Coca Cola and Pepsi

GUIDELINE:

Tip 1. Contextualize the case. There is a method to my madness. Cases generally correspond to a particular set of concepts and theories. Keep this in mind as you prepare your analysis.

Tip 2. Read the case actively. The goal is not for you to grab your highlighter and speed through the case. Instead, ask yourself questions, wrestle with the core decisions, and think through multiple scenarios.

Tip 3+. William Ellet argues that there are “four types of situations” that you will often see in cases, for each here are some tips: – Problems o Define the problem in the case. This may not be obvious. o Then, be able to diagnosis the problem using the various tools you’ve acquired throughout your business training. – Decisions o Identify the decision options. o Determine the criteria by which to evaluate the decision options. o Accumulate as much evidence as possible to support your decision. – Evaluations o Again, determine the appropriate evaluative criteria. o Make the evaluation that is most consistent with the evidence provided by the case and the key criteria. o Be sure to be holistic in your evaluations – think about positive and negative aspects. – Rules (This is particularly critical for quantitative analyses) o Know the information you need to apply a rule (For example, what data is necessary for a break-even or NPV analysis) o Know how to obtain this information. o Know how to apply the rule. o Make sure your data is accurate.

Tools Ellet provides a nice model for analyzing cases. There are five key phases of the process.
1. Situation a. Figure out the big picture first; ask yourself, “What is the situation in the case? What is going on here? 2. Questions a. Develop questions about the problem, namely: i. What do you need to know about the situation? b. Think through issues related to the decision, namely: i. What are the decision options? Any seem particularly strong or weak? What is at stake here? What are the key criteria to base your decision?
c. Questions about the evaluation, in particular: i. Who or what is being evaluated? Who is responsible for the evaluation? 3. Hypothesis a. Here is where your analytical work gains momentum. Develop your perspective on the case. b. Review the aforementioned questions – now begin to develop your answers for each set of questions. 4. Proof and Action a. Ask yourself, what evidence is provided by the case that supports my hypothesis? What additional evidence do I need to collect? b. Equally important for our course, also consider how would I implement my recommendations? 5. Alternatives a. Spend some time critiquing yourself, ask the following: i. How else could this problem be defined? If defined differently, would I have the same hypothesis? ii. Where are the weak links in my analysis? iii. What is the potential downside to my recommended decision? What is the strongest counterevidence? iv. How thorough have I been in my analysis? How might a different course of action be proved?

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COMPETITOR ANALYSIS PERSPECTIVE

QUESTIONS TO BE ANSWERED:

1. Why, historically, has the soft drink industry been so profitable?

2. Compare the economics of the concentrate business to that of the bottling business? Why is the profitability so different?

3. How has the competition between Coke and Pepsi affected the industry’s profits?

4. How can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-CSDs?