StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Analysis of Pepsi Company Limited - Assignment Example

Cite this document
Summary
This essay discusses an analysis of the annual report of Pepsi Company, it is evident that the company’s biggest competitor is Coca-Cola, a rival company that deals with the manufacture of soft carbonated drinks. This conclusion is arrived at after considering the market demographics of the company…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER94.8% of users find it useful
Analysis of Pepsi Company Limited
Read Text Preview

Extract of sample "Analysis of Pepsi Company Limited"

Analysis of Pepsi Company Limited 1. Questions a) From an analysis of the annual report of Pepsi Company, it is evident that the company’s biggest competitor is Coca Cola Company, a rival company that deals with the manufacture of soft carbonated drinks (PepsiCo, 2010). This conclusion is arrived at after considering the market demographics of the company, which indicate that Coca Cola controls the largest market share in the soft drinks and carbonated drinks industry. In the list of competitors in the industry, PepsiCo is the second competitor in the market for soft drinks. The strategy used by the company indicates that the management is in the process of creating action plans that try to augment the market share and take the lead competitor position in the soft drinks industry. The company tries to do this by increasing operations in all major cities of the world to rival the global presence of Coca Cola Company. b) The annual report also points out the fact the company uses the straight line on both depreciation and amortization, a factor which means that the company does not use reducing balance method (PepsiCo, 2010). When the different depreciation methods are compared, it can be seen that the straight-line method is the best for this type of company. This is because the straight-line method allocates the usefulness of the assets to the most productive life of the asset, meaning that when the asset is near obsolete, the depreciation allocated to the asset is small compared to the earlier life of the asset. Conversely, the reducing balance method of depreciation allocates depreciation according to the value of the asset, which ends up allocating depreciation even when the asset is near obsolete. The company also uses the straight-line method to amortize assets, loans and allocate capital expenditure. c) From the annual reports released in the fiscal year ended December 2010, the par value of Pepsi Company common stock is 1 2/3 pence per share (PepsiCo, 2010). This par value reflected by the financial statements of the company indicates that the value has remained constant since the company announced a stock split in 1996, which means that the share data have been adjusted to reflect the stock split. The par value of the shares has remained constant since the period, and capital in excess of the par value is reduced to reflect the increase in par value occasioned by the value of additional shares issued. This means that the par value is computed after the increase in quantity of shares outstanding, but the par value of the shares is not affected by the increase in capital outlay, instead, the company uses a share premium to reflect the increase in par value. d) Also from the annual reports for the year ended 2010, it is evident that Pepsi Company has repurchased (treasury stock) at the amount of 16,745 million dollars; repurchased at a value of 284 shares (PepsiCo, 2010). Stock repurchase is a strategy used by a company to return investment to shareholders of the company and is a substitute for dividend payment that helps a company to grow. Share repurchases creates treasury stock and is a strategy used by a company to ensure that the shareholders are kept satisfied, while at the same time increasing the liquidity of the company. In previous years, the company planned to increase the share repurchase contracts with customers to approximately $4 billion in 2010, a target that was achieved by the repurchase of 16,745 million shares in the year. e) At the end of the year 2010, the number of shares outstanding for Pepsi Company was 1,585 million shares, a figure that can be got from the company’s annual report for the year ended December 2010 (PepsiCo, 2010). To find the outstanding number of shares, a number of concepts have to be understood, the first concept being that a company is authorized by law to issue only a specific number of shares. From the authorized number of shares, the number of shares that investors hold and the restricted shares by the company are called outstanding shares. After the company releases outstanding shares, the remaining numbers of shares are released in subsequent periods through stock sales or rights issues. f) From the analysis of the cash flow statement presented by Pepsi Company Limited, it can be seen that the company uses the indirect method in the operating section of the cash flow statement (PepsiCo, 2010). This method of computing the amounts of cash from operations mainly reconciles net income to the cash available to the company because of operations by starting the computation with the net income and working down to compute the operation cash flow. This method is accomplished by taking the net income and adding back or subtracting those factors that are in the income statement but do not increase or reduce the cash balance. For example, depreciation expenses reduce the value of the net income, but in actuality, depreciation does not reduce the cash balance, therefore, the indirect method reduces expenses like depreciation before the cash from operations is computed. 2) From an analysis of the annual report of Pepsi Company for the year ended 2010, the first factor that is identified as affecting net income is the increase of competition, particularly from companies like Coca Cola (PepsiCo, 2010). As already discussed, the aspect of competition affects the company is several ways, because the company tries to increase the strategic influence in the world market. The company is trying to implement strategies that increase the market and competitive force of the company, therefore, the competition experienced by the company is an economic factor that affects operations. The other factor that is identified by the company as a potential influence on their net income is the effect of the legal and regulatory environment in which the company operates. This means that the legal and regulatory environment affects the operations of the company because the company has to adhere to regulations before any expansion or strategies are set. For example, if the company seeks to expand to new markets in other world regions, the regulatory environment has to be considered. An example of this is that the net income of the company will be affected by the working practices of the countries in which they operate. In a country in which customs restrict the working practices practiced by a company, the legal and regulatory environment affects the operations of the company; therefore, it can be concluded that a major factor that affects the net income of the company is the legal and regulatory environment of operation. Reference PepsiCo. (2010). 2010 Annual Report. Retrieved on September 20, 2011 from: Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Analysis of Pepsi Company Limited Assignment Example | Topics and Well Written Essays - 1000 words”, n.d.)
Analysis of Pepsi Company Limited Assignment Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/business/1580291-pepsi
(Analysis of Pepsi Company Limited Assignment Example | Topics and Well Written Essays - 1000 Words)
Analysis of Pepsi Company Limited Assignment Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/business/1580291-pepsi.
“Analysis of Pepsi Company Limited Assignment Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/business/1580291-pepsi.
  • Cited: 0 times

