Benchmarking Analysis of Pepsico

In: Business and Management

Submitted By moretoluv80
Words 1794
Pages 8
Benchmarking Analysis of PepsiCo
MGT 521
December 3, 2012
Watler Goodwyn

Benchmarking Analysis of PepsiCo
It is hard to tell what company to invest in until a person starts calculating their financial ratios. A company may have high revenues; however, that does not mean that they are fiscally responsible for those revenues. I was surprised to notice that just because the company may do good on the current ratio or earnings ratios that does not necessarily mean that they are financially stable. A person cannot look at one or even a few ratios to determine if a company is financially sound. Many ratios have are pulled to determine the financial stability of the company.
I used a variety of ratios to use for analysis. I pulled a Current Ratio, Acid Ratio, Debt Ratio, Return on Sales, Return on Equity, Inventory Ratio, Cash Conversion Cycle and Net Income Per Share on the companies of Pepsi Co, Coca Cola, Dr. Pepper Snapple Group and Mondelez International. Because the company I had selected to analyze was PepsiCo, I know that I needed to diversify the companies I selected between food and beverage because the company covers both markets. Coca Cola is the top beverage distributor in the world, Pepsi Co is second and Dr. Pepper Snapple Group is the third. Mondelez International is a food company that is a recent spin-off from Kraft Foods. It has some familiar name brands of Nabisco, Oreo, Trident gum, and Cadbury chocolates to name a few and is one of PepsiCo’s major competitors in the snack market.
What surprised me is that the Coca Cola Company looked good when it came to current, acid test, debt, and return on sales ratios. They struggled with their Cash Conversion Cycle with cost of goods sold per day and the amount of time it takes them to pay back…...

Similar Documents

Benchmarking Analysis of Pepsico

...Benchmarking Analysis of PepsiCo MGT 521 December 3, 2012 Watler Goodwyn Benchmarking Analysis of PepsiCo It is hard to tell what company to invest in until a person starts calculating their financial ratios. A company may have high revenues; however, that does not mean that they are fiscally responsible for those revenues. I was surprised to notice that just because the company may do good on the current ratio or earnings ratios that does not necessarily mean that they are financially stable. A person cannot look at one or even a few ratios to determine if a company is financially sound. Many ratios have are pulled to determine the financial stability of the company. I used a variety of ratios to use for analysis. I pulled a Current Ratio, Acid Ratio, Debt Ratio, Return on Sales, Return on Equity, Inventory Ratio, Cash Conversion Cycle and Net Income Per Share on the companies of Pepsi Co, Coca Cola, Dr. Pepper Snapple Group and Mondelez International. Because the company I had selected to analyze was PepsiCo, I know that I needed to diversify the companies I selected between food and beverage because the company covers both markets. Coca Cola is the top beverage distributor in the world, Pepsi Co is second and Dr. Pepper Snapple Group is the third. Mondelez International is a food company that is a recent spin-off from Kraft Foods. It has some familiar name brands of...

Words: 1794 - Pages: 8

Benchmarking

...Benchmarking is a measurement of the quality of an organization’s policies, products, programs, strategies, etc., and their comparison with standard measurement, or similar measurement of its peers. The objectives of benchmarking are; 1 To determine what and where improvements are called for. 2 To analyze how other organizations achieve their high performance levels. 3 To use this information to improve performance Benchmarking is also called; the process of identifying best practices in relation to both products and services. I work for a non-profit organization where we use strategic benchmarking to indicate where the organization needs overall best performance by examining the long terms strategies and general approaches that have enable high performances to success. When you operate on grants, funding sources require high performance and accountability in order to renew their awards-contract each year. The organizations are reimbursed for service provided on performance-based. So there is a constant challenge to stay in business. In performance there is also competitive benchmarking to deal with other organization providing the same services like the public schools, the nursing homes, the hospitals, and the government funded universities as well. Non-profit organizations involve in internal benchmarking for measurement of effective use of available resources, performance evaluation within departments, employees satisfaction, and wages comparison in HR, employee welfare.......

