Pepsi An Introduction

Introduction

PepsiCo, Inc., major producer of carbonated soft drinks, other beverages, and snack foods. Its beverage
division, Pepsi-Cola Company, bottles and markets several popular brands of soft drinks in the United States
and throughout the world. PepsiCo also owns Frito-Lay Company, the leading snack-food maker in the
United States. PepsiCo is based in Purchase, New York.

PepsiCos soft drink products include Pepsi, Diet Pepsi, and Mountain Dew. Other beverages include Lipton
Brisk and Liptons Brew iced teas, All Sport athletic drink, and Aquafina bottled water. Frito-Lay products
include Lays and Ruffles Potato Chips, Fritos and Doritos Corn Chips, Chee-tos Cheese Snacks, Tostitos
Tortilla Chips, Rold Gold Pretzels, and Grandmas Cookies.

Early History

PepsiCo traces its origins to 1898 when Caleb Bradham, a pharmacist in New Bern, North Carolina, created
a curative drink for dyspepsia called Pepsi-Cola. Pepsi-Cola, later referred to simply as Pepsi, was a mixture
of carbonated water, cane-sugar syrup, and an extract from tropical kola nuts. To sell his product, Bradham
formed the Pepsi-Cola Company in 1903. In addition to selling the drink at drugstore counters, Bradham
bottled Pepsi for sale on store shelves. At this time, bottling was a new innovation in food packaging.

However, due to major increases in the price of sugar, Bradham began to lose money on Pepsi, and in 1923
he filed for bankruptcy. The Craven Holding Company of Craven County, North Carolina, purchased the
companys assets. In 1931 Charles G. Guth of the Loft Candy Company in New York City purchased Pepsi-
Cola from the holding company. Guth had difficulty getting the business going again, but he increased sales
by selling larger bottles at an unchanged price. By 1933 Pepsi-Cola was sold by 313 franchised U.S.
dealers; bottled in the United States, Cuba, and England; and sold in 83 countries.

PepsiCos snack-food business dates from 1932 when ice-cream seller Elmer Doolin of San Antonio, Texas,
developed a business idea after eating a package of Mexican-made fried corn chips. He purchased a recipe
for the chips and established the Frito Company in 1932. Originally, Doolin produced Fritos corn chips in his
mothers kitchen. He later mechanized production and moved operations to Dallas, Texas, in 1933. Around
the same time, Herman Lay of Nashville, Tennessee, developed a business distributing potato chips made
by an Atlanta manufacturer. In 1938 Lay bought the manufacturing company, renaming it H. W. Lay &
Company. The company prospered, becoming one of the largest producers and distributors of snack foods
in the southeastern United States. The company made and sold many snack foods, but its best-seller was
its brand of potato chips, known as Lays. In 1945 the Frito Company gave H. W. Lay & Company exclusive
Southeast distribution rights for Fritos corn chips, a market both companies hoped to expand nationwide.
After continuing their close business association for over 15 years, the two companies merged in 1961 to
become Frito-Lay, Inc., with headquarters in Texas.

Growth
The Pepsi-Cola Company, meanwhile, had changed hands several times and grown greatly since 1933. The
Loft Candy Company merged with the company in 1941, keeping the Pepsi-Cola name. About this time,
Pepsi became the second-best selling soft drink in America behind its chief market rival, Coca-Cola
(popularly known as Coke). In 1948 the Pepsi-Cola Company began canning drinks in addition to selling
them in bottles. Alfred Steele, formerly an executive with the Coca-Cola Company, became president of the
Pepsi-Cola Company in 1950. Former amateur boxer Donald Kendall took over as company president and
chief executive officer (CEO) in 1963 and began marketing Pepsi to young people in an advertising
campaign called The Pepsi Generation. The company acquired another popular soft drink, Mountain Dew,
in 1964. In 1965 the Pepsi-Cola Company merged with Frito-Lay, Inc., to become PepsiCo, Inc., based in
New York City. As president and CEO of the newly merged company, Kendall later moved the corporate
headquarters to its current home in Purchase, New York.

In 1972 PepsiCo struck a deal with the Union of Soviet Socialist Republics (USSR), allowing the company to
distribute Stolichnaya vodka in the United States and to build soft-drink bottling facilities in the USSR. Pepsi
thus became one of the first American products to be made and sold in the Soviet Union. In the late 1970s
the company began to purchase fast-food chains. It acquired Pizza Hut in 1977, Taco Bell in 1978, and
Kentucky Fried Chicken (later named KFC) in 1986.

