"Coca-Cola and PepsiCo provide snacks and beverages to billions of people across the world. Throughout my research, I have found that their corporate decisions and behaviors surprisingly vary in a number of ways."
Angelo Sciortino Course Section: MGMT 481W, Class Number #2737 The Coca-Cola Company (KO) VS. PepsiCo Inc. (PEP) Angelo Sciortino, 2018, Course Section: MGMT 481W, Class Number #2737 User ID:
drinks around the world.................................................... Source of information............................................................................................................ Selection Introduction............................................................................................................ History.................................................................................................................................... Business Type........................................................................................................................ General Environment Overview........................................................................................... Industry Overview................................................................................................................. Competitive Environment Overview..................................................................................... General Target company Information.................................................................................... II. Performance Analysis. Quantitative Analysis Profit, Equity, & Share Value Management 1.01 Revenue Productivity.....................................................................................................
(larger #s = greater efficiency)..................................................... 1.04 Income Tax / Pretax Earnings......................................................................................... 1.05 Return on Equity............................................................................................................. 1.07 Capital: Earned / Total.................................................................................................... 1.08 Total Equity.................................................................................................................... 1.09 Basic EPS....................................................................................................................... 1.11 Share Price (Market Price)............................................................................................. 1.12 Price-Earnings Ratio....................................................................................................... 1.13 Diluted EPS / Basic EPS................................................................................................. 1.14 Book Value Per Share..................................................................................................... 1.15 Book Value Per Share / Market Value............................................................................ 1.16 Dividends Per Common Share ($).................................................................................. 1.17 Dividend Payout Ratio.................................................................................................... 1.18 Dividend Yield Ratio...................................................................................................... 1.19 Investment Productivity................................................................................................. 1.20 Projected Time to Investment Payback.......................................................................... 1.21 Price Potential................................................................................................................ 1.22 Beta................................................................................................................................ Debt Management 2.23 Current Debt to Total Debt............................................................................................ 2.25 Total Debt to Total Assets............................................................................................. 2.26 Current Assets to Total Assets.......................................................................................
Coverage Ratio........................................................................................ 2.31 Average Payment Period (days)..................................................................................... 2.32 Total Debt to Equity....................................................................................................... Cash Management 3.33 Working Capital............................................................................................................. 3.34 Working Capital / Total Revenue................................................................................... 3.35 Current Ratio.................................................................................................................. 3.36 Quick Ratio..................................................................................................................... 3.37 Cash Flow Op Act to Revenue....................................................................................... 3.38 Cash Emphasis................................................................................................................ Asset Management 4.39 Revenue / Total Assets................................................................................................................. 4.40 Net Income to Total Assets (ROA)................................................................................. 4.42 Average Collection Period (days)................................................................................... 4.44 Average Age of Inventory (days)................................................................................... Qualitative Analysis Organizational Citizenship 5.29 Employee....................................................................................................................... 5.30 Customer........................................................................................................................
and PepsiCo provide snacks and beverages to billions of people across the world. Throughout my research, I have found that their corporate decisions and behaviors surprisingly vary in a number of ways. On the one hand, Coca-Cola has taken more of an aim at the “health” market and producing beverages that align with the recent trend toward low-sugar and low-calorie beverages. On the other hand, PepsiCo relies more heavily on its mergers and acquisitions, while not as often rebranding and innovating for fresh products of their own. While both companies have made varying corporate decisions, I have selected these two companies because they have both found immense success in an industry with a boatload of competition. Coca-Cola is perhaps the most well-established beverage name in the market. Few would question the prestige that the company’s name demands. However, the company’s executives are consistently aware of where the market is headed, which is another reason the company is so successful. Specifically, Coca-Cola has placed a priority on giving people more of the drinks they want, which recently has consisted of low and no-sugar drinks. According to Chief Operating Officer James Quincey, “Building a portfolio of ‘consumer-centric’ brands requires shifting focus from what the company wants to sell and what the consumers want to buy.” The company’s corporate decisions in response to this have been to reduce sugar and calories across brands, offer new drinks that
option for smaller packaging to allow consumers to better track their sugar content. The company’s executives are confident that this is the direction that the market is headed and have massively shifted their focus to this area. In addition to the production of more natural and organic drinks, Coca-Cola has poured its marketing dollars into building awareness of these drinks. For example, according to their corporate website, the “One Brand” global marketing strategy brings together all four Trademark Coca-Cola brands: Coca-Cola, Coke Zero, Diet Coke and Coca-Cola life. These drinks were included in their “Taste the Feeling” campaign, demonstrating their commitment to showing an appreciation for all consumer tastes. PepsiCo, on the other hand, has a more monetary-value based approach in regard to its corporate decisions. Their main focus of creating fast growth stems from their mergers and acquisitions. According to Research Methodology, Pepsi has made a multitude of acquisitions in different countries over the past few years, obtaining juice and dairy business Lebedyanksy and Wimm-Bill-Dann in Russia, Lucky Snacks and Mabel Cookies in Brazil, and Dilexis Cookies in Argentina. While the company has acquired a handful of businesses that focus more on the growing healthy beverage market, it is clear that its executives’ main concern is growing Pepsi’s international empire so that its hands are dipped into a diverse set of countries. Mergers and
twenty-two of their acquired brands each generating at least one billion dollars in revenue in 2015. Building on Pepsi’s priority on international markets, the company has been aggressive in their pursuit. According to Research Methodology, the company has seen a double-digit growth in snack sales in China and Pakistan in 2015. The company has also placed a priority on strengthening its position in the Middle East. On top of that, Pepsi has more than doubled its e-commerce earnings in China in 2015. The companies that Pepsi is acquiring are delivering for the brand and creating a major international business. Overall, both Coca-Cola and Pepsi’s provide profitable returns for their respective businesses. However, the two companies’ strategies are surprisingly dissimilar while also providing production. Coca-Cola’s premium on a natural and healthy lifestyle differs from PepsiCo’s intent on growing their business through mergers and acquisitions as well as focusing on their international brands. Both companies remain top dogs in their industry and will continue to build on their interesting corporate decisions and behaviors to gain a competitive edge over the other. Selection Information
when it began over a century ago to now; Coca-Cola symbolizes the most beloved beverage in the world which was created through hard working business strategies it bettered throughout the years. Many companies have not and could not create the emotional attachment Coca-Cola has created for many people. For many, it reminds them of a time of amazing memories and experiences they have had. They have accomplished not just selling their product but selling the beliefs and aspirations of the company to their consumers. I chose Coca-Cola as my target company not only because of the sentimentality I have for its beverage but because I hope to one day separate myself in the firm that I will be working for similarly to that Coca-Cola does in its industry. Whether you drink Coca-Cola beverages or do not most people know when referring to Coca-Cola, the PepsiCo beverage is next in mind. For some it is actually favored more than Coca-Cola. Picking PepsiCo as my benchmark was a simple choice because it is Coca-Cola’s biggest rival. Both are extremely successful companies with Coca-Cola being number one and PepsiCo being number two in their industry. Observing how these two companies succeeded in comparison to the other is something I am very interested in considering how high their competition is between the two of them.
