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2014 STRATEGIC AUDIT

BUSINESS 109 – SECTION 023 COMPETATIVE AND STRATEGIC ANALYIS SCHOOL OF BUSINESS ADMINISTRATION UNIVERSITY OF CALIFORNIA, RIVERSIDE

PROFESSOR: DR. SEAN D. JASSO TEACHING ASSISTANT: ANDREW MONROE

 

 

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CREATED BY:

TEAM EXCELLENCE TEAM LEADER: VICTORIAN BARNES

NATHAN ANDERSON MATTHEW CHAVEZ

WILLIAM CRENSHAW LAN GIANG JACOB LEE YALI LUO

DEBORAH NGHIEM DANIEL PERRY

CHAWIT WEJJAKUL BRANDON WILLIAMS

                           

 

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TABLE OF CONTENTS I. CURRENT SITUATION ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

A. History .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 B. Current Performance .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 C. Competitor Comparison .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 D. Industry Comparison .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 E. Strategic Posture .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

II. CORPORATE GOVERNANCE ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 A. Board of Directors ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 B. Top Management .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

III . EXTERNAL ENVIRONMENT ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 A. Natural Physical Environment .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 B. Societal Environment .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 C. Task Environment .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 D. Summary of External Factors ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

IV. INTERNAL ENVIRONMENT ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 A. Core Competencies ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 B. VRIO Analysis ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 C. Business Model ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 D. Value Chain .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 E. Corporate Structure .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 F. Corporate Culture .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 G. Corporate Resources .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 H. Summary of Internal Factors ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

 

 

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V. ANALYSIS OF STRATEGIC FACTORS .... . . . . . . . . . . . . . . . . . . . . . . . . . . . 86 A. Review of Mission and Objectives .... . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88

A. Tows Matrix ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 B. Strategic Alternatives .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 C. Recommended Strategy .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

VII. IMPLEMENTATION ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 A. Implementation Programs .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 B. Procedures .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 C. Action Plans .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95 D. Matrix of Change .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

VIII. EVALUATION AND CONTROL .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 A. Measuring Performance .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 B. Balanced Scorecard .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

IX. APPENDIXES .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 X. REFERENCES .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118

 

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TABLE OF GRAPHS AND CHARTS Ratio of Analysis ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 DPS Annual Financials ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Coca-Cola Financial Reports ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Pepsi 10-Year Revenue .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 PepsiCo Financial Reports ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Valuation Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Profitabil ity Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Efficiency Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Capital Structure Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Liquidity Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Comparison: Industry and Market ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Annual Income Statements .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 TOWS Matrix ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88 Matrix of Change Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 Balanced Scorecard Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113 EFAS Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 IFAS Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115 SFAS Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 116 IECP Chart ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117

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I . CURRENT SITUATION

A. History

The history of Dr. Pepper Snapple Group (DPS) goes all the way back to the

creation of the very first soft drink, through mergers, acquisitions and changes,

into the number one flavored beverage company.

The story begins in 1783, when Jean Jacob Schweppes invented the

very first soft drink when he perfected a way to make carbonated water,

leading to the creation of the original carbonated mineral water (DPS Website -

History, 2014).

In 1885, a pharmacist named Charles Alderton, in Waco, TX,

invented Dr. Pepper. Selling it at a pharmacy he was working for,

locals began calling the drink a “Waco” (DPS Website - History,

2014). The first official soft drink in the United States was

born. The beverage’s name would later be changed to Dr.

Pepper, after an alleged friend of the pharmacy owner, Dr.

Charles Pepper, although the actual story is one of much

debate and mythology (DPS Website - History, 2014).

In the early 1970s, three New York-area health clubs invented an apple

soda they named Snapple. Eventually, the company that owned the Snapple

beverage became the Snapple Beverage Company (DPS Website - History,

2014).

In 1969, the two companies would merge together forming Cadbury

Schweppes. In the next three decades, they would amass the third largest

share of the beverage market through various mergers and brand acquisitions

(DPS Website - History, 2014).

 

 

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In 1982, Cadbury Schweppes purchased the Duffy-Mott Company that

would later be known as Mott’s. Mott’s was one of the largest apple juice

producers in the world. Through the remainder of the decade, Cadbury would

purchase Canada Dry, a leading ginger ale brand, Sunkist sodas, and Crush

sodas (DPS Website - History, 2014).

In 1993, Cadbury Schweppes made another major purchase in the

beverage industry, purchasing the A&W Brands, which included the extremely

popular A&W root beers and cream sodas, along with Squirt and Vernors

ginger ale. Two years later, DPS made their most important purchase, buying

Dr. Pepper/ Seven Up, Inc. (DPS Website - History, 2014).

In 2003, Cadbury Schweppes once again made a major splash in the

beverage industry, buying the Snapple Beverage Company, including Snapple

beverages, RC Cola and Diet Rite, the original diet soda (DPS Website -

History, 2014).

In 2003, after the acquisition of

Snapple, all four of the beverage

companies owned by Cadbury

Schweppes: Snapple, Dr. Pepper/

Seven Up, Mott’s, and Bebidas

(Mexico), were combined into one

company, becoming Cadbury

Schweppes Americas Beverages (DPS Website - History, 2014).

By 2006, Cadbury Schweppes began expanding into the purchasing of

various large and small bottling companies, including Dr. Pepper/ Seven Up

Bottling Group (the largest independent bottler in the U.S.). The company

 

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soon after changed its name to the Dr. Pepper Snapple Group (DPS), after a

separation from Cadbury (DPS Website - History, 2014).

Now, in 2014, DPS is the number one flavored beverage company in

North America, driven by over 50 diverse and distinct brands. These brands

include 6 of the top 10 non-cola soft drinks and 13 of DPS’ 14 leading brands

are either number one or number two in their flavor categories (DPS Website -

History, 2014).

B. Current Performance According to Hoover statistics, for

the fiscal year end of December 2013

the Dr. Pepper Snapple Group

declined in total net income and

operating income compared to the

previous year. With total net income

dropping from $629 million in 2012 to

$624 million 2013 and operating

income dropping from $1.09 billion to

$1.04 billion. DPS also reported

earnings of 0.74 USD per share in

comparison to 0.62 USD per share

from 2013. At the end of the financial

year, it has earned revenue of $6

billion, a gross profit of $3.5 billion,

operating income of $1.05 billion, a

net income of $624 million, and

diluted earnings per share of $3.05. In

Current Ratio 1.086Quick (Acid Test) Ratio 0.892Inventory to Net Working Capital 2.247Cash Ratio 0.149

Net profit margin 11.09%Gross Profit Margin 59.23%Return on Assets 7.60%Return on Equity 27.40%Earnings Per Share $58.43

Inventory Turnover 2.92Days of Inventory 29,209.87Net working Capital Turnover 67.38Asset Turnover 0.732Fixed Asset Turnover 5.115Average Collection Period 35Accounts Receivable Turnover 10.42Accounts Payable Period 1,621.56Days of Cash 1,590.92

Debt to Asset Ratio 33%Debt to Equity Ratio 120%Long-term debt to capital structure 120%Times Interest Earned 431.96Coverage of fixed charges 429.01Current liabilities to equity 27%

Price Earning Ratio 18.08Dividend Payout Ratio 49%Dividend yield on common stock 3%

1. Liquid Ratio

2. Profitibility Ratio

5. Other Ratios

4. Leverage Ratios

3. Activity Ratios

RATIO ANALYSIS

 

 

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general, the carbonated soft drinks industry has experienced a decline, as

consumption habits undergo drastic changes, but the Dr. Pepper Snapple

Group still remains profitable with a revenue growth of .03%, earnings per

share of 2.99%, and net profit margin of 10.41%. The company has reported a

Return on earnings of 27.39% and a Return on Asset of 7.29%, giving a market

cap of $10,371.29 million and shares outstanding of $197.40 million.

 

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C. Competitor Comparison 1. Coca-Cola

Dr. Pepper Snapple group’s sole objective, according to their mission

statement, is “to be the best beverage business in the

Americas.” Currently they are the third highest revenue grossing business

 

 

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in their industry. According to their mission of becoming the number one in

the beverages industry, DPS must focus their efforts toward superseding

the number one leader, which is currently Coca Cola. Globally recognized

for their iconic authentic flavored beverages, Coca Cola has established the

highest grossing revenue organization in the beverages industry. There are

a multitude of factors that play into Coca Cola’s long-lived success such as

their history, their brand, their innovation, etc. As CEO of DPS group, it is

vital that our energy is directed toward our mission of becoming number

one in the beverage business, doing so by learning from and overcoming

the number one competitor, Coca Cola.

Recognized in more than 200 countries worldwide, the iconic brand is an

American staple fulfilled with a renowned

foundation and history. As of the year 2000,

Coca Cola endured three different CEOs whilst

maintaining their status of being the number

one beverages business with a commanding

market share of 42.8%. Worldwide,

approximately 1.7 billion servings of Coca Cola products are consumed

daily, meaning nearly 4% of all flavored beverages consumed around the

globe are Coke products. Coca Cola has established a superior line of

products within their portfolio consisting of more than 3,500 beverages and

500 brands. Coca Cola is far ahead in the beverage industry because they

are worth more than other top competitors such as Budweiser, Pepsi,

Starbucks, and Red Bull combined at a net worth of approximately $74

billion. Coca Cola is purely focused on the beverages industry in order to

perfect and sustain their status as number one, although their rival PepsiCo

 

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generated 38% more in total revenues (2012), Coke produced more

revenue in regards to soft drinks at $28 billion in comparison to PepsiCo’s

$12 billion.

Coca Cola has strategically positioned themselves to reach the highest

amount of people possible through the innovation of vending

machines. With 2.8 million vending machines around the globe, Coke is

able to generate a vast amount of its revenue through automated

machines. One significant distinction that Coca Cola exudes from the rest

of its competition is their iconic brand;

the red and white logo is reported to

be recognized by 94% of the world’s

population meaning that their brand is

essentially a universal term such as

saying okay or hello. Coca Cola is

striving to be number one with their 33 different brands that gross over $1

billion in revenue worldwide; Coke owns nearly half of them. Coca Cola is

constantly geared toward providing people around the world with the

ability to enjoy their products. In terms of marketing, Coca Cola’s

advertising budget alone was $2.9 billion in comparison to other profound

organizations such as Microsoft and Apple combined at only $2

billion. Coke has established and sustains a secure and prosperous financial

position as you can see in their four year financial data reports and charts:

 

 

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Coca Cola assures that its product is made only with the highest quality

of authentic ingredients to keep their consumers’ loyal. Coca Cola spends

an extensive amount of time researching which markets of the world

consume the majority of their products and continuously provides

excellence to them. This is based on market research of consumer’s

preferences. As their biggest consumers, Mexico’s citizens drink on

average nearly 665 servings of Coke products annually. Coca Cola

 

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discovered through research that consumers in Mexico prefer their Coke

products because natural sugar is used opposed to artificial sweeteners. As

a consumer of 300,000 tons of aluminum for its cans annually, Coke assures

that its operations and productions are the highest efficiency for optimal

utilization of necessary commodities. Coca Cola sustains an array of

differentiating products within their portfolio of beverages aside from just

carbonated drinks, consisting of more than 1000 kinds of juice drink such as

Minute Maid, Fruitopia, Hi-C and Odwalla. With all areas Coca Cola is

currently building on; it is critical that Dr. Pepper Snapple group pay close

consideration to their vision in an effort to overtake the number one spot in

their industry, according to their mission.

2. PepsiCo, Inc.

PepsiCo, Inc. Dr. Pepper Snapple Group’s second largest competitor was

established in 1919; arguably not first because of the comparison between

companies is only based upon

beverage performances. They are a

global company providing consumer

goods to Europe, Asia, the Americas,

the Middle East and Africa. Their

headquarters are based in New York

and have an approximate 278,000

employees working for them. PepsiCo’s primary operations range from

marketing and sales, to production of snack and fast foods, and beverages-

both carbonated and non-carbonated. PepsiCo currently holds the 49th

position in the Fortune 500, with 2013 revenues at “$66,415,000,000” and

 

 

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net profits at “$6,787,000,000”. (PepsiCo Inc.: EBSCOhost, 2014) They

currently have approximately 75 subsidiaries and produce over 100 product

lines ranging from foods to beverages.

According to the Market Line Report, PepsiCo’s revenues by region that

Dr. Pepper Snapple Group operates in are as follows:

• “The US, PepsiCo's largest geographical market, accounted for 50.9%*

of the total revenues in FY2012. Revenues from the US reached

$33,348 million in FY2012, an increase of 0.9% over FY2011”.

(PepsiCo, Inc.: EBSCOhost, Market Line Report, 2014)

• Mexico accounted for 6% of the total revenues in FY2012. Revenues

from Mexico reached $3,955 million in FY2012, a decrease of 17.3%

compared to FY2011”. (PepsiCo, Inc.: EBSCOhost, Market Line Report,

2014)

• Canada accounted for 5% of the total revenues in FY2012. Revenues

from Canada reached $3,290 million in FY2012, a decrease of 2.2%

compared to FY2011”. (PepsiCo, Inc.: EBSCOhost, Market Line Report,

2014)

Out of PepsiCo’s $66,415,000,000 generated revenues for fiscal year (FY)

2012, the America’s

account for 61.9% of their

total revenues for FY

2012. This percentage

totals to the amount of

$41,110,885,000.00

generated revenue for

PepsiCo in the America’s alone. This however does not differentiate

 

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between their food, snack, and beverage products. However, it is a well-

known fact the in the United States PepsiCo commands the majority of

shelf-space for their beverages products in most stores across the United

States. As we can see, PepsiCo’s Revenues have increased over the last 10

years, from the high $20 billion to $66 billion.

(GuruFocus-Pep financial, 2014)

Earnings Est Current Qtr. Next Qtr. Current Year Next Year14-Jun 14-Sep 14-Dec 15-Dec

Avg. Estimate 1.23 1.31 4.54 4.89No. of Analysts 17 17 21 22Low Estimate 1.19 1.28 4.5 4.66High Estimate 1.26 1.36 4.6 5Year Ago EPS 1.31 1.24 4.37 4.54

Revenue Est Current Qtr. Next Qtr. Current Year Next Year14-Jun 14-Sep 14-Dec 15-Dec

Avg. Estimate 16.78B 17.23B 67.20B 69.93BNo. of Analysts 14 14 20 20Low Estimate 16.57B 17.00B 66.58B 69.23BHigh Estimate 17.01B 17.53B 68.20B 70.96BYear Ago Sales 16.81B 16.91B 66.42B 67.20BSales Growth (year/est) -0.20% 1.90% 1.20% 4.10%

Earnings History 13-Jun 13-Sep 13-Dec 14-MarEPS Est 1.19 1.17 1.01 0.75EPS Actual 1.31 1.24 1.05 0.83Difference 0.12 0.07 0.04 0.08Surprise % 10.10% 6.00% 4.00% 10.70%

EPS Trends Current Qtr. Next Qtr. Current Year Next Year14-Jun 14-Sep 14-Dec 15-Dec

Current Estimate 1.23 1.31 4.54 4.897 Days Ago 1.23 1.31 4.54 4.8830 Days Ago 1.23 1.31 4.54 4.8960 Days Ago 1.28 1.31 4.53 4.990 Days Ago 1.28 1.31 4.52 4.89

PepsiCo Financial Statistics (Current and Estimates)

 

 

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PepsiCo Operations are a strong and diverse component of PepsiCo. They

have a strong network of manufacturing, bottling and distribution networks

spanning countries they operate in. They rely heavily upon PepsiCo owned

manufacturing plants, bottling plants and distribution networks; however, in

North America and South America PepsiCo relies heavily upon third party

distributors, bottlers, and manufactures. Their leadership considers this to

be a part of several reasons why their revenues have dropped in these

regions. (PepsiCo, Inc.: EBSCOhost, Market Line Report, 2014)

PepsiCo is currently holding a strong market position through

their diverse product portfolio and strong brand management that has built

enormous equity. They are currently focused on increasing local focus, the

changes in customer

preference for healthier

food and beverage

options, and focusing on

widening their presence

in emerging markets.

PepsiCo is currently

concerned with the

reduction and availability of fresh water supplies, sustainability for the

future, increased competition, labor cost, and consumer confidence over

recent controversies. Overall, under their current leadership and track

record, it is foreseeable that PepsiCo will remain a competent and

aggressive opponent in the market for years to come.

Let’s look from an outside perspective, concerning PepsiCo

competition with Dr. Pepper Snapple Group. First and foremost, we have to

 

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address the stigma- isn’t Dr. Pepper a PepsiCo Product? Due to our mass

connection with PepsiCo our brand has lost its ability to differentiate itself

from PepsiCo. Yes, DPS teamed up with PepsiCo to share in PepsiCo’s

manufacturing, bottling, and distribution networks; which are massive in the

United States compared to DPS. Secondly, DPS shares not only fountain

serving stations at restaurants, convenience stores, but also vending

machines. The effects of our collaboration with PepsiCo, is truly causing an

issue for DPS’s ability to maintain a strong customer position and distribute

DPS full line of products. Currently DPS only

commands 1:10th of the shelf space in

convenience stores compared to PepsiCo.

In fact, DPS is commanding less shelf space

for all their beverage brands compared to

Arizona teas, Rock Star, and Monster. In

many cases, DPS products are shelved with

PepsiCo products and share the same marketing

visual aids in vending machines fountain, serving

stations, and store placements.

In many cases while PepsiCo is able to provide top selling items,

introductory items, and displays for consumer ease of access, DPS products

lines are limited to top selling items, and one slot to promote new product

lines. This is a problem because customers do not have full access to our

new product lines, due to shelf availability, and stock quantity of retailers.

DPS is in desperate need of brand management, a full re-facing of the

brand, and repositioning with customers and retailers, market

entrenchment, and further product exposure through mass availability.

 

 

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It may be wise for DPS to take on small competitors that currently

are not an immediate threat but are commanding relative market share of

the beverage industry. These small competitors have PepsiCo and Coke

worried because of their growing impact on the market. DPS is in desperate

need of developing their vending machine availability and a full separation

from PepsiCo, to combat their brand position with customers. While,

PepsiCo has offered availability opportunities at reduced costs, DPS is

losing more than PepsiCo gains from our partnership in the America’s.

Lastly DPS needs to take advantage of PepsiCo’s and DPS’s Core weakness

of third party manufacturers, distributors, and bottlers in north and south

America. This can be accomplished through acquisition of companies, to

combat PepsiCo, and turn the tables of lost revenues to third parties.