The Cola wars

PepsiCos leading soft drink, Pepsi-Cola, and its chief rival, Coke, have dominated the soft-drink market for
decades, although Pepsi has traditionally remained behind Coke. In 1950 Coke outsold Pepsi by 500
percent worldwide. But Pepsis aggressive advertising campaigns aimed at young consumers and major
bottling and marketing deals made Pepsi a close rival to Coke by the 1980s. PepsiCo has also enjoyed
great success with its canned and bottled Lipton brand iced teas, earning higher sales than the Coca-Cola
Companys Nestea products. Also, in the United States, Pepsi had virtually an even market share with Coke
in the mid-1980s, when the Coca-Cola Company changed the formula for Coke. (It later reintroduced the
original formula under a new name, Coke Classic.) However, as Coke regained popularity worldwide in the
late 1980s and into the 1990s, it again became the global soft-drink leader. In 1996 Pepsi-Cola International,
PepsiCos international beverage production and marketing division, suffered difficulties in Latin America,
one of its most important markets. The company was particularly hurt by the loss of a bottling plant to the
Coca-Cola Company in Venezuela.

Snack food Market Dominance

Many of PepsiCos other products continued to dominate their markets in the 1990s. Sales of Frito-Lay
products accounted for about 40 percent of PepsiCos total profits. By the mid-1990s Frito-Lay products
made up more than half of the U.S. market for snack chips, and the company owned eight of the top ten chip
brands. In 1995 U.S. consumers bought the companys original potato chip brand, Lays, at a rate of 4.5 kg
(10 lb) a second. The companys leading product, Doritos tortilla chips, was the best-selling salty snack
(packaged) food in America in the mid-1990s. Salty snack foods include chips, pretzels, and nuts, as
opposed to nonsalty snack foods such as cookies and cakes. In 1994 Frito-Lay began producing several
baked and low-fat versions of some of their snack foodssuch as Baked Lays potato chips and Baked
Tostitos tortilla chipswhich soon dominated the companys sales growth.

Recent Developments

By the mid-1990s PepsiCos restaurant business consisted of 28,000 outlets worldwide, more than were
owned by any other company. The company also supplied its own restaurants through a separate division,
PepsiCo Food Systems (PFS). In 1997 PepsiCo sold PFS. Also that year, PepsiCo spun off its restaurant
chains to form a new company. The move enabled PepsiCo to focus on its beverages and snack foods. In
2001 PepsiCo acquired The Quaker Oats Company, a food and Beverage Company.

Pepsi cola in Pakistan

In Pakistan, there have been consumed different types of soft drinks but Pepsi is the most frequently
consumed soft drink. It is very much popular in the consumer; it has got big target market and is competing
with the other companies of soft drinks. 10 units of Pepsi cola have been installed, in the different places of
Pakistan i.e., Lahore, Multan, Gujranwala, etc., and working with the best utilization of their resources in the
optimum way. Each of these units is owned by the different parties, which are strictly following the rules of
the parent company. The company to made production has licensed each unit. These units have their own
areas of selling and have different target markets. All these units are considered as separate firms, which
are the franchisees of Pepsi cola international.

Pepsi in Multan

Shamim & Company

History

SHAMIM & Co. was established in 1967 as a private limited company. It started its business in 1968. Allah
Nawaz Khan Tareen (Ret. DIG) got license of 7-up franchise and was producing only one product, 7-up. But
in 1973, it became Pepsi Cola franchise. Now a day MD of SHAMIM & Co. is Alamgeer Khan Tareen son of
Allah Nawaz Khan Tareen.

Total production of that plant was 600 crates per 24 hours. Now Factory has 5 plants, which can produce
110,000 crates per 24 hours.

In start Pepsi in Multan imported the material from USA & Ireland but due the problems of shipment, time
and availability, Pepsi Pakistan made the plant in HariPur Hadar where they import the material from USA &
Ireland. And now Pepsi in Multan takes Pepsi Concentrate from the HariPur plant.

Along with the concentrate, Pepsi in Multan also imports the Sugar from Sheikho Sugar mill & from Shaker
Kunj. The bottles are manufactured by Tariq Glass in Lahore under licensed by PEPSI Pakistan. The gases
which are used in PEPSI are made by Multan Factory itself but in case of shortage Factory buys it from
Supreme Gas & Pak Gas. The caps and crowns are imported from Imran Cork, Mehran Karachi and
Wincloa Lahore.

