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Case Review on Pepsi

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Information About PepsiCo, Inc. PepsiCo, Inc., founded in 1907 in North Carolina and regrouped in 1931, is one of the largest business company in the world with three lines of business: soft drinks, snack foods and quick service restaurants. In 1987, PepsiCo's carbonated soft drink business had one-third of the U.S. market share. "Pepsi-Cola", the original brand of PepsiCo, accounted for two-thirds of its soft drinks total sales. Besides, PepsiCo dominated the snack chips business in the United States but moderately extended to the world's market through Frito-Lay and PepsiCo Foods International. What is more, PepsiCo had the world largest restaurant systems by operating three restaurant chains: Pizza Hut, Taco Bell, and Kentucky Fried Chicken. International soft drink operations, which were the most important parts of PepsiCo's international business, were organized under Pepsi-Cola International(PCI). The major competitor of PepsiCo on international market is the Coca-Cola Company, which operated international market in 1902, 32 years earlier than PepsiCo did. Coca-Cola always led PepsiCo in the top 10 markets, only except the Soviet Union. These two companies developed in competition and expended their international businesses to over 150 countries in the world.
Performance Evaluation in PepsiCo, Inc. In evaluating the investment decisions, PCI tended to use indicators like return on assets(ROA) which evaluates the profitability of a company related to its total assets, and internal rate of return(IRR) which is used to measure and compare the profitability of investments considers inflation rate and country risk over 12-year horizon. Both of these two indicators are commonly adopted when evaluating profitability of companies. However, both of these two indicators have their own limitation. IRR is the only real root of its derivation formula. But when

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