all aspects of the company’s performance that must be submitted annually to the Securities and Exchange Commission. The 10-K provides the company’s main operations like for example how it makes money. It states the “Risk Factors” which mentions all risks the company faces or may face in the future. The 10-k allows people to observe the “Selected Financial Data” which refers to clearly defined data about the company in the last five years. The “Management’s Discussion and Analysis of Financial Conditions and Results of Operations” also known as MD&A allows a company to tell their side of a story in their own way. It gives the company a chance to describe its results from previous fiscal years in the 10-K. Lastly on the 10-K, “Financial Statements and Supplementary Data” includes the balance sheets, income statements, and statement of cash flows. Through the above-mentioned information given on the 10-K, the facts stated throughout come from the data mentioned in both companies 10-K and other various reliable websites. Order of material & analysis The Introduction, “The Two Most Competitive Soft Drink Around the World”, will consist of comparisons about general information of how both operate and strategize within their company’s. Specifically, how Coca-Cola diversifies itself through the sales
expanded through its acquisitions. It will also consist of why I selected my Target and Benchmark companies, how I collected my date through the 10-K of each company, and the order in which I follow to create the semester project. Next, I will talk about the history of both Coca-Cola and PepsiCo as well as Coca-Cola’s Company Profile. Following this will be about different trends in the general environment, Industry Overview, and competitive environment. The Performance Analysis will refer to Quantitative and Qualitative Analysis of Coca-Cola. The Quantitative Analysis will start with my grading analysis. Then, the Quantitative Analysis will discuss Profit, Equity and Share Value Management as well as Debt Management, Cash Management, and Asset Management. The Qualitative analysis will mention Organizational Citizenship and Strategic Position. My Conclusion will consist of a review or summary of what was mentioned in the Introduction and Performance Analysis as well as my personal opinions on the matter. Company Profile of Coca-Cola The Coca-Cola Company is currently the top selling soft drink company not only in the United Stated, but in the world. Their headquarters is located in Atlanta, Georgia
Building itself is 29 stories’ and refered to as One Coca-Cola Plaza. The Coca-Cola Company has a fiscal year that ends on December 31st. The Coca-Cola Company’s Ticker Symbol is “KO” and the auditors are Ernst & Young. The Coca Cola Company’s Business type is “Manufacturer.” Their SIC Code is “2086 – Bottled and Canned Soft Drinks and Carbonated Waters” and their NAICS Code is “31211 – Soft Drink Manufacturer.” Their NAICS (The North American Industry Classification System) Code is used by federal statistical agencies in classifying establishments such as The Coca-Cola Company. The code signifies its classification according to similarities in the processes used to produce goods and services by use of 6 six digits. The SIC (Standard Industrial Classification) Code allows an easy way to observe the grouping, presentation and analysis of information. It shows the differentiations and comparisons collected by agencies of the federal government, state government and private organizations using 4 digits. History of Coca-Cola Company It all started in Atlanta, Georgia by pharmacist Doctor John Pemberton. Doctor John Pemberton first created Coca-Cola in 1886. As stated by the current Coca-Cola
tested by the neighborhood Jacobs Pharmacy who which stated it to be “Excellent.” The founder Doctor John Pemberton believe it or not actually came up with one of the most famous beverages around the world today not in a well-known organization or company, but in his backyard in a three-legged brass kettle. Becoming just a product created in a man’s backyard to the number one soft drink in the world was not simply a fast or easy task. It was nothing less than truly remarkable strategic business planning and extreme significance placed on its mission and visions of the company. The name Coca-Cola derived from the beverages ingredients coca leaf extract and kola nut suggested by Doctor John Pemberton’s bookkeeper Frank Robinson. Frank Robinson believed Coca-Kola wouldn’t be as noticeable or attracting to consumers as having two C’s in the name which is why “Cola” was part of the brand name and not “Kola.” It was first sold to the public in Frank Robinsons pharmacy and only nine drinks were sold a day. They used coupons for free beverages to increase the public’s interest in the product. The sales only totaled to around $50 and the expenses totaled to $70. Some may believe Coca-Cola was a success from the beginning, but this was not the case considering it started with loss. The following year an Asa Candler purchased the ingredients for the beverage for $2,300. Through Asa Candler’s diligent marketing, Coca-Cola became one of the most known fountain drinks in America by the late 1890’s. With Asa Candler running the company between 1890 and 1900 the beverages sales increased 4000
painted wall signs, napkins, calendars, pencils, clocks and soda fountain urns. In 1884, Joseph A. Biedenharn was so astonished by the increase of popularity of Coca-Cola, he installed bottle machinery in his store located in Vicksburg, Mississippi. Joseph A. Biednharn began selling cases of Coca-Cola to lumber camp ups and farms and down the Mississippi River. He became the first bottler of Coca-Cola and was a huge foreshadow of what was next to come. In 1899, Benjamin F. Thomas and Joseph B. Whitehead of Chattanooga, Tennessee, gave Asa Candler all personal privileges to bottle and sell the beverage in just about all of America. The Coca-Cola Company then came together with John T. Lupton, another Chattanooga. This was the beginning of what developed the current worldwide Coca-Cola bottling system. Advertising continued to rise and strengthen Coca-Cola’s popularity and in 1904 Coca-Cola purchased its first spot in national magazines. Their advertising budget rose to 1 million dollars by the time the current year was 1911. Coca-Cola added even more to its advertising strategies and started to create outdoor billboards and radio program sponsorships. The company started using holidays in their advertisement strategies as well. In 1931, their famous Christmas advertising consisted of Santa Clause drinking Coca-Cola began. On Thanksgiving Day in 1950, Coca-Cola created their first television
about in 1993’s “northern lights” through television commercials. Presently, Coca-Cola still launches new brands as well as creating original forms of packaging. Decisions about motivating people to purchase their products is just as important as it was when Coca-Cola first came around. All its past and current decisions reflect Coca-Cola’s unstoppable success. History of PepsiCo In 1898, New Bern, North Carolina, pharmacist Caleb D. Bradham created the famous PepsiCo. Striving to match the accomplishments of Coca-Cola, Caleb D. Bradham created the name Pepsi-Cola. Caleb D. Bradham started to establish a network of bottling franchise in 1905 and continued to do well until 1923. The company went bankrupt and great loss was endured during times of World War I. It seemed PepsiCo was going out of business until Charles G. Guth became owner of the company’s trademarks and assets in 1931. He created the new and present PepsiCo. Charles G. Guth started by having a chemist formulate an improved drink than its original, arrange new bottling strategies, and started to promote the sale of PepsiCo successfully with its 12-ounce bottle for 5 cents. Aside from being head of PepsiCo, Charles G. Guth was also president of Loft Incorporated. Loft is a candy manufacturer
his controlling interest in legal battles to Lofts new management. PepsiCo was later merged into Loft in 1941. PepsiCo finally became top rivals of Coca-Cola in 1950. At this time Alfred N. Steele became the chief executive officer. Alfred N. Steele put major significance on PepsiCo advertising campaigns and sales promotions. Alfred N. Steele was so successful he enlarged PepsiCo net earnings 11-fold during this year. In 1965, Pepsi made a huge decision to merge with Frito-Lay, Inc. Frito-Lay, Inc. is the inventor of exceptionally well-known snacks today such as Doritos, Fritos, Rold Gold Pretzels, and Lays potato chips. The company additionally purchased Pizza Hut, Inc. in 1977, Taco Bell Inc. in 1978, and KFC in 1986 to increase the company’s diversification. It also acquired Seven-Up International in 1986. Although, later on the restaurant chains were spun off into a new company called Tricon Global Restaurants. In 1998, PepsiCo attempted to continue diversifying the company and obtained the Dole Juice and Tropicana brands. Brands such as these bring in a new group of consumers looking for healthier drink options. PepsiCo also merged with Quaker Oats company in 2001 to create Quaker Foods and Beverages. Altogether, the mergers included Tropicana juices, Frito-Lay snack products, Lipton Tea, Quaker Oats cereals, Rold Gold Pretzels, and Gatorade sports drinks.
America, but in countries such as Russia. They acquired controlling interest in Russia's biggest juice manufacturer known as JSC Lebedyansky in the early 21stcentury and acquired one of Europe’s largest dairy products companies, Wimm-Bill-Dan Foods in 2011. From these acquisitions PepsiCo became the number one food and beverage company in Russia. Company Board of Directors Herbert A. Allen (President, Chief Executive Officer and Director, Allen & CompanyIncorporated)Since 1982, 78-year-old Herbert A. Allen has been a Coca-Cola Company director. Allen & Company Incorporated is a privately held investment firm and has held the stated positions for over the past five years. Ronald W. Allen (Former Chairman of the Board, President and Chief Executive Officer, Aaron’s Inc. and Delta Air Lines Inc.)Since 1991, 76-year-old Ronald W. Allen has been a Coca-Cola Company director. Ronald W. Allen was the director of Aaron’s Inc. from 1997 to August 2014. He was also President and Chairman of the Board of Aaron’s Inc. ending in April 2014. He retired from the stated positions at Delta Airlines as well in July 1997.