Introduction

In Pakistan, at present SHAMIM & Co. is the largest production unit out of 11 franchisees. SHAMIM & Co.
covers the area of Southern Punjab which consists of Multan, Bahawalpur, Bahwalnagar, Dera Ghazi Khan,
Sahiwal, Khanewal, Rajan Pur, Taunsa, Okara, Rahimyar Khan and Layyah. The company is properly
serving all these areas with quality products.

Honors

In Pakistan, SHAMIM & Co. is in the list of top three out of eleven showing financial and sales growth
according to their relative volume size basis. When franchise cross a certain volume, plant is classified as,
Mega Plant Status. SHAMIM & Co. has achieved this status in 2000 and 2001. Also it has ISO 9002
Certification and for year 2005 Shamim and Company won the award of best quality unit among the eleven
11 units in Pakistan.

Mission Statement

To earn profit by meeting the customers needs with quality products.

Organization

Managing Director

He is the owner of this company and final operational authority to manage all departments of the company.
All departments heads are responsible to report him all about their performances and matters.

General Manager Sales

G. Manager Sales is responsible for the performance of his department and to achieve the objectives
assigned to him such as marketing, sales, distribution. To carry out his duties more efficiently he has four
Regional Managers, 15 Area Sales Managers.

General Manager Operation

He is responsible for the whole administrative, shipping, workshop related activities to smooth on the factory
operations without any hindrances.

General Manager Technical

He is unlike Sales department performs key role as to manage Production Department producing quality
Products as per need of the sales department. Quality Control Department also works under him.
 G. Manager Finance

Finance, Accounts and MIS departments work under his control. He is responsible to make major company
financial policies to meet the needs of the each and every department regarding budgets etc.

Organizational Chart

Global strategy

Pepsi has divided the total international market on the basis of taste constituting into three zones.

Asian zone
European zone
African zone

Pepsi is using the licensing strategy to go abroad. SHAMIM & Co. is also a Licensee.

Competitive priorities
 The competitive priorities are the operating advantages that firms processes must possess to outperform
its competitors.

Shamim & Co. has the competitive priorities of high-performance design and consistent quality.

High-Performance design

Actually Pepsi is getting the competitive edge in our region on the basis of its quality and the quality is its
taste. Through a complete marketing research they found that sweet taste is liked more by this region.
Thats why in Pakistan Pepsi is dominant soft drink and it has almost 75% shares in this market. On the
other hand when we look internationality then Coca Cola is the leading company. So Pakistan is a big
market for the Pepsi, where Pepsi is generating a lot of revenues.

Consistent Quality

Another major and the strong aspect of the Pepsi in Multan is that they are producing a consistent quality
according to the PCI standards. The low quality bottles and the damaged bottles are not dispatched towards
the market. Pepsi has a lot of checks and balances on its output level.

MANUFACTURING AND SERVICES STRATEGIES

Make-To-Stock Strategy

In Pepsi, Make-To-Stock manufacturing strategy is used. Bottles are produced in a standardized process
because the competitive priority is consistent quality. Firstly, marketing department forecasts the demand
then according to this forecasting MPS is made and after making bottles Pepsi distribute these bottles to the
market.

DEPARTMENTALIZATION

As it is a formalized company therefore there is a hierarchy of employees and the division of departments in
the organization. Following are the departments working in the organization.

Production Department
Administration and Personnel department
Sales/ marketing Department
Finance Department
Shipping Department
Purchase Department
Excise Department
Computer Department
Each manager of a department is responsible for overall working of the department. A manager has an
assistant manager and after this there are shift in charge in production and supervisors in sales. They
control the activities of operatives.

Brief introduction of the working of these major departments

Production department

As we can see with the name of the department the working of this department is to control the production
process i.e., to get raw material and process them and convert them into finished goods.

Administration department

The major function of this department is to manage the employees and to made recruitment of new
employees. Assign them their according jobs. And government affairs if employees are working effectively or
not and what are the government recent policies

And what is the impact of these policies on the organization. These are the few matters where administration
plays its role.

Publicity problems

Some government policies directly affect organizational expenses like the tax on different campaigns that is
tax on cap, banners, shirts, and as many taxes on different publicity methods about which organization
come tow know at the end of the year.

