Comparative Analysis of Coca-Cola and Pepsi: Business Report

This report offers a comprehensive comparative analysis of Coca-Cola and Pepsi, two of the world's leading soft drink manufacturers. It begins with an introduction to both companies, highlighting their product lines and financial performance. The report then delves into the external environments of Coca-Cola and Pepsi using PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors impacting their operations. Porter's Five Forces analysis is applied to both companies to assess competitive rivalry, the bargaining power of buyers and suppliers, and the threats of new entrants and substitutes. The organizational structures of Coca-Cola (hierarchy) and Pepsi (matrix) are compared, followed by a SWOT analysis to evaluate their strengths, weaknesses, opportunities, and threats. The report concludes with a discussion of performance measures and key findings, providing insights into the competitive dynamics and strategic positioning of these two beverage giants. The report uses financial data and market analysis to support its conclusions, offering a detailed overview of the companies' strategies and challenges.

REPORT

Table of Contents
INTRODUCTION...........................................................................................................................1
External environment ......................................................................................................................1
1.1 PESTLE Analysis of Coca cola company ............................................................................1
1.2 PESTLE analysis of Pepsi company.....................................................................................2
2.1Porter's five force analysis of Coca cola................................................................................3
2.2 Porter's five force analysis of Pepsi .....................................................................................4
Organisational structure...................................................................................................................5
Organisational structure of Coca cola.........................................................................................5
Organisational structure of Pepsi................................................................................................5
Organisational Performance.............................................................................................................5
SWOT analysis of Coca cola......................................................................................................5
SWOT analysis of Pepsi .............................................................................................................6
Five performance measures applied by Coca cola......................................................................7
Five performance reassumes applied by Pepsi ...........................................................................7

CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
This report is based on tow companies which are Coca Cola and Pepsi, these both
produce soft drinks in market. Coca cola is carbonated soft drink manufacturing company.
Originally it is intended as patent medicine. The current formula of Coca cola remains a trade
secret. Coca cola company produce a variant of products such as diet coke, coca cola zero sugar,
and also provide the drinks in different flavours like mango, cherry, vanilla and many more. And
it have different products like RT cola, afri cola, postobon, Inka kola, and etc. The revenue of
coca cola in the year of 2018 was £28.45 billion and net income of company in 2018 was £5.74
billion. On the other hand Pepsi is also carbonated soft drink manufactured by Pepsi.
Reason for choosing thee company is their strong brand image in the market and
financial condition of the company. Another reason of choosing these companies is to its status
and facility that they provide to their customers via offering different offers in the market.
External environment
External environment is that which is everything outside the company that affect the
organisation as whole and may create problem in operating in new country and influence its
decision making process as well.
1.1 PESTLE Analysis of Coca cola company
Political Factors
 Political condition specially in foreign market such as civil conflicts, governmental
changes affect the company.
 Changes in non alcoholic business era like competitive products and pricing policy
pressures the company to earn share in sales in worldwide market compared to rivals
(Asiedu, 2016).
Economical factors
 Staggering declines in soda consumption in market may hurt t he coca cola sales.
 Economic crisis affect the Coca cola and its sales. As in 2017 coca cola announced a
number of factory closures across he world in a bid to refine its supply chain.
Social factors
 As per the demand of the customers and and nature of the peoples coca cola produce its
zero sugar drinks and diet cola for the heath care of them.
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Technological factors
 Coca cola presently adopt a latest technology I organisation to employing a unique
program called bridge program which aim is to adopt new techniques to grow faster
than competitors.
Legal Factors
 As it is food and beverage industry have to ensure that products are free of excessive
level of harmful chemical as according to the legal form (Asiedu, 2016).
Environmental factors
 In the UK coca cola have called smarter producer responsibility scheme tat boosts recycle
materials in packaging.
1.2 PESTLE analysis of Pepsi company
Political Factors
 Political stability and importance of beverages affect the soft drinks sector in the
country.
 Taxation like tax rates and incentives may affect the Pepsi company as to supply their
products globally.
Economical factors
 Types of economic condition, financial condition of market, labour cost, economic
growth affect the Pepsi company as whole it have to face problem in operating and
decision marketing (Eskandari and et.al., 2015).
 If there is good economical condition then it would help the Pepsi company and gaining
more opportunities to expand business of soft drinks and beverage more.
Social factors
 This refers to the beliefs and lifestyle of the people and mainly region. For instance
modern state people are more state to drinks and food this increase the sales of the
company (PESTLE AND SWOT ANALYSIS OF PEPSICO,2017).
