we LOVE econs

hello 6n! (:

hope you guys enjoyed the lemonde game i posted the previous time. that was an oppotunity for us to have a go at being an entrepreneur! :D haha. firstly, you had to take into consideration the weather for the day, so as to decide how much ingredients to purchase. Also, since it is cheaper to buy the stuff in bulks, we had to make a choice of whether we wanted to buy the things in large quantities but risk having to waste them if we are unable to sell so many cups of lemonade, or just buy smaller quantities at higher prices. there were also other things that we had to decide such as the price of each cup, the amount of ingredients to be put into each cup (which would affect the quality of the drink).

Anyway, enough said about the game, i shall move on to the next issue now, which is about PEPSI vs COCA COLA .

As we all know, there has been a long battle beween the two companies, due to the strong similarity between the two drinks. to have a clearer idea of the world market shares of these towo companies, you guys can go to this website: http://www.nytimes.com/ref/business/20070527_COKE_GRAPHIC.html

Now, referring to the article Coke vs. Pepsi: the new cola wars
Full article at: http://money.cnn.com/2002/05/10/pf/investing/q_cola/index.htm

We can see that although currently, coca cola is still the dominant firm in the soda industry with the highest market share (Coke's market value in 2002 was $140.4 billion, while that of Pepsi was only $92.0 billion) , Pepsi actually seems to be doing better than Coke (in 2002, Coke's estimated revenue was $19.8 billion, while Pepsi's estimated revenue was $26.2 billion. there are various reasons to this.

Firstly, Pepsi is considered trendier than Coke. In 2002, both companies launched their new products: Vanilla Coke and Pepsi Blue. However, while Pepsi tried to reach out to the hipper and younger generation, Coke seemed to be focusing on nostalgia. Pepsi's strategy was more effective as it went for the right market - young people are more likely to drink such sweet carbonated soft drinks. Pepsi's effective approach led to an increased in unit volume for the firm. "According to the Beverage Market Corporation, unit volume for all of Pepsi's soda brands (including Diet Pepsi and Mountain Dew for example) increased 1.3 percent in 2001 while volume for Coke's carbonated beverage brands (Diet Coke, Cherry Coke and Sprite among others) declined by 0.2 percent."

Secondly, there is diversification in the products by Pepsi. Unlike Coke which focuses solely on the beverage industry, Pepsi has a variety of products which include beverages and snack foods. Examples of Pepsi's products are: Gatorade, Fritos, Doritos, Rold Gold, Quaker Oats etc. To quote Crit Thomas, director of growth equity for National City Investment Management Co., the subadvisor for Armada Funds, "What attracts me to Pepsi is I have more faith in their ability to grow earnings. Not only are they successful on the beverage side but they are successful with salty snack foods."

By having diversity, Pepsi is able to generate sales and earnings from different sources. As stated in the article, "Pepsi's Frito-Lay brand of snack foods, which include Fritos, Doritos and Rold Gold, accounted for 61.2 percent of revenue and 65.3 percent of operating profits in the first quarter (of 2002)." thus, even if Pepsi faces strong competiton by Coke, it will still be able to survive because even if it fails to harvest profits by selling carbonated drinks, it can still fall back on their sale of snack products.

To substantiate the fact that many business companies see more potential growth in Pepsi than in Coke, here are some evidence:

As of 30 April 2002 , Pepsi was the second-largest holding of the Henssler Equity Fund. The Henssler Equity Fund (HEQFX) invests in sound companies with strong track records. The top 10 holdings under the fund are:

1. AMEX Energy SPDR
2. PepsiCo, Inc.
3. Apache Corp.
4. ExxonMobil Corp.
5. Johnson & Johnson
6. Int'l Bus Machines Corp.
7. Emerson Electric
8. Procter & Gamble, Co.
9. Teva Pharmaceuticals Ltd.
10. General Electric, Co.

NOTE that the fund does not own Coke.

Also, as of 31 March 2002, Pepsi was the seventh-largest holding in the Armada Tax Managed Equity Fund and the tenth-largest holding in the Armada Equity Growth Fund.

_


Okay so now to end off, i'd just post a few very interesting videos here. (:

1. A commercial by Pepsi (which was banned)



2. A commercial of Pepsi VS Coke



3. Rivals: Coca Cola Chiristina VS Pepsi Britney






- yilina :D