Sales/marketing department

The marketing department of this organization is assigned to make public dealing. The marketing
department is responsible to make advertisements of the company products and get them sold. Advertise
through road site Painting, Wall Chalking, Billboard, TV adds etc. They are given yearly sales targets and
they are liable to achieve that. They use different schemes and offer different discounts etc. to achieve those
targets. Schemes like:

Prize Winning Schemes

Pepsi Ramzan Offer

Haj scheme

Omera scheme

And many more schemes

Finance department

This is one of the most important departments of this organization. This department makes the financial
plans of the organization; they analyze their resources and then compile other reports and give the whole
budget the organization can afford. Another job of this department is to make the complete record all
financial and non-financial transactions made inside as well as outside the organization.

Purchase department

The whole processing of production department is based on the availability of raw material and all the
dealing regarding raw material is under purchase department. They made purchases from their contractors
i.e., bottles, caps ingredients etc.

Computer department

Pepsi-Cola uses a software package (Road Net) to facilitate the design of efficient routes and schedules for
the delivery of bottled and canned products to customers assigned to a given location. In order for
automated routing and scheduling to achieve maximum benefit, however, the set of customers assigned to
each warehouse and bottling facility must be appropriate. During the course of this project the students
developed a procedure based on cluster analysis to assign customers to bottling facilities and integrated this
analysis into a Geographic Information System.

PRODUCTION PROCESS

Water Treatment Plant

PEPSI Bottles Filling Process

Purchasing and washing of bottles

First step regarding the production is the purchasing and washing of bottles. Mainly company use the bottles
returned from the market but if it needed more bottles, then these are purchased from the glass company,
Lahore.

These bottles are placed on conveyer and washed through an automatic plant. Caustic Soda and boiled
water is used for washing of bottles.

Water Traeatment

Raw water is treated to remove its hardness. Here raw water with the Lime, Feso4, and Chlorine comes to
the Coagulation Tank where the initial sludge is removed then this water is moved to Buffer Tank where it is
kept for a certain period in order to stable it. Then this water comes to the Sand Filter and passes through
the Sand and Gravel bed, and then this half treated water comes to the Carbon Filter and passed through
the Carbon and Gravel bed for more purification. After that it is moved to the Purifix Carbon Filter and then to
the Spool Polisher where the filter papers are used to remove the sludge and then to Water Polisher and
then to Ultra Violet Filter where Ultra Violet rays passes through the water in order to eliminate the future
growth of bacteria and lastly this treated water passed through the Thread Type Filter. After passing through
this complex process water is completely free from sludge and bacteria and other hazardous waste.

After that this water comes to the Water Softer Tank and passed thorough the Gravel Bed and this soft water
is used for the syrup making.

Preparation of Simple Syrup

In the sugar weight room sugar is weighted for different brands, because each brand requires different
quantity of sugar, then this weighted sugar is passed to the syrup storage room, where the sugar and water
in equal quantity processed in Pasteurizer Tanks, and heated up to 85 C where Activated Carbon is used to
remove the bacteria, and Chlorine and TSP (Tri Sodium Phosphate) used to remove the smell and color of
the sugar. Chlorine and TSP is also stored in different tanks. After that this mixture of water and sugar is
cooled down up to 20C in order to prevent from the further growth of bacteria, after that in this mixture
Concentrate of each brand is added as per requirement.

Washing of Bottles

The empty bottles that come from the market are brought into the washing room of bottles where different
employees first check the initial damages to the bottles. Damaged bottles are screened out from the lot.
Only the acceptable lot is allowed going towards the bottle washer machine. The bottles remain 45 minute in
this washer machine so that only the good quality bottles that are free from sludge and breakage can be
passed to the filling room.

Filling of Bottles
Mixing of CO2 Gas in Syrup

Syrup is sent to carbon coolers, Ammonia, Carbon Powder and Carbon Granular are mixed in the syrup.

In the filling room the syrup and CO2 comes from syrup and CO2 room. From Carbon cooler syrup goes to
the filler and from other side empty bottles and then crown cock or cap cocks are fixed on the bottles. Here
operator looks after the production process.

Filled bottles are then passed thorough light room where quality of bottles is checked. Here under filled or,
over filled bottles or dirty bottles are separated. There are two light rooms and in each room one employee is
placed to trace out the dirty bottles.

After passing through light room the code is printed on the bottles, which contain the manufacturing date,
machine number and time of manufacturing and the batch number.

After all this checking process bottles are placed in the crates. The whole process of production is
automatic. Only supervision is required. Then these crates are sent to the output warehouse.

QUALITY CONTROL

It has become crystal clear that high quality products have a distinct advantage in the market place, that
market share can be gained or lost over the quality issue. Therefore quality is a competitive priority.