Words: 252 - Pages: 2

Benchmarking

... directed to satisfaction and dissatisfaction. Moreover, Hausknecht (1988) carry another preliminary investigation the experience of students on number of products by applied the critical incident technique (CIT). From his study, Hausknecht conclude that emotions, interest, joy and surprise are best appearances of satisfaction, while dissatisfaction was categorized by anger, disgust, and surprise. Other than that, based on analysis done by Cadotte and Turgeon (1988), when the performance or absence of the preferred featured directed to dissatisfaction, which can consequential in complaining behaviour, it means by some of the variables or determinants were dissatisfier. Besides, the variable such as quality can elicit in both positive and negative feelings because one of the factors that is in high raking in both satisfier and dissatisfier was quality. Then, Bitner et al. (1990), studied incidents from customers of airlines, hotel, and restaurants. They branded the characteristics that can stimulate both satisfaction and dissatisfaction of customers which are willingness of employees to respond to a problem, alertness of employees to customer needs and request, and employee actions without being asked, will be as the key employee actions. As Smith et al. (1992) noted that, the determinants of both satisfaction and dissatisfaction may be unlike each other, it is because they initiate that satisfaction was usually generated by service going beyond expectations meanwhile...

Words: 4825 - Pages: 20

Benchmarking

...Benchmarking The process of benchmarking occurs when a business or company identifies its success factors, studies the practices of other businesses that have achieved these success factors, and then implements improvements in the businesses processes to try to match or beat the performance of those competitors (Blocher, Cokins, Juras, & Stout, 2013). Several businesses use benchmarking to achieve success. Apple Inc. is known as a leader or a benchmark, therefore other businesses implement plans to improve their success to compete with Apple. This discussion will focus on Samsung using benchmarking to compete with technological leader, Apple. More specifically, this discussion will focus on mobile devices. The companies of Samsung and Apple are both known as powerhouses in the technology and mobile phone industry. Apple has been and currently is very successful at attracting consumers to their products. Once they earn a customer’s business, the consumers only want to purchase Apple products whether it is phones, tablets, computers, and music players (Jones, 2013). Recently, Apple released a new smart phone device that can be purchased in a variety of different colors. As of October 10th, Samsung has followed Apple’s lead with their projected release of their new smart phone device, the Galaxy J (Eptstein, 2013). The companies of Apple and Samsung have been described as “frenemies” for life (Gupta, Kim, & Levine, 2013). Apple has sued Samsung in...

Words: 478 - Pages: 2

Benchmarking

...Company Benchmarking for Competitive Advantage Terry Pilcher Assistant Director – Department of Trade and Industry UK Before undertaking a benchmarking study a company must be aware of the different types of benchmarking that exist. One of the major reasons for misunderstanding is the tendency to call a wide variety of different activities Benchmarking. The most simplistic form of benchmarking could be one person talking to another and deciding if they have similar areas of interest. At this level people undertakes benchmarking every day. Before listing the different types of benchmarking that exist it might be useful to present some definitions of benchmarking to set the scene. There are many definitions around but it is not so much the differences that matter but the similarities. This can be best illustrated using the following definitions: ‘A continuous systematic process for evaluating the products, services and work of organisations that are recognised as representing best practices for the purpose of organisational improvement’ (Spendolini, 1992) ‘Benchmarking is an external focus on internal activities, functions, or operations in order to achieve continuous improvement’ (McNair and Leibfried, 1992) ‘A disciplined process that begins with a thorough search to identify best practice organisations, continues with the careful study of one’s own practices and performance, progresses through systematic site visits and interviews, and concludes with an analysis of...

