BACHELOR OF BUSINESS ADMINISTRATION WITH HONOURS

SEMESTER JANUARY 2018

BBPS4103

STRATEGIC MANAGEMENT (ASSIGNMENT 2)

MATRICULATION NO : 791016145081001

IDENTITY CARD NO. : 791016-14-5081

TELEPHONE NO. : 019-6641264

E-MAIL : arman_saad@yahoo.com

LEARNING CENTRE : SHAH ALAM

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TABLE OF CONTENTS PAGE

DR PEPPER SNAPPLE GROUP, INC - 2011

Case Abstract 3

Vision Statement (Proposed) 3

Mission Statement (Actual) 3

CPM (Competitive Profile Matrix) 4

External Factor Evaluation (EFE) Matrix 5

Internal Audit 6

Financial Ratio Analysis (Dec 2009 and Dec 2010) 7

Internal Factor Evaluation (IFE) Matrix 8

SWOT Strategies 9

SPACE Matrix 10

Grand Strategy Matrix 11 - 12

Quantitative Strategic Plan Matrix (QSPM) 13 - 15

Recommendation 16

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 Dr Pepper Snapple Group, Inc. – 2011

Case Abstract

Dr Pepper Snapple group (DPS) is the leading producer of flavoured beverages in North
America and the Caribbean, offering more than 50 brands. DPS is the leading producer of
flavoured beverages in North America and the Caribbean. Headquartered in Plano, Texas, Dr
Pepper Snapple (DPS) produces, bottles, and distributes Dr Pepper, Snapple, and other
beverages in North America, including Canada, Mexico, and the US. DPS owns 6 of the top
10 non-cola soft drinks. Nine of DPS’s 12 leading brands are No. 1 in their flavour
categories. Other DPS beverages include Sunkist soda, 7UP, A&W, Canada Dry, Crush.
Mott’s, Squirt, Hawaiian Punch, Penafiel, Clamato, Schweppes, Venom Energy, Rose’s, and
Mr. & Mrs T mixers. Soft drink companies face an ever changing world market. The
question DPS seeks to answer to guarantee their future includes: how can DPS continue to
grow at levels that will satisfy shareholders? To what extent should acquisition, joint
ventures, licensing agreements, and or internal growth tactics be pursued? Should DPS
diversify into other product markets such as snacks which Pepsi Co is using to create
competitive advantage? What geographic growth options are best for DPS to pursue? Should
any product or brands be divested?

Vision Statement (Proposed)

To become the number one choice for non - cola flavoured soft drinks in the world.

Mission Statement (Actual)

At DPS it is our mission to be domestic leader in the flavoured beverage industry. Our
established and reputable brand allows us to deliver high quality beverages to faithful and
potential customers. We will achieve this through effective marketing, strong distribution
channels, and fruitful partnerships. We will continue to invest in our employees as well as
the communities we operate to invest in our employees as well as the communities we
operate in while remaining environmentally friendly. By implementing the best technology
we are committed to reducing costs in order to ensure sustained profits

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 CPM – Competitive Profile Matrix
Dr Pepper Pepsi Coke
Critical Success Factors Weight

Rating Score Rating Score Rating Score

0.12 3 0.36 2 0.24 4 0.48

Advertising

Market Penetration 0.06 1 0.06 3 0.18 2 0.12

Customer Service 0.09 4 0.36 2 0.18 3 0.27

Vending Locations 0.10 2 0.20 4 0.40 3 0.30

R&D 0.06 4 0.24 3 0.18 2 0.12

Employee Dedication 0.07 2 0.14 3 0.21 4 0.28

Financial Profit 0.10 2 0.20 4 0.40 3 0.30

Customer Loyalty 0.09 1 0.09 3 0.27 4 0.36

Market Share 0.08 1 0.08 3 0.24 4 0.32

Product Quality 0.09 4 0.36 3 0.27 2 0.18

Top Management 0.04 2 0.08 3 0.12 4 0.16

Price Competitiveness 0.10 4 0.40 3 0.30 2 0.20

TOTALS 1.00 2.57 2.99 3.09

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External Factor Evaluation (EFE) Matrix
Opportunities Weight Rating Weighted Score
DPS has great opportunities for growth owing to its exposure 0.10 1 0.10
to international markets
Sale of DPS products enables people to have more 0.03 2 0.06
discretionary income
With more acquisitions or alliances in other parts of the world 0.05 2 0.10
the company can enhance its revenues
Increase in production of bottled water to meet the need of the 0.07 4 0.28
market
Flavoured teas, and bottled water are expected to grow 24% 0.06 4 0.24
and 9% respectively
DPS Group can explore new emerging markets like fast 0.06 1 0.06
growing BRIC nations (Brazil, Russia, India and China) with
steadily growing appetite for carbonated drinks, water and
low calorie drink
Introduction of more innovative products other than 0.03 3 0.09
beverages according to the taste and demand of native people
With other healthy products from DPS Group, they can 0.08 4 0.32
enhance the reputation of the company among health
conscious groups such as juices and non-carbonated drinks
The growing use of electronic technological innovations, 0.05 1 0.05
global communication is rapidly increasing. This allows firms
to collaborate within the country market and expand
internationally into world markets.