Quality is important due to the following reasons:

Cost and market share

Companys reputation

Product liability

International implications

SHAMIM & COMPANY (PVT) LTD takes effective measures for the quality control. Production of the
company is according to the standards set by PCI. So the company is very much concerned about quality.
Quality of raw material as well as of end product is checked.

Following are the main steps taken by the company for quality control.

Testing of Raw Material

Raw material used in production, comprises of the following items.

Concentrate
 Sugar

Treated Water

Empty Bottles

Carbon Dioxide

Crown

From the above items, previously the franchiser from USA provided concentrate. Now it has plant at Haripur
and SHAMIM & COMPANY (PVT) LTD purchase the concentrate from there. Because the franchiser
provides concentrate, so there is no question about its quality. All other raw material purchased by the
company itself.

Sugar Testing

The company from sugar mills purchases sugar. After the arrival of sugar at the plant, it has to pass through
a strict quality check. It should be free from moisture.

First of all supervisor checks the quality of sugar. After this checking, a randomly selected sample from
sugar bag is sent to laboratory for testing. After this testing, if the quality of sugar is according to the
standards, then this sugar is stored for further processing. If the sugar quality is not up to the mark, then it is
sent back to the sugar mill.

Water Treatment Testing

The company has four containers to meet the requirement of water. The water is treated for the use in final
processing. At different stages, different treatment tests are done.

These tests include:

Upper top test

Sand filter and carbon purifier test

Water softness test

Company also keeps the record of these tests. If some abnormality is observed by the shift in charge, then
he stops the supply of water from the container. The supply of water is made from other container. These
containers are also washed at regular basis.

Syrup Testing
Mixing of sugar and water into concentrate produces syrup. This mixture is treated at 90oc and then it is
stored in the tanks. This is called simple syrup. This syrup is also tested in the lab. Then carbon dioxide and
ammonia are mixed into the syrup. Now this is final syrup this is also tested in the lab. If this syrup is not
according to standards, then new syrup is prepared for production.

Finished Product Testing

When bottles are filled, a chemist also takes the sample and checks the quality. Here preservation and
ingredients ratios are also checked. If any deviation from the standard is found, the whole batch is drained
before going in market.

These finished bottles are also passed through light room to control the quality. Here if the bottle is low filled
or dirty, then it is sorted out. The quality of glass, size of neck and size of bottom should be according to the
given standards.

Internal Audit

The firm has hired an internal audit team. And the purpose of this audit team is to make periodic inspection
of output after every 30 minuets. And if they find any laziness from the employees side they immediately
inform to the operation manager, so that right action can be taken.

External Audit

Similarly there are some external auditors from Dubai, they take the random sample of bottle from market
and check the quality of beverages according to their standards. In the past 4 to 5 years the Pepsi Multan
has proved good quality and got a lot of reward from international auditors.

Pepsi cola international also plays an important role in maintaining the quality. Sample from different
markets at different selling points at different times, are collected and quality of these samples are checked.

Coding is also done on the caps of the bottles. In this coding manufacturing date, machine number and time
is printed. So from the above testing, we can conclude that the company has very rigid quality control
system.

Capacity

Capacity is the limiting capability of a productive unit to produce within a stated time period, normally
expressed in terms of out put units per unit of time.

This is actually the intensity with which a facility is used. This intensity is increased through overtime. Other
way of increasing the capacity is to engage in subcontracting when it is feasible.

In Pepsi, the capacity measure in out put form is the number of crates produced. There are two production
units having different lines. The first unit contains 3 lines and allocated for 250 ml. Pepsi, 7UP, Dew &
Marinda. The second unit contains 2 lines and produces 1 & 1.5 litre bottles. These lines are flexible in a
sense that through one line you can produce multiple brands having a set-up time of 2 hrs. They are not fully
utilized. The capacity of one line is 1100 bottles per minute but it is being operated at 800 to 900 bottles per
minute. The reason is that, the bottles move very fast that may cause serious accidents by breaking into
small pieces. There are 3 shifts working in Pepsi cola. The total capacity of 5 lines is 160,000 crates per day.
But the average utilization of 5 lines is 100,000 crates per day in peek season.

Planning Strategies

Chase Strategy

A chase strategy matches demand during the planning horizon by varying either (1) the workforce level or
(2) the output rate.

Pepsi is also following the Chase policy. When higher production is required in the peak season, company
hires the new workers, and during low production the workers are fired from the company to prevent from
unnecessary cost. Company also tries to increase demand through advertising, price cuts and by giving
different incentives.]