D. Industry Comparison 1. Carbonated Beverages

7-Up is a line of citrus non-caffeinated soft

drinks. Dr. Pepper Snapple Group releases

variations in diet form and also a ten-calorie

variant. With an extensive history, 7-Up became

the third highest selling soft drink in the world

by the late 1940’s. One of 7-Up’s biggest competitor is Sprite, which is

owned by Coca-Cola and controls a wider grasp of the market due to its

international operations.

Canada Dry’s rise in popularity during the

prohibition era was due to its pleasant

ability to mask the flavor of home-brewed

 

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alcohol. DPS released variants including club soda, tonic water, sparkling

water and flavors such as pineapple and wild cherry. Its products reach all

parts of the world including North America, South America, Asia and

Europe.

Crush is a line of artificially flavored,

caffeine-free carbonated sodas. Its major

competitor is Coca-Cola’s Fanta, which

controls a larger portion of the market due

to its worldwide availability. Crush is

available in diet, grape, cherry, strawberry

and peach all over the nation. Acquired in

1989 from Cadbury through merger

acquisition.

Dr. Pepper is a considered brand of root beer most noted for its unique

23 flavors, but many place it in a

category all in itself. Dr. Pepper is

America’s oldest soft drink at 129

years old and holds a firm grip on the

market with brand variants being

distributed throughout the world. It

includes many brand variants such as

diet and regular as well as unique

flavors, which include cherry,

chocolate and vanilla.

Current issues with Dr. Pepper Snapple Group right now include that

many of their products are not distributed internationally. In order to grab a

 

 

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larger portion of the market and be seen as a serious competitor to top

brands producers such as Coca-Cola, DPS needs to operate internationally.

It needs to revise its mission of being the best beverage company in the

Americas and strive for bigger goals. With its small ambitions, Coca-Cola

and PepsiCo will remain in the lead with their international presence.

2. Non-Carbonated Beverages

There are many varieties of non-

carbonated beverages offered by DPS.

Clamato is a spicy drink that was the

first of its kind. Its creation resulted in

an entire new category of blended

juices called “seafood blends.”

Clamato has three flavor variations,

which include Clamato Original, Clamato Picante, and Clamato Shrimp

Tomato Cocktail. The original drink is made from tomato juice, clam broth

and spices.

Another non-carbonated beverage

that we choose to discuss is Peñafiel.

Peñafiel was created in 1938 in

Tehuacan, Puebla by the Peñafiel

family. The brand is popular in Mexico

and has been flourishing in that

market for years. Peñafiel contains 7

differences in flavor which

 

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include: Peñafiel Aqua, Peñafiel Fresca, Peñafiel Madarina, Peñafiel

Manzanita, Peñafiel Pina, Peñafiel Toronja, and Peñafiel Tuti Fruti.

In conclusion, Dr Pepper Snapple Group has a lot of non-carbonated

beverage products compared to other companies in the industry. Their

products such as Deja Blue, Peñafiel, and Clamato are well known in the

market of Mexico. Dr Pepper Snapple needs to improve non-carbonated

products to be well known in the U.S. For example, the company needs to

come up with a new brand of water such as Coca-Cola’s Dasani and

PepsiCo’s Aquafina. This will help the company gain more consumers and

increase their profits. Overall, DPS needs to improve their non-carbonated

products in order to become the best beverage company in the Americas.

3. Bottled Tea

One of the most popular products made by DPS is its Snapple line.

Consisting of various flavors of iced teas and juice beverages, Snapple is

one of the highest grossing brands in

the DPS lineup. Snapple is the #4

brand in the bottled and canned iced

tea industry, holding a 7.7% market

share (bevindusty.com, 2012).

Snapple gets its origins back in

1970’s, when health clubs began

selling an apple-flavored soda that

was named Snapple. In 1987,

Snapple began selling bottled iced teas, starting with the infamous Snapple

Lemon Iced Tea.

 

 

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Now, Snapple has over 70 different flavors of juices, iced teas, juice

beverages, and flavored waters; and is sold in all 50 states.

The primary competitors to Snapple are the Arizona Iced Tea brand

owning holding over 25% of the market share, owned by Arizona-

International, Lipton bottled iced teas owned by Unilever that hold 10.3%

of the market share, and Brisk Iced Tea, owned by PepsiCo, that holds

11.8% of the market share (bevindustry.com, 2012).

4. Others

Dr Pepper Snapple Group also has other products excluding carbonated

and noncarbonated beverages, such as Country Time Lemonade, Mott’s,

ReaLemon, Venom, and Yoo-Hoo.

Country Time Lemonade was first created as a powder mix in 1975,

signing a license with Kraft Foods. In 1982, it was introduced in cans and

bottles. The powder drink is still being

sold today by Kraft. Many additional

lineups were created after the first

lemonade, such as the Country Time

Pink Lemonade in 1995, Country Time

Iced Tea with Lemon in 2003, the

Country Time Strawberry Lemonade in

2004, and the Country Time Light

Lemonade in 2005. When the Country Time Strawberry Lemonade was

released in May 2004, it became a new favorite with its perfect blend of

sweet, sun ripened strawberries and lemonade. Although the Country Time

 

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Lemonade Drink Mix was released in 1975, it has become one of the top

selling lemonade products in the United States today.

Mott’s is currently the number one apple juice and number one

applesauce brand in the United States. Some of its products include apple

and other fruit juices such as Mott’s

Plus and Mott’s for Tots. The

products come in varieties ranging

from regular, unsweetened and

flavored. In April 2005, Mott’s Plus

for Kid’s Health and Mott’s Plus

Light was introduced. In 2007,

Mott’s for Tots was released, giving

a great tasting pre-diluted juice

drink that is made from one hundred percent juice and purified water that

contains forty percent less sugar compared to regular apple juice. In 2010,

Mott’s Medleys was added to the portfolio, containing full fruits and veggie

servings in every eight-ounce container, which helps moms to ensure her

kids are getting the fruits and veggies they need.

Since 1842, Mott’s has been dedicated to giving

moms easy ways to help their families be healthy.

Another DPS product that is not a carbonated

or non-carbonated product is ReaLemon Lemon

Juice From Concentrate was first introduced in

1934 by Irving Swartzburg. ReaLemon is basically

regular strength juice offered in a more convenient form that requires no

slicing or squeezing. ReaLime Juice from Concentrate was then created in

 

 

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1947 offering the same convenience as ReaLemon. Both ReaLemon and

ReaLime have been trusted by consumers ever since due to the premium

quality taste of lemons and limes. These products offer a more convenient,

more economical and more consistent taste compared to fresh fruits. The

two brands have grown to dominate their product category by the year of

2000. Today, these products are in distinctive; fruit shaped squeeze bottles

that are familiar and recognizable to consumers.

In conclusion, Dr Pepper Snapple Group has strong brand presence

outside of the carbonated and noncarbonated soft drink industry. Their

products such as Mott’s and ReaLemon are well known in the market

compared to other brands. Mott’s for example, is currently the number one

apple juice and sauce in the United States. ReaLemon and ReaLime, are well

known to consumers who frequently shop at grocery stores. Overall, DPS is

doing a splendid job at achieving its goal of becoming the best beverage

company in the Americas.

E. Strategic Posture 1. Background and Mission

A mission statement is a formal summary of what the company is aiming to

accomplish. The Dr Pepper Snapple

Group has been serving a delicious

taste of non-alcoholic refreshments

that varies from flavored

carbonated beverages to non-

carbonated beverages, such as tea

and juice. Their mission and vision has been to “be the best beverage

 

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business in the Americas.” DPS is the number one flavored carbonated soft

drink company in the Americas and a leading innovator and marketer of

functional or non-carbonated beverages. It serves its consumers throughout

North America via a broad and flexible route to market, which includes a

combination of direct store delivery and warehouse delivery capabilities

supported by their twenty-one manufacturing centers and more than 115

distribution centers across North America, in addition to their operations of

hundreds of third-party bottlers and distributors. Therefore, the company is

in the manufacturing business. A manufacturer takes raw materials and

creates a product from the raw materials, or assembles pre-made

components into a product, like car manufacturers. A manufacturer may

also sell its products directly to its customers, or it can outsource sales to

another company. In this case, Dr. Pepper Snapple Group mixes its own

formulas and packages the product into bulk or wholesale to distributors

such as superstores or vending machines.

2. Objectives

As previously stated, the corporate objective is to create a better

environment and better serve its consumers and their well-being. The

company’s mission is to be the best beverage business in the Americas, and

in order to do that, it must first win the hearts of its consumers. By

protecting and attempting to create a better world for everyone, the

company is able to persuade their consumers that their products are

created in the consumer’s best interest. Consumers are slow to believe that

Dr Pepper Snapple Group’s products are beneficial, or at least more

beneficial than other competitive brands. Helping consumers believe that

the company is not only profit based, but it is also consumer based, will

 

 

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result in DPS reaching its goal of becoming the best in the Americas. A

company is only best if the consumers believe it is the best. Dr Pepper

Snapple Group created a five-year plan for their corporate social

responsibility in 2010 to implement their objective of serving the needs of

the society that we all share. “Setting and achieving long-term goals to

improve our environment and social performance is a vital part of achieving

sustainable growth, because these goals reflect the best interests of the

people who make, sell, buy, invest in, and enjoy our brands everyday,” says

Larry Young, DPS president and chief executive officer. The company’s

objectives focus on the areas of environmental sustainability, health and

wellness, philanthropy, workplace environment and ethical sourcing.

Environmental sustainability focuses on improving energy efficiency

while reducing water usage and wastewater release ratio in manufacturing

operations by ten percent per gallon of completed product, increasing

product shipment per gallon of fuel by twenty percent, replacing roughly

sixty thousand vending machines and

coolers with Energy-Star rated

equipment; leading towards around

thirty percent more energy efficiency,

recycling eighty percent of solid waste

in manufacturing, and sustaining more

than sixty million pounds of PET plastic

through package reengineering by growing the usage of post-consumer

recycled material. Health and wellness focuses on providing a full variety of

products with fifty percent of product innovation in the channel focused on

reducing calories, offering smaller sizes and refining nutrition; while

 

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supporting local and national programs that inspire active routines and

fitness. The company’s philanthropy bases itself on contributing a total of

one hundred thousand volunteer hours and conquering an annual giving

level of ten million dollars in charitable cash donations, with the

mainstream of support focused on fit and active lifestyles,

environmental sustainability, emergency assistance and

communal celebration. In the workplace atmosphere,

DPS plans to preserve team leader engagement

scores comparable to or better than those of other

high-performing companies, and to lessen lost time to

injury incidence rate by twenty five percent. Ethical sourcing is also an

imperative part of the five-year plan, the company’s objective is to conduct

annual third-party risk valuations of all providers and review any high-risk

suppliers to guarantee complete compliance with our Ethical Sourcing Code

of Conduct.

3. Current Strategies

As Jack Welch mentioned in his book “Winning,” you create strategies and

then implement it like hell, and that is what Dr Pepper Snapple Group did.

The company created a list of strategies and continued to implement it,

which clearly reflects upon their success today.

1. Building and enhancing our leading brands

2. Pursuing profitable channels, packages and categories

3. Leveraging our integrated business models

4. Strengthening our route to market

5. Improving operating efficiency

 

 

24  

A functional strategy is an approach taken by a functional area such

as Research and Development, Marketing, or Operational to achieve

corporate and business unit objectives and strategies by maximizing

resource productivity. Every successful company has a type or mix of

strategies that they follow and implement, which has lead to their success

today. Business strategies usually occur at the business unit or product

level, and it emphasizes improvement in the competitive position of a

corporation’s products or services in the specific industry market segment

served by that business unit. The

Dr Pepper Snapple Group follows

six key elements of their business

strategy: to build and enhance

leading brands, to focus on

opportunities in high growth and

high margin categories, to

increase presence in high margin

channels and packages, to leverage our integrated business model, to

strengthen our route to market through acquisitions, and to improve

operating efficiency. In order to build and enhance leading brands, the Dr

Pepper Snapple Group identifies key brands that they believe to have the

greatest potential for profitable sales growth by strengthening consumer

awareness, developing innovative products and brands extensions to take

advantage of evolving consumer trends, improving distribution and

increasing promotional effectiveness. The company also plans to focus on

profitable and emerging categories such as energy drinks, ready to drink

teas and other functional beverages to capitalize on opportunities through

 

 25  

brand extensions, new product launches and selective acquisition of brand

and distribution rights. DPS strategizes on improving product presence in

high margin channels such as convenience stores and vending machines

through increased selling activity and investments in cold drink equipment,

while attempting to increase consumer demand by increasing promotions

and innovations.

Corporate strategy describes a company’s overall direction in terms

of its general attitude toward growth and the management of its various

businesses and product lines. Dr Pepper Snapple Group believes that their

integrated brand ownership, bottling and

distribution business model is a great

opportunity to generate net sales and

profit growth by aligning economic

interests of their brand ownership with

their bottling and distribution businesses.

Therefore, the fourth key element to their

business strategy is to leverage their

integrated business model to reduce costs by creating greater geographic

manufacturing and distribution coverage and to be more flexible and

responsive to the changing needs of their large retail customers by

coordinating sales, service, distribution, promotions and product launches.

The company also plans to strengthen their route to market through their

long-term initiative from acquisition and creation of their Bottling Group

because the additional acquisitions of regional bottling companies will

broaden their geographic coverage and enhance coordination with their

large retail customers. Lastly, since the integration of recent acquisitions

 

 

26  

into their Bottling Group has created the opportunity to improve their

manufacturing, warehousing and distribution operations, DPS believes that

their recent announced restructuring will reduce their selling, general and

administrative expenses and improve their operating efficiency. Overall, the

six key strategies consistently work with each other to help DPS become

the best beverage business in the Americas through building its business

and strengthening its brand among consumers. With the five-year plan and

objectives of making the planet a better place for all, these strategies are

slowly implemented and achievable, helping the consumers while helping

the company. While the corporate objective aims to improve the company’s

growth and management through expansion of distribution centers and

leading brands, the business objectives aim to improve against its

competitors. DPS business objectives are to increase their marketing

through a new marketing campaign that aims to increase their

advertisements to make their leading brands better known.

4. Policies

Dr Pepper Snapple Group has a Human Rights Policy that lives on their

philosophy of respecting the rights of their employees and the people with

which they do business. It is their fundamental way of conducting their

operations. The philosophy and values of their workplace, as well as their

accountability for sustaining the environment and strengthening the

communities where they operate is guided by the United Nation’s Universal

Declaration of Human Rights. As for the employees, the company respects

the rights of their employees in the workplace, and they strive to ensure a

safe and healthy work environment that is free from harassment of any kind.

 

 27  

They work to ensure equal opportunity for all employees and comply with

all applicable laws and regulations wherever they operate or work. DPS

broadly communicates their Human Rights Policy as part of their annual

Core Business Policies or Code of Conduct training to enable their business

to operate in a responsible manner. To their suppliers, the company

ensures that their suppliers operate businesses in a manner that supports

their Supplier Code of Conduct. As part of DPS responsible and sustainable

sourcing strategy, they are committed to working in partnership with their

suppliers to ensure compliance with the supplier code of conduct and to

minimize risks in their supply chain.

Aside from the Human Rights Policy, Dr Pepper Snapple Group also has

a Privacy Policy linking the information collected through web sites, web

pages, interactive features, applications, widgets, blogs, Facebook, Twitter,

and so on. The Privacy Policy explains what information may be collected

through the sites, how such information may be used or shared with others,

and how the information is safeguarded. DPS automatically collects

information from cookies and web beacons. The company uses cookies to

collect data files placed on devices when it is used to visit the sites. Web

beacons help monitor how users navigate the sites, while also counting how

many emails sent to consumers were actually opened or viewed. Some of

the rules included in the policy are that no personal information will be

shared or provided to third parties without the consumer’s consent. But,

the company may share non-personal information such as aggregate user

statistics, demographic information, and usage information. Consumers will

always have the right to disable DPS from sharing their personal

information with third parties, to send them information and offers, and to

 

 

28  

send newsletters through any communication methods. DPS may also have

third party advertisements, where the advertisements may have their own

cookies and web beacons. Consumers will also always have the option to go

through a procedure to opt out of certain third party ad servers the

company may use on their site. The company does not collect every

consumer’s information. Children who are under the age of thirteen will not

have their information collected. Upon collection, if the consumer is

identified, as under the age of thirteen, their information will not be

maintained without their parent’s consents, which without consent will be

deleted from the system. Dr Pepper Snapple’s policies are definitely

consistent with each other, which links to their guarantee of satisfying

customers, employees, and partners. Through satisfying consumer’s needs,

DPS is another step closer to its mission of being the best beverage

business in the Americas. Overall, when everyone is satisfied, the company

is operating at its best. As Welch stated in his book Winning, when the

people are doing well, the company is doing well, and vice versa.

