CASE faster in the manufacturing and distribution coverage.

CASEABSTRACTDr Pepper Snapple Group(DPSG) is a major integrated brand owner in soft drinks industry.

Currently,DPSG perform well with their soft drinks beverages brands and holds strongpositioning in the US, Mexico and Canada. DPSG were the fourth of the largestnon-alcoholic beverage in the US after soft drinks, sport drinks and bottledwater. Furthermore, DPSG can rapidly adapt in the market changes and growfaster in the manufacturing and distribution coverage. DFSG company’s end ofyear 2010 statement of financial, competitor information and organizationalcharts includes the comprehensive strategic management case. To enable studentsto evaluate current strategies, the company sufficient internal and externaldata are provided and recommend a three-year strategic plan. DFSG common stockis publicly traded under the ticker symbol DFSG at their headquarters locatedin Plano Texas.

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DFSG company produce and distribute the soft drinks beverage inNorth America including Canada, Mexico and US. Non-alcoholic drinks likes flavoured,carbonated and non-carbonated soft drinks, teas and juices are offered by theDFSG. The non-alcoholics brands that are famous are Dr Pepper Snapple, HawaiianPunch, A Root Beer, Mott’s, VERNORS, Schweppes and Royal Crown Cola. DrPepper Snapple soft drinks are at number three rating in the soft drinksbeverages industry, number one famous brands are Coke, followed by Pepsi. DFSGis a leading producer of flavoured soft drinks in Caribbean and North Americawith more than 50 brands total and also have 6 non-cola soft drinks of top 10soft drinks.

Sunkist, 7UP, soda, Crush, Clamato, Rose’s and Mr & Mrs Tmixers are DFSG famous soft drinks beverages. Now, DPSG want to grow and theywant to introduce new brands which is energy drinks into the market to expandtheir portfolio. VISION(Proposed)Our vision is to become the best soft drinks beveragesin the world.  MISSION(Actual statement)1.      Tobecome a leader in soft drinks beverages industry.

2.      Toproduce high quality soft drinks beverages to our customers.3.      Toshow respect to every employee and give them the best chance to be successful.

CompetitiveProfile Matrix (CPM)            Dr. Pepper Pepsi Coke No. Critical Success Factors Weight Rating Score Rating Score Rating Score 1 Price Competitiveness 0.10 4 0.

40 3 0.30 2 0.20 2 Top Management 0.04 2 0.08 3 0.12 4 0.

16 3 Product Quality 0.09 4 0.36 3 0.

27 2 0.18 4 Customer Loyalty 0.09 1 0.

09 3 0.27 4 0.36 5 Market Share 0.08 1 0.08 3 0.

24 4 0.32 6 R 0.06 4 0.24 3 0.18 2 0.12 7 Employee Dedication 0.

07 2 0.14 3 0.21 4 0.28 8 Vending Locations 0.10 2 0.20 4 0.

40 3 0.30 9 Customer Service 0.09 4 0.36 2 0.18 3 0.

27 10 Market Penetration 0.06 1 0.06 3 0.18 2 0.

12 11 Advertising 0.12 3 0.36 2 0.

24 4 0.48 12 Financial Profit 0.10 2 0.20 4 0.40 3 0.

30   Totals     1.00   2.57   2.

99   3.09  EFEMatrix No. Opportunities Weight Rating Weighted Score 1 Due to weak US dollar 0.

03 2 0.06 2 Sports drink like Gatorade, Powerade and others which is use coconut water become popular 0.03 1 0.

03 3 In the beverages market, energy drinks hold 62% of the functional 0.03 1 0.03 4 Each day about 25% people in US eat fast food 0.05 2 0.10 5 In the China, food and beverages consumption is forecasted to grow rapidly 0.

06 2 0.12 6 Customer nowadays are concerning about their health 0.05 2 0.10 7 Eastern Europe, India and Brazil offer good long term 0.06 2 0.12 8 Customer is preferred flavoured soft drinks over colas likes Dr.