FORECASTING

Planning and control for operations requires an estimate of the demand for the product or the service that an
organization expects to provide in the future. Since forecasting should be an integral part of planning and
decision making, the choice of a forecasting horizon (a week or a month, for example), a forecasting method
with desired accuracy, and the unit of forecasting (dollar sales, individual product demand.) should be based
on a clear understanding of how the output of the forecast will be used in the decision process.

SHAMIM & COMPANY (PVT) LTD uses the historical data for forecasting demand. As the company has
seasonal business so the demand is high in the month of March, April, May, June, July, August and
September. Sixty percent sale of the company takes place in these months. This is the peak season for the
company.

Company makes the sales forecast on the basis of historical data. For example, if a company wants to
forecast the sale for June 2005. They will take the data of last five year in order to forecast the sale for June
2005. They also take into account the current trend factor.

Level of Forecast

The Pepsi cola forecast the demand for their products on aggregate level. Then they forecast demand for
Pepsi, 7up, Mountain Dew and Miranda individually.

Unit of measurement

They forecast the demand in crates instead of bottles. Pepsi normally forecast the demand in 250ml.
 Forecasting error

It is difficult to reduce the error of forecast demand. They say that the six to eight months are required to
install a new plant. And they lose the market for this particular period.

Inventory Management

Inventory is very important to every company because it helps the company to respond quickly to customer
demand, which is an important element of competitive strategy. The more effective a companys inventory
system is helped full in manage the companys resources.

In SHAMIM & COMPANY the inventory is divided in to two main categories:

Critical material
Non-critical material

Critical Material

Critical material is that which is directly related to the production so management gives full concentration to
critical material to avoid irregularity in operation. The critical materials include:

CONCENTRATE
SUGAR
CO2 GAS
EMPTY BOTTLES
CROWN CORK
CAUSTIC SODA

The store provides a daily stock report of critical material with balance. If that material is reach at reorder
point then they write that material in the daily stock in the column of urgent. If any material is going to be
reordered, it is highlight with red pen. The procurement manager physically checks the stock and place
order. They are managing high inventory in which order for concentrate is placed for 3 months and the order
for the rest of the material is placed for 1 month.

The reason for maintaining high inventory is;

Customer satisfaction, to prevent from stock-outs and back-order situation

Low ordering cost
Labor and equipment utilization
Low transportation cost

Non-Critical Material
In Pepsi cola the non-critical material are those material which is not directly related to the production. The
storekeepers inform the procurement manager. When there is need. The non-critical material consists of
stationery, Greece, and supplies etc.

Selection of Supplier

The co. purchase material from those suppliers, which provide the material at least cost, on time delivery
and meets the specification of the quality control department

In start Pepsi in Multan imported the material from USA & Ireland but due the problems of shipment, time
and availability, Pepsi Pakistan made the plant in HariPur Hadar where they import the material from USA &
Ireland. And now Pepsi in Multan takes Pepsi Concentrate from the HariPur plant.

Along with the concentrate, Pepsi in Multan also imports the Sugar from Sheikho Sugar mill & from Shaker
Kunj. The bottles are manufactured by Tariq Glass, Toynasic and BGL under licensed of PEPSI Pakistan.
The gases which are used in PEPSI are made by Multan Factory itself but in case of shortage Factory buys
it from Supreme Gas & Pak Gas. The caps and crowns are imported from Imran Cork, Mehran Karachi
and Wincloa Lahore.

Distribution

In Shamim & company, major item of inventory is finished product. There are two ways to distribute that
finish inventory, the first method is direct and second is indirect method. In direct method they provide crates
of bottles to their dealers at the required destination through their own transport, in indirect method the
dealers have their own transport for distribution.

PEPSI is just one link in a customer value delivery system that includes thousands of dealers. It is a winner
in this part of the world because they have superior dealer networks. Also the wholesalers and retailers
involved are doing well because PEPSI supplies superior beverages. PEPSI also focuses on placement of
their product such that the consumer can buy a PEPSI from nearby location. PEPSI also takes immediate
action in delivering its products to market. Overall PEPSI is focusing on fastest delivery and great
assortment.

PEPSI Multan is obtaining strong trade cooperation and support from resellers. The marketing department
commands unusual cooperation from resellers regarding displays, shelf space, promotions and price
policies.