L.P.)Since 2015, 59-year-old Marc Bolland has been a Coca-Cola Company director. He has had the stated position since September 2016. He was also the Chief Executive Officer and Director of WM Morrison Supermarkets PLC and Chief Executive Officer of Heineken. Ana Botín (Executive Chairman, Banco Santander, S.A.) Since 2013, 58-year-old Ana Botín has been a Coca-Cola Company director. She has been Executive Chairman of Banco Santander, SA since 2014. She has also served Chief Executive Officer of Santander UK plc. Richard M. Daley (Executive Chairman, Tur Partners LLC; Of Counsel, Katten Muchin Rosenman LLP)Since 2011, 76-year-old Richard M. Daley has been a Coca-Cola Company director. Richard M. Daley was Chicago’s Mayor from 1989 to 2011. He has held Executive Chairman position in Tur Partners LLC May 2011 and has been Of Counsel in Katten Muchin Rosenman LLP since June 2011. Chris Davis (Chairman, Davis Advisors)Since April 2018, 45-year-old Chris Davis has been a Coca-Cola Company director. Chris Davis is Chairman of Davis Advisors which is an investment management firm. Barry Diller (Chairman of the Board and Senior Executive, IAC/InterActiveCorp and Expedia Group, Inc.)Since 2002, 76-year-old Barry Diller has been a Coca-Cola
in December 2010. He is currently Chairman of the Board and Senior Executive of Expedia Group, Inc. Helene D. Gayle(Chief Executive Officer, The Chicago Community Trust)Since 2013, 63-year-old Helene D. Gayle has been a Coca-Cola Company director. She has held the position of Chief Executive Officer in The Chicago Community Trust Since October 2017. Alexis M. Herman(Chair and Chief Executive Officer, New Ventures LLC)Since 2007, 71-year-old Alexis M. Herman has been a Coca-Cola Company director. She has held the stated positions since 2001. Muhtar Kent(Chairman of the Board, The Coca‑Cola Company) From 2009 to 2017, 65-year-old Muhtar Kent was a Coca-Cola director. He joined the company in 1978 and had a variety of leadership positions. Bobby Kotick(President, Chief Executive Officer and Director, Activision Blizzard, Inc.) Since 2012, 55-year-old Bobby Kotick has been a Coca-Cola Company director. Aside from being the stated position of Activision Blizzard, Inc., He is a publisher and leading global developer of interactive entertainment and has held that position since 2008. Maria Elena Lagomasino(Chief Executive Officer and Managing Partner, WE Family Offices) Since 2008, 68-year-old Maria Elena Lagomasino has been a Coca-Company
she has had this position since 2013. Sam Nunn(Co-Chairman and Former Chief Executive Officer, Nuclear Threat Initiative (NTI)) Since 1997, 79-year-old Sam Nunn has been a Coca-Cola director and the stated above position. James Quincey (President and Chief Executive Officer, The Coca-Cola Company) Refer to pg 55 Caroline Tsay(CEO, Compute Software Inc.) David B. Weinberg(Chairman of the Board and Chief Executive Officer, Judd Enterprises, Inc.) General Environment Overview Currently, all businesses of different industries are all greatly surprised about the changes that are taking place in their external environment. All companies are facing the unpredictability’s of the external environment. Discussing the sociocultural, demographic, economic, technological, and political/legal environment of which affects The Coca-Cola Company are the five topics that could be categorized under the general environment overview. I will further discuss how The Coca-Cola Company is affected by these five topics and how the company responds to the uncertainties.
calling their top selling drink, Coca cola, “extremely unhealthy” because of high it is in fructose corn syrup. This is a major problem for the Coca-Cola Company and can have real long-term effects on the business. Their sociocultural effects are not benefiting them how they’d want it to be, but The Coca-Cola Company is trying to fight claims such as these. For instance, The Coca-Cola Company mentions its other healthier products they sell such as soda with no calories or soda that is made with natural cane sugar. The Coca-Cola Company can narrow in their focus on their fruit juices and sports drinks as well since the culture seems to be centering its interest on fitness. Who they target in the population is part of the demographic topic within general environment overview. Coca-Cola targets nearly all age groups from ages around 65 years old that can enjoy their diet options and sweet teas, to ages as young as 5 that can understand messages. They target both females and males, but primarily males drink their beverages since males tend to drink unhealthier options such as Coca-Cola. Although, females are still a target consumer group because females look to drink more of their healthier options such as their water, teas, and juices. The Coca-Cola Company looks to sell their products to all ethnicities and races as well. In terms of economics a hike of prices caused by Inflation could potentially hurt The Coca-Cola Company’s consumer price index as well. The Coca-Cola Company’s
of expenses for their ingredients due to inflation. However, it seems that the inflation pressures will slow down. The company stated that it expects the expenses for their ingredients to cost around $300 million down from what they forecasted previously of $350 million to $450 million. The Recession of 2008 damaged many companies profits and returns; this was not the case for The Coca-Cola Company. The Coca-Cola Company has the financial stability to persist to invest in its business. The company’s second quarter outcome during this time were comparatively healthy as the North American Market showed more signs of fixing itself. The Coca-Cola Company observes that currency will turn against it. foreign exchange rates that originally boosted their profit is supposed to hurt their profits in the fourth quarter as the U.S dollar strengthens. The company makes majority of their profit from foreign countries outside the United States so changes in hedging strategies and in currency can have a real effect on the outcome. When the United Stated strengthens the US dollar it decreases the value of it oversees. The Coca-Cola Company is one of the most well-known brands globally. The company continues to expand and grow making it the biggest beverage company in the
in over 200 countries. Although this may be true, some countries have actually banned their products because they “threaten public health. A lot of different accusations such as child labor and unfair health care benefits for workers have been claimed as well. Additionally, the company has many tough competitors globally such as PepsiCo. Even with all the tough challenges The Coca-Cola Company faces, they still provide high quality and satisfying products to their consumers. They keep their ingredients to their delicious drink in great secret for no competitor to find out. The increase disposable income has drawn in more consumers for the company. In 2012, growth has exceeded mainly by Asia, Africa, and Eastern Europe which interim bettered the company’s disposable income. This has shown an increase of 10% in volumes for the company’s final fourth quarter. In total, net revenues have increased 5% for both the final quarter and also for the full year. The increase of technology will undoubtedly help The Coca-Cola Company better their sales and advertising strategies. New technology will allow the company to research different materials and allow them to seek out and create the best and lowest price point products. With new internet technology, Coca-Cola bottles have been seen in numerous video games such as “Grand Theft Auto.” Wireless communications create
better feedback. The Coca-Cola Company Is subject to many political/legal factors. They must follow the different laws and regulations of food products provided by the government in which they sell their products as well as common accounting and business regulations. In the United Stated they’re subject to the food and drug regulations, but they may have to follow different laws according to different regions outside the United States. The company has many court cases in which they are being sued for their overuse of water. The Coca-Cola Company uses a massive amount of water in their products in an already water scarce world. India has already had many protests against the company because of their overconsumption of water in their products. Other lawsuits have been made because of the harmful ingredients they use in their products as well. Situations like this definitely influence the company’s profits and revenues. Industry Overview The industry overview assists one’s knowledge of the current position of a business in the market. It is the overall analysis of an industry’s legal, economic, and market status. The Industry overview consists of previous background information from years ago, current information of the state of the business, and future forecasts of the
and PepsiCo are in the beverage industry, specifically in the non-alcoholic beverage landscape. They are both currently the largest entities that dominate the industry they’re in. They produce their noncarbonated and carbonated drinks and sell them worldwide via sizeable bottling companies. Competition is high and both companies must be innovative in their business strategies to create better returns than the other. Both The Coca-Cola Company and PepsiCo control a high 60% of the industry they are in. The companies have about a 40% to 20% split in the industry. Although both companies have such a domination in their industry, the increase of demand in healthier beverage options has created big competition. As years go on, a greater awareness of health continues to follow it. Health issues such as obesity have increased the demand for bottled water and other low sugar drinks. Their beverages including diet soda are starting to lose its popularity so both companies in response put greater emphasis on their caffeinated energy drinks. Although, regulators refer to the large risks of drinking their energy drinks because of the high level of caffeine they contain. They have a large geographic base they sell their beverages to and continue to try to expand it. Specifically, the large areas they sell to are Brazil, Russia, India, and China. The two entities have spent a substantial amount of money to open up new bottling plants and develop distribution systems in these different countries. The down
operations, but the cash flow far outweighs the debt and covers maturities and the annual interest payments. COMPETITIVE ENVIORNMENT An analysis in a company’s competitive environment is one of the most important factors for its success. A company in a competitive industry such as Coca-Cola needs to keep an up to date basis with competitor’s strengths and weaknesses. The Coca-Cola Company must constantly increase their knowledge closely to their competitors to have an advantage over them. As spoken about previously, PepsiCo is their largest competitor and both try to figure out new market strategies to outperform the other. The Coca-Cola Company customers include huge amounts of worldwide chains of retailers, small independent businesses, and different restaurants. They deliver their beverages to their customers by means through their account management teams that provide amazing services and support to tailor the needs their customers benefit from. Any customer of any business looks to purchase products at reduce prices. The Coca-Cola Company diligently to generate new value for its customers by foreseeing