Words: 1707 - Pages: 7

Benchmarking

...The definition of benchmarking is “the continual process of measuring products, services and practices against the toughest competitors or those companies recognized as industry leaders” (Wheelen & Hunger, 2010). Benchmarking focuses on bettering a company by openly learning how other companies operate and so competing companies can better their business operations. There are usually six steps involved with benchmarking and they are known to be used within companies that are already well managed, instead of focusing on companies that are in poor standings. To me, benchmarking is a positive program. I do not believe it is just another fad. “Benchmarking can help with increase sales, expand goal setting, and lift employees drive” (Wheelen & Hunger, 2010). To look into benchmarking, “the average cost of a benchmarking study is $100,000.00 and involves 30 weeks of effort” (Wheelen & Hunger, 2010). By reading about benchmarking, it seems as if the study would be well worth the money and effort (time put into bettering a company) because the outcome would be on top of what was spent. If my company was already doing well and I took on a benchmarking study and come out on top of what I spent, the time, effort and money would not be a waste. In fact, it would be a positive resource brought into my company. I do believe it is a valuable tool now and will continue to be in the future. References             Wheelen, T. L., & Hunger, D. J. (2010). Concepts in......

Words: 264 - Pages: 2

Benchmarking

... recognize that success and advancement come from a clear understanding of how the business is doing, not just against last year’s performance, but against the best they can measure. There are two parties in the benchmarking process. The initiator is the firm that initiates contact and studies another company in an attempt to improve their own processes. The target firm, or the benchmarking partner, is the one being studied. Of all the benchmarking tactics, the two most popularly used are competitive benchmarking and process benchmarking. Competitive benchmarking compares the performance of one organization to that of its competitor. This method is useful for estimating a company’s position in the industry. Process benchmarking evaluates business processes or practices that are vital to a firm’s performance. It involves the identification of the best practices used by an organization, regardless of what industry they are in. The practices are then studied and implemented by the initiator firm. The four most common types of benchmarking are process, performance, strategic, and internal benchmarking. Process benchmarking focuses on work processes and operation systems and tries to identify the most effective approaches used by other firms that perform similar work or deliver similar services. Performance benchmarking is competitive benchmarking and allows assessment of a company’s competitive position through the comparison of products and services and the......

Words: 1042 - Pages: 5

Benchmarking

...The basic idea behind benchmarking is by doing a comparison. An organization finds another organization that is similar and compares them. By studying the achievements of such results; make plans for improving the business performance; implement plans monitor and evaluate the results. By doing the comparison it allows the organization to make the necessary changes, but it is not a quick fix. Benchmarking is vital, by using this practice it can identify costs and provide efficient information that can implement best practice by becoming a central instrument for improvement and the performance of an organization; under the right conditions comparison can be a key driver of performance (OECD, International benchmarking, p. 1). Through benchmarking, many organizations realize that more can be achieved through collaboration between leaders in an industry. There are three primary types of benchmarking used today; first is process benchmarking, which is done at the lower levels of the organization. It focuses on the day to day activities and operations to include anything from customer complaints to the billing process. The changes made on this level improve performance quickly. Second there is performance benchmarking, focuses on competitiveness by looking at where the company’s products and services are in relation to other competitors referring to things such as speed, quality and reliability. Third there is strategic benchmarking, focusing on top management. Discussions are...

Words: 644 - Pages: 3

Benchmarking

... ridicules copying then benchmarking will not take place, and lastly if the managers are reluctant to accept change or copy an expert then benchmarking will not take place. (Chandra 2001) New Look a fashion retailer had a challenging year in 2011 which was caused by relocating central buying, merchandising, and design teams from Weymouth to central London in 2009. In New Looks annual report from 2011 the chairman statement had said, “We have not done a good enough job listening to our customers or been quick enough to respond to their needs in an increasingly competitive, fast-paced environment.” This statement shows that New Look is up for improvements, and this is an example of gap analysis which has made it clear for New Look where they need to be in the future. Chairman of New Look also stated “We need to work harder to offer our customers better fashion ability and better value than our competitors, without compromising quality,” this statement is evidence that they know what to improve on. New look has raised the benchmark for putting customers first. They have done this by delivering fashion advice from the fitting room consultants, showing customers how to wear the latest trends, and many more. New look also measures its in-store service via a shopping program called Snapshot which has captured month after moths improvement and so they are benchmarking next to or are above their competitors. (New Look’s 2011 Annual Report) Bangladesh is a main supplier for New......