 As where population is more conscious about their health there would be low sale of
Pepsi drinks and food.
Technological factors
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 Technology affect the Pepsi and offer the best quality production drinks on time to the
customers and in market.
 Impact on value chain structure in increased trend of automation and technological
change will give the opportunities to Pepsi to expand its business (Eskandari and et.al.,
2015).
Legal Factor
 Follows laws and regulation on food and beverage.
 Pepsi recently agreed to revise label on Naked juice drinks lawsuit filed in 2016 by
consumer advocacy group.
Environmental factors
 As to maintain its position in the market as world's biggest soft drink company, have to
address its sustainability by take care of the environment by making effective CSR.
 Adopt environmental friendly practices through sustainable framing program.
2.1Porter's five force analysis of Coca cola
Bargaining power of buyers
 Bargaining power of buyers is low as no individual customer can put pressure on Coca
cola.
Bargaining power of suppliers
 There is also a low pressure of supplier on Coca cola as it is large company and have
large number of suppliers. So it can switch any time to new suppliers (Haji, 2018).
Threats of new entrants
 Entry barrier is low. There is no consumer switching cost and zero capital requirement.
 Coca cola has very large and significant market share and loyal customers not like to try
new brand (Porter’s Five Forces In Action: Sample Analysis of Coca-Cola,2019).
Threats of substitute
 There are many kinds of energy, soft drinks and juice products in market. And even
people can not tell the difference between coke and Pepsi, so people can try other drinks.
So the threat of substitute is medium to high.
Rivalry among existing firms
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 Rivalry with existing firm is high as the Pepsi is main competitor of Coca cola and it
provide other beverage to the customers.
 And in the market there are other brands too which become popular and give different
unique flavour (Ling, 2017).
2.2 Porter's five force analysis of Pepsi
Rivalry among existing firms
 Number of operators and competitors are available in the market in which Pepsi operate.
Pepsi have to operate accordance to their share.
 Very few competitors have large market, these will engage in strong competitive action
to become market leader. This makes it strong force to Pepsi (Max, 2018).
Threats of substitute
 There is few number of sub substitutes available in the market which produce things that
Pepsi produce this make this threat weaker for Pepsi.
 If substitute are available then hey are very expensive and not provide high quality as
Pepsi provide quality at low price.
Threats of new entrants
 Economic scale is difficult to achieve in the industry in which Pepsi operate. It make
costlier production for the new entrants. So the threat of new entrants is low (PepsiCo
Porter’s Five Forces Analysis,2019).
 Also need high capital requirement, that making it difficult for new entrants.
Bargaining power of suppliers
 Bargaining power is low for Pepsi as it produce different beverages, food and snakes and
juice also ad for this it deal with many suppliers (Max, 2018).
Bargaining power of buyers
 Bargaining power of buyers is low for the Pepsi. As it produce different products and
drinks in market so to find alternative is difficult for he customers.
 There is no significant threat to buyers to integrate backwards, this makes bargaining
power low for this industry.
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Organisational structure
Organisational structure is a system of an organisation in which activities are outlines and
directed in order to achieve the organisational goal. These activities include rules, regulation,
roles and responsibility. This also determine how the information flows between different level
of organisation (SHTAL and et.al., 2018).
Organisational structure of Coca cola
Coca cola follows hierarchy organisational structure in their organisation. This is very
effective structure that smoothly flow the information between different level of organisation. As
this structure employees are ranked at various level in the Coca cola company . Basically
according to this structure consist of multiple entities that placed in the organisation into the base
level of staff level of employees (Simkin, 2016).
In this function of all the division staff and employees is very clear . And the teams under
the leaders play effective role to accomplish the task by follow this structure, as in this decision
is t take step by step by the different level. Before reaching to the direct to CEO or manager,
supervisors or leader tackle the situation and try to manage the employees and their problem.
Organisational structure of Pepsi
Pepsi follows matrix organisation structure in their company. This structure is used by the Pepsi
company to maintain the balance in the company. In this structure one manager is handles
functional activity and the other handles more projects. Main benefit of this structure is that is
allows the sharing of highly skilled resources between the functional units and project in the
Pepsi company. In this Pepsi has highly skilled functional department and it people and team
who are always available to help if needed.
Further more, efficiency is enhanced and teams remain loyal because this structure
provide more stable environment and employees work hard and Pepsi gives job security as well
(SHTAL and et.al., 2018). And employees are always in connected with each other.
