 12/27/20 12/28/20 12/29/20

d
15
14
13
12
$1,941,00 $2,199,00 $2,104,00 $2,090,00
0
0
0
0
($49,000) ($45,000) ($47,000) ($36,000)
$0

$0

$0

$0

$5,452,00 $6,513,00 $6,740,00 $6,178,00

0
0
0
0
$5,452,0 $6,513,0 $6,740,0 $6,178,0
00
00
00
00
$5,452,0 $6,513,0 $6,740,0 $6,178,0
00
00
00
00

Ratio Analysis :
Profitability ratio:
To check the companys profit, profitability ratio is used. It is used to check
the companys performance, profitability is simply the capacity of companies
to make profit and profit is that what is left behind after paying all expenses
and deducting all cost which is related to the companies earning. Profitability
ratios used to check that the companies are making profits from their assets.
If there is low profitability ratio higher the productivity of expense and high
ratio indicates that companies is generating well against their expenses.

Gross profit:
(Gross profit /sales)
Gross profit ratio is used to check that how the company is generating its
revenue and determine the cost while producing the products. Its a
company profit after paying all CGS expenses.

Net profit:
Net profit ratio = (Net profit/net sales)*100

Net profit ratio is a relationship between net profit and sales after tax. It
measures overall profitability of the company.net profit ratio results of a
Pepsi

18

business also used to compare with its competitor. Investor wants that there
is high net profit ratio of a company which affects the dividend.

Investor ratio:
EPS= Net income / Total outstanding shares

Earnings per share ratio tells that the amount of earning on each share. This
ratio also shows that how a company is profitable on shareholder basis. High
earning per share is more profitable than low EPS means when you invested
in high EPS Ratio Company it will give you more profit against per share and
company has a enough profit to distribute its shareholders.

CONCLUSION
Pepsi is one of the famous and successful brands in the FMCG industry. It
enjoys a high credibility, high market share and has growth potential. From
the above analysis we got to know that Pepsi can go with the strategy of
market development by targeting niche. It can also go for related and
unrelated diversification by joint ventures with other organization in
same and other industries. As it enjoys a high growth potential so can go for
new product development as well. It can strengthen its product line and
product mix and give a back to those brands which are at maturity stage of
their product life cycle.

Pepsi

19