 

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I I . CORPORATE GOVERNANCE A. Board of Directors

Wayne Sanders – Chairman Mr. Sanders has been with The Dr. Pepper Snapple Group (DPS) since May, 2008 and is currently the chairman of the board of directors, serving as an external member. In addition to being the chairman of the board Mr. Sanders is also the chairman of the corporate governance nominating committee. Mr. Sanders dealings outside of DPS includes serving on the board of Texas Instruments and the board of the Belo Corporation. The Belo Corporation owns and operates many television stations throughout the state of Texas and the Mid-west. (DPS Website - Directors)

John Adams Mr. Adams has been a member of the DPS board of directors since April 2008 and is a member of the audit committee, serving as an external employee. Before he was part of the DPS team he served as the executive vice president of Trinity Industries, Inc. from January 1999 to June 2005. Trinity Industries, Inc. is one of North America’s largest manufacturers of transportation, construction and industrial products. Mr. Adams is still serving on the boards of Trinity Industries, Inc. and Group 1 Automotive. Mr. Adams also brings a plethora of knowledge from his time served on the boards of American Express Bank Ltd. and the Phillips Gas Company. (DPS Website - Directors)

 

 

30  

David Alexander Mr. Alexander has been a member of the DPS family since November 2008. He is currently serving as an external employee and is the chairman of the audit committee. Like the other members of the board Mr. Alexander brings invaluable experience from his extensive job resume that includes time as a national trustee on the board of Boys & Girls Clubs of America and as a board member of the American Heart Association. Furthermore, Mr. Alexander has served as an executive member on the board of Southern Methodist University’s Cox Business School giving him insight into the quality of business students that entering the work force. (DPS Website - Directors)

Pamela H. Patsley Ms. Patsley has served as an external member of DPS board of directors since April 2008 and is a member of the audit committee. She is presently serving as the CEO of MoneyGram International, bringing needed leadership skills to the DPS. Ms. Patsley serves with Wayne Sanders on the board of directors for Texas Instruments, Inc. and is the chair of the audit committee. A skill that Ms. Patsley brings to the DPS group is her time spent on the board of Molson Coors Brewing Company from 1996 – 2009. This experience could prove to be invaluable if DPS chooses to expand its portfolio into the alcoholic beverage industry. (DPS Website - Directors)

 

 31  

Joyce Roche` Ms. Roche` has served as an external member of DPS groups board of directors since February 2008 and is a member of the compensation committee. Ms. Roche` brings valuable experience from her time as president and CEO of Girls, Inc. which she was a part of from 2000 – 2010. Additionally Ms. Roche` brings marketing experience from her time spent on senior marketing positions with Carson Products Company, Revlon, Inc. and Avon, Inc. Like Ms. Patsley, she brings experience in the alcoholic beverage industry from her time spent on the board of Anheuser-Busch Companies From 1998 – 2008. (DPS Website - Directors)

Ronald Rogers Mr. Rogers has been an external employee serving on the board of directors at DPS since May 2008. He is currently a member of the compensation committee and draws from his time spent in various positions with the Bank of Montreal from 1972 – 2005. Considering that DPS’s primary market is North and South America, it is very important for DPS to have directors with international experience. (DPS Website - Directors)

 

 

32  

Jack Stahl Mr. Stahl has been serving on the DPS group’s board of directors as an external employee since May 2008. He is currently a member of the corporate governance and nominating committee and brings valuable experience from serving on the board of one of DPS group’s competitors. Mr. Stahl Was the president and CEO of The Coca-Cola Company from February 2000 to Mach 2001 and before that he was president of the Coca-Cola Company’s Americas group and the CFO of The Coca-Cola Company. When building a strategy to combat the huge portion of the carbonated soft drink industry that Coca-Cola has a firm grasp on, Mr. Stahl will be a valuable DPS asset, having first and knowledge of their operations. (DPS Website - Directors)

M. Anne Szostak Ms. Szoztak has been a member of the DPS group since May, 2008 and has been serving as an external employee on the board of directors and also been the chairman of the compensation committee. Ms. Szoztak brings a strong financial background to the DPS group from her time spent with FleetBoston Financial Corporation (now Bank of America) from 1998 until her retirement in 2004. She is currently also governor and chairperson emeritus of the Boys & Girls Clubs of America, a chairperson of the Women and Infants’ Hospital of Rhode Island as well as, serving as a member on numerous board committees of the Rhode Island Foundation. (DPS Website - Directors)

 

 33  

1. DPS B.O.D. Sustainability The Dr. Pepper Snapple Group (DPS) board of directors have taken huge steps towards environmental sustainability and set stringent goals based on their simple principle, “Say what you’re going to do, and do what you say” (DPS Website - Sustainability, 2014). DPS’s first sustainability report was put forth in 2010 and with it a number of goals.

The first goals were to “improve energy efficiency and reduce CO2 from emissions in manufacturing by 10% per gallon of finished product,” and to “increase product shipments per gallon of fuel used by 20%” (DPS Website - Sustainability, 2014). DPS has been striving towards this goal by devoting resources to aligning operations with customers efficiently, resulting in a reduction in energy and fuel consumption. Next comes a goal that is focused solely on energy consumption, which is to “replace 60,000 vending machines and coolers with Energy Star-rated equipment” (DPS Website - Sustainability, 2014). The exchange of these coolers will boast a 30% higher rate of energy-efficiency.

Additionally DPS has set large goals to recycle “90% of solid waste,” and to “reduce manufacturing water use and wastewater discharge by 10% per gallon of finished product (DPS Website - Sustainability, 2014). The recycling of solid waste is being implemented with a multi tier approach that ranges from delivery drivers to warehouse employees all participating in the push to recycle solid waste. In regards to water consumption, DPS started tracking wastewater discharge in 2008 to use as a guide to reach the 2015 goal. Finally, DPS plans to “conserve more than 60 million pounds of plastic through PET package light weighting and redesigns.” (DPS Website - Sustainability, 2014). This goal is being pursued through alignment with other producers within the carbonated soft drink (CSD) industry in the “Full Circle Recycling Initiative” (DPS Website - Sustainability, 2014). Also, DPS is investing resources into designing new and innovative packages that will reduce plastic consumption.

 

 

34  

B. Top Management

Larry D. Young - Chief Executive Officer (CEO) and President Mr. Young has been the President and CEO of DPS since 2007, after serving as the CEO of the Bottling Group division starting in 2005. Mr. Young played a central role transitioning the company’s business model into that of a fully integrated beverage company; allowing DPS to have a more reliable, sustainable and secure route to market through the integration of the bottling group and several smaller bottling companies into DPS. Mr. Young has over 30 years of experience in the beverage industry, working within the United States, Russia, and many different European countries. Before being hired by DPS, Mr. Young was an employee of PepsiCo for over 25 years, starting as a truck driver and working his way up to CEO and President of PepsiAmericas. In 2008, Mr. Young was inducted into the Beverage World Soft Drink Hall of Fame and was named as the Executive of the Year by Beverage Industry magazine in 2010. This extensive experience as a worker through all levels of the beverage industry will help propel DPS into the next level of beverage excellence. (DPS Website - Leadership) Marty Ellen - Chief Financial Officer (CFO)

Mr. Ellen has been the CFO for DPS since 2010, being responsible for DPS’ finances and IT departments. Mr. Ellen has over 25 years of corporate experience; serving as the CFO for companies in the manufacturing, distribution, franchising, and services industries. Prior to becoming the CFO of DPS, Mr. Ellen was the CFO and senior vice president (VP) for Snap-On Incorporated, a global manufacturer of tools, diagnostics, equipment, and software for professionals. Mr. Ellen also brings previous experience in the beverage company,

 

 35  

having served as the senior VP and CFO of Whitman Corporation, which at the time owned Pepsi Cola General Bottlers, Inc. Mr. Ellen began his career as a senior audit manager at the international accounting firm, Price Waterhouse. (DPS Website - Leadership) Jim Baldwin - Executive Vice President and General Counsel Mr. Baldwin has served as the executive VP and general counsel for DPS since 2003, and is responsible for all legal issues facing the company. Mr. Baldwin started with DPS in 1997 as assistant general counsel, providing support to the Licensing department. In 1998 he was promoted to general counsel of Mott’s, overseeing all legal aspects of the finished goods. In 2002, he was relocated to the corporate headquarters in Dallas to run the legal department for Dr Pepper/ Seven Up as senior VP and general counsel. The next year he was promoted to his current position. Prior to working for DPS, Mr. Baldwin was a partner of the Houston based law firm, Hutcheson & Grundy. Mr. Baldwin began his career with the law firm Berman, Mitchell, Yeager and Gerber. (DPS Website - Leadership) Rodger Collins - President of Packaged Beverages

Mr. Collins has been the president of packaged beverages since 2007, and is responsible for all company owned routes to the market for both direct to stores delivery (DSD) and warehouse direct businesses. Additionally, Mr. Collins leads the national account selling teams and all related support groups. Mr. Collins has been with DPS for his entire career, dating back to 1978, working in route sales. From 1991 to 2005, Mr. Collins held regional VP and division VP roles in different locations and departments of the companies that now make up the Dr Pepper Snapple Group. In 2005 he was

promoted to the president of the Midwest division, being promoted again in 2007 to his current position. Mr. Collins has also served in various other

 

 

36  

management positions in sales and marketing within DPS. His experience in all of the different levels of DPS and its subsidiaries makes him the ideal person to run the packaged beverages division. (DPS Website - Leadership) Derry Hobson - Executive Vice President of Supply Chain Mr. Hobson has held the role of executive VP of supply chain since 2007. He is responsible for all supply chain functions; including but not limited to manufacturing, engineering, packaging, environmental health and safety, and logistics. Mr. Hobson has more than 40 years of senior operations and general management experience, having been with DPS since 1999, when he served as executive VP of supply chain for the Dr Pepper/ Seven Up Bottling Group. Before working for DPS, Mr. Hobson was the CEO and President of Sequoia Pacific Systems, which developed election systems used in elections around the world. Mr. Hobson also has extensive experience in the beverage industry prior to his employment with DPS. Before working for Sequoia Pacific Systems, he held the roles of VP of operations for Coca-Cola Enterprises and also managed manufacturing for the Southern region of Pepsi-Cola Bottling Group. Mr. Hobson began his operations career in 1974 working for Kellogg. Mr. Hobson’s extensive experience in the beverage industry, primarily with the main competition, as well as a long list of management experience makes him the right man to oversee our manufacturing, bottling and distribution departments. (DPS Website - Leadership) James Johnston - President of Beverage Concentrates and Latin American Beverages

Mr. Johnston has served as the president of beverage concentrates since 2007 and president of Latin American Beverages since 2009. He is responsible for the route-to-market and fountain foodservice teams in the U.S. and Canada; while also being responsible for all brands and business in Latin America. Mr. Johnston joined DPS in 1992, hired as the manager of marketing services. From 1992 until 2005, he progressed through the company as division

 

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marketing manager and VP of field marketing, before being promoted to senior VP over system marketing, franchise and licensing strategy. In 2005, he was again promoted to executive VP of sales. Before being hired by DPS, Mr. Johnston spent 14 years with New York 7-UP Bottling Company, working in sales and marketing. (DPS Website - Leadership) Lain Hancock - Executive Vice President of Human Resources (HR) Mr. Hancock has served as executive VP of HR since 2012. He is responsible for DPS’ HR department. Mr. Hancock has been with DPS since 2007, when he was hired in the supply chain department, where he focused on improving safety, product quality and productivity. From 2007 to 2012, Mr. Hancock served as senior leadership for different departments such as supply chain strategy, manufacturing operations, and procurement. Prior to his employment at DPS, Mr. Hancock served in the United States Army as an officer after graduating from the West Point Military Academy. After his time in the Army, Mr. Hancock worked as a consultant for McKinsey and Company. (DPS Website - Leadership) David Thomas - Executive Vice President of Research and Development (R&D)

Mr. Thomas has served as the executive VP of R&D since 2010. He is responsible for all aspects of research and development, including product development, nutrition, and flavor and concentrate technology. Mr. Thomas has been with DPS since 2006, when he was hired as the senior VP of R&D. Mr. Thomas has extensive experience in research and development, having served R&D roles for Gerber Products Company, General Mills, Pillsbury, and Unilever; progressing from project leader roles into senior director positions.

Mr. Thomas’ experience in R&D has led to him holding 15 patents across a range of ingredients, processes, and product related technologies. He holds a

 

 

38  

B.S. in microbiology as well as a M.S. and Ph.D. in food science, concentrating in flavor biochemistry. He also serves on the Board of Advisors for the Center of Food Safety. (DPS Website - Leadership) James Trebilcock - Executive Vice President of Marketing Mr. Trebilcock has held the position of executive VP of marketing since 2008. He is responsible for all areas of brand management and marketing; including market research, graphics, merchandising, and advertising. Mr. Tebilcock has been with DPS for 27 years, starting in 1987 as the Cherry 7UP brand manager. Since then, he has progressed through the company serving as the director of promotions, VP of marketing, and senior VP of marketing services. In 2003, Mr. Trebilcock was promoted to senior VP of consumer marketing; being responsible for all consumer-marketing operations for the entire portfolio of brands. Prior to joining DPS, Mr. Trebilcock held numerous different marketing and sales positions with Coca-Cola Bottling Company. Mr. Terbilcock began his marketing career with General Mills Inc. (DPS Website - Leadership)

I I I . EXTERNAL ENVIRONMENT: Opportunities and

Threats (SWOT) (See Appendix A for EFAS Chart) A. Natural Physical Environment: Sustainabil ity Issues

The Dr Pepper Snapple Group warehouses are located directly next to bottling

plants. This works to the company’s advantage by providing a great

opportunity for the firm to quickly produce products for their customers. This

guarantees high product efficiency to meet the customer demand. The Dr.

Pepper Snapple Group warehouses are located in St. Paul Minnesota. Due to

this, warehouses are in risk of being damaged due to floods, tornadoes, and

wildfires. Solar panel technology is very popular in Minnesota. In fact the

financial assistance company NCB launched a solar electric project on August

 

 39  

2008, which used 525 solar panels in the process. Dr. Pepper Snapple Inc.

would easily be able to benefit from the use of solar panel technology in

Minnesota.

These factors have different effects on other regions of the world. The

Dr Pepper Snapple warehouses are located safely within the United States,

more specifically in St. Paul, Minnesota. However, other areas around the world

may suffer from natural disasters. For example, warehouses placed in Japan

are in risk of falling victim to tsunamis or earthquakes, while warehouses on the

east coast of the United States may fall victim to tornados.

 

 

40  

B. Societal Environment At Dr Pepper Snapple group, we strive to provide excellence to our consumers

as well as the rest of the world in any way we can. We understand that what

we do as a business has a tremendous impact on the environment in which we

practice. One of our core action plans we abide by as an organization is the

STEEP concept. STEEP is acronym that stands for all the dynamics of our

environmental concerns including: Social, Technological, Economical,

Environmental, and Political (Hunger & Wheelen, 2012). This allows us to take a

macro approach to dealing with the external environment in which we do

business. We start with S (social) which correlates directly to what we exude the

most here at DPS, social developments in areas as demographics, social value,

individual lifestyles, cultural values, consumer behaviors, and even

advertising. It is our priority to sustain a healthy social environment as an

organization and therefore it is our first letter in STEEP. Innovation is always a

dynamic for institutions to expand from and here at DPS we strive on it

(Hunger & Wheelen, 2012).

The next letter of the STEEP analysis is T (technology). The rate at which

technological development is executed here at DPS is vital to our business to

keep up with an evolving marketplace. In general we understand that the

speed of technological innovation is very rapid and therefore we make it one of

our leading priorities to sustain. Essentially every day new services and

products have an immense impact on the way we do business and learn,

therefore, changes in technology greatly influences economical, social, and the

political fields. When we think about technology, we consider factors such as

 

 41  

innovation, energy, transportation, communication, research, and development

(Hunger & Wheelen, 2012).

A more moderate dynamic of the STEEP analysis which we abide by is E

(economical). Here at DPS, although we are vastly concerned with who in the

economy is prevailing, we understand we have less of an impact on major

economical factors such as interest rates, taxes, international trade, availability

of jobs, and entrepreneurship. Therefore while we do our best to prepare for

economic hardships, we try not to be steered away from what we do as a

business by not investing all our energy in this aspect being that the economic

situation is directly correlated to the buying position the consumer (Hunger &

Wheelen, 2012).

Our next E (environmental) is another factor of the STEEP analysis in

which we have little control over. Generally environmental concerns are

ecosystem related such as soil, water, food, and energy which although a vital

dynamic in our business, we realize that we cannot dedicate most of our efforts

toward this field as we have little control over it. Rather we steer our energy

regarding this factor toward abiding by it rather than trying to reshape it

(Hunger & Wheelen, 2012).

Lastly, there is P (political). Political developments can definitely

influence our consumers as well as the rest of the world in which we do

business. The political landscape changes dramatically as other political parties

gain power and therefore, at DPS we make sure to keep up to date with what’s

going on in our government in effort to combat any sudden changes or new

laws to abide by. We make it our priority to consistently be aware of possible

upcoming shifts in power during elections in all dynamics of politics. Political

developments affect different types of laws for example anti-trust,

 

 

42  

environmental, trade markets, and financial markets (Hunger & Wheelen,

2012).

1. Economic

The corporation and industries in which Dr. Pepper Snapple group

competes is least affected by its current economic standing. General

environmental forces such as the consumers within the regions that DPS

serves are more than likely to continuously buy their beverages. In fact,

DPS will inevitably grow as our economy grows as a whole being that

population growth rate in America is nearly one percent, therefore more

people means more growth for DPS. The Economy within the regions that

DPS serves is all

in the Americas,

which mostly

consist of strong

standing

economies. The

consumers of DPS

consist of a broad

range of

demographics

including people of all ages and race. Some threats imposed by the

economies within the areas DPS serves are the fact that if DPS wants to

further expand its organization worldwide then it has to consider that there

are a multitude of poor economies outside the Americas. Poor economic

standing countries could significantly impact DPS in a negative way being

 

 43  

that their #1 competitor is globally superior. Competition amongst DPS can

easily overpower their products outside the Americas being that their

beverages are already well established and DPS main products are more

unique as oppose to what is generally accepted by consumers.

2. Technological

In effort to continuously grow Dr. Pepper Snapple group’s main objective

currently is to expand their products through technological innovations

such as utilizing the latest and greatest vending machines to directly sell

their beverages and keeping their manufacturing facilities up to date with

the most efficient method of producing their products. DPS developed its

own delivery system, which enables for immediate delivery of their

beverages as they are produced from the manufacturing sites throughout

the Americas. The opportunity presents itself to increase productivity by

means of technologically advancing both their delivery system to work

more effectively with their manufacturing process.

3. Political-legal

The political-legal aspect with regards to Dr Pepper Snapple group is not so

much of a threat in comparison to the other societal environment

issues. Therefore, DPS is not necessarily concerned with potential threats

and opportunities concerning political-legal attributes. At DPS one of the

pillars of integrity is to undoubtedly abide by all the legal codes associated

to their bottling services. DPS has not had any major issues regarding legal

mishaps within the last ten years. Any mistake within the political-legal

 

 

44  

aspect of their organization could definitely pose a threat to DPS therefore

they understand good intentions lead to a superior integrity status.

4. Sociocultural

Dr. Pepper Snapple group has dedicated a vast amount of funding toward

campaigns geared to positively impact their consumers. DPS understands

that their consumers’

loyalty is dire in

terms of competing

with other beverages

that offer completely

different qualities

and taste. DPS has

established a social aspect that exudes positive outcomes and energy from

the consumption of their products. DPS products are consumed amongst a

wide variety of social dynamics that all share the same needs, which is a

unique product.

DPS can be negatively impacted within their sociocultural standing if

they do not sustain their positive energy focused means of advertising,

which brings people of any demographic together in the sense that they all

enjoy a unique tasting beverage. With their two main competitors gaining

the relationships of many consumers, DPS needs to overcome this threat by

creating opportunities to build long lasting relationships to establish

lifelong customers.