Benchmarking

The bench marking is a continuous process of comparing a companys strategy, products and processes
with those of world leaders and in best-in-class organizations in order to learn how they achieve excellence
and then setting out to match and even surpass it.
Comparative analysis of Pepsi & Coca-Cola

We will compare these two companies in regard of shares. The shares can be described in two ways:

Market shares

Volume shares

Market Shares

The market share of a company represents the portion of accounts that the company holds from the 100%
accounts of the market. The market share distribution of Pepsi and Coca-Cola is more than 80% and
remaining respectively. For Instance if the total market comprises of 100 consuming accounts then 80
accounts are being served by Pepsi and rest are being server by Coca-Cola and others. Pepsi has been
focusing to increase its market share, which represents the long-term approach of organization because
majority of the customers of the Pepsi are low volume purchase and if someone will switch towards the other
brand then it would not be a big loss for the firm. But on the other hand Coca cola is focusing on the short-
run approach, it is dealing with the institutional customers, which are high volume purchaser. But the major
disadvantage of this approach is that if Coca-Cola will lose any one customer among these 20 then it would
be a great loss for the firm but in case for it.

Volume Shares

The volume share of a company represents the portion of sales volume that the company holds form the
100% sales volume of the market. The volume share distribution of Pepsi and Coca Cola is 65% and 34%
respectively. For instance if total market demand is 100 units then Pepsi is supplying 65 units while Coca-
Cola is supplying 34 units and remaining 1 unit is supplied by other beverages companies of Pakistan.

Benchmarking in Pepsi

In 1970s Pepsi was the follower and Coca-Cola was the leader here in Pakistan as well. At that time Pepsi
used to benchmark the Coca-Cola in order to prosper and progress. But after 1970s Pepsi stopped
benchmarking strategies and procedures of Coca-Cola and adopted an idea of Out-of Box thinking.

Thinking Outside The Box

Thinking Outside the Box means thinking beyond the parameters of human consciousness and experience -
to see beyond the norm - to be a visionary - to activate your DNA. We exist inside the box - the physical
plane - but we soon evolve our conscious awareness back to its source of creation - outside the box.

Are you trapped inside the box - the emotions of the game?
Thinking 'outside the box' means balancing lower frequency emotions - fear, anger, etc.
With higher frequency emotions and therefore not being controlled by your emotions.
Let it all go ... it's just an illusion in time.


Humanity is evolving out of the box and into the light of creation.

What PEPSI found out from out-of-box thinking?

Pepsi got following findings from this idea:

Cricket is the most Popular game in Pakistan.

Pakistan is an immature market.

The tactics that Pepsi derived from above ideas are:

1. Contract with PCB

It is an admitted fact that there is a craze of cricket in Pakistani Nation irrespective of age factor. So the
Pepsi thought to take the benefit from it and made a contract with PCB in mid 70s. This created a fantasy in
the minds of people and market shares of Pepsi Cola started increasing. It gave real boost up to repute of
Pepsi in world-cup 1992 and in very short span of time; Pepsi was able to double its sales.

2. Extensive advertisement and Penetration

In view of the lack of knowledge and immature market of Pakistan Pepsi adopted the aggressive strategies
of distribution and advertisement. This also was proved to be an effective move towards the growth of the
company. They are using almost all modes of advertisement and are using them extensively right now such
as:

Electronic Media

Print Media

Display Media

It is the task of the sales and marketing officer of Pepsi Cola that whenever and wherever a departmental
store will open they have to capture it and have to convince the shopkeeper to make an agreement by
meeting his requirements.

Benchmarking PCI

As we already mentioned that in sub-continent Pepsi is the leader so here in Pakistan Pepsi is not
benchmarking Cola-Colas standards rather Coca-Cola is benchmarking Pepsi here such as in pricing,
advertisement (Celebrity Hiring) and aggressive distribution. Pepsi benchmark its parent company for
technical, quality and for human resource considerations.
Quality issues

Shamim & Company infect adopt the standards of PCI such as about the proportion of ingredients. Such as
the standard for CO2 in 7up was set 3.5 to 3.9 but to become more efficient in quality issues the Shamim
and Company redefined it as 3.6 to 3.8. However the ideal standard for CO2 is 3.7. Similarly for the Marinda
they refined the standard for getting much and much closer to the ideal standard.

Technology

Pepsi in Pakistan always benchmarks its parent Company for the sake of technology improvement. For
instance they are going to start a new plant in Lahore, which would have the capacity to fulfill the total
demand of Lahore district. And it would require only 3 operatives to operate this plant.

