Strategic Management PepsiCo

Submitted to: Ms. Saira Ibraheem Submitted by: Saadia Rehman Uzair Haider Owais Ahmed (07-0114) (07-0076) (07-0292)

Beenish Khaleeq (07-0434)

April 21, 2011

PROGRAM BACHELORS OF BUSINESS ADMINISTRATION (BBA) SPRING 2011

National University of Computer & Emerging Science Management Science Department, Karachi

Acknowledgment
We would like to express our gratitude to all those who gave us the best support to complete this report. First, we want to thank Almighty Allah who gave us the strength to work on this report and made it successful. Sincere thanks to all the people who have contributed to and worked on this. We are deeply indebted to our teacher MS. Saira Ibrahim whos help, encouragement and stimulating suggestions have been the best motivator for us. She helped us each time we went to him for discussion on the report and writing of this report. We are extremely grateful and profusely appreciate the organization (PEPSI) and individuals for taking time out of their busy schedules and providing us with necessary and vital information essential for the compilation of this report. Last but not the least I would like to appreciate the efforts put up by my colleagues who were always ready to provide every sort of help in every context of this report, with which we were able to make this report a success.

Letter of transmittal
To: From: Saadia Rehman Uzair Haider Owais Ahmed Beenish Khaleeq (07-0114) (07-0076) (07-0292) (07-0434) Ms. Saira Ibrahim Date: April 21st, 2011

In compliance with your demand for a full report on Live Case, this report on PEPSICo is submitted. Its motive is to explain that what strategies are required that can help them in dealing with the external and internal issues that is affecting their company, proposing effective strategies can lead to success and hence synthesizes the skills of employees of the organization. This report is based on critically generated SWOT analysis that defines the position of the organization internally and externally and the challenges faced by the company. Also included is a developed Case Study of PEPSI. In the light of this case study and relevant supportive materials we offer various strategies that are significant and crucial to their success towards overcoming the internal and external issues.

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Table of Contents
Executive summary ................................................................................................................................... 1 About Company ......................................................................................................................................... 2 Origin ........................................................................................................................................................... 2 PepsiCo Pakistan ........................................................................................................................................ 3 PepsiCo existing vision and mission ....................................................................................................... 3 Vision Statement .................................................................................................................................... 3 Mission Statement .................................................................................................................................. 4 PepsiCo Values ........................................................................................................................................... 5 Proposed Vision Statement....................................................................................................................... 5 Proposed Mission Statement .................................................................................................................... 5 Internal analysis ......................................................................................................................................... 6 Strengths .................................................................................................................................................. 6 Weakness ................................................................................................................................................. 7 External Analysis ....................................................................................................................................... 7 Opportunities.......................................................................................................................................... 7 Threats ..................................................................................................................................................... 7 EFE Matrix .................................................................................................................................................. 8 CPM ........................................................................................................................................................... 10 IFE Matrix.................................................................................................................................................. 11 STRATEGY FORMULATION ................................................................................................................ 13 SWOT Matrix ........................................................................................................................................ 13 SPACE Matrix ....................................................................................................................................... 16 IE Matrix ................................................................................................................................................ 19 Grand Strategy Matrix......................................................................................................................... 20 Matrix Evaluation ................................................................................................................................ 21 Possible Strategies ................................................................................................................................ 22 Quantitative Strategic Planning Matrix ................................................................................................ 23 Recommendations.................................................................................................................................... 25

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Conclusion ................................................................................................................................................ 25 Appendix ................................................................................................................................................... 26 Proposal ................................................................................................................................................. 26 1.4.1. PRODUCTS IN PAKISTAN ............................................................................................... 30

Pepsi Product Line ................................................................................................................................... 31 4.3.1..................................................................................................................................................... 38 Case ......................................................................................................................................................... 41 History of Pepsi ........................................................................................................................................ 41 Pepsi Pakistan ........................................................................................................................................... 42 Pepsi Bottlers ............................................................................................................................................ 43 Exhibit-1 Exhibit-2 PepsiCo Consolidated Statement of Income (in millions) ............................................... 44 PepsiCo Consolidated Balance Sheet (in millions) ...................................................... 45

Corporate Strategies of Pepsi ................................................................................................................. 47 Target Market ........................................................................................................................................... 47 Organizational Chart (Sales Department) ............................................................................................ 48 Industry Analysis ..................................................................................................................................... 49 Water Global Trends and Pakistans Struggle .................................................................................. 50 Competitors .............................................................................................................................................. 50 The Future ................................................................................................................................................. 53 References ................................................................................................................................................. 54

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Executive summary
The core purpose of this project is to analyze the company (PEPSI) with respect to internal and external factors that affect Pepsi. Pepsi is graded as a leading brand in Pakistan while Coke is leading the global Arena .The reason for Pepsis success is the focus on the taste that is liked by consumers in Pakistan,. Knowledge of local consumer is very important and for multinationals, this knowledge is very essential because no market is entirely homogeneous. The strategies opted by such companies will not work effectively if they dont fit into consumer values. Pepsi is finding ways to target customers more effectively and also to distinguish itself from competitors to break the clutter and is enjoying big market share in Pakistan. So, the aim of this live case is to enclose the strategies that are effective for Pepsi which will benefit them in overcoming the existing problems externally and internally. International advertisement (global marketing) versus localization is growing concern for multinational companies striving for market share. Consumer preferences for soft drink vary from country to country as each country have different cultural, Physiological and social patterns. In Pakistan, reason that help Pepsi is in preference for consumers in buying Pepsi include taste, sponsorship, availability and affordability .Therefore ,this report analyze competitors critically which include: Pepsi hold in Pakistan. Different matrices are developed in proposing the best possible strategies according to the internal assessment and also the external assessment, including: IFE, EFE, CPM, SPACE, GSM, IE and most important matrix SWOT matrix and finally the two best strategies that came out for PEPSI were critically analyzed in QSPM matrix which helped in proposing the best possible strategy for PEPSI through evaluating the total attractiveness score of that particular strategy. Companies should adapt the strategies proposed in the matrices .This will give a competitive edge and increased market share and will help in overcoming the current issues facing PEPSI. (availability ,affordability & taste), advertisement and sponsorship. These are the strengths that

About Company
PepsiCo is an international cold drink brand and the leader of Pakistani beverage industry. Their vision is 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 satisfied and happy with their products. Pepsi International is a world most admired company. It is a very well organized multinational company, which operates almost all over the world. They produce; one of best carbonated drinks in the world. Pepsi is a symbol of hygiene, quality and service, all over the world. Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time. Its head office is in New York.