Although Dr Pepper Snapple group is constantly focused toward

superseding the issues that come along with the Societal environment in

 

 45  

which it operates, globally DPS is not necessarily affected by these

objectives concerning environmental, societal, political, and

technological. The fact that DPS is currently geared purely toward being

the best beverage business in the Americas, they are not in conflict with the

rest of the world. Therefore, these forces are essentially non-existent in the

rest of the world. However, if DPS wants to become the greatest then

these factors would have to become the focal point.

C. Task Environment

1. Threat of New Entrants: Low. Well-established companies, such as

Coca-Cola, PepsiCo., Nestle, other food brands, and DPS make it hard for any

new business to enter the market when these other leading brands already

have advanced technology and high profits. (O)

2. Bargaining Power of Suppliers: High. DPS relies heavily on

commodities, such as sugar, plastic and aluminum. The bargaining power of

suppliers is high because DPS does not have many alternatives if suppliers

choose to raise prices. (T)

3. Threat of substitute products or services: High. Consumers may

not be in the mood for a Dr Pepper or 7-Up, but may prefer a coke from either

Coca-Cola or Pepsi Co, simply because they prefer the tastes to those

opposed to what DPS offers. (T)

4. Bargaining power of Buyers: High. Consumers can just as easily pick

another soda brand purely by the availability in stores. Since Coke and Pepsi

dominate most of the shelf-space in stores, Dr Pepper Snapple depends on its

customer’s loyalty. Aside from consumers, DPS also depends on bottlers and

distributors; and retailers. (T)

 

 

46  

5. Rivalry Among Existing Firms: High. Coca-Cola and PepsiCo., have a

larger consumer base than DPS. Their drinks are more sought after and

preferred by consumers versus DPS’s own Dr Pepper drink, 7-Up or other

brands. (T)

6. 6th Force (Stakeholders): High. In recent years, DPS’s cash flows have

increased, allowing them to invest in their business, repurchase shares of their

common stock, and pay dividends to stockholders to reduce debt. In 2013

particularly, DPS had planned productivity to be $150 million through

reductions by laughing Rapid Continuous Improvement (RCI). They exceeded

their goal, which allowed DPS to increase amount of cash returned to

stockholders. (O) (DPS, 2013 annual report)

With today’s generation geared

toward a healthier lifestyle, Dr

Pepper Snapple Group has

recently dedicated an extensive

amount of funding toward

research and development of

health conscious beverages such

as the new 10-line. The new 10-

line is a set of their more

popular brands with a drastic

drop in calories, therefore

making a healthier choice of

beverage. Customers in this sense pose a future threat because there are a

multitude of other substitutes to choose from. This allows the opportunity to

 

 47  

develop and add to our portfolio new beverages and more customer oriented

products such as low calorie drinks.

Dr Pepper Snapple Group has made a strong commitment to environmental

stewardship on every level of their business. Creating and distributing such a

wide portfolio of brands from their locations across North America gives them

an opportunity to make a real difference. Over the past five years, the

company has invested resources into aligning and integrating their operations

to serve their customers and consumers more efficiently and consequently

reducing their energy and fuel consumption per unit of production. At the

same time, they have pursued a multi tier approach to reducing waste by

ramping up recycling, developing innovative packaging solutions and

collaborating with the industry on the Full Circle Recycling Initiative. Water

conservation has also been one of their primary concerns, and in 2008 they

began tracking their consumption and wastewater discharge to help them

measure the success of their ongoing production and facility improvements. In

their first sustainability report in 2010, they set big goals in a number of

categories – fuel conservation, energy consumption, recycling, reducing waste

with innovative packaging, water conservation, and creating sustainable

processes in all their manufacturing locations.

Competitors pose a huge threat toward Dr Pepper Snapple group for

the sheer fact that their two superior rivals are in a position to produce what

DPS produces. DPS holds a unique portfolio of beverages however; both

PepsiCo and Coca Cola possess many, if not all similar tasting

beverages. Their competitors are focused toward a worldwide approach, while

DPS is currently geared toward the Americas. DPS lacks the ability to branch

out to the rest of the world because their portfolio of beverages are easily

 

 

48  

mocked and therefore a substantial establishment has not been made

throughout the rest of the globe. In consideration to the competitors strong

array of beverages offered, such as sports drinks and vitamin drinks, DPS holds

the opportunity to develop similar products in an effort to combat it’s

competition. In doing so, DPS opens up a wide range of beneficial possibilities

such as marketing to the sports industry, where sports drinks are number one.

At DPS, they owe the quality,

strength and integrity of their

company and brands largely to

the people who support their

business. This includes their

19,000 employees across North America and the Caribbean as well as the

people working for companies around the world who supply them with the

materials, ingredients, resources and equipment that bring their brands to life.

Now more than ever, beverage consumers are holding products to a higher

standard. Not only do they base their purchasing decisions on whether

beverages are safe and of the highest quality, but increasingly, they’re also

focused on whether the ingredients and packaging materials are ethically

sourced.

DPS is committed to upholding what they expect of their suppliers. They

ensure their brands are produced at high standards of quality and safety

throughout their supply chain and are committed to using suppliers that

operate in a way that provides safe working conditions, dignity and respect for

their employees. We seek commitment to their Ethical Sourcing code of

conduct and require their suppliers to adhere to this code or participate in the

Supplier Ethical Data Exchange (SedEx).

 

 49  

D. Summary of External Factors

A moderately important factor to the Dr. Pepper Snapple Group is the threat

of new entrants into the market. At the moment, it is somewhat easy for new

competitors to enter and compete in the marketplace and to challenge the Dr.

Pepper Snapple brand name. An even heavier threat at the moment is the

threat of substitutes. There are many alternatives to the Dr. Pepper Snapple

products. Consumers can buy bottled water, fruit juices, sports and energy

drinks, or other carbonated drinks out of the Dr. Pepper Snapple’s target

market. The most important factor that the Dr. Pepper Snapple Group should

keep in mind is the threat of their target audience shifting to the healthy drink

market. The world, especially America, is becoming more health conscious and

this will be reflected in the items that they purchase which will be healthy

drinks, which are outside of Dr. Pepper Snapple’s target product range. So as a

result, if the Dr. Pepper Snapple group wishes to compete in the near future, it

should invest in producing health drinks.

IV. INTERNAL ENVIRONMENT: Strengths and Weaknesses (SWOT) (See Appendix B for IFAS Chart)

A. Core Competencies Core competencies, described by Wheelen and Hunger, is a collection of

corporate capabilities that cross divisional borders and are widespread within a

corporation, and is something that a corporation can do exceedingly well

(Hunger & Wheelen, 2012).

 

 

50  

1. R&D Spending:

In the past three years (2013, 2012, and 2011) DPS allocated $15 million

dedicated to just R&D. The focus of such spending helps DPS develop

better product development, process engineering, and nutrition, which in

turn helps the research team to experiment with new flavors and enhance

already established products.

2. Manufacturing:

In addition to concocting their own flavors, DPS also manufactures their

own drinks. As of now, DPS has 18 manufacturing locations and 113

principal distribution centers in the U.S., as well as two manufacturing

facilities and eight principal distribution centers and warehouses in Mexico.

(DPS annual report, 2013).

3. Flavors:

With a focus in research and development, DPS has shown an expertise in

sweeteners and beverage flavors that gives their products unique flavor

and styles. DPS puts much of its time and

effort into enhancing and creating

delicious flavors for their consumers.

The company does well with its

consumers for its likeability,

uniqueness and value, performing

well in brand relevance, brand

strength and brand equality among CSD consumers in 2013. In the last

year, DPS launched their 10-calorie version of their top 4 flavors- 7UP TEN,

A&W TEN, Sunkist TEN soda, and Canada Dry TEN, which has successfully

 

 51  

started bringing back consumers who had previously stopped drinking soft

drinks or were drinking fewer servings. (DPS annual report, 2013)

4. Management Team:

Experienced executive management team. DPS’s crew has over 200 years

of experience in the food and

beverage industry. They have broad

experience in brand ownership,

manufacturing and distribution, and

enjoy strong relationships both in the

industry and with customers (DPS

annual report, 2013).

B. VRIO Analysis 1. Value

DPS provides customers value by ensuring that products are always

conveniently located at local retailers. This is made possible by DPS’s

“geographic manufacturing and distribution coverage.” (DPS SWOT, 2014)

Currently, DPS has “18 manufacturing facilities and 113 principal

distribution centers and warehouse facilities in the US.” (DPS SWOT, 2014)

Additionally there are two manufacturing facilities, with eight distribution

centers in Mexico. All of these facilities and warehouses are geographically

dispersed in a manner that allows DPS to have their products available to

consumers with minimal travel time. The manufacturing plants are all next

to a distribution warehouse and from there “DPS utilizes its own fleet of

 

 

52  

approximately 6,000 delivery trucks,” to get the product to market. (DPS

SWOT, 2014)

2. Rareness

Other competitors produce similar products to DPS’ but 14 of DPS’s

beverages are number one or two in their respective flavor category. For

example, the “Dr. Pepper brand holds the number one position in its flavor

category and number two position in overall flavored CSD. (DPS

SWOT,2014) A&W, Sunkist and Squirt also maintain leading positions in

their flavor categories. However even though they lead many of the flavor

categories in the CSD industry, there are still major competitors for many of

their flavors. To stay ahead of other companies within the CSD industry,

DPS allocated “$15 million on research and development during FY 2013.”

(DPS SWOT, 2014) Research and development is one of DPS’s competitive

advantages and employs a range of disciplines including “product

development, microbiology, analytical chemistry, process engineering,

sensory science, nutrition, knowledge management and regulatory

compliance.” (DPS SWOT, 2014)

3. Imitabil ity

It is relatively easy for companies to make alternatives to DPS’s products.

Giants like Pepsi and Coca-Cola “together represent about 60% of the

liquid refreshment beverages market by volume. (DPS SWOT, 2014) Within

the large portion of the market they command, there are substitutes for

many of DPS’s products. Fortunately for DPS, much of their sales are

dependent on consumer preferences. No matter how close the substitute

is, there is always a noticeable difference between the two products and

 

 53  

that differentiation is what propels DPS into the first and second spots in

their flavor categories.

4. Organization

DPS uses all resources to its advantage

during business operations. For example,

the wide geographic coverage of its

manufacturing and distribution network,

coupled with its own fleet of 6000 trucks,

maximizes DPS’s ability to get products

to market quickly and efficiently. The strategically placed infrastructure

allows “DPS to coordinate new product launches in an effective way.” (DPS

SWOT, 2014) For example, DPS’s “TEN” line of products did not take long

to get to market because of the strong distribution network DPS has

established.

C. Business Model According to Wheelen and Hunger, a business model is the mix of activities a

company performs to earn a profit. Put simply, the business model explains

how a firm earns revenue and makes money. The simplest model, which is the

one DPS operates under, explains how the company provides goods that can

be sold, so that revenues exceed costs and expenses (Hunger & Wheelen,

2012).

Dr Pepper Snapple Group maintains an integrated business model. The

business model includes both company-owned direct-store-delivery (DSD)

distribution, as well as third-party distribution. Within the model,

 

 

54  

approximately 40 percent of the company’s volume is distributed through

company-owned networks, another 40 percent through third-party distributors

in the Coca-Cola, Pepsi-Cola and independent bottler systems, and the

remaining portion is split between warehouse

direct and foodservice distributors. Dr Pepper

Snapple groups serves consumers and

businesses around the Americas, from bottlers

and distributors to national retailers, large food

service and convenience store customers,

different carbonated soft drinks and non-carbonated soft drinks. 88% of the

company’s consumers are located in the U.S. Individuals of all ages and

backgrounds enjoy DPS’s products. DPS differentiates and sustains a

competitive advantage through its expertise in sweeteners, which create

distinctly flavored soft drinks. Essentially, DPS follows a simple business model.

D. Value Chain

Value chain is a linked set of value-creating activities that begin with basic raw

materials coming from suppliers, moving on to a series of value-added

activities involved in producing and marketing a product or service, and ending

with distributors getting the final goods into the hands of the ultimate

consumer. The focus of value chain analysis is to examine the corporation in

the context of the overall chain of value-creating activities, of which the firm

 

 55  

may be only a small part. Value chain can be separated into two parts the

primary activities and support activities.

1. Primary activities:

a. Inbound logistics:(raw materials, handling and warehouses)

Aluminum cans, glass bottles, PET bottles and caps, paper products,

sweeteners, juice, fruit, water and other ingredients are the raw

materials for DPS. Although the company has contracts with a relatively

small number of suppliers, it has generally not experienced any

difficulties in obtaining the required amount of raw materials. And

keeping suppliers in a small amount help the company to ensure the

quality of raw materials.

b. Operations: (machining, assembling, testing)

DPS is a highly automated manufacturer with limited employees and

support staffs. DPS

requires the same up to

date automated systems

of its select third-party

bottlers. This automotive

system requires a

relatively low number of

employees to feed it raw

materials and resources to produce the end product. These systems

allow employees to keep a high level of supervision of manufacturing of

their products and also increase the efficiency and lower the costs.

 

 

56  

c. Outbound logistics: (warehousing and distribution of finished

products)

The company has 21

manufacturing centers and

more than 115 distribution

center across North

America. Our warehouses

are generally located at or

near our hundreds of third-

party bottlers and

distributors in the U.S. Moreover, we actively manage the sale,

merchandising and transportation of our products using a combination

of our own fleet of approximately 6,000 delivery vehicles and third party

logistics providers.

DPS’s manufacturing/bottling plants and distribution networks

are vulnerable to many weather conditions, from floods, earthquake,

tornadoes, and hurricanes to heavy rain. The company has set

contingencies for such vulnerabilities to ensure high levels of product

availability.

d. Marketing and Sales: (advertising, promotions, pricing,

channel relations)

Our marketing strategy is to grow our brands through continuously

providing new solutions to meet consumers’ changing preferences and

needs. They are working hard in providing customers with new

beverages, which are healthier, and taste better. Also, the company is

 

 57  

now working with some of their retailers to

come up with promotions to increase the

volume sales. They are now focusing mostly

on the dollar channels, which are the fastest

growing channel in the past year, to win the

shelf space from other competitors and also earn profits.

e. Service:(installation, repair, parts)

As a beverage company, there is no need for installation or repair.

2. Support Activities:

a. Firm infrastructure:(general management, accounting,

finance, strategic planning)

DPS was facing a decline of net income years before. Despite that the

company is still in good standing considering its gross profit has not

declined since last year and remains at an impressive $3.5 billion. For

strategies, the main strategy for the company in the following year is to

enhance the leading brands by investments to chase the customer’s

loyalty for the company.

b. Human resource management: (recruiting, training,

development)

Dr Pepper Snapple group has workshops to train and

learn before they start working with the company in

order to create good employees with high skills

and moral. The company is managing the diversity

 

 

58  

of its workforce very well by creating an equal opportunity for their

employees and leaders to be involved in the business. Employees are

recruited regardless of gender, race or belief and everyone has the

same chance of promotion as long as they work hard.

c. Technology development: (R&D, product and process

improvement)

The Research and Development team is composed of scientists and

engineers, which ensures the corporation is creating new flavors and

perfecting its current line of drinks to make them healthier, lowering the

calories while still retaining great taste. DPS uses a variety of IT systems

and networks configured to meet our business needs. DPS developed its

own delivery system, which enables for immediate delivery of their

beverages as they are produced from manufacturing sites. Also, the

company utilizes the latest and greatest vending machines to maintain

efficiency.

d. Procurement: (purchasing of raw materials, machines,

supplies)

DPS has few suppliers for raw materials but they are not facing

problems of purchasing raw materials since their materials are easily

found in the market. In addition, to emphasize on the environmental

protection, DPS uses various refillable and non-refillable, recyclable

bottles and cans. DPS is not the kind of company that requires high-level

technology.

 

 59  

E. Corporate Structure

After the corporate restructuring of 2008, which lead to “the creation of Dr

Pepper Snapple Group as a separate entity,” DPS reorganized into three

operating segments; manufacturing, distributing and marketing. (Cadbury,

2008) Currently there are 21 manufacturing centers in the U.S., accompanied

by 115 distribution centers, being operated by approximately 19,000

employees. (DPS Website, 2014) A rigorous marketing campaign is being

undertaken by DPS, including the new health conscious beverages of the “TEN

Line,” which is DPS’s leading brands being offered in a low ten calorie

alternative to the full flavored counterparts.

Decision making for DPS was previously carried out by the board of

Cadbury-Schweppes, however since the corporation split in 2008 “ DPS’

independent board has been charged with “regularly

evaluating the strategic direction of the Company,

management's policies and the effectiveness with which

management implements its policies and overseeing

compliance with legal and regulatory requirements.” (DPS

Website, 2014) DPS is organized on the basis of

geography and projects. It is based on geography

because as DPS strives to“ be the best beverage business

in the Americas,” it is constantly growing manufacturing

and distribution operations through acquisitions and mergers of existing

bottling companies and distribution centers.

The corporate structure is clearly understood from top to bottom of

DPS through it’s “call to ACTION” plan (DPS Website, 2014) Within this “Call

to ACTION,” DPS outlines for its employees guidelines to drive towards

 

 

60  

efficient business operations and includes; being accountable, customer-

centric, transparent and honest, to inspect what we expect, own decisions that

are made and no blame fixing. DPS being accountable means “we say what we

are going to do and we do what we say,” which builds into being customer-

centric where employees focus on customers’ and consumers’ needs. (DPS

Website, 2014) Being transparent and honest means that DPS operates by

sharing knowledge and information and never maintains a hidden agenda.

Inspect what we expect is an accountability measure and states that

expectations are set forth by DPS and the progress and results are evaluated

internally. Owning decisions that are made exemplifies DPS’s confidence in

decisions because they are not made lightly and rely heavily on facts and input.

No blame fixing is DPSs motto for when something goes wrong, instead of

pointing fingers at whose fault it is, DPS strives toward finding a solution to

remedy the situation.

This corporate structure is consistent with corporate strategies, which

are “building and enhancing leading brands, pursuing profitable channels,

packages and categories, strengthening route to market and improving

operating efficiency.” (DPS Website, 2014) Marketing caters to building and

enhancing leading brands. Pursuing profitable channels, packages and

categories, strengthening route to market and improving operating efficiency,

are all supported by the corporate structure of manufacturing and distributing.

Internationally, DPS only operates in North and South America and outside of

the U.S. DPS relies heavily on third party manufacturers and distributors.