giving them a competitive edge. Their suppliers are a significant part of The Coca-Cola Company’s achievements against their competitors. They assist the company by delivering the materials the company needs that allows them to “refresh the world” more than 1.7 billion times daily. Having excellent suppliers is essential for growth and expansion. They provide raw materials such as the caffeine, sugar, packaging, and flavors the company needs at a fast rate and provide their business with Coca-Cola in an ethical manner that complies with all applicable laws and regulations. They run their business to the highest degree of following fair labor rights, business conduct, quality and service. The Coca-Cola Company does seem to have some trouble with its union workers. Their Union workers are their freight drivers and warehouse workers. Many protestors within their unions claim for example that in reality their labor practices are unfair. A strike in Alabama and Mississippi took place which involved members of Teamster Local 911; the largest American union. They held picket signs and walked along busy roads for their communities to see. On December 3rd,2016, Members of Teamster Local 727 also held picket signs protesting unfair labor treatment at two different Chicago-area production plants. They accused Coca-Cola of announcing health care costs that would’ve taken away wage bumps. The Coca-Company has
do continue today damaging their competitive edge. The Coca-Cola Company is a part of the American Beverage Association. Presently, the association brings in a large number of flavors, brands, and packages. They are associated with a variety of different beverages such as soft drinks (diet or regular), sports drinks, energy drinks, bottled water, and much more. Members attempt to maintain competitive advantages than their competitors and speak upon different issues. Their most recent plan is to lower The Coca-Cola Company’s calories and sugar level. The hopes of their strategies outcome will cut beverage calories by 20% by 2025. The American Beverage Association is working hard to aid current problems we face in America to better our health. This would be extremely beneficial for The Coca-Cola Company because as I mentioned before, consumers are now looking for healthier alternative drinks. Competition grows day by day in this industry and new entrants add to that increasing competition. New entrants influence the potential of current firms to achieve financial gainsand impact the competitive environment for current businesses in the same industry. An observation of an industry’s and company’s competitors can be analyzed in Porter’s five forces model. This is a simple way of understanding what elements could influence a company’s financial gains. PepsiCo is The Coca-Cola
has competition against Dr. Pepper Snapple Group. The Dr. Pepper Snapple Group sells very well-known products such as Dr. Pepper, Snapple, Sunkist, and A&W Root Beer. Although they do not sell a cola beverage, this actually may benefit them because as the population is attempting to stay away from less caffeinated beverages, the chance consumers may switch their beverage preference for Dr. Pepper Snapple Group products increases. New entrants in this industry are not impossible, but to compete with a company such as Coca-Cola would require a substantial amount of money for brand recognition. Again, consumers are leaning towards healthier beverage alternatives and new entrants with that produce healthier beverages could really threaten The Coca-Cola Company’s profit. The soda consumption has gone from an all-time high of 54 million gallons consumed per capita to an all-time low this year. Companies in the non-alcoholic beverage industry are attempting to add more flavors, rebrand, or decrease the can or bottle size to fight this downhill movement. People are increasingly trying to find substitutes that are not as unhealthy as the products The Coca-Cola Company sells. Substitutes consist of Arnold Palmer Lite, Teas, freshly squeezed lemonade, sparkling water, Kombucha, Maple Water, Coconut water, and many more. The Coca-Cola
minimize profit damages from healthier substitute competition. There are many competitors in the non-alcoholic beverage industry other than PepsiCo. Their major competitors are the obvious PepsiCo being their number one competition and closest rivals, then Dr. Pepper Snapple group as second closest, Redbull as third, Nestle as fourth, and Parle as the firth closest in terms of competition. Although, Coca-Cola is the leading soda beverage company it still must be innovative and keep an eye out for their competitors. They have a variety of external stakeholders that invest into their business that can either affect or be affected by the company known as creditors. The Coca-Cola Company seeks to meet with creditors to speak about issues by combining the skills and knowledge from a variety of individuals and organizations. The Coca-Cola Company stated that working together with the creditors “helps us achieve far greater positive impact on environment, social and other issues than by working alone.” The creditors are exceptionally beneficial and have a significant impact on Coca-Cola’s strategies.
well-organized fashion of aggregating and examining information acquired from various sources. When using this type of research, we use The Financial Four which consists of Profit, Equity and Share Value Management, Debt Management, Cash Management, and Asset Management. Unlike qualitative information which explains more of a detailed subjective approach of the industry, quantitative information shows a well-arranged cause-and-effect relationship between the trouble a company is having and the factors contributing to it. This is done by different surveys and experiments. The results of quantitative analysis are found by the use of computers processing mathematical data and statistics. Profit, Equity and Share Value Management When referring to a company’s capability to obtain competitive advantages and high returns, you are analyzing profit, equity and share value management. Equity rises based on a company’s profitable gains and decrease from expenses a company
all of what this category consists of. Revenue Productivity 1.5 When calculating the amount of net earnings produced for each dollar, you are observing revenue productivity. Revenue productivity also known as net margin, shows the amount of each dollar to be collected from a company as profit. I decided to grade The Coca-Cola Company’s revenue productivity a 2.0 for the ending fiscal years of 2016 to 2017 because it went from went from 15.6% to 3.6%. Although, PepsiCo also decreased from 10.1% to 7.6% from 2016 to 2017, Coca-Cola originally had a greater revenue productivity in 2016 but decreased to an even lower percentage than PepsiCo did. The Coca-Cola Company must be more innovative with its market strategies to increase its competitive advantage. Coming up with healthier beverage options is a way they could increase their revenue productivity since that seems to be a steady trend consumers are veering towards. Gross profit to revenue (Gross Margin) 5.0
close attention to a percentage known as gross margin. It represents earnings before deducting operating expenses to the total revenue a company has. You subtract a company’s products cost from its revenues to fully understand what a company’s gross profit to revenue is. I decided to grade The Coca-Cola Company’s gross margin a 5.0 for the ending fiscal years of 2016 to 2017 because it went from went from 60.7% to 62.6%. The PepsiCo decreased from 55.1% to 54.7%. In order for The Coca-Cola Company to stabilize this increase it may have to do certain things such as decreasing the amount of expenses they pay. This obviously is not an easy task, but they could also potentially up their price on their products that way certain expenses will not affect the company as much. Operating Efficiency 2.5 Operating Efficiency is figured out by taking the revenue a firm has and dividing it by operating expenses in this case. A market is operationally efficient when actual costs required to provide a product or service are fairly valued in terms of the price consumers pay for it. I decided to grade The Coca-Cola Company’s operating efficiency
2017 because it went from went from 2.5 to 2.42. The PepsiCo increased from 2.53 to 2.62. The Coca-Cola is underperforming against its competitor PepsiCo by .12. It can increase its operating efficiency by decreasing its expenses while maintaining its great products and service. Again, this is not a simple task, but if this is done correctly Coca-Cola can benefit from it in numerous ways. Income Tax / Pretax Earnings 2.0 By dividing income tax by pretax earnings, you are able to observe if a company is paying an ample amount of taxes. This could almost be an individual’s personal opinion on what he or she believes a firm’s income tax / pretax earnings should be. I decided to grade The Coca-Cola Company’s income tax / pretax earnings a 2.0 for the ending fiscal years of 2016 to 2017 because it went from went from .195 to .813. The PepsiCo increased from .256 to .491. I believe that this is a lot higher than it should be especially in comparison to PepsiCo. Some investors may find this to be correct, but personally .813 seems to be too much income tax / pretax earnings to be paid.
dollar or other currency of owner investment is known as the return on equity. It is calculated by dividing net income by shareholders equity and is a measure of financial performance. I decided to grade The Coca-Cola Company’s income tax / pretax earnings a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went from 28.2% to 6.8%. The PepsiCo did decrease from 56.5% to 44.2%. In comparison, The Coca-Cola Company’s decrease was a lot more substantial. The Coca-Cola Company must lower their operating expenses to better their return on equity. They can accomplish this by potentially increasing their price on their products that way certain expenses will not affect the company as much. Capital: Earned / Total 1.5 The percentage of ownership that has accumulated as a result of company profits is known as the capital: earned / total. You observe the amount of capital a company has made from the company’s profits by dividing capital earned by total capital.
total a 1.5 for the ending fiscal years of 2016 to 2017 because it went from went from 76.4% to 74.0%. The PepsiCo increased from 90.7% to 91.1%. In comparison, PepsiCo. Seems to not only have increased its percentage, but has a much greater one as well. The Coca-Cola Company would have to decrease its dividends it pays annually in order to increase their capital: earned / total. Coca-Cola would have a hard time competing with PepsiCo in this aspect even with innovative methods. Equity Capital 1.0 Equity Capital changes tells an organization or individual the amount the total stockholder equity has changed. An increase could mean that a company earned a profit or that the company issued more stocks. A decrease may tell one that the company experienced a loss or that a company paid a liquidating dividend and or purchased a large amount of treasury stock. I decided to grade The Coca-Cola Company’s equity capital a 1.0 because it went down 18.3%. The PepsiCo decreased 1.9%. In comparison, The Coca-Cola is unfortunately a lot lower than PepsiCo.
