Documente Academic
Documente Profesional
Documente Cultură
Forest David
A. Case Abstract
Dr Pepper Snapple Group (DPS) is a comprehensive strategic management case that includes the
company’s year-end 2010 financial statements, organizational chart, competitor information and more. The
case time setting is the year 2011. Sufficient internal and external data are provided to enable students to
evaluate current strategies and recommend a three-year strategic plan for the company. Headquartered in
Plano, Texas, DPS’s common stock is publicly traded under the ticker symbol DPS.
Headquartered in Plano, Texas, Dr Pepper Snapple (DPS) produces, bottles, and distributes Dr Pepper,
Snapple, and other beverages in North America, including Canada, Mexico, and the US. DPS offers many
non-alcoholic beverages including flavored, carbonated soft drinks and non-carbonated soft drinks, along
with ready-to-drink non-carbonated teas, juices, juice drinks, and mixers. Among the company’s popular
brands are Dr Pepper, Snapple, A&W Root Beer, Hawaiian Punch, Mott's, Schweppes, Vernors, Squirt, and
Royal Crown Cola. DPS is the #3 soda business in North America, after #1 Coke and #2 Pepsi. With more
than 50 brands total, DPS is the leading producer of flavored beverages in North America and the
Caribbean. DPS owns 6 of the top 10 non-cola soft drinks. Nine of DPS’s 12 leading brands are No. 1 in
their flavor categories. Other DPS beverages include Sunkist soda, 7UP, Canada Dry, Crush, Peñafiel,
Clamato, Venom Energy, Rose's and Mr & Mrs T mixers.
DPS’s Q3 2011 diluted EPS were $0.71 compared to $0.60 in the prior year period. For Q3 2011, DPS
sales increased 5 percent and their income from operations was $261 million compared to $260 million in
the prior year period.
1. Customers
2. Products or services
3. Markets
4. Technology
D. External Audit
Opportunities
1. Customers currently prefer favored soft drinks over colas such as Sunkist, Dr. Pepper, and A&W.
2. Flavored teas, and bottled water are expected to grow 24 percent and 9 percent respectively.
3. Customers are becoming more health minded in their food and drink choices.
4. Brazil, India, and Eastern Europe should offer good long term opportunities.
5. China's food and beverage consumption is forecasted to increase by 54.1% by 2014.
6. 25% of Americans eat fast food each day.