Pepper and Sunkist 0.07 4 0.28 9 Flavoured teas and bottled water are expected to grow 24% and 9% 0.

06 4 0.24                 No. Threats Weight Rating Weighted Score 1 Tax sugary drinks are imposed by the governments 0.05 2 0.10 2 Among cost conscious customers, private label products and store brand still have great appeal 0.

06 2 0.12 3 In the soft drinks industry, the sales for Coke and Pepsi is 63% 0.08 3 0.24 4 Reduce the number of companies and increase bargaining power is consolidated by the retailers 0.06 2 0.

12 5 In the winter month, the business sales is slower 0.06 2 0.12 6 The concern about health and wellness are increase among consumers 0.05 4 0.20 7 In the poorer economic times, soft drinks are not perform well and considered as discretionary product 0.08 3 0.

24 8 Commodity price in tin and sugar are high 0.12 3 0.36   TOTALS       1.00   2.58   InternalAuditStrengths·        DPSG markets is more on non-carbonateddrinks·        DPSG make an agreement with COKE todistribute DR. Pepper and Canada Dry in the US for about 75 million dollar·        DPSG indicate the health benefits on thebottle label·        In 2011, National launch of Sun Drop·        6 of the top 10 non-cola soft drinks areowned by Dr.

Pepper·        In Beverage Industry Magazines, CEO ofDFSG Larry Young was named 2010 beverage executive of the year·        DPSG are able to increase the 28%dividends, pay down their debt and repurchase shares in the 2010 salesWeaknesses ·        Revenuescomes from the United States are about 89%·        Revenuescomes from the carbonated soft drinks sales are about 80% only·        Netsales generated through bottlers not owned by DPSG·        Thesales declined in 2010 for 7UP, A and Sunkist.·        DPSGdo not have vision and mission ·        In2010 Coke and Pepsi revenue growth over 13% while DPSG profit were lower·        Lessadvertisement for brands like A, Canada Dry and Mott’s  FinancialRatio Analysis  Growth Rate Percent DPS Industry S&P 500 Sales (Qtr vs year ago qtr) 4.90 30.50 14.50 Net Income (YTD vs YTD) NA NA NA Net Income (Qtr vs year ago qtr) 6.

90 7.90 47.50 Sales (5-Year Annual Avg.

) 11.95 9.85 8.

27 Net Income (5-Year Annual Avg.) 1.63 14.68 8.68 Dividends (5-Year Annual Avg.

) NA 9.67 5.68         Profit Margin Percent       Gross Margin 58.4 56.1 39.9 Pre-Tax Margin 14.

1 23.2 18.1 Net Profit Margin 9.4 19.3 13.

2 5Yr Gross Margin (5-Year Avg.) 57.5 58.2 39.

8         Liquidity Ratios       Debt/Equity Ratio 1.16 0.94 1.01 Current Ratio 1.0 1.

2 1.4 Quick Ratio 0.8 1.

1 0.9         Profitability Ratios       Return On Equity 22.8 34.

6 26.0 Return On Assets 6.1 14.

3 8.9 Return On Capital 7.2 20.

3 11.8 Return On Equity (5-Year Avg.) 10.8 32.0 23.8 Return On Assets (5-Year Avg.

) 3.9 15.2 8.0 Return On Capital (5-Year Avg.) 4.

5 20.9 10.8         Efficiency Ratios       Income/Employee 29,000 67,398 126,213 Revenue/Employee 308,105 338,900 1 Mil Receivable Turnover 11.0 9.7 15.7 Inventory Turnover 9.

0 7.5 12.4   InternalFactor Evaluation Matrix (IFE Matrix)  No. Strengths Weight Rating Weighted Score 1 DPSG markets is more on non-carbonated drinks 0.12 4 0.

48 2 DPSG make an agreement with COKE to distribute DR. Pepper and Canada Dry in the US for about 75 million dollar 0.15 4 0.60 3 DPSG indicate the health benefits on the bottle label 0.05 4 0.