Origin
PepsiCo is invented in 1883. Initially company was introduced as Brads Drink but on June 16, 1903 it was renamed as Pepsi-cola. In 1909 Pepsi was advertised their product with the theme of Delicious and Healthful. PepsiCo is a world leader in convenient foods and beverages, with revenues of about $27 billion and over 143,000 employees. The company consists of the snack businesses of Frito-Lay North America and Frito-Lay International; the beverage businesses of Pepsi- Cola North America, Gatorade/Tropicana North America and PepsiCo Beverages International; and Quaker Foods North America, manufacturer and marketer of readyto-eat cereals and other food products. PepsiCo brands are available in nearly 200 countries and territories.

PepsiCo Pakistan
Pepsi started its operations in Pakistan in 1971. Pepsi was put up their first plant of Pakistan in Multan. Pepsi is the first choice of every one in soft drink. Pepsi is popular in all age groups due to its distinctive taste. As compare to the other Cola brands in the market, it is bit sweeter which contributes greatly to its liking by all. Against the biggest competitor Coca Cola, Pepsi use its aggressive marketing planning and diversification in creating and promoting new ideas is successfully maintaining its No.1 position in Pakistan. Pepsi strong their portfolio by adding new brands of cold drinks which make them stronger than their competitors. Due to the strong portfolio Pepsi enjoy 70% market share in cold drink industry where as its strong competitor coke just has 28% market share. To maintain the power of brand name Pepsi make sure the availability of their products so that they can gain edge over their strong competitor Coke. Pepsi also advertise their brand creatively, which stands Pepsi apart from competitors.

PepsiCo existing vision and mission

Vision Statement
Our vision is 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. Evaluation This vision statement is: Inspiring Enduring lengthy It reflects the industry and focus of the company to the premier customer care company.

Mission Statement
To be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce 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. ANALYSIS OF THE EXISTING MISSION STATEMENT No 1 2 3 4 5 6 7 8 9 COMPONENET Customer Products or Services Markets Technology Concern for survival of growth and profitability Philosophy Self-concept Concern for public image Concern for employees YES/NO YES YES YES NO YES YES NO YES YES

PepsiCo Values
OUR COMMITMENT To deliver SUSTAINED GROWTH Through EMPOWERED PEOPLE Acting with RESPONSIBILITY and building TRUST

Proposed Vision Statement

Refreshing life of every customer with best quality, taste, and value Comment: It is brief and concise and it takes into account the quality, taste and value to refresh the life of every consumer.

Proposed Mission Statement

Our mission is to create long term shareholder value by remaining as the industry leader in terms of growth, profit, customer service and as the only choice of customer by providing outstanding value, exceptional experience and pure drinking experience at competitive prices globally. This will be achieved through teamwork and focus on providing best customer service, employees who are valued, motivated, and capable with expansion in portfolio of relevant brands.

ANALYSIS OF THE EXISTING MISSION STATEMENT: No 1 2 3 4 5 6 7 8 9 COMPONENET Customer Products or Services Markets Technology Concern for survival of growth and profitability Philosophy Self-concept Concern for public image Concern for employees YES/NO Yes Yes Yes No Yes Yes Yes Yes Yes

Internal analysis
Strengths
1. Pepsi has an established brand name and brand image. 2. Associated with celebrities that are ideal and are association with major sports events. 3. Due to the strong portfolio Pepsi enjoy 70% market share in cold drink industry where as its strong competitor coke just has 28% market share. 4. Pepsi is an international company and it has a very strong position internationally. 5. Strong bottlers, supply and distribution are main asset of PepsiCo. 6

6. ISO 9000, 9002, 14000 certified.

Weakness
1. Difficulty in increasing infrastructure. 2. Dependent on bottlers. 3. Only focus on youth 4. No ERP system 5. Lack of healthy beverages in product line

External Analysis
Opportunities
1. Healths craze increase among youngsters. The company may also diversify its portfolio in healthy beverages. 2. Increase in population 3. Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for Pepsi to increase its sales through them. 4. Soft drink market in Pakistan has increased at annual growth rate of 6.4%. 5. Need of bottled water is increasing in Pakistan due to lack of availability of safe drinking water.

Threats
1. Huge duties and taxes like excise duty at the rate of 12.5 percent and sales tax at the rate of 15 percent 2. The production of beverages declined by 3.7% as the prices of sugar rose sharply. Increased prices of raw material and sugar (drink industry dependent on it) 3. The growth rate 28% of beverage industry is on the decline. 4. Economic downturn may cause more damage to the beverage industry. 5. Frequent power failure and shortage of electricity. 6. The unhandled law & order situations of the country

EFE Matrix
Factors Opportunities
1.

Weight

Rating

Weighted Score

Healths craze increase among youngsters. The company may also diversify its portfolio in healthy beverages. 0.10 3 0.30

2.

Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for Pepsi to increase its sales through them. 0.05 4 0.20

3.

Increasing demand of beverages among young generation will increase growth rate in this industry. 0.15 4 0.60

4.

Increase in population of mega cities like Karachi, Lahore and Islamabad.

0.10

0.30

5.

Need of bottled water is increased.

0.10

0.30

Factors Threats
6.

Weight

Rating

Weighted Score

Huge duties and taxes like excise duty at the rate of 12.5 percent and sales tax at the rate of 15 percent 0.10 2 0.20

7.

The production of beverages declined by 3.7% as increased prices of raw material and sugar (beverage industry dependent on it). 0.15 2 0.30

8.

The growth rate 28% of beverage industry is on the decline.

0.07

0.21

9.

Economic downturn may cause more damage to the beverage industry.