trying to find ways to decrease some of its operating expenses. They can also issue out more common stock to bring in more profit. Basic Earnings Per Share 1.0 An increase in basic earnings per share is viewed as more desirable since as earnings per share grow, the greater the chance the stock price goes up. When referring to this topic you are analyzing profits that are allocated to a share of a common stock. I decided to grade The Coca-Cola Company’s basic earnings per share a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went from $1.51 to $0.29. The PepsiCo decreased from $4.39 to $3.40. Both companies have decreased, but The Coca-Cola Company’s basic earnings per share is much lower than PepsiCo. An obvious way The Coca-Cola Company can increase its basic earnings per share is to increase its revenue. They can do this by either increasing their sales, ramping up the prices they charge, and or implanting both strategies. Share Price (Market Price) 2.5
a stock is selling for on each annual report. A high share price may signify the most an individual or organization is willing to pay for a stock. I decided to grade The Coca-Cola Company’s share price a 2.5 for the ending fiscal years of 2016 to 2017 because it went from went from $41.46 to $45.88. Although The Coca-Cola Company’s Share Price has increased, The PepsiCo increased from $104.48 to $119.92. In comparison, PepsiCo. Seems to not only have increased its share price more, but has a much greater one as well. The Coca-Cola Company can attempt to increase investor expectations. In other words, an investor takes both the real value or current value of how much a company is making and the expected value in the future to make an assumption on what they are willing to pay. By The Coca-Cola Company showing investors that they can increase their expected value by means of potentially coming up with innovative ways of selling more products, they can increase their share price. Price / Earnings Ratio 2.0
mean investors have confidence in the company, but can also signify that a stock is overpriced or has limited growth. A small number may mean less confidence of investors or potential for share gains. A lower number seems to be more desirable. I decided to grade The Coca-Cola Company’s price / earnings ratio a 2.0 for the ending fiscal years of 2016 to 2017 because it went from went from 27.5 to 158.2. The PepsiCo increased from 23.8 to 35.3. Again, the price / earnings ratio is based on perspective in whether you believe the number is too high or too low. I believe the increased number of The Coca Cola Company increased because the stock is viewed as having limited growth potential. The Coca-Cola Company needs to change investors view by coming up with innovative ways to convince them that there is room for the company to have a better future value than it does currently. This will increase the share price as well as decrease their price / earnings ratio to a better value. Diluted EPS / BASIC EPS 4.5
on an investment they use diluted EPS / basic EPS to measure it. A large percent close to 100% is what an investor is looking for in this topic. I decided to grade The Coca-Cola Company’s diluted EPS / basic EPS a 4.5 for the ending fiscal years of 2016 to 2017 because it went from went from 98.7% to 100%. The PepsiCo increased from 99.3% to 99.4%. Both The Coca-Cola Company and PepsiCo have increased their percentage, but Coca-Cola is .6% higher than PepsiCo. So, they aren’t ahead of PepsiCo by much but still have the advantage of achieving the full 100%. The Coca-Cola Company does not need to improve its diluted eps / basic eps since it has reached 100% in 2017. They just have to continue to maintain what they are doing to keep this stable 100%. Book Value Per Share 2.0 When investors are observing whether the book value per share has increased or decreased they’re focusing on whether they investment risk of the share has raised or lowered. An increase of book value per share indicates lower investment risk.
Share a 2.0 for the ending fiscal years of 2016 to 2017 because it went from went from $5.32 to $4.39. The PepsiCo decreased from $7.71 to $7.64. The Coca-Cola Company lowered its book value to a number less than PepsiCo book value showing higher investment risk. The Coca-Cola Company can do a few things to increase its book value per share. They would have to either increase their stockholder’s equity or lower their common shares outstanding by purchasing back a good amount of their shares outstanding. Book Value Per Share / Market Value 3.5 A large number of book value per share / market value may signify lower investment risk, but can also mean the investment public lost confidence in the company. Small numbers in relation of book value per share / market value could mean fewer number of assets support the market price of the stock. Investors use their own subjective view if a company’s book value per share / market value is too large or too low. I decided to grade The Coca-Cola book value per share / market value a 3.5 for the ending fiscal years of 2016 to 2017 because it went from went from 12.82% to
Company seems to have lessened its book value per share / market value which could mean that there are a fewer number of assets supporting the market price of the stock, but PepsiCo decreased their value to a lower percentage than Coca-Cola did. So, The Coca-Cola Company is still doing better than its competitor. The Coca-Cola Company can implement a strategy in which they state a one-time dividend to the degree of the excess cash they have made by the disposable of unhelpful assets to improve their book value per share / market value. Dividends Per Common Share 1.5 Dividends per common share is the total amount of declared dividends issued by a firm for all ordinary shares outstanding. To figure out the value you must divide the total dividends paid out by the company by the number of outstanding ordinary dividends. This is significant to investors because the dividends company pays out goes towards income for the shareholder. I decided to grade The Coca-Cola Company’s dividends per common share a 1.5 for the ending fiscal years of 2016 to 2017 because it went from went from $0.35 to $0.37. The PepsiCo increased from $2.96 to $3.17. The Coca-Cola Company shows
to an organization or individual they cannot pay better dividends per share because they cannot afford too. What The Coca-Cola can issue out a substantial number of dividends to improve its dividends per common share. The Increase in issuing more dividends creates happier shareholders. Dividend Payout Ratio 4.0 The dividend payout ratio signifies the amount of present profits that have been paid to shareholders. It is more desirable for a company to have a high dividend payout ratio in the eyes of investors. Investors make more money from the dividends the company pays as the dividend payout ratio increases. I decided to grade The Coca-Cola Company’s dividend payout ratio a 4.0 for the ending fiscal years of 2016 to 2017 because it went from went from 0.232 to 1.276. The PepsiCo increased from 0.674 to 0.932. In comparison, The Coca-Cola Company showed a huge increase with a greater ratio in 2017 than PepsiCo has. A greater ratio shows that they are able to pay stockholders with the current profits they’re making which looks more desirable to an investor.
done to increase the dividend payout ratio by the amount it has. Dividend Yield Ratio 1.5 A large number of dividend yield ratio signifies that there is greater “immediate cash” return on investment for potential shareholders. You calculate this ratio by dividing the dollar value of dividends paid by the company’s share of stocks in a year by the dollar value of one share of stock. I decided to grade The Coca-Cola Company’s dividend yield ratio a 1.5 for the ending fiscal years of 2016 to 2017 because it stayed at a steady 0.8%. The PepsiCo decreased from 2.8% to 2.6%. Although The Coca-Cola Company did not receive any loss on their dividend yield ratio, PepsiCo does show a greater dividend yield ratio. The Coca-Cola Company can better its dividend yield ratio by issuing out a substantial number of dividends. Investment Productivity 3.5 Investment productivity is the increase in market price of common shares plus dividends paid during the year. It is a theoretical measure of the return a shareholder
year being reported. Increase in investment productivity is good for shareholders since it translates to receiving more money. I decided to grade The Coca-Cola Company’s investment productivity a 3.5 because it only increased by 0.116. The PepsiCo increased by 0.178. Although the Coca-Cola Company has a positive increase on its investment productivity, PepsiCo still has a better value. The Coca-Cola Company can improve their investment productivity by for instance decreasing operating costs or by earning higher profits. If the company is able to increase the money it retains, this will increase the money shareholders can receive. Projected Time to Investment Payback 1.0 The projected time to investment payback is a theoretical estimate of the length of time it would take for a company to achieve the amount invested for one share of stock. It combines the dividends per share and earnings per share. This is found by taking dividends and adding it to the present sell price of the stock dividend by EPS. I decided to grade The Coca-Cola Company’s projected time to investment payback a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went
18.3. The Coca-Cola Company’s projected time to investment payback shows high risk. The Coca-Cola Company could increase their earnings per share to better its projected time to investment payback. It can also increase its dividends according to the formula. Price Potential 1.5 An estimate taking from historical values estimated of what a certain share of stock could sell for in its next fiscal year. Investors look for the price potential to observe the potential of a company to grow. I decided to grade The Coca-Cola Company’s price potential a 1.5 because it came out to $49. The PepsiCo price potential is $173.17. PepsiCo seems to be dominating The Coca-Cola Company in this aspect. The Coca-Cola Company would have to increase its current earnings per share by increasing profits. Beta 4.0
volatility of a security in comparison to the market, they will look for a company’s beta. A beta of “1” means a security is likely to move with the market. A beta less than “1” suggests that a security will be less volatile than the market and a beta greater than “1” is more volatile than the market. I decided to grade The Coca-Cola Company’s beta a 4.0 because it came out to be .61. The PepsiCo beta is .68. Organizations or individuals will see The Coca-Cola Company as less risky than PepsiCo. They do not seem to have to improve their beta and should continue on the path they’re are following. Debt Management When analyzing how to manage debt and reduce the number of payments a company has to pay, you are speaking upon debt management. Debt can make or break a company and needs to be handled carefully and thought out. In most cases, financial leverage is the vital interest of discussion. Too much can lead to creditors having influence on a company’s strategies which is not desired.
