Coke Cola and Pepsico Case Study

Introduction

The purpose of this paper is to give a short history of the Pepsi Cola Company and the Coca Cola Company and to explain their current financial status of both Coke Cola and Pepsi Co. This paper will utilize, Horizontal analysis, Vertical analysis and Ratios to determine the financial health of each organization. This paper will also compare and contrast the numbers of each company and make a determination as to which company is in better financial health. After this paper has made made a determination upon the financial health of each company, the paper will then varies options for improvement for both companies.

History behind the names

Coca Cola was founded in 1892 by John Pemberton, which was then bought by a business man named Asa Candler. Asa was a brilliant business man and marketer and grew the company within a matter of years to be the number one beverage drink in the USA. Coca Cola is know to be a timeless brand, keynoted for being the first company to utilize the Santa Clause depiction and polar bear the most Americans have learned to love. When one thinks Coca Cola, one thinks tradition, timeless and classic, thus the name Coca Cola Classic. On the other hand Pepsi, the now generation was founded in 1898 by Caleb Bradham a pharmacist who originally created the product as a solution to the upset stomach; When he discovered that the drink was more suitable for recreational drinking and was much appreciated, he decided to for the Pepsi-Cola company in 1902. Pepsi became the formable rival against Coca Cola and gave it's competitor a run for it's money. Then in the late 1900's Pepsi launched a marketing campaign called the Pepsi Challenge, were consumers were asked to taste both an unmarked Pepsi and Coke, the results came in well in favor of the Pepsi. But as the year went by, through many misguided marketing designs and Coke's continual reliance on their classic trademark, Coke finally official won the battle; with an outstanding 1.6 billion annual sales too Pepsi 892 million in 2010. Even Coca Cola diet out sold Pepsi.

Moral of the story

The moral of this story is, in order for a company to brand it's self it is vital the organization produces an image that the people can identify with down through the years, and Coca Cola understood this and capitalized with over one-hundred and twenty years of inclusive advertisement, while Pepsi targeted the young, hip; the now generation.

Two methods of business

Pepsi with the hip young image seems to also implement this attitude in its business management, with a constant turnover in managers and it's constant focuses on innovation drinks and diverse product lines, the company continues to lose market share while Coca Cola, the winner of the cola battle continues to stand behind their classic flagship as well as implementing innovation drinks. Pepsi has diversified and has focussed on growth with it's many other product lines, while Coca Cola continues to focus on beverage sales.

Numbers don't lie

As one is to look at the financial report from both companies it is fairly easy to see each company's business philosophies in action. For example: When comparing the companies numbers in the Horizontal Analyses chart labeled "Net revenue and Net Assets." It is easy to see that Pepsi is making aggressive investments, by acquiring a large amount of assets between the years of 2004 and 2005, 27.4% more acquisitions then that of Coke, but at the same time incurring 50.96% in debt. These numbers clearly indicate that Pepsi is still aggressively trying to establish itself, while Coca Cola seems to be paying down it's debt and focussing on being more profitable per dollar spent. Although Pepsi does show a higher asset to debt ratio at 1.11:1 to Coke's 1.04:1; this is deceptive because of Pepsi's much larger footprint. Overall Coke is setting it self up to be much more solvent then its competitor in the near future.

Recommendation to Pepsi

Don't forget what made you successful in the first place. The once keynote mission statement of the the company "We Sell Soda" has almost become a joke. This company sells health food, snacks, innovation drinks and occasionally sells soda. Get back to the basic's, it's okay to sell innovative products and diversify, but honestly to allow Coca Cola Diet to out sell Pepsi's flagship brand should really be a cause for concern. Brand your product, focus on an inclusive marking pitch that doesn't exclude those of us who aren't so young and hip anymore, and maybe try not to make a skinny can to commemorate all the beautiful skinny people out there today, and the company might want do background checks on it's marketing celebrities before investing millions of dollars in them. The message is short, find something that works and stick with it.

Recommendations Coca Cola

This company is doing remarkably well,not only maintaing it's market share but aggressively growing it; but don't get to comfortable. It's good to pay down debt, but be careful to be to reserved. Pepsi is actively growing it's overall market share and although you have a firm lead with your flagship, Pepsi is continually growing their overall footprint. Take advantage of the opportunities that you have know while you have the assets to find other flagships to develop, possibly diversifying in other product lines like Pepsi, but in a more reserved pace.

Recommendations for both companies

Reward your employee's, invest in their education. Advance your faithful employees to positions of management regardless of scholastic background, but based upon their personal drive and ability. Steer away from the collage recruitment programs. The beverage industry is not an industry for an ivy league, silver spooned graduate, it is very competitive market and know one knows the industry better then your faithful employees that are in in the trenches, day in and day out. Through rain, sleet and snow. Utilize your personal assets, hire and promote within and each company will save much and profit much. In short, reward your employees to avoid turnover, believe it or not customer service still hold much wait with the American retailer and end user.

In Summary

Pepsi can take a lesson in marketing and management from it's competitor Coca