0.10

0.20

10. Frequent power failure and shortage of

electricity.
11. The unhandled law & order situations of the

0.03

0.09

country Total

0.05 1

0.15 2.85

CPM
Pepsi Critical Success Factor Market Share Advertising Product Taste Quality Brand Image Customer Loyalty Innovation Skilled Personnel Supply Chain Total 0.13 4 Weight Rate Coca-Cola Nestle

Total Score

Rate

Total Score

Rate

Total Score

0.52

0.26

0.39

0.10

0.30

0.20

0.30

0.10

0.30

0.30

0.30

0.12

0.36

0.36

0.48

0.15

0.60

0.60

0.60

0.10

0.30

0.20

0.30

0.10

0.30

0.30

0.30

0.05

0.15

0.15

0.15

0.15

0.45

0.30

0.30

1.00

3.28

2.67

3.12

10

IFE Matrix
Factors Strengths 1. Pepsi has an established brand name and brand image. Weight Rating Weighted Score

0.15

0.60

2. Associated with celebrities that are ideal and are association 0.10 with major sports events. 3. Due to the strong portfolio Pepsi enjoy 70% market share in cold drink industry where 0.10 as its strong competitor coke just has 28% market share. 4. Pepsi is an international 4 0.40 4 0.40 3 0.30

company and it has a very 0.10 strong position internationally.

5. Strong bottlers, supply and distribution are main asset of 0.10 PepsiCo. 3 0.30

6. ISO 9000, 9002, 14000 certified.

0.05

0.15

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Factors Weakness

Weight

Rating

Weighted Score

1. Difficulty

in

increasing

infrastructure.

0.05

0.15

2. Dependent on bottlers.

0.10

0.20

3. Only focus on youth

0.10

0.30

4. No ERP system

0.05

0.10

5. Lack of healthy beverages in product line Total

0.10

0.10

2.98

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STRATEGY FORMULATION
SWOT Matrix
Strengths 1. Pepsi has an established brand name and brand image. 2. Associated with celebrities that are ideal and are association with major sports events. 3. Due to the Pepsi strong enjoy portfolio cold where Weaknesses 1. Difficulty in increasing infrastructure. 2. Dependent on bottlers. 3. Only focus on youth 4. No ERP system 5. Lack line of healthy beverages in product

70% market share in drink as its industry strong

competitor coke just has 28% market share. 4. Pepsi is an international company and it has a very strong position internationally. 5. Strong bottlers, supply and distribution are main asset of PepsiCo. 6. ISO 9000, 9002, 14000 certified.

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Opportunities 1. Healths craze increase among youngsters. The company may also diversify its portfolio in healthy beverages. 2. Increase population 3. Increased interest of people groups, shows has and in musical cultural sports an for in

SO STRATEGIES 1. Launch product increasing for drinks(S1,01) 2. Increase share (S4, O4). 3. Enhance international image leveraging brand through cultural market through to healthy cater healthy demand

W0 STRATEGIES 1. Launch promotional campaign focusing on building Pepsi as a healthy brand .(w 5,01) 2. Sponsor events people to cultural make associate

increased production

Pepsi as a family and traditional brand to attract all age group .(w3,03)

provided

opportunity

values .(S4,03)

Pepsi to increase its sales through them. 4. Soft drink market in Pakistan has increased at annual growth rate of 6.4%. 5. Need of bottled water is increasing in Pakistan due to lack of availability of safe drinking water.

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Threats

ST STRATEGIES

WT STRATEGIES Can make will of different the

1. Huge duties and taxes 1. Import power generators 1. rate of 12.5 percent and power failures.(S4,T5) sales tax at the rate of 15 percent 2. The production of beverages declined by 3.7% as increased prices of raw material and sugar it). 3. The growth rate 28% of beverage industry is on the decline. 4. Economic may industry. 5. Frequent power failure and shortage of electricity. 6. The unhandled law & order situations of the country downturn more cause (beverage industry dependent on 2. Taking benefit of locally produced sugar in Pakistan can increase market share as well as build strong image internationally. (joint venture) (S1,T2,S3)

like excise duty at the to mitigate the risk of portfolio of target market which impact reduce economic

conditions. (W3,T4)

damage to the beverage

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SPACE Matrix
Financial Strengths (FS) Liquidity profitability ROA NI Inventory turnover 4 4 4 3 2 3.4 Environmental Stability (ES) Competitive pressure Technological changes Rate of inflation Price range of competing products Demand variability -3 -2 -4 -4 -3 -3.2

Competitive Advantage (CA) Market share Product quality Control over supplier and distributer Innovation Customer loyalty -1 -2 -2 -1 -2 -1.6 FINANCIAL STRENGTH:

Industry Strengths (IS) Growth potential Financial stability Resource utilization Profit potential Ease of entry into market 4 5 3 3 2 3.4

ROA: We have given score of 4, because company is utilizing its resources in a good way. Liquidity: Current ratio and quick ration has increased in the past years.

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ENVIRONMENTAL STABILITY: Rate of inflation: For a multinational company, relying on imports of raw material there is a huge impact of inflation on their performance. Demand variability: Consumers as well as emerging new trends are causing high Variability in demand i.e. different variety of beverages. Competitive pressure: There are lots of competitors who are considered big players in the market. Apart from multinationals, local companies are also entering the market with their low quality products. We have given -3 to competitive pressure because PepsiCo is the leader of Pakistani Beverage industry. Price range: price range of competing products was given a score of -4 because there is less gap between prices of different companies in the market. COMPETITIVE ADVANTAGE: Market share: PepsiCo have 70% market share in beverage industry so we rate it high. Product quality: PepsiCo has the good quality product because it has to cope up with the international standard being a multinational company. Innovation: PepsiCo is involved in innovations from the day one. They change their logo and introduce new cold drink products time by time. INDUSTRY STRENGTHS: Beverage industries have growth of 30.5% while if we look at all competitors are financially strong and stable. The entry in the market is difficult due to giant competitors.

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5 4 Conservative 3 2 1 0 -5 -4 -3 -2 -1 0 -1 Defensive -2 -3 -4 -5 X-axis: IS + CA = 3.4 + (-1.6) = 1.8 Y-axis: FS + ES = 3.4 + (-3.2) = 0.2 Analysis of Matrix Result: As PepsiCo lies in Aggressive profile it means that an organization is an excellent position to use its internal strengths to take advantage of external opportunities and overcome internal weaknesses and avoiding threats. Firm in this quadrant can pursue; 1. Integrative strategies like horizontal, forward and backward integration. 2. Intensive strategies like market development, market penetration and product development. 3. Diversification strategies like related and un-related diversification. Competitive (1.8, 0.2) 1 2 3 4 5 Aggressive

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IE Matrix
IFE Score EFE Score 2.98 2.85

IFE Weighted Score Strong (3-4) EFE Weighted High (3-4) Score Medium (2-2.99) IV V Low (1-1.99) Analysis of IE Matrix As PepsiCo lies in Quadrant V which shows that company must hold and maintain by using market penetration and product development strategies. VII VIII IX VI I Average (2-2.99) II Weak (1-1.99) III

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Grand Strategy Matrix

Rapid market growth

Quadrant II

Quadrant I

Weak competitive position

Strong competitive position

Quadrant III

Quadrant IV

Slow market growth Analysis of Grand Strategy Matrix PepsiCo is place in quadrant 1 because of its strong competitive position (70% market share) and beverage industry is having 30.5% market growth, so PepsiCo can afford to take advantage of external opportunities in several areas. They can take risk aggressively when necessary. Strategies like intensive, integrative and related diversification is suitable.