an individual seeks figure out if current debt rises while long term debt decreases to see if there is potential for financial troubles they’re are analyzing a company’s current debt to total debt. I decided to grade The Coca-Cola Company’s current debt to total debt a 2.5 for the ending fiscal years of 2016 to 2017 because it went from went from 41.4% to 39.5%. The PepsiCo decreased from 33.9% to 29.8%. PepsiCo has a better current debt to total debt since it decreased its percent to a much lower value than The Coca-Cola Company. The Coca-Cola Company would need to decrease its short-term credit to decrease its ratio. This would increase the cash they would have at hand. Total Debt to Total Assets 1.5 When referring to total debt to total assets one can be looking for a company’s financial leverage. The better the percentage, the more of an increase of support from creditors. Also, the more the percentage rises the more influence the creditors have on the company. This is not something a company would want and is undesirable.
assets a 1.5 for the ending fiscal years of 2016 to 2017 because it went from went from 73.4% to 78.4%. The PepsiCo increased from 84.8% to 86.2%. Although The Coca-Cola Company is not as high of a percentage of that PepsiCo increased its percentage to, their percentage is still high. Current Assets to Total Assets 4.0 The current assets to total assets measures the distribution of asset investments by a company. A company can capitalize its services on its present obligations and current opportunities. Increasing ratios are good and desired since they show a firm strengthening its financial condition. I decided to grade The Coca-Cola Company’s current assets to total assets a 4.0 for the ending fiscal years of 2016 to 2017 because it went from went from 39.0% to 41.6%. The PepsiCo increased from 36.0% to 38.9%. Both the Coca-Cola Company and PepsiCo have increasing percentages, but Coca-Cola has a better current asset to total assets percent.
and can continue to maintain its operations for the current assets to total assets ratio it has. Earnings to Imputed Interest Expense 1.5 The earnings to imputed interest expense measures a company’s capability to increase enough cash to cover its debt load carrying costs. This is figured out by knowing the number of times it is exceeded by earnings. Decreasing numbers are undesirable. I decided to grade The Coca-Cola Company’s earnings to imputed interest expense a 1.5 for the ending fiscal years of 2016 to 2017 because it went from went from 11.6 to 9.3. The PepsiCo increased from 12.4 to 12.6. Shareholders would observe earnings to imputed interest expense of PepsiCo more attractive. Coca-Cola can decrease their debt load carrying costs to improve its earnings to imputed interest expense. Current Cash Coverage Ratio 1.5 When wanting to find out the amount of cash available to cover its current debts the current cash coverage ratio is what you are looking for. A higher current cash
to accomplish its short-term debts they owe. An increasing number is desirable. I decided to grade The Coca-Cola Company’s current cash coverage ratio a 1.5 for the ending fiscal years of 2016 to 2017 because it went from went from 33.2% to 25.7%. The PepsiCo decreased from 50.5% to 48.7%. The Coca-Cola Company decreased by more and to a smaller percent than PepsiCo did. To increase their current cash coverage ratio Coca-Cola can lower the present debts they owe. Average Payment Period (days) 1.0 The time it takes a company to pay its present bills that rise from daily activities is the average payment period. The shorter the average payment period, the better. So, a decrease in this topic is more desirable. I decided to grade The Coca-Cola Company’s average payment period a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went from 209 to 241. The PepsiCo increased from 183 to 189. PepsiCo has a much period length than Coca-Cola does meaning it pays current bills quicker.
pay back individuals to better their average payment period. Total Debt to Equity 4.0 When measuring not just the financial leverage, but the control creditor investors have over a firms strategies you are using total debt to equity. As the percent grows large, the debt issued by a company increases. It is undesired that a company increases its total debt to equity significantly. I decided to grade The Coca-Cola Company’s total equity a 4.0 for the ending fiscal years of 2016 to 2017 because it went from went from 275.8% to 363.2%. The PepsiCo increased from 556.2% to 626.7%. Although The Coca-Cola Company has experienced a big increase in percent, it is far smaller than the value PepsiCo increased to. I believe The Coca-Cola Company is doing exceedingly well compared to PepsiCo and should continue the methods they are following. Cash Management
within a company could only be positive, but this is not always the case. Too much cash could mean a company does not know how to gain a superior position in the market. Too little cash could also mean a company doesn’t have the financial stability to maintain paying its debt. A balance needs to be found for every company in any industry. Working Capital / Total Revenue 5.0 The working capital / total revenue is the percentage of revenue that defines the net liquid assets available to management. This is measured by dividing working capital by total revenue. A decrease in this value is undesired by a company. I decided to grade The Coca-Cola Company’s working capital / total revenue a 5.0 for the ending fiscal years of 2016 to 2017 because it went from went from 17.9% to 26.4%. The PepsiCo increased from 8.5% to 16.6%. There are more net liquid assets available within The Coca-Cola Company than PepsiCo. The Coca-Cola Company should continue following its strategies and methods to continue its growing working / total revenue. Current Ratio 4.0
bills as they are currently falling due. It is measured by dividing current assets by current liabilities. Increasing one’s current ratio is desirable. I decided to grade The Coca-Cola Company’s current a 4.0 for the ending fiscal years of 2016 to 2017 because it went from went from 1.282 to 1.344. The PepsiCo increased from 1.251 to 1.513. PepsiCo has a greater increase in its current ratio than The Coca-Cola Company, but this is still a high ratio. Coca-Cola should keep doing what it is doing to keep up the increase in its current ratio. Quick Ratio 1.5 Similar to current ratio, the quick ratio or acid test ratio measures liquidity, but it does so in a “tighter” way. Computationally, it removes inventory and other types of current assets. An uprising percent is desirable. I decided to grade The Coca-Cola Company’s quick ratio a 2.0 for the ending fiscal years of 2016 to 2017 because it went from went from 0.9 to 0.8. The PepsiCo
by 0.1, while PepsiCo increased its quick ratio by .3 and it fell below “1”. To improve quick ratio, Coca-Cola can increase sales and inventory turnover. This will increase cash on hand. This will increase the rate of meeting short-term obligations. Cash Flow Operations Activities to Revenue 4.0 This measures the relationship between a company’s revenue and cash it makes from its normal business activities. An organization or individual will look at the percentage to see if a company is able to support its business operations. I decided to grade The Coca-Cola Company’s cash flow operations activities to revenue a 4.0 for the ending fiscal years of 2016 to 2017 because it went from went from 21% to 20%. The PepsiCo decreased from 17% to 16%. Coca-Cola is producing rather than consuming more cash than PepsiCo. The Coca-Cola Company should obtain more cash from their operating activities. They can sell their products at a higher price for more profit to do this.
the significance the top management team places on cash. It is the percentage of total assets committed to cash assets. If the number significantly increases or decreases it can be a “red flag.” It could mean hidden adverse operation issues. So, it is only desirable if there is a small increase or decrease opposed to a large one of either. I decided to grade The Coca-Cola Company’s cash emphasis a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went from 9.8% to 6.8%. The PepsiCo increased from 12.5% to 13.3%. PepsiCo increase suggests that it has a better management strategy than The Coca-Cola Company. The company would have to put more value on its cash in the future then they have historically. This could resolve the cash emphasis situation. Asset Management A company uses asset management to come to the true realization of value from things that the company is responsible for. It is both tangible and intangible assets.