 

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F. Corporate Culture

The culture of a business revolves around all the values it instills within all of its

employees. The culture of a corporation could include its mission, objectives or

even values. With DPS, there is a well-defined or emerging culture composed

of shared beliefs, expectations and values. This is done by encouraging each

employee to take effective action, minimize environmental impacts and

transforming society to

have positive impacts. The

culture is consistent with

the current objective,

strategies, policies and

programs because Dr

Pepper Snapple Group

strives to implement a

culture that revolves around what they refer to as “action”. This belief is

derived from each and every aspect of the business down to society, which

include employer, manufacturer, marketer and neighbor.

As of environmental sustainability, the company currently is initiating

their five-year plan that started back in 2007 to help the environment and their

consumers. According to the company, since we all share this Earth, their goal

is to help everyone live better by creating a better environment for everyone

to live in, and by creating products that will benefit consumer’s health and

lifestyle. The company has made a strong commitment to environmental

stewardship on every level of their business. Over the past five years, DPS has

been working towards reducing their usage on energy and fuel per unit of

production. They are also pursuing a multi-tier approach to reduce waste by

 

 

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increasing their recycling rate through developing packages that are better for

the environment by collaborating with the industry on Full Circle Recycling

Initiative. Overall, DPS sets big goals in a number of categories ranging

through fuel conservation, energy consumption, recycling, reducing waste with

innovative packaging, water conservation, and creating sustainable processes

in all manufacturing locations.

Dr Pepper Snapple Group understands the influence it has on many

different aspects and strives to positively influence each point. It prioritizes

environmental sustainability and corporate responsibility. It moves towards

protecting the environment through strategically controlling production to

maintaining efficient transportation. It maximizes resources through strategic

inventory management, manufacturing formulas and handling efficient

transportation to and from warehouse to distribution centers and finally

distribution to retailers. Dr Pepper Snapple group encourages employees to

take appropriate action in all situations. They are responsible for their own

work all the way from employees to top management. “Say what you’re going

to do, and do what you say” is a simple principle employees are supposed to

live by. Currently, Dr Pepper Snapple Group handles its operations only in

North America and Mexico.

G. Corporate Resources 1. Marketing

DPS is focused on providing all kinds of beverages in the U.S., Canada and

Mexico. Their products are average price but high quality in both taste and

nutrition. They do not have typical groups of target consumers since they

provide tons of choices, but each of their product lines may concentrate on

 

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a certain group. For example, TEN lines focus on people who care a lot

about healthy lifestyles and pay much attention to their calorie intake.

According to the product life

cycle, the company is mature

but there are still many small

brands, which are growing or

facing the decline. That is the

reason why DPS built their

strategy to enhance the

leading brands in the

following year.

The marketing strategy of

DPS is to “grow their brands through continuously providing new solutions

to meet consumers’ changing preferences and needs.” In recent years, with

customers’ growing concentration on healthy diets, beverage companies

are faced with a severe test to adjust the calorie content of products. DPS,

however, provided the consumers with a brand new idea to adopt active

lifestyles by balancing their calorie intake. The company produces a large

amount of beverages aiming at low-calories, including the TEN Line for men

and Diet Dr Pepper for woman. They continue to expand product lines into

different categories, but the tendency that non-carbonated beverages, like

water and juice, have higher sales makes the overall sales of the company

suffer a lot. Compared with its competitors’ strategies to expand the

market outside the U.S, DPS is having trouble to do so since they never

reached the market outside North America. They have to find a way out of

this social stress. It will take a lot of effort to reach the market outside since

 

 

64  

they have no idea of the consumers’ preference in Asia or Europe. The

company should also make an effort to launch new non-carbonated

beverage products.

By following the strategy to “increase presence in high margin channels

and packages”, DPS did a great job in manufacturing and distribution

coverage. Before Dec. 31st, 2013, the company owned 115 distribution

centers in its operational front United States. Moreover, these warehouses

are usually near the bottling factories to reduce the fee of transportation.

Also, they have multi-product producing facilities to reduce the fees

from transportation and co-packing process. However, bottling remains to

be a severe problem for the group because they are not independent

enough in this area. Bottler systems affiliated to Coca-Cola or PepsiCo are

undertaking 63% of the distribution assignment for DPS, which makes the

company less proactive in business. Since cooperative strategies are

unlikely to appear due to the conflict of interest among these three top

companies. Bottling system are powerful methods for Coca-Cola, as well as

PepsiCo, to restrict the development of DPS.

Also the company works closely with their retail partners in increasing

sales. DPS sells their products in millions of stores all around, but they still

keep an excellent relation with the main retailers. For example, in 2013,

DPS worked with Sam’s Club to provide promotions and, in return, earned

nearly 4% more of the volume sales that year. Another major channel for

the corporation is the dollar channel including the Dollar General and so on.

Due to the economic situation, which remains pessimistic, the dollar channel

turns out to be the fastest-growing channel for the company. Hence, the

 

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company is working on providing more flavor lineups in these kinds of store

to increase sales.

However, consumers’ loyalty has been a great competitive advantage

for DPS to continue their market performance. Being #1 in the U.S.

flavored CSD beverage industry; DPS always receives high scores from

questionnaires for its likeability, uniqueness and value. Even though, DPS’s

market share is much lower than Coca-Cola and PepsiCo, they still get

credit by providing a variety of products including ready- to-drink tea, low-

calories alternatives and so on. The TEN Line is a huge success for DPS

since it brings back many consumers who already abandoned soft drinks for

the sake of health. Therefore, the following year, they are ready to “build

and enhance the leading brands ” and they want to strengthen position in

the minds of consumers and push other brands forwards.

2. Finance

 

 

66  

According to Wheelen and Hunger’s Strategic Management and Business

Policy, the financial manager is responsible for allocating funds to the best

and most appropriate resources and areas of the business. Finance deals

with all strategic issues and controls the funds that go into as well as out of

the business. A firm must use financial leverage, which is the ratio of total

debt to total assets, in determining how debt is used to increase the

Company Industry Median Market MedianPrice/Sales Ratio 1.92 2.39 1.47Price/Earnings Ratio 17.18 20.53 20.83Price/Book Ratio 5.03 5.01 2.27Price/Cash Flow Ratio 12.59 4.85 11.59

Comparison to Industry & Market

13-Dec 12-Dec 11-DecRevenue $6.00B $6.00B $5.90BGross Profit $3.50B $3.50B $3.42BOperating Income $1.05B $1.09B $1.02BTotal Net Income $624.00M $629.00M $606.00MDiluted EPS (Net Income) 3.05 2.96 2.74

Annual Income Statements

 

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earnings available to common shareholders. Financial managers must also

perform capital budgeting, which entails analyzing and ranking possible

investments in fixed assets like land, buildings and equipment. DPS uses

both financial leveraging and capital budgeting concepts.

Dr Pepper Snapple Group continues to be the number one flavored

Carbonated Soft Drink (CSD) company in the U.S. as nearly 83% of the

company’s volume accumulates from brands that are either number one or

number two in their categories; brand CSD categories include flavors like

lemon-lime, orange, grapefruit, carbonated mineral water, and citrus while

brand non-carbonated soft drinks categories (NCSDs) consist of shelf-stable

fruit punch, apple juice, and applesauce (DPS 2013 Annual Report). Since all

competitive businesses desire to win and lead the industry, it can be

assumed that DPS would strive for its number one brands to remain in that

position and for its number two brands to capture first place in their

respective markets. By way of retail sales, DPS maintained a 20.7% share in

the U.S. CSD market in 2012 and 2013 so, just like any leading company,

DPS desires to increase that market share.

From 2011 to 2012, the company was in good standing, with a net profit

of $629 million, which led to an increase of 3.8% over the 2011 financial

year. The net profit, unfortunately, declined to $624 million in the following

year; a loss of $5 million compared to the previous year. Despite Dr. Pepper

Snapple Group’s small decline this past year, the company is still in good

standing, as its gross profit has not declined since last year and remains at

an impressive $3.50 billion. Such a large amount of profits could potentially

provide the company with exponential resources towards continuing to

excel in business for many years to come. The Dr Pepper Snapple Group

 

 

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reported revenues of $5,995 million by the end of the 2012 financial year,

which was an increase of 1.6% from the 2011 financial year. The operating

income of the Dr Snapple Group for the 2012 financial year was $1,092

million, which was a 6.6% increase over the 2011 financial year. The net

profit for the 2012 financial year was $629 million, which was an increase in

3.8% over the 2011 financial year. According to Bloomberg BusinessWeek,

Dr Pepper Snapple Group Inc. has experienced minimal variation in their

bottom line (net income to common excluding extra items), which declined

to $624 million at the year-end of 2013. However total revenues has

nominally increased by only 0.03336 percent between years 2012 and 2013.

Unfortunately, their net income has faced a deficit pursuant to the fact

that net interest expense and other operating expense totals variance of

increase are greater each year (2010-2013) while total revenues are not

increasing as abundantly. As suggested by the hoover statistics, this past

year, the Dr. Pepper Snapple Group has declined a bit in terms of the

money that it has brought in, more specifically its total net income and

operating income which have both decreased since the 2012 financial year.

With total net income dropping from $629 million in 2012 to $624 million

2013 and operating income dropping from $1.09 billion in 2012 to $1.04

billion in 2013. Dr Pepper Snapple Group reported earnings of 0.74 USD

per share in comparison to 0.62 USD per share in the previous period (2012-

2013). Year-to-date DPS has endured a downturn of diluted shares to fall at

a rate of 4.386 percent from 1.14 to 1.09. According to the statistics on

hoovers.com, the Dr Pepper Snapple Group at the end of the 2013 financial

year has earned revenue of $6 billion, a gross profit of $3.5 billion,

operating income of $1.05 billion, a net income of $624 million, and a

 

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diluted EPS (net income) of $3.05. In general, the CSD industry has

experienced a decline, as consumption habits undergo drastic changes, but

DPSG still remains profitable.

For the first quarter of 2014, Dr Pepper Snapple Group, Inc. EPS of

$0.78 compared to $0.51 in the prior year period. Core EPS were $0.74

compared to $0.53 in the prior year.

Also, reported net sales increased 1% as a sales volume increase of 1%,

favorable product and package mix and net pricing were partially offset by

unfavorable segment mix and 1 percentage point of foreign currency.

Reported segment operating profit (SOP) increased 14%, or $40 million, on

net sales growth, lower commodity costs, including an unfavorable year-

over-year LIFO comparison, and ongoing productivity improvements.

Reported income from operations for the quarter was $260 million,

including $12 million of unrealized commodity mark-to-market gains.

Reported income from operations was $197 million in the prior year period,

including $7 million of unrealized commodity mark-to-market losses. Core

income from operations was $248 million, up 21.6% compared to the prior

year period.

Dr. Pepper Snapple Group remained focused and executed the strategy

in a highly competitive and challenging environment. It maintained

distribution and availability across key CSD brands and packages and

gained distribution on the key juice and tea brands and packages. DPS

continued to invest behind its well-loved brands and engaged with

consumers and shoppers through innovative marketing programs. Rapid

Continuous Improvement (RCI) continues to be embedded throughout the

organization as the company makes good progress on its lean tracks.

 

 

70  

Its 2014 priorities remain unchanged and its teams will continue to build the

TEN platform with programming focused on driving awareness and trial,

provide consumers with a range of products that meet their evolving needs

and execute with excellence in the marketplace.

Overall, DPS is performing under the industry’s financial standards.

3. Research and Development (R&D)

Research and development (R&D) is working towards the improvement of

products and processes through innovation. In regards to Dr Pepper

Snapple, their R&D is conducted by scientists in well-equipped laboratories

where the focus is on theoretical problem areas and on improving the taste

of their beverages. The company’s objectives and strategies come from an

annual report, dated 2010, Jim Trebilcock (executive vice president of

Marketing) and David Thomas (executive vice president of Research and

Development) commented that “developing consumer insights is the key to

building brands... [DPS] has to understand firsthand consumers' wants,

needs and beliefs.” From then on, their annual reports up to 2013, have

reported that they have scientists and engineers in the U.S and Mexico

“who are focused on developing high quality products which have broad

consumer appeal,” which are sold at competitive prices and consistently

produced. Their research and development team is engaged in a variety of

product developments, such as: microbiology, analytical chemistry, process

engineering, sensory science, nutrition, knowledge management and

regulatory compliance. They focus on sweetener development, thanks to

their expertise in researching flavors and sweeteners.

 

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Included in the research and development section, the annual report

showed incurred costs of $15 million in each year of 2013, 2012, and 2011.

Also, in the same years, the company incurred costs from package

engineering of $6 million that were reported in general and administrative

expenses in their Consolidated Statements of Incomes.

DPS's mission is to “Be the best beverage business in the Americas”,

and with R&D paying close attention to what consumers want, and

continuously improving their products to be better, while offering more

choices, both sweet and healthy. It is evident in their beverage selection

where they have included teas, juices, and energy drinks.

a. R&D Manager:

Dr. David Thomas is the current executive vice president of research and

development at Dr Pepper Snapple Group.

His role oversees responsibility for all

aspects of R&D, including product

development, regulatory, nutrition, sensory

and consumer guidance, flavor and

concentrate technology, chemistry,

functional ingredient technology, process

development engineering and knowledge

management. For testing new products, Thomas and his team may put

together as many as 40 prototypes for a single beverage, testing all of

the qualitative and quantitative data available. He and the team test

location and test consumers before coming down to the last five

 

 

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samples, and then one before the final product is launched as an official

new drink.

In 2012, Thomas and his team managed to cut the Dr. Pepper Snapple

Group’s top beverages to a mere

10 calories, known as the TEN line it

included Dr. Pepper, 7-Up, Sunkist,

A&W, Canada Dry and RC. Many of

the beverages have “no aftertaste

and a more full-bodied mouth feel”

(Bhasin, 2012).

b. Technology:

DPS invests much into its Information Technology (IT) resources “to

improve route productivity and data integrity and standards”. With third

party bottlers, they continue to deliver programs that maintain priority

for their brands in the systems (DPS annual report, 2013). They use a

variety of IT systems and networks configured to meet their business

needs. The primary IT data center is hosted in Toronto, Canada by a third

party provider. They also make use of a third party vendor for application

support and maintenance, which is based in India and provides resources

offshore and onshore (DPS annual report, 2013).

c. Advantages:

DPS competitive advantage is that it focuses most of its R&D into

perfecting their flavored drinks and sweeteners. The Dr Pepper drink is

unique only to that of the company. Since its humble beginnings from its

conception in 1885 in Central Texas of Waco, the new soda drink had

 

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established itself with its unique taste among new consumers and took

off from there. Since then, to now in 2014, the company has continued to

focus its R&D department into creating new flavors and perfecting its

current line of drinks to make them healthier, lowering the calories while

still retaining that great taste.

4. Operations and Logistics

DPS’s overall mission to “Be the Best Beverage Business in the Americas” is

supported in DPS Operations through goals to strengthen their route to

market and improve operational efficiency. Their “Call to Action” program

focuses upon several aspects including operational, environmental,

resources, company sustainability, and an Operational “Rapid Continuous

Improvement” (RCI) program. As a basis of growth in DPS’s operational

efficiency these programs and policies have become the foundation

towards providing leverage in accomplishing its overall mission, of “Being

the Best” and recognizing that in order to be the best they must continually

improve and find ways to improve upon and focus their efforts on safety,

productivity, delivery, and growth. What are most notable about these

policies and programs are the time, resources, and commitment DPS has

put into solidifying each component within their operations and employees.

DPS mandates employee’s to include subsidiaries, and outside suppliers,

manufactures/ bottling companies, and distribution providers, trained to

implement these policies and procedures. They are truly focused on the Call

to action program, safety, sustainability, and RCI programs and policies.

DPS’s Director of Operations is Derry Hodson the Executive Vice President

of Operations. In his role as the Executive Vice President of the Operations-

 

 

74  

Supply chain he is responsible for the entire supply chain function including

all forms of logistics, distribution, manufacturing, quality, efficiency,

environmental sustainability, health and safety, supply chain planning,

manufacturing and engineering. He is also responsible for non-franchise

sales across the America’s. In addition, he is also directly responsible for the

implementation of the above practices that is currently leading DPS

forward.

DPS’s focus on the America’s has set DPS into three major divisions-

Canada, United States, and South America. These three divisions operate

under the same mission, policies, and objectives. However, each division’s

operational makeup is different. The operational capabilities and structure

differs per division in these ways:

a. United States:

DPS- The United States is the main Operational front of the

organization. The corporate offices and board of directors are

stationed in the US which adhere to a strict set of values, ethics, and

business behaviors derived from the strictest most critical culture, in

way of people management, environmental care/concerns, and

ethical business practices. This division sets the minimal standards;

values, ethics, and practices for each of its major divisions to ensure

DPS products stay strong in a competitive market.

DPS-United States current operations include 115 warehouses

and distribution centers strategically placed that respond to burning

issues such as demand and logistical efficiency. These factors reduce

cost and deliver a high value product to both vendors and

 

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consumers. They also maintain and run 18 manufacturing facilities

centrally placed within their distribution network. In order to increase

cost efficiency, DPS strives to reduce transportation costs, facilitate

and coordinate new product launches, and better control on time

delivery of supplies to the manufacturers.

DPS-United States logistically is geographically dispersed-

warehouses are located near bottling plants, which are near suppliers

to insure that the product availability can meet on time consumer

demand. They have 6000 plus trucks to deliver their products to

manage it’s overall transportation needs of products. Many times, it

may be too costly for DPS to rely upon its own distribution network

in satisfying demands. In addition, DPS relies upon third party

transportation/logistic providers that are selected to help reduce

costs. This extensive network provides the company with a

competitive edge to accomplish its mission.