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Matrix Evaluation
ALTERNATIVE STRATEGIES Forward Integration Backward Integration Horizontal Integration Market Penetration Market Development Product Development Related Diversification Unrelated Diversification Joint Venture Retrenchment Divestiture Liquidation 1 2 4 2 4 2 2 SWOT IE SPACE GRAND COUNT 2

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Possible Strategies
Market penetration and product development are the possible strategies because it takes highest count i.e. 4. Strategy 1: Expand into existing markets by increasing promotion strategies and sponsorships. Strategy 2: Increase product portfolio by adding the healthy and nutritious beverages.

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Quantitative Strategic Planning Matrix

ALTERNATIVE STRATEGIES Key External Factors OPPORTUNITIES 1 Healths youngsters. diversify beverages. 2 3 Increase in population Increased interest of people in musical groups, cultural shows and sports has provided an opportunity for Pepsi to increase its sales through them. 4 Soft drink market in Pakistan has 0.10 4 0.40 2 0.20 0.15 3 0.45 2 0.30 0.05 4 0.15 3 0.15 craze The its increase company in among may also healthy 0.10 2 0.20 4 0.40 Weight Strategy 1 AS Strategy 2 TAS

TAS AS

portfolio

increased at annual growth rate of 6.4%. 5 Need of bottled water is increasing in

Pakistan due to lack of availability of safe 0.10 drinking water. THREATS 1 Huge duties and taxes like excise duty at the rate of 12.5 percent and sales tax at the 0.10 rate of 15 percent. 2 The production of beverages declined by 3.7% as increased prices of raw material and sugar (beverage industry dependent on it). 0.15

0.20

0.40

0.30

0.60

23

The growth rate 28% of beverage industry is on the decline.

0.07

0.14

0.28

Economic downturn may cause more damage to the beverage industry.

0.10

Frequent power failure and shortage of electricity.

0.03

The unhandled law & order situations of the country. TOTAL STRENGTHS 0.05 -

1.0

Pepsi has an established brand name and brand image.

0.15

0.60

0.45

Associated with celebrities that are ideal and are association with major sports 0.10 events. 4 0.30 2 0.20

Due to the strong portfolio Pepsi enjoy 70% market share in cold drink industry where as its strong competitor coke just has 28% market share. 0.10 -

Pepsi is an international company and it has a very strong position internationally.

0.10

Strong bottlers, supply and distribution are main asset of PepsiCo.

0.10 0.05

3 2

0.30 0.10

4 4

0.40 0.20

ISO 9000, 9002, 14000 certified.

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WEAKNESSES 1 2 3 4 5 Difficulty in increasing infrastructure. Dependent on bottlers. Only focus on youth. No ERP system. Lack of healthy beverages in product line. TOTAL 0.05 0.10 0.10 0.05 0.10 1.00 1 3 2 0.05 0.30 0.20 3.69 2 2 4 0.10 0.20 0.40 4.28

Recommendations
From QSPM we have identified that strategy 2 has the highest total attractive score of 4.28 so we recommend this strategy as suitable. Increasing the product portfolio by adding nutritious and healthy beverages support the PepsiCo brands which also help them to target the health conscious people in efficient manner. This new portfolio will help in building brand loyalty and ultimately increase demand for PepsiCo products which lead them to the profitability and growth. Pepsi should also introduce flavored water because they are leading in Pakistan because of their sweet taste in their drinks, this will help them in gaining even better market share in the sector.

Conclusion
Although our both strategies S1 and S2 are suitable but as per QSPM, the total attractiveness score of S2 i-e increase product portfolio by adding the healthy and nutritious beverages is greater, so we recommend Pepsi to pursue this strategy. By expanding the portfolio with healthy beverages will help Pepsi to attract the health conscious people.

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The end result of this strategy is enhanced and strengthens portfolio of PepsiCo over its competitors and the loyalty of all its customers that is an important asset for every company.

Appendix
Proposal
General Information

Pepsi International is a world renowned brand. It is a very well organized multinational company, which operates almost all over the world. They produce; one of best carbonated drinks in the world .Pepsi is a symbol of hygiene, quality and service, all over the world. Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time. Its head office is in New York.
History of Pepsi

Pepsi is a carbonated soft drink that is produced and manufactured by PepsiCo. Invented in 1883 and introduced as "Brad's Drink", it was later renamed as Pepsi-Cola on June 16, 1903. In 1883 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.[1] Bradham sought to create a fountain drink that was delicious and would aid in digestion and boost energy.[2] 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.[3] In 1926, Pepsi

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received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. In 1931, at the depth of the Great Depression, the Pepsi-Cola Company entered bankruptcy - in large part due to financial losses incurred by speculating on wildly fluctuating sugar prices as a result of World War I. Assets were sold and Roy C. Megargel bought the Pepsi trademark.[4] Eight years later, the company went bankrupt again. Pepsi's assets were then purchased by Charles Guth; the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. He sought to replace Coca-Cola at his stores' fountains after Coke refused to give him a discount on syrup. Guth then had Loft's chemists reformulate the Pepsi-Cola syrup formula. On three separate occasions between 1922 and 1933, the Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company and it declined on each occasion. Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with the new name, Pepsi Cola, is derived from the two of the principle ingredients, Pepsin and Kola Nuts. It was first used on the August 28. At that time, Bradhams advertising praises his drink as Exhilarating, invigorating, aids digestion. The popularity of Pepsi increase. In 1992 Pepsi- Cola formed a partnership with Thomas J. Lipton Co. Today Lipton is the biggest selling ready-to-drink tea brand in the United States. Outside the United States, Pepsi-Cola Company's soft drink operations include the business of Seven-Up International. Pepsi- Cola beverages are available in more than 190 countries and territories. PepsiCo is a world leader in convenient foods and beverages, with revenues of about $27 billion and over 143,000 employees. The company consists of the snack businesses of Frito-Lay North America and Frito-Lay International; the beverage businesses of Pepsi- Cola North America, Gatorade/Tropicana North America and PepsiCo Beverages International; and Quaker Foods North America, manufacturer and marketer of ready-

27

to-eat cereals and other food products. PepsiCo brands are available in nearly 200 countries and territories.