Organisational Performance
SWOT analysis of Coca cola
Strengths
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 Coca cola is ranked 3rd in 2016 “best global brand” after Apple ad Google.
 Growing product portfolio with more than 500m new products in 2016.
Weakness
 Coca cola is less diversified as compared to its rival Pepsi, as it too focused on beverages
including snakes (Mburu, 2016).
 Insensitive toward water management.
Opportunities
 Coca cola have opportunity to grow more by producing beverages.
 Major opportunity in bottled water e-commerce and delivery segment.
Threats
 Major threats is its competition with Pepsi.
 Increasing taxes on sodas and sugary soft drinks (Mburu, 2016).
SWOT analysis of Pepsi
Strengths
 It has massive portfolio of more than 100 different brands.
 Pepsi also use brand endorsements to push its products.
 Pepsi is one of the most popular brand food, beverage and snakes.
Weakness
 Pepsi had to face problems in the health community as many products are high in sugar
and calories (Nwakoby, Ezejiofor and Ajike, 2017).
 As Pepsi offers ore than 100 brands, sometime it become difficult to manage all these
brands.
Opportunities
 AS this Pepsi does not produce most healthy, so it can be easily work on producing
alternative which would be healthy as well.
 It can also work into the different industry, as this Pepsi have number of clients, funds
and talent to achieve new market.
Threats
 Pepsi's main competition is Nestle and coca cola. These give head to head competition to
Pepsi, this is the biggest threat of Pepsi (Nwakoby, Ezejiofor and Ajike, 2017).
 The economy and the possibilities of recessions will be always threat to Pepsi.
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Five performance measures applied by Coca cola
1. Volume – 2,055 (2015)
2. Net sales revenue - £6,346million (2015)
3. FX neutral NSR/ case improvement – 0.3% (2015)
4. OpEX as percentage of NSR – 29.2% (2015)
5. Free cash flow – £412million (2015)
Five performance reassumes applied by Pepsi
1. Reduce added sugar – share of pepsi's global beverage portfolio volume that has 100
calories.
2. Reduce saturated fat – volume that does not exceed 1.1 grams.
3. Reduce salt – does not exceed from 1.3 milligram of per sodium.
4. Quality and safety – The quality of product is not negotiable.
5. Environmental policy – Pepsi environmental policy is inline with national legislation and
EU directives.
CONCLUSION
It has been concluded that both the organisation Coca cola and Pepsi are the world's
largest soft drink manufacture. Which gives different drinks to the customers. To identify the
external environment which affect these company are PESTLE, porter's five that determine
which factor affect the most to the company . On the basis of these company can make changes
to improve its operation in the market.
As the coca cola focused on hierarchy organisational structure which help it to smooth
flow of information and direction to the employees, that help the company to complete its task
and gain profit. And Pepsi company uses matrix structure 8in the organisation which allow it to
flexible operation and help the company to easily adopt changes in the company. Both the
companies have large market share but the coke have larger than Pepsi which provide different
beverages to the market.
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REFERENCES
Books and journals
Asiedu, E., 2016. How to create and sustain a strategic marketing plan through the 4p’s of
Innovation: With reference to Red Bull energy drink company.
Eskandari and et.al., 2015. Factors Affecting The Competitiveness of The Food Industry by
Using Porter's Five Forces Model Case Study in Hamadan Province, Iran. Journal of Asian
Scientific Research. 5(4). pp.185-197.
Haji, A., 2018. Exploring Consumers’ Attitude and Behavior toward Carbonated Soft Drinks: In
the case of Coca Cola and Pepsi Cola (Doctoral dissertation, St. Mary's University).
Ling, X., 2017. Customer Relationship Management: Case study Coca-Cola Company.
Max, K., 2018. Three Business Plan Models to Help a Start-up with Strategic Analysis: Lessons
from using SWOT, Porter’s Five Forces, and Price Equalizer to write a business plan.
Mburu, E.N., 2016. Porter’s five forces influence on Competitive Advantage in the Kenyan
beverage industry: A case of large Multinationals (Doctoral dissertation, United States
International University-Africa).
Nwakoby, N.P., Ezejiofor, R.A. and Ajike, A.K., 2017. Effect of SWOT Analysis on
Performance of Manufacturing Firms in Nigeria.
SHTAL and et.al., 2018. Methods of analysis of the external environment of business
activities. Revista ESPACIOS. 39(12).
Simkin, L., 2016. 11 Segmentation. The Marketing Book, p.271.
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