Words: 1493 - Pages: 6

Pepsico

... keeping watch to see how that would affect their sales and profits. Some companies have warned of possible erosion in margin, others have cited increasing opportunities from overseas to offset the downturn in US market. Strengths and Risks Analysis Strengths • Deep-bench management team, with a tradition of promoting from within. The recent transition of CEO from the veteran Steve Reinemund to Indra Nooyi was remarkably seamless. The company also willing to acquire and integrate attractive close-to-home businesses that can plug a hole in its brand portfolio and provide additional growths. • With 16 brands each contributing $1 billion of sales or more, PepsiCo has a sweet-spot in the food and beverage market. • Strong logistical / distribution infrastructure. After years of building this infrastructure, PepsiCo has an edge in making sure its products are available where needed cost effectively and efficiently. • Growths from foreign (outside of North America) markets contributed increasingly to PepsiCo’s sales and profits. • Continuing investment in research and development, with spending of $344 million in 2006. PepsiCo has spotted the shifting trends in consumer interest toward health and wellness. The company also extends its strong brand image into new product lines. Risks • Competitors such as Coca-Cola and Cadbury-Schweppes will not stand still; they will also innovate and / or acquire other companies to capture rising consumer......

Words: 4205 - Pages: 17

Pepsico

...The PepsiCo group were faced with increasing competition and slow growth in the carbonated drink market. In a response to this PepsiCo’s strategy was to move into new rapidly growing markets such as soft drinks, mineral water and snack products. The acquisitions of 2 major companies at premium price were in an attempt to extend the company’s product range to best utilize the growth in these new markets to continue showing growth and return on investment for their shareholders. They also targeted their markets away from their North American stronghold and they strived to grow their brands internationally. The organizational structure A useful starting point in the analysis is to undertake a human resource audit. This is an examination of an organisation’s leadership, its people, their skills, backgrounds and interrelationships. Robert Lynch suggests the following as important areas to consider in such an audit: People • Leadership in terms of people and style • Employee numbers and turnover • Organisation structure • Structures for controlling the organisation • Use of special teams, e.g. for innovation or cost reduction • Level of skills and capabilities required • Morale and rewards • Employee and industrial relations • Selection, training and development • Staffing levels • Capital investment/employee • Role of quality and personal service in delivering the products or services of the organisation •......

Words: 296 - Pages: 2

Pepsico

... Facilities with two filling lines working can fill over 1.5 billion cans of soda in a year with just 20 employees. This is a tremendous direct labor cost savings for PepsiCo. As part of a Global Sustainable Packaging Policy PepsiCo has provides the framework through which PepsiCo has aspire to: Increase the use of recycled content or materials from renewable sources; (b) Optimize packaging design to use the fewest materials necessary; Promote the use of materials that can be recycled (beverage containers, snack packages , etc.); (c) Minimize raw material waste; (d) Avoid known negative impacts to the environment(reduce plastic); and (e) ensuring sustainability by efficient energy usage across the product lifecycle have all contributed to savings in PepsiCo balance sheet for Fixed and variable cost. As result of these cost cutting measures PepsiCo reported a 5 percent jump in quarterly profits in 2014. For Pepsi Cola Ltd, marketing opportunity analysis is a continual and ongoing process. Pepsi have used the new- product strategy to realize their ambitions to both defend their current market position, and reinstate their position as a product innovator. Pepsi wishes to create a clear cola that is 100% natural, low in sodium, caffeine-free, and still maintains the flavor of its original cola. They will call it Pepsi Au Naturel. Pepsi's hope is to usher in a new era, which will give them a clear-cut advantage over their rival's, Coca-Cola. PepsiCo's profitability can be......