28

Vision & Mission Statement

VISION STATEMENT Our vision is 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.

MISSION STATEMENT To be the world's premier consumer Products Company focused on convenient foods and beverages. We seek to produce 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.
PEPSICO VALUES

OUR COMMITMENT To deliver SUSTAINED GROWTH Through EMPOWERED PEOPLE Acting with RESPONSIBILITY and building TRUST

1.4.

Pepsi 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. 29

Pepsi's greatest rival is Coca Cola. Coca Cola has an international recognized brand. Cokes basic strength is its brand name. But Pepsi with its aggressive marketing planning and quick diversification in creating and promoting new ideas and product packaging, is successfully maintaining is No.1position in Pakistan. When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and lime drinks, which was established during 1968, in Multan. Pepsi introduced its lemon and lime, "Teem" to compete with 7up. It successfully, after some years, took over 7up, and this enhanced Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys 70% of the market share whereas the coke just has 20% markets share. Pepsi is operating in Pakistan, through its 12 bottlers all over Pakistan. These bottlers are Pepsi's strength. Pepsi has given franchise to these bottlers. Bottlers, produce, distribute and help in promoting the brand. Pepsi also launched its fast food chain KFC i.e. "Kentucky Fried Chicken.

1.4.1. PRODUCTS IN PAKISTAN Pepsi has been bringing fun and refreshment to consumers for over 100 years. Pepsi offers flagship brand and the broad spectrum of beverages worldwide. Under the umbrella of Pepsi Pakistan the main brands of Pepsi in Karachi are Pepsi, 7up, Dew, Mirinda. Pepsi Co. product portfolio in Karachi includes Pepsi Beverages, Frito Lay, energy drink, water.

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Pepsi Product Line

PEPSI
BEVERAGES WATER

AQUAFINA

COLD DRINK

JUICES

ENERGY DRINK STING

SLICE

COLA

LEMONADE

ORANGE

CITRUS

PEPSI

7-UP

MIRINDA

MOUNTAIN DEW

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1.5.

Reason for selection

The reason for selecting Pepsi Company is to create awareness towards the possible risks and problems a beverage company could face in both the long and short-run. This report will be comprised of the recommendations and strategies that this company should apply for continual survival and growth, as well as the detailed analysis of the companys operation which will highlight its performance and current standing in the domestic market.
1.6. Major problem

Pepsi Co is facing the major problem that is prices of raw material are increasing day by day and causing the company to operate at a low profit in spite of a very large market share. General Manager Mr. Mansoor Ali told us that even though Pepsi had increased the prices from what is used to be even than they cant reach the point of profit that used to be three of four years back.
1.7. Minor problem

There were many minor problems about which we were briefed by the GM Mr. Mansoor Ali Pepsi Co in Karachi is the biggest hub from where the drinks are supplied to all over the country. The current situation of the country with strikes and political turmoil leads to labor unavailability or absences at work. They face problem if government employ taxes on them which force them to raise the price of their product. ERP system implemented is relatively new and is not fully functional to support and coordination between the different departments.

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2. 2.1.

Solution overview Response to requirements

The GM Pepsi Mr. Mansoor Ali provided us with all the necessary details regarding the companys operations and the possible threats that a beverage business could face. As per our report requirements they had also provided us with the companys profile and financial statements which will help us in the detailed analysis of the company. They had also provided us with the visiting cards for further response and support if needed.

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3. 3.1.

Project plan Time line

Selection of the Company March 06, 2011

Progress Report and Proposal March 14, 2011

Submission Case Format April 14, 2011

of

March 12, 2011

March 12, 2011 Analysis

17-April

April 21 , 2011

Interview conducted the GM Pepsi with

And Final Submission Report

Evaluation Techniques Application

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3.2.

Work days by phase

Date

Work Company Department wise study of operations and problems

15-17 March 2011 18-20 March 2011 21-23 March 2011

Analysis on Management Activities Analysis Of Operation Department Analysis of Functional Department Competitors study Company based

24-28 March 2011

Coca Cola Pakistan

29 March 2011

Compilation of Work Industry Trend Study

30

March

04

Trend Pakistan

of

industry

in

April 2011 05 April 2011

Compilation Of Work Comparison of Company and Competitors Comparison of Coca Cola Pakistan with Pepsi Cola

06-07 April 2011

Pakistan

35

Compilation of Information for Case Study 08-10 April 2011 Case Formation

Finalization of Case study 11-13 April 2011 14 April 2011 Revision of Case Submission of Case Format Recommended Solution of case 15-20 April 2011 21 April 2011 Recommended Solution of case Final Report Submission

3.3.

Work days by Role

In order to achieve a comprehensive approach of report processing we will be dividing the work load equally in all four members, which will be covering the management, marketing, finance and operations departments. We will hold a discussion sessions at each stage of analysis and report formation and counter check it for any errors or improvement if needed.

GROUP MEMBERS Beenish Khaleeq Owais Ahmed Uzair Hayder

TASK BCG,CPM IFE, EFE SWOT, SPACE

DURATION 1 Week 1 Week 1 Week

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Saadia Rehman

IE, Grand Strategy

2 weeks

All four members support each other in completing their tasks. All members work together for compiling the report.

3.4.

Issues

The issues faced are:

3.5.