upgrading, and disposing of assets in the most cost-effective manner. Revenue / Total Assets 2.0 Revenue / total assets refers to the number of dollars made from revenue produced for each dollar of assets committed to the business. An Increase of this number means a company is using their assets well and is desirable. I decided to grade The Coca-Cola Company’s revenue / total assets a 2.0 for the ending fiscal years of 2016 to 2017 because it went from went from 0.480 to 0.403. The PepsiCo decreased from 0.855 to 0.796. PepsiCo shows much greater productivity than The Coca-Cola Company. If The Coca-Cola Company raises its degree of productivity it can improve its revenue / total assets. Net Income to Total Assets (ROA) 1.0 The net income to total assets ratio is similar to the revenue / total assets ratio because it compares the company’s net income to the company’s total amount of assets
total assets. An increasing number is desirable because it means you are using less assets and producing more income. I decided to grade The Coca-Cola Company’s net income to total assets a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went from 7.5% to 1.5%. The PepsiCo decreased from 8.6% to 6.1%. PepsiCo has a much more effective ROA than The Coca-Cola Company has. If Coca-Cola can increase the degree of productivity and use a smaller amount of assets it will improve its net income to total assets. Average Collection Period (days) 3.5 The length of time it takes a company to receive money from customers once something has been sold is known as the average collection period. This is significant for coming up with different strategies for cash flow. Increasing this number would be undesirable. I decided to grade The Coca-Cola Company’s average collection period a 3.5 for the ending fiscal years of 2016 to 2017 because it went from went from 34 to 38. The PepsiCo increased from 39 to 40. Although The Coca-Cola Company has a better
has only increased by 1 day. Average Age of Inventory 1.0 When an organization or individuals wants to find out the number of days a company holds its inventory for is known as average age of inventory, another way of assessing inventory management. A company should keep the number of days in inventory to a minimum amount of days. So, decreasing this number is desirable. I decided to grade The Coca-Cola Company’s average age of inventory a 1.0 for the ending fiscal years of 2016 to 2017 because it went from went from 59 to 73. The PepsiCo increased from 35 to 37. The average age of inventory is no comparison between PepsiCo and The Coca-Cola Company; PepsiCo is doing far better. The Coca-Cola Company needs to decrease the amount of time it holds inventory for. They can do this by coming up with a strategy in which they are able to sell inventory they have had a difficult time selling. Qualitative Analysis
or individual uses personal opinion made from data that is impossible to measure in terms of quantity, such as strength of research and development, labor relations, management expertise and industry cycles. It refers to data about organizational citizenship and strategic positioning. Organizational Citizenship Organizational Citizenship is something all companies wish to obtain, but many cannot. It is achieved through strong building relationships and comes from the views of individual employees of the company and how they connect themselves with it. Employee 4.0 The Coca-Cola Company speaks upon ensuring their associates are happy, healthy, and treated fairly and with respect. They have stated that respect for human and workplace rights is engrained in their culture and if this was not to be correct the
They have 61,800 employees and through my research and reviews employees have rated the company, it seems the company is doing a good job keeping its employees happy and motivated. I have not only read the actual Coca-Cola Company’s website for my analysis, but researched reviews of current employees of the company. I read various reviews on “Indeed” and the average rating of working at the Coca-Cola Company was a 3.9. I came across mixed reviews, but majority were positive. I rated this a 4 instead of a 3.9 because I have read that The Coca-Cola Company does a lot to better its human right policies whenever a change needs to be made. I believe if The Coca-Cola follows the path it’s on, in a few years to come their ratings will go from a 3.9 to a 5.0. They should continue their strategies because they seem to be doing fairly well with employee relations. If the company wanted to improve this rating quickly, they can possibly increase employee benefits or even salary. Customer 5.0 The Coca-Cola Company unlike any brand in and outside of the non-alcoholic beverage industry cannot createthe emotional attachment Coca-Cola has created for many people and continues to create. For many, it reminds them of a time of amazing
hard work of over a centuries time. They did not just build great customer relations, but mastered it. The Coca-Cola does more every day to attempt to come with new innovative ideas that their customers want. Their customers of course want reduction of costs, better-quality, and more diverse products. The Coca-Cola Company works to create additional value their customers by anticipating their demands and interests and to work hard to deliver what they can to make customers satisfied. As long as The Coca-Cola Company keeps coming up with innovative strategies that captivate their customers, they’ll always have a rating of a 5. There are no improvements to be made. Competitor 3.5 The Coca-Cola Company is doing better than its rival companies, but competition increases more and more as years pass. The Coca-Cola Company must constantly be aware of the other company’s new ideas and strategies to be better than them. Consumers are looking forhealthier beverage options also which has created a lot more competition so even new entrants that come at the right time with the right product may have a chance to compete (although difficult).
to create everything it can that customers are looking for which is why I came to my grade of 3.5. The Coca-Cola Company needs to continuously increase their knowledge closely to their competitors to have an advantage over them. Their competitors constantly think about new strategies to do better than The Coca-Cola Company so it is up to Coca-Cola to not let this happen. The Coca-Cola Company is still number one in its industry, but that can change very quick if the company does not continuously work hard and innovative to beat its competitors. As long as they pay close attention to their competitors and continue being innovative to customer needs, they will always be number one. Directors 5.0 As stated previously, there are 16 Board of Directors in the Coca-Cola Company. Many of the Board of Directors are outside members with no duality. The only two members of the board that are inside members with duality are James Quincey and Muhtar Kent. James Quincey is the Chief Executive Officer and Chief Operating Officer and Muhtar Kent is the Chairman of the Board and was Chief Executive Officer before James Quincey. In 2005, Muhtar Kent was the President and Chief Operating Officer of The Coca-Cola Company's North Asia, Eurasia and Middle East Group, an organization
and Russia. He achieved the position of the President of Coca-Cola International not even one year later. This position consisted of being in charge of all the Coca-Cola’s operations outside North America. Muhtar Kent was given the title Presidency and Chief Operating Officer in 2006, and he later became CEO in 2008. In 2007, James Quincey took the position of Chief Executive Officer of The Coca-Cola Company. He has accomplished many great things to get to the spot he is now. Quincey played a significant role in leading the merger of Coca-Cola enterprises, Erfrischungsgetranke AG and Coca-Cola Iberian Partners to create Coca-Cola European Partners Plc. This independent Coca-Cola bottler that he participated in heavily did not only create a lot of net revenues, but created the most net revenue out of any of its independent bottling companies making it the largest profit creating one. The rest of the Board of Directors are members that the company brought in from outside the organization. I graded them a 5 because I believe that the company is doing a great job with its Board of Directors and not much change needs to be done. The Coca-Cola Company should continue doing what it has been doing to succeed as well as it has with its Board of Directors. Government 4.5
they are, definitely is involved with different government aspects. They involve themselves in many political debates in the form of lobbying to ensure their view is heard for example. They have a wide variety of constituencies to serve such as customers, distributors, small businesses, community partners, bottlers, etc and because of this they need to be involved in of these political avenues. The Coca-Cola Company works hard and efficiently to make sure their views are heard to those in the government and outside that have the potential to impact the law or regulations that can influence their worldwide business. Their Chief Public Affairs, Communications and Sustainability Officer oversees the company’s political activities. The Coca-Cola Company’s Public Issues and Diversity Review Committee of our Board of Directors also has full access to see all of their political activities and reviews them constantly. Although they do a great job with government involved aspects, there are many times in which The Coca-Cola company has lost cases in which they were sued for various reasons and lost. I graded this topic a 4.5 because of this, but I also believe they should continue what they are doing because they always seem to improve in this aspect.
in which they were sued for different environmental reasons. Many court cases consisted of lawsuits for their overuse of water. The Coca-Cola Company products use a huge amount of water when there are a lot of parts in the world that suffer from having very little. Various protests against The Coca-Cola Company has taken place in India because of their overconsumption of water in their products. Problems such as this definitely has a poor influence on the company’s profits and revenues. However, according to Coca-Cola they have been setting yearly improvement targets and working toward ambitious goals in 2020. They have established strategy based on three principles. The first principle is to protect the water resources supplying their facilities, minimize the amount of water they use in their products. Second is to partner with suppliers to lessen their water footprint across the total value chain. The third is to put money into water conservation projects. I graded them a 3.5 because although they do use a lot of water, they are taking initiative to decrease the amount they use. If they continue to excel in improving their environmental relations it will slowly rise their grade up more and more.
Company has felt strongly about giving back. The Coca-Cola foundation was launched as the global philanthropic arm of the company in 1984. The company still continues to give back to communities every day in amazing way. The Coca-Cola Company supports its foundation by sending donations and financial support. From doing this they are able to give back 1% of their annual income. This to some people that do not know what that is equivalent to may not sound like a lot, but in 2016 they were able to donate $106 million from following this strategy to give back. 230 organization in over 200 countries are given grants or donations by the Coca-Cola Foundation and 97% of the foundations donations went into its core priorities. To put that into perspective, the Coca-Cola Foundation has granted a total of around $917 million to communities internationally which is why I graded this a 5 The company does not need to do anything more than it is doing already for communities. It gives a huge amount of donations not just in the United States, but across the whole world.
from $41.46 to $44.88, this could constitute to satisfied stockholders. The share price has increased more and more as time goes on. It seems to be positive and continuously moving upward for the most part with no real reason to believe a sudden decrease will happen. Compared to other competitive companies such as the increase in share price for PepsiCo from $104.48 to $119.92 they still aren’t up to par. I graded this topic 4.0 because of this, but the increase in stock price still shows stockholders must be satisfied with The Coca-Cola Company. Communication 5.0 I have not seen too much poor communication between the Coca-Cola Company and everyone they communicate with. Everything about the company financially is found online and can be easily obtained. All Qualitative data as can be found online as well which I was able to easily obtain through various websites.
with the public which is why I graded them a five. They should continue communicating how they are with the public. Persona 3.5 The Coca-Cola Company is viewed by some as a company that gives back to the world from the money it makes. Others drink their beverage and it takes them back to great past memories. However, there are individuals that protest against it. Although customer loyalty is very high with this company, there are countries that banned their products because they “threaten public health. A variety rumors such as child labor and unfair health care benefits for workers have been stated as well. Even with such challenges The Coca-Cola Company faces, they still provide high quality and satisfying products to their consumers. In the eyes of majority of their consumers they maintain a great persona, but certain areas still do not believe in the persona these consumers do and because of this I graded them a 3.5. They can create healthier products to sell in countries that have banned their drinks to change the persona they have currently.