CHECK THESE SAMPLES OF Analysis of Pepsi Company Limited

Coca-Cola and Pepsi SWOT Analysis

Opportunities One of the factors affecting the competitive positions of pepsi and Coke is brand recognition.... SWOT analysis of Coca Cola and Pepsi Strengths Both Pepsi and Coke have long history of the world culture for quite some time.... company Analysis Name Institution The consumption of soft drinks, especially among the youth, has become a popular culture in the contemporary society.... Coca Cola and Pepsi share a similar history: an insignificant business from a simple idea that grows to a multi-billion dollar company after a century....
4 Pages (1000 words) Term Paper

Coca Cola/Pepsi Case

Water is considered as a limited resource which might cause challenge in this industry in future since it is owned by the national governments of a state which limits the access to it by the firms.... Hence differentiation is the main strategy to be followed by the company so that they can keep the buyer loyal to themselves due to taste, specificities and reputation.... Coca Cola was the first company to make their entrant in the soft drink market....
4 Pages (1000 words) Assignment

Pepsi Entry into india A lesson In globilization

hellip; The intimidating tone of the letter would tell what a kind of power a politician in a much regularised and non liberalized society wields. When a domestic company itself was ruled by red tapism because of the license raj, it wouldn't be difficult to surmise what kind of transgressions an American company would have endured to make its inroads into the unexplored Indian Soft drink Market.... Given all these promises, If a question is asked whether the company materialized all that, the answer would be no....
7 Pages (1750 words) Case Study

The product Pepsi Cola

One of pepsi-Cola's earliest known advertisement is found in Feb.... rdquo; (Soda Museum) The promotional kick-off must be effective because at the start Caleb was selling 2,008 gallons of pepsi-Cola syrup, and by 1904 he was selling 19,848 gallons a year, the same year he started bottling Pepsi Cola.... (History of pepsi-Cola.... Judging by the flow of events in the early years of pepsi, the product and the accompanying advertisement proved effective....
5 Pages (1250 words) Essay

Enterprise Integration: the Pepsi Challenge

However, there are still several strategies wherein the CEO could effectively improve the implementation of “the Power of One”. A good mple of using political power is when the CEO effectively influences the managers in pepsi-Co Beverages North America, PepsiCo International, Frito-Lay North America, and Quaker Foods North America by allowing them to actively participate in the decision-making process during the development of strategies behind the implementation of “the power of one”....
8 Pages (2000 words) Essay

Coke and Pepsi War

The main problem discussed in the case study is the future prospects of pepsi and Coke.... The effectiveness and creativity of pepsi and Coke's strategic advantage will determine the ultimate winner with respect to sales, profits, market share and customer loyalty.... The analysis of the case study brings to light the problems both the companies have had with their concentrate producers, bottlers, and retailers while also highlighting the throat cut competition between Coke and Pepsi....
12 Pages (3000 words) Article

Marketing Plan & Strategy at Pepsi

The major brands under the banner of pepsi Co.... hellip; The marketing strategy is a mechanism that incorporates all the possible measures that a company would adopt so as to reach its short term or long term goals.... The marketing strategy of one company differs from the other and it totally depends on the nature of the product and the demand for the product in the market.... In this paper, a marketing plan is developed for the company's operations in India....
9 Pages (2250 words) Case Study

Dr.Pepper Snapple Company's Vision and Mission

Each segment has intense competition and promises substantial profitability to the company.... Additionally, the company does not enjoy a significant share of the global market.... This arises from the various manufacturing, distribution and marketing difficulties the company continues to encounter in its attempt to globalize the brand.... As such, the company concentrates on growing its local market in North America.... DPS is not any different; the company has strived to develop various recognizable brands, which it continues to position both locally and internationally....
8 Pages (2000 words) Case Study
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us