Words: 1705 - Pages: 7

Pepsico

...PepsiCo Publicly Traded Company Marcella Holloway XACC/290 Principles of Accounting I October 3, 2015 Instructor, Eileen Matson •What are the company’s total assets at the end of its most recent annual reporting period? Why is this important? PepsiCo total assets at the end of June 30, 2015 was $72.26 billion. www.ycharts.com/companies/PEP/assets A company’s total asset is important, it allows for the company to be able to account for total assets for the shareholders of the company. Assets drive revenue and generate earnings. Total assets are listed on a company's balance sheet based on their level of liquidity, which is based on the speed in which they can be exchanged for cash. Assets can be cash or short-term investments such as equities and accounts receivable, which are funds owed to a business. Assets generate cash flow and can provide benefits over the course of years for a company. A company’s assets can indicate how successfully a company is utilizing its assets to generate revenues. Asset can give you a snap shot of how efficiently and effectively a company is using its assets in the generation of revenues. They indicate the ability of a company to translate its assets into the sales. •What are the total assets at the end of the previous annual reporting period? PepsiCo total assets at the end of December 2014, was 70. 5 billion based on the reporting of the New York Stock Exchange. •How much cash and cash equivalents did the company have...

Words: 781 - Pages: 4

Pepsico

...PepsiCo Case Study Analysis Paper Michael Gillespie Organizational Policy and Strategy, OML-450, Cohort (835) Professor Vicky Sons-Eiden September 15, 2011 PepsiCo Case Study Analysis Paper A case study analysis on PepsiCo’s diversion strategy in 2008 will be addressed in this paper. The elements that will be discussed are the vision and mission of PepsiCo, the background and history of the company, the external and internal forces of PepsiCo’s business environment, PepsiCo’s strategic marketing plan, and a conclusion and recommendations on how the PepsiCo company can improve their business strategy to stay competitive in years to come. Vision and Mission The vision of PepsiCo is to be a responsible company that supports continuous improvement of all areas across the globe in which they operate. These areas include the environment, social, and economic conditions creating a better future then the present. The mission of PepsiCo is to be the best company in the industry that provides convenient foods and beverages to the consumer. The company has a goal to provide financial benefits and growth for its shareholders as the company provides growth for its employees, its business partners, and the communities in which they are established. In all aspect of the business, PepsiCo strives to be the leader in honesty, fairness, and integrity. (PepsiCo, 2011). Company History PepsiCo Inc. was formed in 1965 when Pepsi-Cola Bottling merged with salty snack icon...

Words: 2714 - Pages: 11

Benchmarking

... catching up rather than being innovative •         Lack of strategic relevancy PROCESS OF BENCHMARKING Organizations that benchmark, adapt the process to best fit their own needs and culture. Although number of steps in the process may vary from organization to organization, the following six steps contain the core techniques: 1. Decide what to benchmark. 2. Understand the current performance of your organization. 3. Do proper planning of what, how and when of benchmarking endeavor. 4. Study others well (the practices or system you wish to benchmark) 5. Gather data and learn from it. 6. Use the findings. It involves the following; Plan: Critical success factors, select a process for benchmarking, document the process, and develop performance measures Search: Find bench-marking partners Observe: Understand and document the partners’ process, both performance and practice Analyze: Identify gaps in performance and find the root causes for the performance gaps Adapt: Choose “best practice”, adapt to the company’s conditions, and implement changes. TYPES OF BENCHMARKING • Process benchmarking –It’s where we go beyond performance measures and also compare how business processes are performed. The initiating firm focuses its observation and investigation of business processes with a goal of identifying and observing the best practices from one or more benchmark firms. Activity analysis will be required where the objective is......

Words: 2078 - Pages: 9