The basic issue we face was the poor health of all group members. We face difficulty while arranging the meeting with GM Pepsi. Company was resist to share the major and minor problems they face.
Assumptions

The assumptions made are: Organization would cooperate with us for any further help needed for the completion of this report. We hope that the strategies suggested will be implemented by them. Strategies would benefit them for achieving both long and short term objectives. Due to lack of technical knowledge and inexperience in strategic planning we would face some difficulty while formulating strategies.
4. MARKET ANALYSIS OF SOFT DRINKS

Soft drinks set to become world's leading beverage sector Global consumption of soft drinks is rising by 5% a year, well ahead of all other beverage categories, according to the new 2003 Global Soft Drinks Report from leading drinks consultancy Zenith International. Now challenging hot drinks to become the largest overall sector, soft drinks volume is projected to reach 467 billion liters in 2003, equivalent to 75 liters per person. 37

"Economic and climate variations around the world present complications for all soft drinks companies, but many have succeeded at weathering the elements," commented Zenith Research Director Gary Roethenbaugh. "As a combined category, soft drinks offer a powerful growth proposition. The unrelenting advance of bottled water and still drinks, coupled with the scale of carbonates, help place soft drinks on track to become the number one beverage sector in 2005.
4.1. MARKET SHARE OF SOFT DRINKS IN BEVERAGE INDUSTRY

Concern over diet has persuaded many consumers to scale down their consumption of sugary drinks, instead choosing healthy products such as fruit juice and bottled water. Despite this shift in attitude, the majority of consumers around the world still favor carbonated soft drinks over these alternatives according to latest data from TGI. In 11 out of 15 countries analyzed, it is revealed that consumption of carbonated soft drinks is higher than consumption of fruit juice or bottled mineral water.
4.2. PAKISTANI SOFT DRINK INDUSTRY

About 75 million cases a year for Pepsi alone; the total beverage market is about 120 million cases of which 65% per cent are Pepsi products; about 20 to 22 per cent are Coca-Cola products and Zum Zum cola and Mecca Cola, Amrit Cola and Muslim Cola... there are so many colas; there is RC and Double Cola which are franchised products. Altogether they have around 5 per cent of the market. Due to the Afghan and Iraq wars, they did get a little footing especially in the frontier and Islamabad area but still they are not hugely popular.

4.3.

Competitors

4.3.1. COCA COLA Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world. Created in Atlanta, Georgia, by Dr. John S. Pemberton, Coca-Cola was first offered as a fountain beverage by mixing Coca-Cola syrup with carbonated water. Coca-Cola was introduced in 1886, patented in 1887, registered as a trademark in 1893 and by 1895 it

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was being sold in every state and territory in the United States. In 1899, The Coca-Cola Company began franchised bottling operations in the United States. Coca-Cola might owe its origins to the United States, but its popularity has made it truly universal. Today, you can find Coca-Cola in virtually every part of the world. New Coke On April 23, 1985, Coca-Cola, amid much publicity, attempted to change the formula of the drink with "New Coke". Follow-up taste tests revealed that most consumers preferred the taste of New Coke to both Coke and Pepsi, but Coca-Cola management was unprepared for the public's nostalgia for the old drink, leading to a backlash. The company gave in to protests and returned to a variation of the old formula, under the name Coca-Cola Classic on July 10, 1985. 21st century On February 7, 2005, the Coca-Cola Company announced that in the second quarter of 2005 they planned to launch a Diet Coke product sweetened with the artificial sweetener sucralose, the same sweetener currently used in Pepsi One. On March 21, 2005, it announced another diet product, Coca-Cola Zero, sweetened partly with a blend of aspartame and acesulfame potassium. In 2007, Coca-Cola began to sell a new "healthy soda": Diet Coke with vitamins B6, B12, magnesium, niacin, and zinc, marketed as "Diet Coke Plus." On July 5, 2005, it was revealed that Coca-Cola would resume operations in Iraq for the first time since the Arab League boycotted the company in 1968. In April 2007, in Canada, the name "Coca-Cola Classic" was changed back to "CocaCola." The word "Classic" was truncated because "New Coke" was no longer in production, eliminating the need to differentiate between the two. The formula remained unchanged. In January 2009, Coca-Cola stopped printing the word "Classic" on the labels of 16ounce bottles sold in parts of the southeastern United States. The change is part of a larger strategy to rejuvenate the product's image.

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In November 2009, due to a dispute over wholesale prices of Coca-Cola products, Costco stopped restocking its shelves with Coke and Diet Coke.

5.

Conclusion

Pepsi is a well renowned company and it has maintained its position well by understanding the client psychology, by ensuring quality, introducing ingenuity in products, enlarging its product base, keeping economic factors in view and by intense and jazzy advertisements. Whenever and where ever there is a spotlight event, Pepsi must figure in, like the one day international cricket matches between India and Pakistan many other such occasions. The key word for success in the Marketing World is to remain in the spotlight and that is what Pepsi is doing.

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Case
PepsiCo is an international cold drink brand and the leader of Pakistani beverage industry. Their vision is 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 satisfied and happy with their products. Pepsi International is a world most admired company. It is a very well organized multinational company, which operates almost all over the world. They produce; one of best carbonated drinks in the world. Pepsi is a symbol of hygiene, quality and service, all over the world. Pepsi is producing Cola for more than 100 years and it has dominated the world market for a long time. Its head office is in New York. History of Pepsi PepsiCo is invented in 1883. Initially company was introduced as Brads Drink but on June 16, 1903 it was renamed as Pepsi-cola. In 1909 Pepsi was advertised their product with the theme of Delicious and Healthful. Pepsi was engaged in innovations from the day one. In 1926, Pepsi received its first logo redesign since the original design of 1905. In 1929, the logo was changed again. But in 1931 the company entered bankruptcy and face huge financial losses due to the fluctuating sugar prices. RC Megargel bought the Pepsi trademark. But unfortunately company was again face bankruptcy after eight year. Pepsi's assets were then purchased by Charles Guth; the President of Loft Inc. Loft was a candy manufacturer with retail stores that contained soda fountains. On three separate occasions between 1922 and 1933, the Coca-Cola Company was offered the opportunity to purchase the Pepsi-Cola company and it declined on each occasion. Many of PepsiCo's brand names are over 100-years-old, but the corporation is relatively young. In 1965 PepsiCo merged with Frito-Lay. In 1998 Tropicana was attained by PepsiCo with the new name, Pepsi Cola. In 1992 Pepsi-Cola entered in ready to drink tea with the partnership of Lipton. Pepsi- Cola beverages are available in more than 190 countries and territories.