DPS-United States also relies upon Coca-Cola and PepsiCo’s

affiliated bottler systems in their beverage concentrates division with

dependence at 30% and 18% respectively. This reliance is a negative

strength, but allows DPS to reduce costs of employing more

resources and developing their own unaffiliated bottler systems. The

primary negativity of this dependence lies in the substantial impact a

limited group of suppliers can inflict upon DPS revenue. If third party

organizations increase cost of use above profitable margins, DPS

could see a major reduction in revenues. Subsequently, due to

affiliation with these competitors if there is a price differentiation

that makes the other affiliates a priority, DPS will experience a

 

 

76  

decline in ready inventory, which will impact their ability to meet

demand. Ultimately, this will cause a reduction in revenues, unless

they are willing to enter a price war, which will drive up

manufacturing costs.

b. South America:

South-America DPS (SA-DPS) is comprised of Mexico, Caribe, and

Latino-Americana. The SA-DPS Mexico division is classified as Grupo

Penafiel. They manufacture and sell DPS brands through their own

bottling plants/operations and rely on third party bottlers. However,

while DPS relies heavily on third party logistics and delivery for

Mexico distribution; which can be considered a weakness for the

company. They also rely exclusively upon third-party bottlers and

distributions networks in Caribe and Latin America. This heavy

reliance on third party bottlers and distributors supplemented with

the limited number of competing companies which DPS typically

relies upon for bottling and distribution, may have large impacts on

revenue. Therefore, DPS cannot fully ensure compliance with its

mission, objectives, company policies, procedures, and practices;

which could increase cost, and greatly reduce their ability of

continuous improvement.

c. Canada:

DPS’s subsidiary, Canada Dry Mott’s, Inc. is based in Ontario Canada

and services the entire Canadian market. They rely primarily upon

outside distributors and bottling companies to help service the

extensive market. This heavy reliance on third party networks has the

potential to cause DPS the same weakness and issues as SA-DPS. The

 

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biggest concerns regard DPS’s ability to maintain continuous

improvement, satisfy its “Call to action” program and improve the

mission of strengthening route to market.

d. Vulnerabilities:

DPS’s manufacturing/bottling plants and distribution networks are

vulnerable to many natural conditions such as floods, earthquake,

tornadoes, and hurricanes to heavy rain and snow fall. Each location’s

vulnerabilities are different, depending on the climate and physical

location. However, DPS has set strict contingencies for such

vulnerabilities through an extensive network as well as their ability to

rely upon other distributors and bottlers to pick up the slack.

However, if extremely severe situations do occur, DPS does not

posses the ability to deliver its products to areas that are being

afflicted by natural disasters.

e. Machine/ People mix:

DPS relies upon automated manufacturing and assembly lines to

formulate and bottle its

products with a low

number of employees

and support staff. DPS

requires the same up to

date automated systems

of its select third-party

bottlers. This automotive

system requires a relatively low number of employees to feed it raw

 

 

78  

materials, and resources to produce the end product. It can

manufacture several flavors and unique beverages simultaneously,

with only a few minutes of employee re-calibration and uploading

manufacturing data into the machinery to begin the next

manufacturing process. These machines notify and alert bottle mix

variations, quality control measures, safety, and alerts to deviations

outside the limits set. These abilities provided by the machines allow

for employees to keep a high level of supervision of manufacturing

over products that meet the demands of high quality, low variations,

and high volumes.

f. Environmental Sustainability:

Environmental sustainability is not only a social responsibility to DPS,

but also an opportunity for DPS to help reduce their footprint on the

environment. They employ a “reduce, reuse, and recycle” program

to recycle resources that can be returned to the market for reuse.

(www.DRPepperSnappleGroup, 2014) They actively recycle

aluminum, plastics, paper, and other materials to reduce landfills and

return resources to the market. This allows DPS to make a difference

in the communities that they operate in. They have recycled and

diverted approximately 30,000 tons from waste disposal sites. This

also affords DPS with an opportunity to diminish cost in waste, by

recycling aluminum, plastic, and other materials. The recycling value

of unusable materials can be transferred into cost savings for

customers by reducing the cost of materials through lower depletion

of resources, and through replenishment of cost from funds received

 

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from recycled reusable wasted materials. In many ways this will help

DPS with cost reduction, and community/consumer appeal.

g. Current Operations Analysis

As of the fourth quarter in 2013 Dr Pepper Snapple Group “reported

net sales were flat. Reported income from operations was $1,046

million, compared to $1,092 million in the prior year period. Core

income from operations was $1,123 million, up 3.7% compared to

the prior year period. For the year, the company reported earnings

of $3.05 per diluted share compared to $2.96 per diluted share in the

prior year period. Excluding a $16 million unrealized commodity

mark-to-market loss in the current year and a $17 million unrealized

commodity mark-to-market gain in the prior year period, and certain

items affecting comparability in both years, Core EPS were $3.20

compared to $2.92 in the prior year period.”

(News.drpeppersnapplegroup.com, 2014)

CEO, Larry Young reported that Dr Pepper Snapple group

was able to remain focused and execute the Strategy for DPS over

the last year, even during challenges. DPS Continues to gain

distribution availability across many key brands in the corporate

network, allowing DPS to hold dollar share in the highly competitive

Market of carbonated soft drinks and the Rapid Continuous

Improvement program that has strengthened the organizational

capabilities of DPS in the Americas. While the Operations

Managers/Supply Chain Presidents do not hold strategic decision-

making, they provide valuable input of the current operations of their

 

 

80  

respective distribution areas. Ultimately the role of the Supply Chain

Presidents is to implement the strategic plan for the Operations of

DPS.

During 2013’s fourth quarter DPS’s Bottler Case (BCS) Sales

has declined 2% overall, with carbonated and noncarbonated

beverages. U.S. and Canada volume per BCS decreased 2% and

South America increased 3% BCS. DPS is maintaining a distribution

efficiency of 98% respectively in the United States, 92% respectively

in South America, and 88% in Canada, maintaining a balanced

inventory across DPS bottling and distribution networks, with the use

of DPS Bottling plants, Transportation networks, Distribution

Networks, and third party additions to these networks. The use of

PepsiCo for help in this area has greatly extended the reach of DPS

operations in the United States, while maintaining reduced cost in

accordance with DPS third Party Bottling and Distribution policies.

DPS requires that all third party Bottling and Distribution companies

insure alignment with DPS mission, and strategy. DPS also only

considers third party operation from those vendors that can do what

is needed for a cost less than that of what it would cost DPS to

perform the same operations.

The key issue affecting DPS’s BCS is the efficiency of DPS Canada

distribution efficiency. Their bottling plants, hubs, and warehouses

are located in one location that cares for a large region of consumers

and retailers. During the winter it becomes harder for DPS Canada to

fully service the market. Secondly, the U.S. Market is saturated with

 

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the top two competitors in the market, leaving DPS with little shelf

space due to DPS’s reduced popularity, greatly effecting DPS BCS in

the United States.

5. Human Resources Management (HRM)

Dr pepper Snapple Group currently employs a Human Resources

Management team that allows them to control and set up an efficient work

force. In order to do so, they need to create strong employees ready to

serve their customers. The objective of Human Resources Management is to

create good employees with high skills and

strong moral values. DPS conducts

workshops for potential employees to train

and learn before they start working with the

company. The strategy is that they welcome

all people and recruit individuals around the

world so they can get viewpoints from all

sorts of different individuals. An important

component to the successful

implementation of Human Resources

Management is to ensure the highest level

of performance by properly recruiting and

training the correct individuals.

DPS’s highest objective in regards to

Human Resources Management is to train

its employees. This is important because it instills the values of DPS and

also provides employees the proper protocols in accordance to company

 

 

82  

guidelines. This program helps employees by spelling out the quality of

work employees are expected.

The company supports their employees and leaders to become more

involved with the company and expand their understanding of their

individual cultures into DPS culture awareness workshops. They also work

with cross-functionally to solve business challenges. DPS is committed to

maximizing organizational effectiveness and individual contribution through

the diversity in the workforce. Every employee has equal opportunity and

rights in the work environment. DPS welcomes all their employees

disregarding color, race, national origin, sex, ancestry, creed, age, religion,

gender, marital status, disability, military status, medical condition, genetic

information, sexual orientation, or any other status protected under the

federal law. This applies to everyone in the company including hiring,

recruitment, compensation, promotion, benefits, termination, discipline,

and all other privileges, terms, and condition of employment.

6. Information Systems (IS)

Information systems are critical towards managing and organizing data. Dr

Pepper Snapple Group currently

employs information technology

that allows them to organize and

mitigate risks efficiently. Most

businesses aren’t able to fully

customize systems tailored to their

unique visions. By doing so, Dr

Pepper Snapple Group is actually able to better define risk management

strategies more in line with their business missions and objectives. Dr.

 

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Pepper Snapple Group employs Aon’s RiskConsole, which has the

capabilities to analyze massive amounts of data and report the most viable

options to adapt to changing trends. An important component to the

successful implementation of this information system is having accurate

data, identifying cost components and transmitting vital options to top-

level executives.

These strategies, policies and programs are not clearly stated and are

rather more implied from performance and budgets. While the RiskConsole

does provide upper management with a wide array of alternatives,

ultimately it is up to individuals to select which strategies to implement. The

information system is only responsible for outputting analyzed data while

providing options and alternatives.

The information systems are consistent with the corporation’s mission,

objectives, strategies and policies because RiskConsole analyzes all aspects

of the business infrastructure. It factors in the adapting business climate Dr.

Pepper Snapple Group must compete in to contend with the internal and

external environments. Prior to this, Dr. Pepper Snapple Group had to rely

upon many sources such as third parties but now with RiskConsole it is easy

to depend on a single reliable source for data.

The corporation is doing very well in terms of providing a useful

database, automating routine clerical operations and providing information

necessary for strategic decisions. DPS’s information systems is now

responsible for identifying and analyzing risks for all 24 manufacturing

facilities, 200 distribution centers and 20,000 employees. Pertinent to this

issue includes consolidating coverage and losses spanning across the entire

organization.

 

 

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The trends that emerged from this analysis include the advantage of

being better able to control risk. Previously, information had to manually be

uploaded into the IS, but now with the implementation of Aon’s

RiskConsole, information is automatically uploaded in the same format with

automated data transfers on monthly, quarterly or an annual basis.

These trends have had an enormous impact on past performance

because before the implementation of such an advanced IS, Dr Pepper

Snapple Group had to reach out to each of its third party members to

retrieve information. After this information was retrieved, it would have to

be formatted and uploaded manually into the system. However, now since

all these processes are automated with the use of Aon’s RiskConsole, Dr

Pepper Snapple Group can focus on the logistical aspects of the business.

The analysis does support the corporations past and pending strategic

decisions of striving to be the best beverage business in the Americas.

Through efficient information systems, Dr Pepper Snapple Group is able to

focus on its primary business strategy while reducing overall risk for the

organization.

The IS does provide the company with a competitive advantage because

many businesses do not rely upon a sophisticated IS such as RiskConsole.

Most businesses have a IS manager responsible for ensuring information

and data are up to date and reliable.

Dr Pepper Snapple Group holds a firm grip in managing its risks, but

many other businesses such as Pepsi and Coca Cola also implement third

party information systems that are automated. These automated

information systems also include the ability to analyze and disseminate data

while providing the best possible options in accordance with internal and

 

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external data. Dr Pepper Snapple Group does not have a global IS because

of the fact that it conducts it business only in the Americas. However, it

does have operations that span into Mexico, which is also governed by

Aon’s RiskConsole systems. The role of the IS manager in the strategic

management process is to oversee all computer system hardware and

software are operating properly and updated. Previously, Dr Pepper

Snapple Group had an IS manager responsible for these tasks, but now with

the implementation of RiskConsole, Aon electronic solutions now holds

those responsibilities.

H. Summary of Internal Factors The most important current factors to the company and industry are DPS’s

strengths of Research and Development (R&D), and Sustainability Initiatives.

R&D is DPS’s core strength. Through the innovation of their R&D, DPS has

developed diverse product and brand lines to service their markets. These

brands are able to serve the wide variety of consumer needs and tastes; which

provides DPS with higher competitive power against it competitors in the

industry. DPS Sustainability Initiatives are key too not only DPS but also the

industry. As waste fills landfills and pollutes the environment, the resources

DPS and the industry uses are continually being depleted. Currently the

industry is concerned with the amount of drinkable water for use in

manufacturing and the amount of waste the industry and their products

containers and packages are contributing to the landfills. Each company is

looking for better ways to manufacture their products by using fewer resources

and reducing waste. These initiatives for each company is greatly contributing

to cost reducing practices. If DPS is not on board with sustainability, it will not

 

 

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be able to competitively keep up with other firms due to cost and the

reduction of resources available; making sustainability the most important

future factor for DPS and the industry,

The most important weaknesses that DPS is facing are DPS’s reliance on

PepsiCo for distribution and Product Availability. Currently DPS has a fraction

of the shelf-space available in retail locations. Their reliance on PepsiCo has

caused DPS to be able to deliver products more effectively, but DPS has not

been able to use the advertising on distribution trucks, on fountain dispensers,

and in stores due to their reliance on PepsiCo. Customers continually think of,

DPS, as a PepsiCo brand. Their inability to remain differentiated from PepsiCo

is causing DPS to lose attention and shelf-space. If DPS wants to remain a

separate entity from PepsiCo, they need to differentiate from PepsiCo. The

future of DPS is dependent on their ability to be different.

V. ANALYSIS OF STRATEGIC FACTORS (SWOT) (See Appendix C for SFAS Chart)

A. Review of Mission and Objectives

The current mission and objective are appropriate in light of the key strategic

factors and problems. The current mission is to be the best beverage business

in the Americas. As the objectives are to create a better environment and

community for all consumers because we all share the same Earth. According

to a strategist, Richard Rumelt, a good strategy is often unexpected due to the

fact that most companies do not have one. It is said that good strategies are

obvious and simple. They are built to resolve critical problems, where their

purpose is to overcome a challenge that involves many analyses and thorough

 

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planning. It should focus on solving the fundamental issues. By focusing on

improving consumer’s lifestyles through environmental sustainability and

improving our healthy product lines, we are slowly getting closer to our

mission. According to Cynthia Montgomery from the Strategist, change is

constant. It is said that an effective strategy is based on the realization and

comprehension that change is continuous and organizations should change and

adapt accordingly to the modifications in order to retain their relevancy. As

changes are constantly made, it is important that a strategist leads the

company through all the ongoing changes. DPS recognizes that consumers are

heading towards living a healthy lifestyle, and it adapts to it. It began creating

healthier drinks such as the 10 Line, where sodas are ten calories. It also sees

that eating well is simply not enough, consumers must also live well. As a

result, they created programs that added value to the company, such as Let’s

Play, ACTION Nation, and the Five Year Environmental Sustainability Plan. By

creating a better living environment for consumers, DPS is able to adapt to the

changes and be consistent with consumer’s lifestyles.

The mission and objectives can be changed to benefit the firm and give it a

greater competitive advantage against Coca Cola and PepsiCo. As of now, Dr.

Pepper Snapple Group’s mission is to be the best beverage firm in the

Americas. However, this goal is small compared to its leading competitors. In

order to rise above its competition, DPS needs to consider globalization. By

globalizing its operations, it can expand and penetrate into a diversity of

market segments. If DPS chooses to adopt this, it can expect to be a strong

contender against its primary competition. It can expect to increase market

share abroad while also increasing its annual revenue. However, one key factor

 

 

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hindering this is all the valuable resources and coordination it requires to

expand outside of its current market.

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED

STRATEGY (See Appendix E for TOWS Chart)

A. TOWS Matrix for Dr Pepper Snapple Group, 2014

B. Strategic Alternatives 1. Strength/ Opportunity Alternatives

a. Take advantage of research and development investments to enhance leading brands, diversify new categories, and enhance healthy brands

PRO: Continued investments in R&D will improve the quality of the

leading products, improve efficiency in manufacturing, and

Sustainability Iniatives Lack of globalizationBrand diversity (Portfolio)Employee basseStrong brand Distribution Net vs Prime CompetitionBrand Rep Difficulty in decision making

Lack of shelf spaceR&D Lack of distribution in Canada & Central/South America (wt1) Internal bottling Too many brands

Competition of internal brands (wo1)Reliance on Pepsi for distribution (WO2)

Rapid continuousImprovement initiative

Marketing to newStreghten colaEnhance position as "cola alternative" Expansion of distirbution outside of USA (WO2) Acquistions: -Bevarage companies, -Bottlers/distribution (wo2)Diversifying new categories(?)-Sports drink, -Water, -coffee, -energy drink (so2)Enhance top brands (so1)(wo1)(wo2)DP/7UP bottling of west (wo2)Enhance healthy brands (SO1)

Health concernsResources & sustainability (st1)Labor costs (st1)

Competitive price- comp. lower profit margin

Strengths Weaknesses

WT1: Increase product availability in new Americas (Canda & South/central Amerca) through expansion of distribution network tapping into markets untouched by competitors

Competition: -Coca-Cola, -Pepsi/ 66% of revenue from americas, -smaller companies (wt1)

ST2: Use R&D and brand diversity to introduce cost efficient, at home beverage dispenser, offering all of the DPS brands for the machine. Takes advantage of a market untouched by competition and has only limitied competition. "Keurig for soft drinks. (RECOMMENDED STRATEGY)

WT2: eliminate weaker brands and enhance marketing and pricing strategies to eliminate threat of generic brands Taxes (Government) (st1)

Generic Brands (wt2)

Threats ST1: Improve efficiency and reliance on resources through the 5 year sustainability; decreasing tax exps., labor costs & resource expense

Opportunities SO1: Take advantage of R&D investments to enhance leading brands, diversify new categories, and enhancing healthy brands

WO: Eliminate smaller brands to enhance leading brands

WO2: Weaken reliance on Pepsico & 3rd parties to increase product availability, improve brand position to increase distribution outside of the US and enhance leading brands SO2: through R&D and susatainability initiatives create &

disburse innovative new vending & fountain machines to

Product availability (wo2) (wt1)Brand position and Management (wo2)

Wide geography manufacuturing and disribution

"Constant improvement Program"13 and 14 top brands #1 or #2 in worldwide category

TOWS MATRIX

 

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ultimately lead to higher revenue and brand enhancement. To be the best beverage company in the world will require regular R&D to stay current with the market. This also allows DPS to enter into markets it currently either does not have a position or has a weak position, such as the sports drink industry, growing energy drink industry, and bottled water industry. Finally, we live in a nation that is moving towards a more health conscious lifestyle, and for DPS to survive it must also adapt with these changes. Developing and enhancing healthier brands, like the Ten Line, keeps DPS current with the market and the ability to survive as “unhealthy soft drinks” become more and more scrutinized as unhealthy.

CON: Research and development will be expensive, so it might take a while for the return on R&D investments to become positive.

b. Through research and development and sustainability initiatives create

and disperse innovative new vending and fountain machines to enhance

top brands, corporate position, and expand product availability.

PRO: With the rising frequency of energy star rated vending

machines and innovative fountain machines, DPS can raise

brand awareness while setting a positive company image of

environmental sustainability.

CON: DPS has much lower capital than the leading competition, and

convincing storeowners and other locations to carry DPS

vending machines instead of Pepsi or Coca-Cola vending

machines will be extremely difficult, if not completely

impossible.