Celebrity Hiring:

In our culture cricketers and film stars have much influence on people. Pepsi is using both the vehicles to
advertise its brands. It has established the contract with prominent film star Reema as a brand
representative for Pepsi. Similarly contracts have been established with Inzamam-ul-Haq and other
cricketers.

Employee policies

Earlier Pepsi was not focusing too much on employees benefits and facilities. Then it adopted the idea that
result and rewards have a positive co-relation. Shamim & Company took this idea from PCI that if
employees and satisfied and motivated towards the achievement of the Goals only then organization can
better grow. In early 90s Pepsi adopted a new benefit plan for its employees and management. Now in
employee in the marketing department has a car, having the medical facilities, insurance and a good
compensation. So these policies regarding the employees helped the organization to achieve its target
related to sales, growth and image of highly committed organization.

Collecting Feedback from customers

Actually, Pepsi is using two ways to collect the feedback from its customers.

Direct Method

Indirect Method

Direct Method

In direct method they collect feedback from its distributors, business customers and retailers about demand,
market situation, consumer behavior and on other issues through its Sales Information System (SIS). For
example they take vehicle plan from the distributors.
 And Pepsi measures the performance of its distributors and other customers through collecting the data
about

Targets
Inventory Level
Repute
Daily, monthly and yearly sales Report

Indirect Method

This method is specifically used to judge the consumer behavior. In this method Pepsi uses the services of
ACNELSON Company, which is basically a biggest and authentic most research organization in Pakistan.

Vehicle to change organizational culture

They use two vehicles focus and employees policies to incorporate the quality culture. For the urgent and
most important issues they make employees policies and make sure these policies are being followed with
considerate supervision. And for less urgent issues they use focus strategy and arrange lectures,
presentations, conferences and excessive training programs.

Agreement with the Competitors

Pepsi has NO agreement with Coca-Cola on pricing and other strategic issues. And the major reason of
recent increase in prices has been reported to be the revision of tax policy of the Government.

ISO 9000

Now the situation has been changed. Products of low standards are not acceptable in international markets.
These standards are ISO-9000 i.e., International Standard Organization. Now as the world has become a
global village, therefore, there is a very tough competition among the companies. Especially for the
companies of developing countries, they have to do much more smart work than the companies of
developed countries because they have strong economy and their products are widely acceptable in the
international market. For this purpose almost all organizations are doing struggle for getting ISO-9000
certificate. Shamim & Company (PVT) Ltd is one of those Pakistani organizations that struggled for ISO-
9000 and awarded. They have been awarded ISO-9002 certificate.

The management and labor of Pepsi is committed with their responsibilities. The evidence of this the
company has certified as international standard organization. They had to fulfill the 20 clauses of ISO 9000.
In this way they got ISO 9002 certificate. The company is franchisee so; they have no authority to design a
product.

They up date their records on daily basis. In Pakistan no one have authority for inspection for ISO 9000. The
company has selected SGS Malaysia for inspection of their records. This is a continuous process the
auditors come after six month and check the records.
SWOT Analysis

1- Strength

Activities the firm does well or resources it controls are called strength. Resources that a company contains,
size of organization, size of market, loyalty of the organizations products, sales point of product of the
company shows the company strength.

The strength of PEPSI lies in the loyalty of the product, their market share, size of market, having numerous
sales points and efficient delivery system.

2- Weaknesses

Activities the firm does not do well or resources it needs but does not possess. Such activities that a firm
does not perform or not have some resources those other competitors have.

Locally, PEPSI is enjoying its position in the market. Internationally, PEPSI faces some tough competition
from Coca-Cola. Their weakness is the lack of relationship marketing in some parts of the world. And also in
Pakistan they are facing some serious problems in building the relationship with institutional customers.

3- Opportunities

A combination of favorable circumstances or situations for organizations product/s such as loyalty of

customer about your products, social environment, size of target market, size of organization, advantages
over other competitors etc.

Opportunities are coming in the market day by day in the shape of new retailers. PEPSI has a big research
department; they try to capture each new retailer who comes in the market. Pakistan population size is
rapidly increasing with the passage of time so opportunities are there for Pepsi to enhance its sales volume
more than others.

4- Threats

Unfavorable circumstances that a company faces time by time to achieve its goals are called threats. Some
times small companies introduce the same products with low quality and low price that the company did not
produce.

Locally, PEPSI stands second to none. Internationally, Pepsi is facing heavy competition from its rival Coca-
Cola. Coca-Cola is focusing global market while PEPSI is somehow lagging behind. The situation can
become a serious threat to PEPSI globally