Coca-Cola Company’s success. They assist the company by delivering the materials the company needs that allows them to “refresh the world” more than 1.7 billion times daily. Theirs multiple requirements their suppliers have to follow to run a fair and efficient relationship. One is the Supplier Code of Business Conduct which refers to the expectation Coca-Cola has with all its employees to comply with the law and to act ethically in all aspects. This also applies to its suppliers. Having a good relationship with suppliers is a necessity for growth. They provide raw materials such as the caffeine, sugar, packaging, and flavors the company needs at a fast rate. They have a variety of creditors that invest into their business that can affect the company. The Coca-Cola Company schedules to meet with creditors to communicate about situations by combining the skills and knowledge from a variety of individuals and organizations. Working alongside with the creditors assist Coca-Cola “achieve far greater positive impact on environment, social and other issues than by working alone.”
I have not seen any situations between the company and its vendors. So, The Coca-Cola Company should continue doing what it has been to keep that relationship. Strategic Positioning This section of qualitative analysis thoroughly goes over how The Coca-Cola Company’s strategically positioned itself within the non-alcoholic beverage industry Strategic Positioning is the direction a company is heading down in the future, while analyzing the changing environment. The strategic positioning also includes a company’s goals they wish to achieve long term known as the vision statement and the mission statement which is what the state of the company is currently. Vision and mission 5.0 The Coca-Cola Company has set of goals it needs to achieve in order to accomplish its mission in the future. According to The Coca-Cola Company’s website, They will work with their bottlers to deliver: “People: influence each other to be the best we can be by providing a great place to work
anticipate and satisfy people's desires and needs Partners: Nurturing a winning network of partners and building mutual loyalty Planet: Being a responsible global citizen that makes a difference by helping to build and support sustainable communities Profit: Maximizing long-term return to shareholders, while being mindful of our overall responsibilities Productivity: Being a highly effective, lean and fast-moving organization.” The Coca-Cola Company’s mission for what they wish to accomplish is to stimulate all its consumers mind, body and spirit, to rouse periods of optimism and joy through their brands and influential actions, and to generate value and make a difference. This is a great way The Coca-Cola Company will ensure its chances of a good strategic position and the reason I graded this topic a 5. Competitive Environment 4.5 The Coca-Cola Company generates a relationship with its customers by evoking happier times or memories with the brand and distinctive selling proposition “live the Coke side of life.” Because of reasons such as this, other competitors cannot achieve
Industry inside the United States of America and outside. Although this may be true, PepsiCo is still a close second. Coca-Cola does have to pay close attention with its rival so they do not excel passed them in this topic. I rated them a 4.5 instead of a 5 because PepsiCo does also have extremely good brand recognizably. General Environment 4.5 In each industry a company works in, they have to figure out the factors in their environment such as the sociocultural, demographic, economic, technological and political / legal factors. Knowing how these might change in the future and when they may change is very significant because this information can be helpful in avoiding a major loss or helpful in the aspect of obtaining major gains. The Coca-Cola Company rapidly innovates different methods to match those of the general environment and accomplishes more gains in doing so. The only problem with one change that is damaging to the company is the position people are gaining towards health. Coca-Cola has been making alternatives for these consumer groups and continues to come up with more ways that benefit customer satisfaction.
interpreting the general environment, but it needs to start producing much healthier beverages to satisfy certain consumer groups. This is why I graded this topic a 4.5 Innovation 5.0 There is no company more innovative than The Coca-Cola Company in this industry. This is a big part as to why they are number one in the industry. They’re innovative in their product strategies, marketing strategies, sustainability strategies, and system strategies. All strategies combined made the company who they are today. If you go on their website you will see these four categories and a variety of different things they’re accomplishing with in them. For example, in product strategy “Coca-Cola Orange No Sugar Launches in Australia.” They accomplish all different types of new products or products being created in this category. In the marketing category, you can view things such as “Coke Studio: Building KO’s Largest Digital Asset with More Than 1 billion views.” It refers to all the different advertising techniques it accomplished whether like being in movies or “inside coke’s first-ever virtual sponsorship deal.” For the sustainability category, you can read “Why A World Without
example save the environment. And lastly the system category, refers to improving how things are in a culture. The Coca-Cola Company undoubtedly deserves a 5.0 on this grade. They in my opinion have the strongest innovation strategies. Plans and Progress 4.5 The Coca-Cola Company seems to have a great historical background of planning and progressing its strategies to increase its own gains. There are cases that The Coca-Cola Company did not excel as well in, but for the majority of the company’s existence they have always managed to better themselves and improve on what aspect of the company needed improvement. The Coca-Cola Company started with just hopes and dreams that it eventually become successful when it was first originated in 1886 to the largest selling beverage company in its industry. This couldn’t have been done without long and diligent planning and progression to get to where it is today. The company in this area has a grade of a 4.5 for now. I believe if the company continues to create new products through planning that follow the current trends such as healthier options, it’ll progressively become higher in demand than it already is and that will eventually lead to an increase in grade.
companies for years. They have acquired Dasani, Smart Water, Powerade, Vitamin Water, Honest tea, and Odwalla. The company just stated to the public its newest acquisitions. It has Acquired the brand known as Moxie, a regional soda company, which only produces around 225,000 cases. The other company it has acquired is Costa, a huge overseas retail coffee chain. The company has faced a decrease trajectory since times are changing. So, in order to keep their market share stable “they have to buy the little guy” says Bill Sipper (partner at Ramsey). Since Coca-Cola does very well in Asia it can likely grow Costa there as well making more profit and long-term growth. The Coca-Cola Company collaborate internationally with its partners to talk about the company’s social and environmental issues and how to responsibly use resources such as decreasing the amount of water they have used in the past. They work and speak with both community and global levels to come up with new innovative ideas. They also do this to meet their sustainability goals. The knowledge and skills they gain from their partners is superior than rather working without them and because of this their long term growth increases more and more.
Company’s main problem is its health dilemma. People are veering towards healthier choices and staying away from their products. The Coca-Cola Company is and needs to create healthier products to increase customer satisfaction as well as increase its own profits. Another dilemma is their over water consumption they use in their products. However, The Coca-Cola Company has stated it will progressively use less and less water as time passes through their remarkable strategies. Protests about unfair labor rights is also another problem that The Coca-Cola Company faces today. Although not as easy as it sounds, by possibly increasing employee salaries they may be able to achieve more employee satisfaction and less protests. Conclusion The Coca-Cola Company was created in 1886 by Doctor john Pemberton. He originally created the product came up with one of the world’s most famous products in his backyard in a three-legged brass kettle. When Asa Candler purchased the
sales by 4000 percent and since then the company has increased its values for the majority of the time year by year. Today, The Coca-Cola Company is the largest selling soft drink beverage organization in the non-alcoholic beverage industry. I chose Coca-Cola as my target company not only because of the emotional attachment I have gained reminding me of great memories, but because I hope to one day standout in the organization that I will be a part of similarly to that Coca-Cola does in its industry. General Environment Overview The Coca-Cola Company has shown that through different time periods in trends it has been able to overcome majority of the challenges it faces. Their strategies for this topic are to solve issues or grow within changes in sociocultural, demographics, economics, technology, and political / legal environment. So far it seems their biggest issue is battling with healthier trends, but they’re are coming up with innovative ways to
changes not only to benefit the company, but to support their customers satisfaction. Industry Overview The Coca-Cola Company is part of the non-alcoholic beverage landscape. This company mainly focuses on producing their carbonated and noncarbonated drinks and sell them worldwide via sizeable bottling. The Coca-Cola Company has control over 40% of the industry while PepsiCo has 20%. Although, Coca-Cola is still very popular in demand, decreases have followed because of consumers wanting healthier beverage options. The company of course will not give up because of tougher trends that are against it and comes up with many various ways to combat this trend by producing healthier alternatives. They continuously expand the large geographic areas they have already obtained to sell their beverages to. These areas consist of Brazil, Russia, India, and China. Through endless hard work, I believe Coca-Cola will always be number one in the industry. Quantitative Analysis The Coca-Cola Company has had its fair share of ups and downs in the quantitative analysis section. They are constantly making improvements and arrangements to better themselves day by day and I believe slowly but surely, they will improve their grading I have made based off the PSC.
my own research was for the most part extremely high. I do not believe much improvement needs to be made here. They have a strong organizational citizenship and better strategic positioning. Final Opinion The Coca-Cola Company is above all others in the non-alcoholic beverage industry and I believe this will not change. Through my research and final thoughts on The Coca-Cola Company, there is room for improvements just like in any organization, but I truly believe this company will thrive and better any situation it faces now and in the future. I definitely believe this is a company an individual should invest in because no matter what trend follows, the Coca-Cola company will always find innovative ways to stay with the times and continuously grow and expand.
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