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PepsiCo is a world leader in convenient foods and beverages, with revenues of about $27 billion and over 143,000 employees. The company consists of the snack businesses of Frito-Lay North America and Frito-Lay International; the beverage businesses of Pepsi- Cola North America, Gatorade/Tropicana North America and PepsiCo Beverages International; and Quaker Foods North America, manufacturer and marketer of readyto-eat cereals and other food products. PepsiCo brands are available in nearly 200 countries and territories. Pepsi Pakistan Pepsi started its operations in Pakistan in 1971. Pepsi was put up their first plant of Pakistan in Multan. Pepsi is the first choice of every one in soft drink. Pepsi is popular in all age groups due to its distinctive taste. As compare to the other Cola brands in the market, it is bit sweeter which contributes greatly to its liking by all. Against the biggest competitor Coca Cola, Pepsi use its aggressive marketing planning and diversification in creating and promoting new ideas is successfully maintaining its No.1 position in Pakistan. Pepsi strong their portfolio by adding new brands of cold drinks which make them stronger than their competitors. Due to the strong portfolio Pepsi enjoy 70% market share in cold drink industry where as its strong competitor coke just has 28% market share. To maintain the power of brand name Pepsi make sure the availability of their products so that they can gain edge over their strong competitor Coke. Pepsi also advertise their brand creatively, which stands Pepsi apart from competitors, but Pepsi face difficulty in installing ERP system now a day.

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Pepsi Bottlers Pepsis main asset is their bottlers and distributors. Pepsi gave franchise to their 9 bottlers who produce, distribute and help in promoting the brand in Pakistan. Distribution is the powerful strength of Pepsi as they built superior relations with their trader. Pepsis distribution is strong but still the seasonality factor threatens the whole beverage industry. The huge majority of Pepsi's plastic bottles are made from PET (polyethylene terephthalate). A few of Pepsis products are packaged in a plastic called High Density Polyethylene (HDPE), which is a multi-layered material. All of these plastics not contain BPA and are perfectly safe for consumption. Pepsis local bottlers, many of which are privately owned, franchise operations, make all packaging decisions whereas most of other bottlers are following the industry-wide trend to use plastic packaging due to environmental considerations. The industry is now making greater use of fully recyclable aluminum cans and PET plastic bottles. Pepsi-Cola local bottlers determine which products to package and sell in their territory based on local consumer demand and other market factors.

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Exhibit-1

PepsiCo Consolidated Statement of Income (in millions)

2009 Net Revenue Cost of sales Selling, general and administrative expenses Amortization of intangible assets Operating Profit Bottling equity income Interest expense Interest income Income before Income Taxes Provision for Income Taxes 1,973 Net Income 5,979 33 $43,232 20,099 15,026 63 8,044 365 (397) 67 8,079 2,100

2008 $43,251 20,351 15,877 64 6,959 374 (329) 41 7,045 1,879

2007 $39,474 18,038 14,196 58 7,182 560 (224) 125 7,643

5,166 24

5,670

Less: Net income attributable to no controlling interests 12 Net Income Attributable to PepsiCo 5,946

5,142

5,658

Net Income Attributable to PepsiCo per Common Share Basic Diluted 3.81 3.77 3.26 3.21 3.48 3.41

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Exhibit-2

PepsiCo Consolidated Balance Sheet (in millions) 2009 2008

ASSETS Current Assets Cash and cash equivalents Short-term investments Accounts and notes receivable, net 4,683 Inventories Prepaid expenses and other current assets 1,324 Total Current Assets Property, Plant and Equipment, net Amortizable Intangible Assets, net 732 Goodwill Other non-amortizable intangible assets Non-amortizable Intangible Assets Investments in Non-controlled Affiliates 3,883 Other Assets 2,658 Total Assets 39,848 35,994 45 965 6,534 1,782 8,316 4,484 5,124 1,128 6,252 12,571 12,671 841 10,806 11,663 2,618 1,194 2,522 $3,943 192 4,624 $2,064 213

LIABILITIES AND EQUITY Current Liabilities Short-term obligations Accounts payable and other current liabilities Income taxes payable 145 Total Current Liabilities Long-Term Debt Obligations Other Liabilities Deferred Income Taxes Total Liabilities Commitments and Contingencies Preferred Stock, no par value Repurchased Preferred Stock PepsiCo Common Shareholders Equity Common stock, par value 1 2/3 per share (Authorized 3,600 shares, issued 1,782 shares) Capital in excess of par value Retained earnings Accumulated other comprehensive loss 30 250 33,805 (3,794) 30 351 30,638 (4,694) 41 (145) 41 (138) 8,756 7,400 5,591 659 22,406 8,787 7,858 6,541 226 23,412 464 8,127 165 369 8,273

Repurchased common stock, at cost (217 and 229 shares, respectively) (13,383) (14,122) 46

Total PepsiCo Common Shareholders Equity Non-controlling interests Total Equity Total Liabilities and Equity

16,908 638 17,442 39,848

12,203 476 12,582 35,994

The carbonated drinks holds the largest market share of 70% where as juices contains 12% market share. Pepsi leads energy drinks bracket with 65% market share due to the very low pricing strategy compare to the Red Bull. To capture the market of energy drink Pepsi introduce Sting in 250ml bottle. Pepsi portfolio contains bottled water Aquafina which is known for its purity, has a PH scale of 7 which is standard taste of water being used in Pakistan. It has ISO 9000, 9002, 14000 certified. Aquafina is the second biggest competitor in bottled water having 22% market share.

Corporate Strategies of Pepsi PepsiCo implement a decentralized organization structure from the day one. Pepsi practice the job rotation across divisions to enhance the ability of their people to execute the work innovatively. These innovative practices built various competitive advantages for Pepsi. PepsiCo establish a distinct image which lead them to success. PepsiCos corporate strategy is to concentrate their resources on growing beverages business, through strengthen their portfolio by adding number of beverages, thereby having an edge over its competitors. Target Market Youth more consume their pocket money on eating and drinking cold drinks so Pepsi more focus on Youth of age 15 to 30 years and advertise heavily to target their market. But Pepsi is still not capable to target the rural areas efficiently. Pepsis tin pack is not available in far off rural areas. 47

Organizational Chart (Sales Department)