 

 

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2. Weakness/ Opportunity Alternatives

a. Eliminating smaller brands to enhance leading brands

PRO: DPS will gain more market share as the leading brands

generate more revenues.

CON: Eliminating smaller brands may, to some extent, hurt the sales

volume of the company no matter how small the brands.

b. Weaken reliance on PepsiCo and 3rd parties to increase product

availability, improve brand position and increase distribution, therefore

enhancing leading brands.

PRO: DPS is already dedicated to enhancing its route-to-market

through continued expansion within the U.S. by buying

regional and small business bottling and distribution

centers. By expanding in the Canadian, Southern, and

Central American regions, it will also enhance its route-to-

market there as well. Eliminate reliance on third parties will

increase quality control of products and delivery, while

decreasing profits to outside companies, especially

competitors like PepsiCo.

CON: DPS will have to find other sources of bottling supply, which

might lead to greater costs.

3. Strength/ Threat Alternatives

a. Improve efficiency and reliance on resources through the five-year

sustainability; decreasing tax expenses, labor costs, and resource

expenses

 

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PRO: This will allow for DPS to set a better brand image that is more

concerned with societal issues rather than purely focused on

profits.

CON: Costs to replace inefficient vending machines and retrofitting

bottling and manufacturing plants might outweigh the

benefits received from the initiatives.

b. Use R&D and brand diversity to introduce cost efficient at home

beverage dispenser, offering all of the DPS brands for the machine.

Takes advantage of a market untouched by competition and has only

limited competition. “Keurig for soft drinks”.

PRO: Take advantage of a growing market that has little to no

competition. Currently, only one major brand makes an at home

soda machine, Soda Stream. By entering into this market, DPS jumps

at an opportunity to capitalize before the competition

does. Additionally, if DPS can work out a way to team up with the

already established coffee brewing company Keurig, DPS could use

an already known and strong brand name to market this new soda

machine.

CON: Entering a new and untouched market requires a significant

amount of research and preparations. Even though, competitions are

limited, the company still cannot guarantee high profits since they

have no strength in new areas and there are already some

monopolies there.

 

 

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4. Weaknesses/ Threats Alternatives

a. Increase product availability in Canada and South/Central America

through expansion of distribution network, tapping into markets untouched

by competitors.

PRO: Decreases reliance on competitors, such as PepsiCo to

distribute our fountain products. By expanding distribution,

we reduce our reliance on PepsiCo, picking up our game,

which brings us closer to our goal and mission of becoming

the best beverage business in the Americas.

CON: To create and expand our distribution centers, it involves a

huge investment and risk, where there is no guarantee that

our profit would be greater than our cost. The cost of

expanding our distribution rather than relying on PepsiCo is a

huge cost.

b. Eliminate weaker brands and enhance marketing and pricing strategies

to eliminate the threat of generic brands

PRO: High risk high reward. Due to the strength of stronger brands,

and concentration on stronger brands DPS will be able to

narrow focus on their strong brands and increase revenues.

CONS: DPS will lose the revenue of weaker brands for the off

chance that they can cover the lost revenue through

enhancement of stronger brands. They are taking a large risk

of uncertainty with a reduction of weaker bands.

 

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C. Recommended Strategy Recommended Strength/ Threat Alternative b: Use R&D and marketing

strategic to create an at home beverage dispenser, offering all of the DPS

brands as flavors for the machine.

The at home soda brewing market is still in its

infancy. Currently there is only one real competitor in

this market, the Soda Stream. As it was the first to

introduce the product, it does have a solid position.

The disadvantage that the Soda Stream gives to

consumers is the lack of brand named beverages

usable through the machine. This is where DPS can

take advantage of this rising market. By offering a

similar or better version while providing flavors of the

over 50 DPS brands, we can offer a convenient, cost

friendly, product that provides the tastes and flavors

consumers love about DPS.

Another major advantage to this strategy is that DPS’ two biggest

competitors; Pepsi & Coca-Cola have no presence in this market. They neither

sell their flavors or sell at home brewing machines. This DPS an opportunity to

get there first, be the first to promote this new product before they have a

chance to gain a position.

This also provides consumers with a discount on the beverages they love.

By brewing at home, they save money on containers, beverage taxes, and

disposal of spoiled or old drinks. With the new at home brewer, you can make

the soda you want right when you want it, without worrying about wasting

what does not get consumed.

 

 

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There is also an opportunity to work with Keurig Green Mountain, Inc. They

are the creators of the most popular brand of at home coffee brewers today.

By teaming with this already established at home

brewing company, we can utilize their strong brand

name to help push the sales our new soda machine.

Consumers will see the Keurig logo, know that the

coffee makers have an amazing reputation, and be

intrigued and curious about also owning a Keurig

soda machine as well.

Finally, there is a sustainability initiative that

comes with the new machine. By allowing consumers to make their own drinks

into their own containers, DPS can drastically cut down on reliance on

commodities such as drinking water and plastics, while drastically decreasing

production waste.

VII. IMPLEMENTATION A. Implementation Programs

Implementation is the process that turns strategies and plans into actions in

order to accomplish strategic objectives and goals. It has been said that

strategy implementation is as important, or even more important, than a

company’s strategy. Strategic implementation is the activities performed

according to a plan in order to achieve an overall goal. For instance, a business

strategic implementation may involve developing and executing a new

marketing plan to increase the company’s sales. As for Dr Pepper Snapple

Group, our main focus is to expand our distribution centers and leading brands

 

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to further market our products. Some programs that will be implemented to

help us reach our goals are to develop flavored syrup that can be delivered

directly to consumer’s homes, to create mobile applications that allows

consumers to monitor or manage the device and order supplies, to create a

division to develop a Keurig soda machine, to launch opportunities that

encourage consumers to create and suggest new flavors, and to create

marketing campaign to promote the new Keurig machine.

B. Procedures A new operating procedure will definitely need to be developed in order to

accommodate Dr Pepper Snapple Group’s strategy implementation to expand

its distribution and leading brands. Some procedures that will be taken in order

to implement the programs are to team with Keurig to utilize their established

brand name, to create the best and low cost machine through Research and

Development, to market and research to find out what flavors and brands to

promote, and to establish a new manufacturing process for creating smaller

packaged syrups.

C. Action Plans 1. Program objective: Customer

Dr. Pepper Snapple Group’s program objective is to focus, develop, and

implement a marketing campaign for Dr. Pepper Keurig soda fountain,

application program as well as a direct buy and delivery program. The

program activities consist of seven unique processes. One of the program

activities includes identifying the best three possible advertising agencies

for a new campaign. The first action step is to review prospective

 

 

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advertising agencies from the beginning to the end of September. At the

beginning of October until the fifth of October, potential agencies will be

discussed with upper management; where the final decision on the top

three agencies should be decided by the fifth in order to move onto the

next program of determining specifications for advertisement and contact

agencies on the sixth of determining specifications for the advertisements.

If everything goes as planned, a draft for the advertisement request should

be done on October 8th and the advertising agencies will be contacted the

following day. The third program activities are to ask for bid and proposal

for new advertising campaign to be submitted to the Marketing Manager.

The first action plan is to prepare proposals for advertising agencies

starting from November ninth until December ninth. Beginning December

tenth, the next step is to present the proposals for advertising agencies.

The fourth program activity includes selecting the best proposal for a

new ad campaign to be submitted to the marketing manager. Beginning

December fifteenth, the marketing manager will select the best proposal,

which is imperative towards getting the product on the correct path. The

following day the manager will meet with the agency and inform the others

of the decision made. While the manager makes decisions, it is necessary to

inform others of the logic and reasoning behind the selected proposal. The

fifth program activity consists of fine tuning and preparing for all

advertising media. The first step towards this process will take place on the

December 16th and last until January 4th, which begins with fine-tuning the

proposal. The following day will involve presenting the final proposal and

ad campaign to the Board of Directors for review. After the review is

complete, an ad agency will begin to prepare the necessary components for

 

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the campaign the following day. The sixth program activity is to air the ad

on radio, TV and promotions in stores, billboards and other promotional

opportunities. After the proposal has been created, reviewed and

implemented, it is now time to select the most viable media outlets to

disseminate the ad campaign. Beginning February first, we will begin to air

the ad on TV and radio. Next, we will display the advertising in stores to

promote the new fountain. Finally, we will display advertising in other

selected outlets.

Lastly, the seventh program activity will consists of measuring the

results of campaign in terms of view, recall and initial sales. The first action

step for the program will begin on April first, by gathering recall data of all

advertising media. Then, an evaluation of the sales data will begin the

following day until April tenth. A preparation of analysis for the advertising

campaigns will begin between the tenth until the fifteenth. In conclusion,

these are the seven program activities and their steps in order to achieve

DPS’s objective of marketing a campaign for Dr Pepper Keurig Soda

Fountain, App Program, and Direct Buy and Delivery program.

2. Program objective: Internal Business Process

DPS’ program objective for the internal business process is to improve

distribution and route to market operations. This will be accomplished

through six program activities. The first activity will be to identify strengths

and weaknesses of current manufacturing and distribution processes. The

action steps that will be taken during this program activity will be to create

a visual layout of the current distribution and route-to-market process and

then to evaluate the layout to identify existing strengths and weaknesses.

 

 

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The next program activity is to choose two teams of DPS employees to

create alternative plans. The steps to accomplish this activity are to employ

top DPS performers in supply chain management and to ensure that the

plans created exploit strengths to improve weaknesses.

The third program activity is to compare existing and proposed

plans. This will be accomplished by putting all three distribution and route-

to-market plans side by side for comparison and then evaluating them

based on time to market, fuel consumption, emissions and resources

expended. The next program activity is to present the winning plan to top

management. The team that produces the most efficient alternative to the

current distribution and route-to-market plans will give a presentation of

their findings to top management. The program will be put into action upon

approval of top management. The next program activity is the

implementation of the approved distribution plans. The action steps that

will be use to implement this activity are to give briefings on new

distribution plan to applicable personnel and make necessary changes to

distribution process. Finally an evaluation of the new plans efficiency will

need to be completed. This will be done through a before/after comparison

of time to market, fuel consumption, emissions and resources.

3. Program objective: Learning and Growth

Dr. Pepper Snapple Group’s program objective for learning and growth

includes creating and implementing a direct buy/home delivery program.

The objective contains 7 separate program activities. The first program

activity is to design and determine the needs for the program. The first

action step that needs to be taken is to evaluate the internal and external

 

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networks, which should begin on June tenth until the end of the month. At

the beginning of July, the top three alternatives should be picked. The

request for alternatives to draft and submit proposals should be completed

by the second of July. The following program activity is to determine

distribution network that should be used. The first action plan for this is to

begin drafting the alternative proposals between July 2nd till the thirtieth,

and the proposal will be submitted the following day. At the beginning of

August to the eighth, operations manager will select the best proposal and

submits their decision to management. The third program activity is to

establish policies and procedures. A draft policies and procedures for

implementation will operate between the tenth to the end of August. A

submission to the upper management will be submitted at the beginning of

September. On the second to the sixth, policies and procedures will be

refined.

The fourth program activity includes initiating stock and preparing for

distribution. From September six to the fifteenth. This first begins with

determining initial stock needs. The following day, we will acquire the initial

flow of stock. This entire process will be succinct with preparing for full

distribution until January. The fifth activity consists of beginning advertising

campaign and implementing an ordering application. This step involves

implementing an ad campaign, which will begin on February first. The sixth

activity is to distribute to customers. This process is about planning and

coordinating distribution to our consumers. Lastly, the seventh activity is

evaluation. We must begin by collecting sales data and distribution data.

This will give us a more detailed look and clear insight as to what is

occurring. This process is quite extensive and will occur from February fifth

 

 

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to the end of May. The following day, we must evaluate the data. The raw

data must be processed in order to provide useful and valuable information.

B June eleventh, we will present our findings to upper management.

4. Program Objective: Mobile App

In effort to reach a vast array of consumers and allow for a more virtually

convenient experience, Dr Pepper Snapple Group will provide users with

the ability to utilize a mobile app in conjunction with the Keurig

machine. We aim to give consumers the accessibility to virtually monitor

and manage their machine wherever they are. Giving users the ability to do

so gives them convenience for the fact that they can essentially control their

machine without having to physically be there. The mobile app will have a

simple to use interface in effort to appeal to a broad range of consumers,

which our target age range is from 13-50 years old. The app will consist of

multiple options including the ability to monitor dispensing usage, which

will automatically alert users when to refill ahead of time. For users’

convenience, we will establish a subscription to users who would like the

opportunity to be notified via mobile app when new flavors are out or

special pricing is available. The advertising campaign will incorporate

promotion of both android device users as well as Apple users.

The necessary action steps we will take include researching and

developing the actual app to be easy to operate. Surveying consumers’

choice of what app format to use will be used to create the most universal

template. The app will be appealing to our targeted consumers through

hiring a sophisticated design team. A developing team will be hired to

create the ability to connect with the Keurig machine via bluetooth, which

 

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will enable capabilities of sending information automatically from the

machine to the app. Easy to understand videos will be created as

directional steps to follow to assist our users. We will hire an advertising

agency o promote the app to impact both Apple users and Android

users. We understand that Apple users and Android users have different

preferences, therefore we’ll be sure to assist to their specific taste be

establishing custom interfaces in accordance with their operating

server. Within the app itself, users will automatically be prompt with the

option to sign up for the free subscription option upon downloading the

app. A team will be established to manage the subscription and

continuously update as necessary with promotions as well as potential

savings for our consumers.

5. Program objective: Financial

Dr. Pepper Snapple Group’s program objective for Financial. The objective

contains 4 steps. The first one is design and determine how to increase the

profit. First, The company will come up with promotions to try to increase

their profit. This program can start at the end of the first period so DPS can

know what promotion they should come up with in order to increase their

profit. Second, expand more about company activities through R&D by

advertising so consumers can buy more products from DPS. To show what

the company has, this will increase the profit and reduce a cost for

advertising in other ways. This program will help DPS to make more profit

and see the weakness of the sales. The program should start at the

beginning of the second period. This can help financial become more

stable.

 

 

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Third, DPS should try to increase stock value per share, this will enable

DPS to control their budget through their stock and maintain the position

from stock. In order to do that, DPS will contribute a total of 100,000

volunteer hours and attain an annual giving level of $10 million in charitable

cast donation, with the majority of support in finance. This will help DPS

become the first beverage in the Americas. This program will start between

second and third period so DPS can help their consumers on financial and

make them trust in DPS brands. Lastly, DPS needs to evaluate on their

performance so they can know how well they perform throughout the year.

This can help the board and company see the strength and weakness from

the number of revenue. This evaluation can help on how to improve the

sales and DPS can see what they need to fix to make it better. This will help

DPS fix from their mistake and make it become better in the next year. This

program can start at the end of fourth period so they can evaluate from the

beginning until the end of the year. At the same time, DPS can implement

their program objective and make it stronger for the next year program.

The DPS team will be help and established to manage the financial for our

consumers.

6. Program Objective: Environmental and Production Resource

Sustainability (WRC)

Dr. Pepper Snapple Group’s (DPS) program objective of Environmental and

Production Resource Sustainability is to help DPS reduce resource

consumption, reduce waste, and recycle waste for future resource use.

Currently DPS is concerned with the amount of solid waste from their

manufacturing going to landfills. This is not good for the environment nor

 

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DPS' cost efficiency. DPS wished to increase the percentage of material use

per unit, and reduce the overall waste. DPS also realizes that resources are

being depleted and are in need of replenishment. Through the recycle and

reuse that resource material instead of sending it to landfills, they can

replenish resource supplies available and reduce cost of production. These

actions will also lead DPS into a new position within their customer’s minds-

Environmentally friendly. While this is a political position, it is the right way

of doing business, plus it helps DPS remain competitive through cost

reducing practices like this.

This program is a part of our learning and growth strategies and

requires 5 Action Steps- Evaluation of current production resource use,

policy, program, and procedure development, employee training,

implementation and review. From evaluation to implementation this

program should take an approximate time frame of seven months. The

Director of Manufacturing will be in charge of this program and the Director

of Operations will review the success of the program. To be considered

successful this program must reduce the cost of production by the cost of

implementation and 10%. It also needs to increase material use efficiency

by a min of 5% annually in all process of manufacturing. Lastly, the program

must reduce DPS solid waste discarded by 50%. These numbers may seem

extreme, but the environment requires extreme action to insure we will still

be able to provide our products to our customers.

 

 

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7. Program Objective: R&D Design and Build for Keurig soda

dispenser

Dr. Pepper Snapple Group’s (DPS) program objective to use R&D to design

and build a Keurig soda dispenser is an internal business practice objective

to help fulfill the business strategy of DPS. This dispenser is the next big

thing in the market, and it offers environmental stability by reducing

packaging needs, and reduces distribution of in home products from

consumption. Customers will be able to produce more beverage per

volume through the machine than a six or twelve pack of beverage will

offer, and at a reduced cost.

This is a highly feasible program that requires 7 Program activities:

Research, team up with Keurig, contract licensing, develop dispensers, test,

and distribute. This program is a supplement to other R&D programs and

Marketing Programs that are aligned with the development of this product.

The biggest obstacle in this program is the DPS ability to team up with and

use the brand Keurig. We believe that due to their success in coffee

dispensers, their brand will help offer greater success in this new product

area.

D. Matrix of Change The Matrix of Change is a tool that is used to help managers anticipate the

complex interrelationships that surround change, and identify critical

interactions among processes. It provides a simpler understanding of the

issues of feasibility, sequence, location, pace, and stakeholder’s interest. In

other words, this tool helps managers deal with problems such as how fast

 

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change should proceed, the order that the changes should take place, and

whether the systems that were proposed are stable and coherent.

1. Existing Practices

a. Sustainability & efficiency: It is the practice about operating responsibly

and minimizing our environmental impact and having a positive influence

on society.

b. Corporate philanthropy: Through grant giving, program partnerships

and disaster relief, DPS is committed to driving meaningful change by

doing good things with flavor.

c. Health & wellness: DPS is going to provide a full range of products, with

at least 50% of innovation projects in the pipeline focused on reducing

calories, offering smaller sizes and improving nutrition, which encourage

people to adopt into active lifestyle and fitness.

d. RCI: Rapid Continuous Improvement (RCI) efforts will focus on safety,

quality, delivery, productivity and growth. All business activities align to

these five key areas, and improvements within them will create value not

just for DPS, but also for customers and other stakeholders. Almost

every location and function within DPS will house a full-time RCI

professional.

e. DPS campus/ call to action: Getting employees active in taking actions

to win a changing market. In details, it is the program to get employees

accountable, customer-centric, transparent and honest, and also keep

them unified behind our vision and purpose. The program includes a

daylong training course designed to educate employees on every aspect

of our business, from innovation pipeline to our route to market. To date

 

 

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more than 6000 employees at more than 75 locations have taken the

class throughout the U.S., Canada and Mexico.

f. Let’s play: DPS aims to remodel and build more playgrounds for children

to encourage a healthy and active lifestyle.

