The Coca-Cola Company and PepsiCo, Inc.The financial statements of Coca-Colaand PepsiCoare presented in Appendices C and D, respectively. The companies’ complete annual reports, including the notes to the financial statements, are available online.InstructionsUse the companies’ financial information to answer the following questions.(a)What are the primary lines of business of these two companies as shown in their notes to the financial statements?The primary line of business for Coca-Cola is providing many different beverages to theircustomers according the financial statements. Pepsi’s primary line of business also includes beverages but they also produce food and snack products to customers.1.Coca-Cola - Beverages2.Pepsi - Beverages and food and snack products(b)Which company has the dominant position in beverage sales?1.Coca-Cola has the dominant position in beverage sales. Coca-Cola has more than 500 non-alcoholic beverage brands Pepsi also sells food like Frito-Lay and Quaker.
Essay about Case Study on Coke versus Pepsi
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The case study "Cola Wars Continue: Coke and Pepsi in the Twenty-First Century" focuses on describing Coke and Pepsi within the CSD industry by providing detailed statements about the companies’ accounts and strategies to increase their market share. Furthermore, the case also focuses on the Coke vs. Pepsi goods which target similar groups of costumers, and how these companies have had and still have great reputation and continue to take risks due to their high capital. This analysis of the Cola Wars Continue case study will focus mainly on the profitability of the industry by carefully considering and analyzing the below questions:
Why is the soft drink industry so profitable?
Compare the economics of the concentrate business to the…show more content…
Barriers to entry is another factor that accounts for the high profitability of the soft drink industry. As stated in the case, it is nearly impossible for new concentrate producers or bottlers to enter the industry. The new producers would not require high capital to enter (low cost of capital to produce concentrate), however the entry would be impossible due to patents and the presence of Coke and Pepsi which have nearly century old established names. Meanwhile entering bottling is very capital intensive, and the existing bottlers have exclusive territories in which they distribute their products. Provided the above stated facts it is clear that the soft drink industry is a highly profitable industry. Moreover, in Exhibit 5 it is easily observed that in 2000 the Concentrate Producers (CP) earned 35% profit on sales whereas the bottlers earned 9% profit, which account for a total positive industry profit of 14%. The data listed in the case shows how the soft drink industry in itself is very profitable, however the profitability of the concentrate producers is much higher that that of the bottlers, even though these two businesses should be inseparably linked. Exhibit 5 clearly reflects the profitability of concentrate producers vs. bottlers; even though the dollars per case profit is much higher for the bottlers, the ultimate profit as a percent of sales is higher for the concentrate producers. The cost of goods sold for a CP is equivalent