DSBU

Territory General Manager

Sales & marketing Manager

Production manager

Finance manager

HR Manager

Quality control Manager

1 Sales Territory Manager ASTM

3 Regional Sales Managers

1 Marketing Sales Manager

1 Supply Chain Manager

16 Sales Managers

Territory Marketing Executive

6 Coordinators

100 Marketing Development Officers

TMO

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Industry Analysis Running a business in today's globalized world does not often offer easy times, as Pakistan normally scores quite low on global competitiveness indicators. One such industry in Pakistan, that seems to be bucking this trend however, is the Beverage industry. According to the www.accountancy.com.pk the growth in the production of beverage industry is 30.5% during 2008-2009. About 84 million cases a year for Pepsi alone; the total beverage market is about 120 million cases of which 70% per cent are Pepsi products; about 26 to 28 per cent are Coca-Cola products and remaining are other local cola drinks. Due to the Afghan and Iraq wars, local Cola did get a little footing especially in the frontier and Islamabad area but still they are not immensely popular. Success of the cold drink industry is depends on the sugar as it is the key input in beverages. According to the Federal Bureau of Statistics the production of beverages declined by 3.7% as the prices of sugar rose sharply in recent months. Another challenge faced by the beverage industry is the taxes and excise duty. Beverages are subject to excise duty at the rate of 12.5 percent and sales tax at the rate of 15 percent on the retail price. (Business Recorder 2006 Leading Beverage Makers Audit Starts.) In addition to a 16 percent sales tax, carbonated soft drinks are subject to double taxation with a 50 percent input tax levied on soft drink concentrate and a 12 percent tax on finished carbonated soft drink beverages. Therefore, high duties on machinery and raw materials, which are not available locally, are a disincentive to companies that want to establish manufacturing facilities. According to Mr. Siraj Kassam Teli, Chairman Pakistan Beverage manufacturers Association in an interview with Pakistan & Gulf Economist (PAGE) beverage industry was growing at the rate of 25 per cent every year but now this growth has gone down instead, because of excessive taxation policy on this industry. The beverage industry at the moment has very low per capita consumption of 20 serves whereas in other countries of our region it varies from120-250 on the basis of single serve of 250 ml. This is definitely due to the heavy taxation, as the price of the product is very important and especially in our country where clean drinking water is not available and our products has to be affordable to a common man which it is not at moment.

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Water Global Trends and Pakistans Struggle

To survive and development water is essential for human. But as water is a limited good, and shortage results in crises. The lack of water hinders development and a decorous life. This can be accessed from global trends, as well as from Pakistans national and local struggles for better access for people to safe and sufficient drinking water. Only three percent of Pakistans sweet water resources are used for household purposes and drinking. The focus is on water for agriculture rather than for people. With regard to the availability of safe and sufficient drinking water, Pakistan lacks reliable statistics. Competitors Coca Cola is among the largest competitor of Pepsi. Coca-Cola is the most popular and biggest-selling soft drink in history, as well as the best-known product in the world. Coca cola started its operations in Pakistan in 1950s with the vision of achieving sustainable growth; they have established a vision with clear goals that is people, plant, portfolio and profit. . In 1996, the coca cola itself took over business operations in Pakistan and setup its 1 st production plant in Karachi. Now there are 6 production units and 11 distribution units working in Pakistan providing employment to more than 6000 people. Some of these territories are: Lahore Karachi Rawalpindi Peshawar Hyderabad Multan Rahim Yar Khan, etc. 50

Coca cola Beverages Pakistan has a very narrow product range. It has the following brands in Pakistan. Coca Cola Sprite Fanta Splash Kenly

Coke position itself as a traditional and classy cold drink by showing family oriented advertisements. Coca-Cola, in fact has now become one of the most famous and widely consumed brands in the world. It has not only established its footings in the beverage industry but is currently heading the list of the most financially sound companies in the world. Coca cola is on third rank in bottled water with 16% market share of Kinley. Coca cola offer almost same products that Pepsi have. Pepsi have the advantage of their citrus drink (Dew) as competitors have no citrus drink in their portfolio. Coke also lack in the supply chain and distribution process as compare to its competitor Pepsi. The cost of sales of Coca Cola increase from 8140.4 million to 8310 millions. Year Revenues Profit Net Income 2008 (in millions) 17,176 2,784 2784 2009 (in millions) 17,293 3,217 3217.6

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Nestle more than just offering food and beverages; Nestl Pakistan is a leading health, wellness and nutrition company. Nestle believe that good food is necessary for a good life. With the wide range of products Nestl has been serving Pakistani consumers since 1988, when parent company, the Switzerland-based Nestl SA, first acquired a share in Milkpak Ltd. Nestle involve in manufacturing, processing and sales of food products includes: Dairy Confectionery Culinary Coffee Beverages Infant nutrition Drinking water

Currently Nestle lead the juice market with more than 45% market share. Nestle is also the market leader of bottled water in Pakistan with holding the 53% market share. (Rupees in 000) Year Revenues Sales) Profit Income Statement 3,005,133 2,985,832 4,112,849 4,102,642 2008 (Net 41,155,822 2009 51,487,302

COGS of Nestle increased from 29,256,902 to 37,608733.

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The Future Soft drinks market in Pakistan has increased at a compound annual growth rate of 6.4% between 2004 and 2009. And the carbonated category is the leader in the soft drink market with a share of 63.7 %( www.datamonitor.com). Pakistans Soft Drinks Industry Is Set to Experience Volume Sales Growth of 30.5% to 2010(www.businesswire.com) .This reflects such a huge market to cater. Coca-Cola and Pepsi are two companies that have fought hard to be on top in the beverages and nonalcoholic industry. Scope of beverage industry is very vast in Pakistan as there is sluggish but potential growth in the market.

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References
(http://www.scribd.com/doc/28348957/Industry-Analysis-and-Political-EconomicSocial-and-Technological-for-Beverage-Industry-Pakistan) http://www.pakistaneconomist.com/issue2001/issue50/i&e1.htm http://www.nestle.com/INVESTORS/REPORTS/Pages/Report-2010.aspx http://www.pepsi.com/faqs.php http://pakwatercare.org/bottle-water/water-business/ http://www.freeonlineresearchpapers.com/coke-pepsi-race-higher-market-pakistan http://www.pepsi.com/home.php http://www.pepsico.com/web_pages/corp_structuresf.html http://www.scribd.com/doc/29753468/Pepsi-Stratigic-Management-Report-2010 http://www.docstoc.com/docs/9877950/project-report http://www.scribd.com/doc/32890006/PEPSI http://www.scribd.com/doc/18633636/CocaCola-Case-Study

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