20 4 In 2011, National launch of Sun Drop 0.04 3 0.12 5 6 of the top 10 non-cola soft drinks are owned by Dr. Pepper 0.15 4 0.60 6 In Beverage Industry Magazines, CEO of DFSG Larry Young was named 2010 beverage executive of the year 0.

02 3 0.06 7 DPSG are able to increase the 28% dividends, pay down their debt and repurchase shares in the 2010 sales 0.08 4 0.

32                 No. Weaknesses Weight Rating Weighted Score 1 Revenues comes from the United States are about 89% 0.08 1 0.08 2 Revenues comes from the carbonated soft drinks sales are about 80% only 0.06 2 0.

12 3 Net sales generated through bottlers not owned by DPSG 0.05 2 0.10 4 The sales declined in 2010 for 7UP, A&W and Sunkist. 0.05 2 0.10 5 DPSG do not have vision and mission 0.03 1 0.03 6 In 2010 Coke and Pepsi revenue growth over 13% while DPSG profit were lower 0.08 1 0.08 7 Less advertisement for brands like A&W, Canada Dry and Mott’s 0.04 2 0.08   TOTALS 1 2.97   SWOT StrategiesSWOT analysisis a useful technique and often used by many company as part of their strategicplanning to better understand the strengths and weaknesses, and to identify theopportunity and threat the company faced. The strengths and weaknesses areidentifying from the internal factors of the organization. The opportunitiesand threats are determining from the external factors of the organization. Thestrategic planning using the SWOT analysis comprehend the company fromcompetitors. This strategy also helps the company to develop good strategy tocompete with competitors in the industry. The strengths analysis of DFSG arethey have strong brands portfolio throughout North America. DPSG also haveintegrated business model policies which helps the company to maintain thequality of production and distribution of the products. Moreover, DFSG are theexperienced management, holds strong market position and customer relationship.The broader line of products by DFS Group assured the consistent growth of cashflow and revenue. The weaknesses of DFSG are the company received their 70% to85% revenues from North America that includes Canada, USA and Mexico only. TheDFSG have two major competitors which are Coca Cola and Pepsi Co. and DFSG areconsiderably small when compared to both companies. Moreover, the sales ofdrinks are to depends on the few markets only and lack of internationalexposure. The opportunities that DFSG has are the rapid growth of production ofbottled water to meet the need of market. The soft drinks markets are rapidlygrowth. They have opportunities to expands business and transform in the newmarket categories. Unfortunately, in the business, there must be a threats. So,in the DFSG company, they experience some threats, which is the price for sugarand tin is high. They also know that soft drinks are actually not good forhealth and wellness among the customers. The sales during the winters seasonare slower compare to others season. Other than that, the sales in the softdrinks industry are monopoly by Coke and Pepsi. Both company get 63% sales inthe industry. Furthermore, the governments are imposing the tax for sugarydrinks.SPACE MATRIX            Internal Analysis:   External Analysis:   Financial Position (FP)   Stability Position (SP)   Sales 5 Rate of Inflation -2 Debt/Equity 4 Technological Changes -2 Current Ratio 4 Healthy Options -4 ROE 4 Competitive Pressure -6 ROA 2 Barriers to Entry into Market -3 Financial Position (FP) Average 3.8 Stability Position (SP) Average -3.4 Internal Analysis:   External Analysis:   Competitive Position (CP)   Industry Position (IP)   Market Share -3 Growth Potential 4 Product Quality -2 Financial Stability 5 Customer Loyalty -1 Ease of Entry into Market 5 Product Variety -3 Resource Utilization 5 Control Over Suppliers and Distributors -4 Profit Potential 5 Competitive Position (CP) Average -2.6 Industry Position (IP) Average 