7. Energy drinks hold 62% of the functional beverages market.
8. Coconut water is becoming a popular alternative to sports drinks such as Gatorade and Powerade.
9. Weaker US Dollar.
Threats
Critical Success Factors Weight Rating Score Rating Score Rating Score
Advertising 0.12 3 0.36 2 0.24 4 0.48
Market Penetration 0.06 1 0.06 3 0.18 2 0.12
Customer Service 0.09 4 0.36 2 0.18 3 0.27
Vending Locations 0.10 2 0.20 4 0.40 3 0.30
R&D 0.06 4 0.24 3 0.18 2 0.12
Employee Dedication 0.07 2 0.14 3 0.21 4 0.28
Financial Profit 0.10 2 0.20 4 0.40 3 0.30
Customer Loyalty 0.09 1 0.09 3 0.27 4 0.36
Market Share 0.08 1 0.08 3 0.24 4 0.32
Product Quality 0.09 4 0.36 3 0.27 2 0.18
Top Management 0.04 2 0.08 3 0.12 4 0.16
Price Competitiveness 0.10 4 0.40 3 0.30 2 0.20
Totals 1.00 2.57 2.99 3.09
E. Internal Audit
Strengths
Weaknesses
Liquidity Ratios
Debt/Equity Ratio 1.16 0.94 1.01
Current Ratio 1.0 1.2 1.4
Quick Ratio 0.8 1.1 0.9
Profitability Ratios
Return On Equity 22.8 34.6 26.0
Return On Assets 6.1 14.3 8.9
Return On Capital 7.2 20.3 11.8
Return On Equity (5-Year Avg.) 10.8 32.0 23.8
Return On Assets (5-Year Avg.) 3.9 15.2 8.0
Return On Capital (5-Year Avg.) 4.5 20.9 10.8
Efficiency Ratios
Income/Employee 29,000 67,398 126,213
Revenue/Employee 308,105 338,900 1 Mil
Receivable Turnover 11.0 9.7 15.7
Inventory Turnover 9.0 7.5 12.4
F. SWOT
SO Strategies
1. Increase advertising by $200M marketing the health benefits of Snapple teas (S5, O3).
2. Increase R&D by $200M to develop an energy drink (S7, O7).
WO Strategies
1. Increase advertising by $300M for Canada Dry, A&W and other non cola flavored soft drinks (W3,
O1).
2. Build a new bottling plant in Croatia for $100M (W7, O4).
ST Strategies
1. Increase advertising by $100M for Snapple juice and tea products (S5, T3).
WT Strategies
1. Develop a line of flavored waters without sugar in plastic bottles only (W2, T1).
2. Develop a line of Christmas themed hot coco and ciders for $100M (T4, W6).
FP
Conservative Aggressive
7
CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1
-2
-3
-4
-5
-6
-7
Defensive Competitive
SP
Quadrant II Quadrant I
Dr. Pepper
Weak Strong
Competitive Competitive
Position Position
Segment Revenue 2010 (in millions) Operating Profit 2010 (in millions)
Beverage Concentrates $1,156 $745
Packaged Beverages $4,098 $536
Develop a
Build a new
new line of
bottling plant
flavors
Opportunities Weight AS TAS AS TAS
1. Customers currently prefer favored soft drinks over colas such
0.07 4 0.28 2 0.14
as Sunkist, Dr. Pepper, and A&W.
2. Flavored teas, and bottled water are expected to grow 24 percent
0.06 4 0.24 2 0.12
and 9 percent respectively.
3. Customers are becoming more health minded in their food and 0.05 4 0.20 2 0.10
4. Brazil, India, and Eastern Europe should offer good long term 0.06 2 0.12 4 0.24
opportunities.
5. China's food and beverage consumption is forecasted to 0.06 2 0.12 4 0.24
6. 25% of Americans eat fast food each day. 0.05 0 0.00 0 0.00
7. Energy drinks hold 62% of the functional beverages market. 0.03 4 0.12 3 0.09
8. Coconut water is becoming a popular alternative to sports drinks
0.03 3 0.09 2 0.06
such as Gatorade and Powerade.
9. Weaker US Dollar. 0.03 1 0.03 4 0.12
K. Recommendations
M. Epilogue
Year-to-date including Q3 2011, DPS’s sales increased 5 percent and their income from operations was
$753 million compared to $757 million in the prior year period. Net income was $440 million compared to
$416 million in the prior year period. DPS’s national launch of Dr Pepper TEN is benefiting the firm as it
continues to build per capita consumption with new fountain availabilities and cold drink placements.
For the Q3 of 2011, DPS’s volume declined 1 percent with carbonated soft drinks (CSDs) flat compared to
the prior year and non-carbonated beverages (NCBs) down 5 percent. In CSDs, Sun Drop added 2 million
cases, Canada Dry volume grew double digits and Squirt grew low-single digits. Dr Pepper volume was
flat. Crush and Sunkist soda declined double digits while 7UP and A&W grew low-single digits. Fountain
foodservice volume grew 4%. In NCBs, Clamato volume grew double-digits and Snapple grew 2 percent.
Both Hawaiian Punch and Mott’s volume declined as net pricing increased, driving sales dollar increases
for both brands. Aguafiel also declined double-digits.
In Q3 2011, DPS’s U.S. and Canada CSD volume was flat while NCB volume declined 5 percent. In
Mexico and the Caribbean, CSD volume grew 4 percent while NCB volume declined 6 percent. Year-to-
date through September 2011 and across all measured channels, as reported by The Nielsen Company, U.S.
CSD dollar share declined 0.2 percentage points.
Regarding DPS’s Latin America Beverages in Q3 of 2011, sales for the quarter increased 4 percent
reflecting low-single digit price increases, favorable product mix and 2 percent volume growth. A the end