2. Target Practices

a. R&D design and build for Keurig: DPS plans to license with Keurig to

develop a soda stream style machine using DPS products for consumers

to use conveniently at home.

b. Create and implement direct buy/home delivery program

c. Develop mobile app designed to establish convenience for the user:

With the mobile application, consumers are able to keep track of their

machine and make orders when it is needed.

d. Environmental and production resources sustainability: DPS currently

has a Five Year Environmental Sustainability Plan that started back in the

year of 2007. If everything that was planned is achieved or shows great

progress by 2015, we will continue to implement and enhance the

sustainability through improvement and reevaluations.

e. Improve distribution and route to market operations

 

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VIII. EVALUATION AND CONTROL A. Measuring Performance

The current information system is capable of providing sufficient feedback on

implementation activities and performances. For instance, RiskConsole by Aon

has the capabilities of data aggregation and providing viable solutions to

burning key issues. However, it is not proficient at measuring critical success

factors. Top management and executives must personally analyze the external

environment and then decide which options are the most beneficial for the

business. The performance results are automatically mapped out and split into

different categories such as manufacturing, distribution or bottling.

 

 

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Management can use these separate areas to pinpoint critical issues afflicting

each unique division. The information that is collected is considered timely

because it is analyzed and aggregated on a monthly basis.

B. Balanced Scorecard The Balanced Card is a business tool that gives managers a better

understanding of how their companies are really doing. It supplements

traditional financial measures of performance from three different

perspectives, those of customers, internal business processes, and learning and

growth. It was developed because companies around the world transformed

themselves for competition that is based on information, their ability to exploit

intangible assets has become far more decisive than their ability to invest in

and manage physical assets. The balanced scorecard supplements traditional

financial measures with criteria that measure performance from three

additional prospective- customer, internal business processes and learning and

growth. This enables managers to track financial results while simultaneously

monitoring progress in building capabilities and acquiring the intangible assets

they need for future growth. It also introduced four new management

processes that separately or in combination link long-term strategic objectives

with short-term actions. The processes are translating vision, communicating

and linking, business planning, and feedback and learning.

This Strategic Plan’s Balanced Card for DPS is centered upon the current

mission- To Be the Best Beverage Company in the Americas, and the corporate

strategy of this plan- To expand Company Activities, and the business strategy

to use R&D and brand diversity to introduce cost efficient, at home beverage

dispenser, offering all of the DPS brands for the machine. Takes advantage of a

 

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market untouched by competition and has only limited competition; "Keurig

for soft drinks". The objectives for each aspect of the scorecard- Financial,

Customer, Internal Business Process, and Learning and Growth, are aligned

with each other and build upon each other to ultimately Increase Shareholder

and customer confidence in DPS. Employee moral builds Employee confidence

and they become more willing to make suggestions to help the company be

more proficient, efficient, and increase product quality; which also leads to

higher more moral. Employee suggestions lead to company and environmental

sustainability which also increases morale. Company and environmental

sustainment allows DPS to operate more efficiently, increase productivity,

reduces cost, reduces waste, and allows the DPS to use more resources to

improve products and process; which leads to high quality, lower defects, and

lower rework; which provides the customer with higher satisfaction due to

quality and cost reduction. As customers become more satisfied and purchase

more product, DPS gains the ability to gain more shelf space, allowing for

more products to be available to our customers for consumption driving up

sales, revenue, and profits; which gain shareholder confidence, increasing DPS

stock value and allows DPS to provide higher dividends to shareholders.

 

 

110  

1. Finance

Objective1: Maximize shareholder’s wealth to the highest level possible.

Measure 1: Increase stock value per share

Target 1: Increase price per share from $57 to $65 per share by the end of

fourth quarter of 2014

Initiative 1: Expansion of company activities increasing R&D activities and

developing innovative new products, increasing revenue and

decreasing cost through product innovation.

Objective 2: Maximize Shareholders confidence

Measure 2: Increase stock Value Per Share

Target 2: Increase price per share from $57 to $65 per share by the end of

fourth quarter of 2014

Initiative 2: Expansion of company activities increasing R&D activities and

developing innovative new products, increasing revenue and

decreasing cost through product innovation.

Objective 3: Highly Profitable

Measure 3: Amount Dividend increase relative to Profit Increase

Target 3: Profit increase by 10% annually, Dividend increase by 10%

annually

Initiative 3: Expansion of company activities increasing R&D activities and

developing innovative new products, increasing revenue and

decreasing cost through product innovation.

 

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2. Customer

Objective 1: DPS Brands to become the preferred beverage and flavors

Measure 1: Market Industry Report, Industry Brand Rank

Target 1: 14 DPS Brands rank #1

Initiative 1: Product quality and position improvement

Objective 2: Highly available and Exposed

Measure 2: Increased Shelf Space available for DPS and Increase Marketing

media output

Target 2: Shelf space available increase by 20% and Marketing media

output by 30%

Initiative 2: Marketing

Objective 3: Brand Choice Availability

Measure 3: Increased Shelf Space

Target 3: Shelf Space available and used Increase by 20%

Initiative 3: R&D for regional Brand Choice and Marketing

Objective 4: DPS is the premier provider of in home soft drink dispensers

Measure 4: Market Industry Report, Industry Ranking, for In Home Soda

Dispensers and Revenues

Target 4: #1 ranking in Home Soda Dispensers and Revenue increase by

20%

Initiative 4: R&D Co Op with Kuerig- Soda Dispensers

 

 

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3. Internal Business Process

Objective 1: Manufacturing and Bottling Productivity, Efficiency, and Zero

Defects

Measure 1: Daily Production Reports

Target 1: a) Increase Daily production by 10%, b) Increase efficiency by

15%, c) Decrease waste by 20%, d) decrease defects by 18%

Initiative 1: Rapid Improvement Initiative

Objective 2: Enhance Distribution and Route to Market

Measure 2: Amount of Third party reliance

Target 2: Decrease Third Party Reliance 100%

Initiative 2: Expand DPS Internal Distribution Network

Objective 3: Product Flavor and Health Innovation

Measure 3: Number of DPS quality Flavors and Healthy Alternatives

available to consumers

Target 3: Increase quality flavors and health alternatives by 4%

Initiative 3: Flavor and Healthy Alternatives R&D

4. Learning and Growth

Objective 1: Environmentally Friendly Production Measure 1: Reduce DPS Production Solid Waste Target 1: Reduce Solid Waste by 25% in Production Process Initiative 1: Environmental and Production Resource Sustainability/ Recycle,

Reuse, Reduce Initiative Objective 2: Environmentally friendly Distribution Network Measure 2: Amount of Fossil fuels consumed in Distribution Network Target 2: Reduce Fossil Fuel Consumption By 20% Initiative 2: Environmental and Resource Distribution Sustainability

 

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Objective 3: Process and Procedure Improvement Measure 3: Operations Annual Cost Target 3: Annual Operational Cost Reduced by 15% Initiative 3: Call to Action

ACTION PLANProcess:Theme:FINANCIAL

1. Maximize Shareholders wealth to highest level

possible

1, 2. Increase stock Value Per Share

1,2. Increase Price per share from $57.00 to

$65.00 per share by the end of fourth quarter

20142. Maximize Shareholders

confidence

3. Highly Profitable3. Amount Dividend

increase relative to Profit Increase

3. Profit increase by 10% annually, Dividend

increase by 10% annually

CUSTOMER 1. DPS Brands to become the preferred beverage and

flavors

1. Market Industry Report, Industry Brand Rank 1. 14 DPS Brands rank #1 1. Product quality and

position improvement

2. Highly available and Exposed

2. Increased Shelf Space available for DPS and

Increase Marketing media output

2. Shelf space available increase by 20% and

Marketing media out put by 30%

2. Marketing

3. Brand Choice Availability 3. Increased Shelf Space3. Shelf Space available and used Increase by

20%

3. R&D for regional Brand Choice and

Marketing

4. DPS is the premier provider of in home soft drink

dispensers

4. Market Industry Report, Industry Ranking, for In

Home Soda Dispensers and Revenues

4. #1 Ranking in Home Soda Dispensers and

Revenue increase by 20%

4. R&D Co Op with Kuerig- Soda Dispensers

INTERNAL

1. Manufacturing and Bottling Productivity, Efficiency, and

Zero Defect1. Daily Production Reports

1. a) Increase Daily production by 10%

b) Increase efficiency by 15%,

c) Decrease waste by 20%, d) decrease defects

by 18%

1. Rapid Improvement Initiative

2. Enhance Distribution and Route to Market

2. Amount of Third party reliance

2. Decrease Third Party Reliance 100%

2. Expand DPS Internal Distribution Network

3. Product Flavor and Health Innovation

3. Number of DPS quality Flavors and Healthy

Alternatives available to consumers

3. Increase quality flavors and health alternatives by

4%

3. Flavor and Healthy Alternatives R&D

LEARNING and Growth

1. Environmentally Friendly Production

1. Reduce DPS Production Solid Waste

1. Reduce Solid Waste by 25% in Production

Process

1. Environmental and Production Resource

Sustainability/ Recycle, Reuse, Reduce

Initiative

2. Environmentally friendly Distribution Network

2. Amount of Fossil fuels consumed in Distribution

Network

2. Reduce Fossil Fuel Consumption By 20%

2. Environmental and Resource Distribution

Sustainability3. Process and Procedure

Improvement 3. Operations Annual Cost 3. Annual Operational Cost Reduced by 15% 3. Call to Action

Balanced Score CardSTRATEGY MAP

Measurement Target

BALANCED SCORECARED

1,2, 3. Expansion of company activities

through R&D, Marketing and,

Internal Business Processes

InitiativeObjectives

Increased Accounts Recievable, Lowered Operating Expence, Higher

return on capital

Employee Morale

Employee Suggestions

Company and Enviromental Sustainment

Process and Product Improvement

Customer Satisfaction

Higher Quality, Lower Defects , & Lower Rework

Increased Divident Paid

Increased Stock Value

Increased shelf space

 

 

114  

APPENDIXES Appendix A: EFAS Chart for Dr Pepper Snapple Group, 2014

EXTERNAL FACTORS Weight Rating Weighted Score Comments

Enhance Customer Interactions 0.11 4 0.44

There is an opportunity to expand through technology and social media to enhance

customer intaction. Opens up a two way route for information from the consumer to us, and marketing and promotions from us to them.

Enhance top brands 0.1 5 0.5 Enhancement of top brands will drawl in more consumer focus

Expansion of distribution outside of USA 0.08 4 0.32

By gaining a better foot hold in distribution outside of the US DPS can strengthen their

performance abilities and distribute for other brands.

Acquisitions: Brands, bottling companies, and distibution centers 0.08 4 0.32 Through acquisitions DPS can gain stronger

brands, and improve their network

Diversifying new categories 0.08 3 0.24DPS can gain market share of these perspective

markets and gain higher revenues through a more diversified product and brand portfolio.

DP/7UP Bottling Company West 0.06 5 0.3 DP/7UP west is the last US DP bottling subsidiary not fully under DPS control.

Marketing to new markets 0.06 3 0.18New American Markets that are untouched by the industry provide new consumers without

brand preferences

Strengthen cola brand 0.04 2 0.08DPS cola RC Cola has lost its appeal with

customers and is in need of strengthening with in the market

Enhance position as "cola alternative" 0.04 2 0.08

DPS strengths of providing cola alternatives have given DPS a distinct advantage by

providing alternative products to the norm, creating a distinction between DPS and

competitors

Health concerns 0.1 5 0.5Americans have been transitioning to healthier lifestyles, creating a stigma that soft drinks are

unhealthy

Resources & sustainability 0.09 4 0.36 Resources are in danger of depletion and threaten sustainability

Labor costs0.06 3

0.18 Labor cost are on the rise and threaten DPS ability to maintain competitive pricing

Taxes (Government) 0.04 2 0.08 Increased Taxes threaten price/ cost strategiesCompetition: -Coca-Cola, -Pepsi/ 66% of revenue from Americas, -smaller companies 0.04 4 0.16 Top Competitors own majority of the market in

the AmericasGeneric Brands

0.02 3 0.06 Some DPS brands are heavy considered and compared to Generic Brands

Competitive price- comp. lower profit margin 0.02 4 0.08

Due to intense competition extensive price threatens DPS ability to maintain competitivness

and maintain profitsTotal Scores 1.00 3.88

OPPORTUNITIES

THREATS

 

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Appendix B: IFAS Chart for Dr Pepper Snapple Group, 2014

INTERNAL FACTORS Weight Rating Weighted Score Comments

R&D 0.1 5 0.5 Core competency

Sustainability Initiatives 0.09 5 0.45Through these initiatives DPS replenishes

resources to the market, reduces cost, and insure future ability to remain competitive

Brand diversity (Portfolio) 0.08 4 0.32 DPS Portfolio gives DPS larger market presence and consumers increased variety

Employee base 0.05 4 0.2DPS maintains high quality and talented

Employees, giving DPS higher ability to remain competitive

Strong brand 0.05 3 0.15 Strong Brands increase company presence, market position, and consumer recognition

Brand Rep 0.04 3 0.12 DPS has an established a good Brand reputation that Shareholders and consumers recognize.

Wide geography manufacturing and distribution 0.04 2 0.08 Gives DPS market advantage and ability to

service multiple marketsInternal bottling 0.03 3 0.09 Helps DPS reduce cost and insure quality

13 of 14 top brands #1 or #2 in worldwide category 0.03 5 0.15

These brands help DPS maintain exposure, market presence and allows DPS to remain

highly competitive

"Constant improvement Program" 0.02 5 0.1Insure DPS increases proficiency, efficiency, reduce variation and continual improve to

remain cost efficient and competitive

Reliance on Pepsi for distribution (WO2) 0.1 5 0.5 Cost DPS differentiation from PepsiCo in the market place

Product availability (wo2) (wt1) 0.09 4 0.36

DPS is unable to maintain full availability of their products due to limited shelf space and reliance

on third party distributers, bottlers, and manufactures

Brand position and Management (wo2) 0.08 4 0.32Brand position appears to be decreasing as more consumers affiliate DPS products with

generic or PepsiCO Product

Competition of internal brands (wo1) 0.06 2 0.12Each brand DPS offers to consumers adds competition to both external and internal

brands.Lack of distribution in Canada & Central/South America (wt1) 0.04 5 0.2 DPS has to rely heavily on third party co ops,

which increases cost and reduces controlToo many brands 0.04 3 0.12 DPS focus is diverse and concentrated

Lack of shelf space 0.03 5 0.15

DPS brands are not considered to be in as much demand as competition brands, which affects

availability of products and reduces the number DPS can place in view of the consumer

Difficulty in decision making 0.02 4 0.08Leads DPS to fall behind competition costing market position and decreases DPS ability to

compete effectively

Distribution Net vs Prime Competition 0.02 3 0.06DPS distribution network is inferior compared to

competitors, which effects DPS overall competitiveness

Lack of globalization 0.01 2 0.02 Limits the number of markets and revenues available to DPS

Total Scores 1.00 4.09

STRENGTHS

WEAKNESSES

 

 

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Appendix C: SFAS Chart for Dr Pepper Snapple Group, 2014

Short Intermediate LongS1 R&D 0.15 5 0.75 X X Core competency

S2 Sustainability Initiatives 0.10 5 0.5 X

Through these initiatives DPS replenishes resources to the

market, reduces cost, and insure future ability to remain

competitive

W1 Reliance on Pepsi for distribution 0.05 5 0.25 X X Cost DPS differentiation from PepsiCo in the market place

W2 Product availability 0.12 4 0.48 X X

DPS is unable to maintain full availability of their products due

to limited shelf space and reliance on third party

distributers, bottlers, and manufactures

O1 Enhance Customer Interaction 0.15 4 0.6 X X

There is an opportunity to expand through technology and

social media to enhance customer intaction. Opens up a two way route for information from the consumer to us, and

marketing and promotions from us to them.

O2 Enhance top brands 0.20 5 1 X X X Enhancement of top brands will drawl in more consumer focus

T1 Health concerns 0.13 5 0.65 X X

Americans have been transitioning to healthier

lifestyles, creating a stigma that soft drinks are unhealthy

T2 Resources & sustainability 0.1 4 0.4 XResources are in danger of

depletion and threaten sustainability

1.00 4.63Total Score

STRATEGIC FACTORS Weight Rating Weighted Score

DurationComments

 

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Appendix D: Implementation, Evaluation and Control Plan for Dr Pepper Snapple Group, 2014

Strategic Factor Action Plan

Priority System

(1-5) 1 = Top Priority

Who will Implement

Who Will Review

How Often to Review

Criteria Used

R&D R&D Design and Build for Kuerig Soda 1 Director of R&D CEO Quarterly Product Consumer reviews

Sustainability Initiatives Environmental and Production Resources Sustainability 2 Director of Operations CEO Quarterly Solid Waste Rate, Recycling Rate, and Resource Rate

of use

Reliance on Pepsi for distribution Improve distribution and route to market operations 2 Director of Distribution CEO Quarterly Efficiency rate, and Cost of Distribution

Product availability Create and implement direct buy/home delivery program 4 Director of Distribution CEO Quarterly Sales, Revenues, and Cost evaluation

Enhance Customer Interaction Develop mobile app designed to establish convenience for the user 4 R&D Director CEO Quarterly Cost of Implementation vs.. Revenues generated

Enhance top brands Develop and Implement Marketing Campaign for Dr Pepper Keurig Soda Fountain, App Program, and Direct Buy and Delivery program. 1 VP of Marketing CEO Quarterly Sales, Revenues, and Cost evaluation

Health concernsEnhance focus on marketing the innovative and healthier alternatives DPS is producing and selling. Many of the top brands now come in a

tem calorie version2 VP of Marketing CEO Quarterly Sales of new products, changes in market share

Resources & sustainability Environmental and Production Resources Sustainability 2 Director of Operations CEO Quarterly Solid Waste Rate, Recycling Rate, and Resource Rate

of use

Implementation, Evaluation and Control Plan

 

 

118  

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