4.8   Grand Strategy Matrix  Quantitative Strategic Planning Matrix (QSPM)   STRATEGIC 1 STRATEGIC 2 Develop new type of flavours Build a new bottling factory No. Opportunities Weight AS TAS AS TAS 1 Due to weak US dollar 0.03 1 0.03 4 0.12 2 Sports drink like Gatorade, Powerade and others which is use coconut water become popular 0.03 3 0.09 2 0.06 3 In the beverages market, energy drinks hold 62% of the functional 0.03 4 0.12 3 0.09 4 Each day about 25% people in US eat fast food 0.05 0 0.00 0 0.00 5 In the China, food and beverages consumption is forecasted to grow rapidly 0.06 2 0.12 4 0.24 6 Customer nowadays are concerning about their health 0.05 4 0.20 2 0.10 7 Eastern Europe, India and Brazil offer good long term 0.06 2 0.12 4 0.24 8 Customer is preferred flavoured soft drinks over colas likes Dr. Pepper and Sunkist 0.07 4 0.28 2 0.14 9 Flavoured teas and bottled water are expected to grow 24% and 9% 0.06 4 0.24 2 0.12           No. Threats Weight AS TAS AS TAS 1 Tax sugary drinks are imposed by the governments 0.05 4 0.20 2 0.10 2 Among cost conscious customers, private label products and store brand still have great appeal 0.06 0 0.00 0 0.00 3 In the soft drinks industry, the sales for Coke and Pepsi is 63% 0.08 2 0.16 4 0.32 4 reduce the number of companies and increase bargaining power is consolidated by the retailers 0.06 0 0.00 0 0.00 5 In the winter month, the business sales is slower 0.06 4 0.24 2 0.12 6 health and wellness concern are increase among consumers 0.05 4 0.20 2 0.10 7 In the poorer economic times, soft drinks are not perform well and considered as discretionary product 0.08 0 0.00 0 0.00 8 commodity price in tin and sugar are high 0.12 2 0.24 1 0.12           No. Strengths Weight AS TAS AS TAS 1 DPSG markets is more on non-carbonated drinks 0.12 3 0.36 2 0.24 2 DPSG make an agreement with COKE to distribute DR. Pepper and Canada Dry in the US for about 75 million dollar 0.15 1 0.15 4 0.60 3 DPSG indicate the health benefits on the bottle label 0.05 0 0.00 0 0.00 4 In 2011, National launch of Sun Drop 0.04 0 0.00 0 0.00 5 6 of the top 10 non-cola soft drinks are owned by Dr. Pepper 0.08 0 0.00 0 0.00 6 In Beverage Industry Magazines, CEO of DFSG Larry Young was named 2010 beverage executive of the year 0.02 0 0.00 0 0.00 7 DPSG are able to increase the 28% dividends, pay down their debt and repurchase shares in the 2010 sales 0.08 0 0.00 0 0.00           No. Weaknesses Weight AS TAS AS TAS 1 Revenues comes from the United States are about 89% 0.08 1 0.08 4 0.32 2 Revenues comes from the carbonated soft drinks sales are about 80% only 0.06 4 0.24 2 0.12 3 Net sales generated through bottlers not owned by DPSG 0.05 1 0.05 4 0.20 4 The sales declined in 2010 for 7UP, A and Sunkist. 0.05 1 0.00 0 0.00 5 DPSG do not have vision and mission 0.03 0 0.00 0 0.00 6 In 2010 Coke and Pepsi revenue growth over 13% while DPSG profit were lower 0.08 0 0.00 0 0.00 7 Less advertisement for brands like A, Canada Dry and Mott’s 0.04 0 0.00 0 0.00   TOTALS 3.72 3.80   RECOMMENDATIONSThere are somerecommendations and alternatives for DFSG to increase their company revenue. Themarket targets, product lines, channel for the markets, promotion, advertisingmarketing, and its pricing strategy are needed in making good decisions for thecompany. Instead of developing a soft drink, DFSG can increase the R&D by200 million dollars for developing a new energy drinks. Others alternative areDFSG can allocate 100 million dollars’ budget for building a new bottling factoryin Croatia. 100 million dollars advertising budget for produce tea and juiceproducts and 200 million dollars marketing budget for Snapple teas. DSFG canallocate budget for about 100 million dollars for developing a flavoured drinkswithout sugar since people nowadays are concern on healthy life.  

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