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Internal Audit

Strengths

1. Dr. Pepper has 6 of the top 10 noncola soft drinks.

2. CEO Larry Young was named 2010 beverage executive of the year by Beverage Industry
Magazine
3. Sales in 2010 allowed DPS to: increase dividends 28% to $0.32, pay down debt, and repurchase
shares.
4. National launch of Sun Drop in 2011.
5. Snapple distributes their juices with labels indicating their health benefits.
6. $715 million agreement with Coke to distribute Dr. Pepper, and Canada Dry in the United States.
7. DPS markets many non - carbonated drinks.

Weaknesses

1. DPS as of 2011 does not have a written vision or mission statement.

2. Profits were lower in 2010 than 2009 while Coke and Pepsi both had revenue growth over 13%.
3. Brands like Mott’s, A&W, and Canada Dry have not received any serious advertisement since
the 1990s.
4. Sunkist, 7UP, and A&W sales declined in 2010.
5. Substantial portion of net sales are generated through bottlers not owned by DPS.
6. 80% of revenues come from the sale of carbonated soft drinks.
7. 89% of revenues come from the US.

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Financial Ratio Analysis

Description 2009 2010

Debt / Equity Ratio 1.75 2.60

Current Ratio 1.50 0.98

Quick Ratio 1.06 0.70

Return on Equity 17 21

Return on Asset 6.40 6

Return on Capital 27.50 39.38

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Internal Factor Evaluation (IFE) Matrix

Strengths Weight Rating Weighted

Score

Dr Pepper has 6 of the top 10 non-cola soft drinks 0.15 4 0.60

CEO Larry Young was named 2010 beverage executive of the 0.02 3 0.06
year by Beverage Industry Magazine

Sales in 2010 allowed DPS to : increase dividends 28% to 0.08 4 0.32

$0.32, pay down debt, and repurchase shares

National launch of Sun Drop in 2011 0.04 3 0.12

Snapple distributes their juices with labels indicating their 0.05 4 0.20
health benefits

$715 million agreement with Coke to distribute Dr Pepper and 0.15 4 0.60
Canada Dry in the United States

DPS markets many non-carbonated drinks 0.12 4 0.48

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 SWOT Strategies
STRENGTHS
Wide scope of company operations
Strong portfolio of leading, consumer-
preferred brands
Integrated business model
Strong customer relationships
Attractive positioning within large
growing and profitable market
Broad geographic and distribution
coverage
Strong operating margins and stable cash
flows
Experienced executive management team
SWOT
OPPORTUNITIES
Generally energy beverage sales are growing
in USA
Opportunity for innovation
Opportunity for making acquisitions
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WEAKNESSES
No experience in segment of functional
drinks market
Low budgets prevent to promote and
advertise products on high level like
Pepsi, Coke and other competitors do.
THREATS
Strong competitors like Pepsi and Coca
Cola
Traditional position of energy beverages
Dependency on small number of large
retailers
Dependency on third party bottling
companies
Distribution agreements could be
terminated
People allergic on milk cannot use the
product since proteins are milk based.
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 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 & Distributors -4 Profit Potential 5
Competitive Position (FP) Average -2.6 Industry Position (IP) Average 4.8

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Grand Strategy Matrix

Possible strategies for Quadrant I are:

Forward Integration

- The company should be more independent and not really so much on their
competitors to sell their products

Market Penetration

- Advertise with celebrities to help sell product like Snapple and show that there
products are healthy and good for you

- Advertise their other brands more like Snapple, Hawaiian Punch, and Mott’s

- Concentrate marketing efforts on Snapple rather than soft drinks since Snapple brand
is growing and soft drinks are decreasing.

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 Horizontal Integration

- Use the advantages of the other countries manufacturing facilities to produce

products to help avoid taxes on sugar

Market Development

- Enter new market such as India, China or other Asian countries that has large GDP
growth

Product Development

- Develop more non-cola, low calorie drinks

Related Diversification

- Develop sport drinks

- Produce more healthy drinks

- Develop a luxury water

- Develop a flavoured water

- Purchase vineyard and produce wine

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Quantitative Strategic Plan Matrix (QSPM)
Market Product
Penetration Development
(increase mrkt (Developing
share with healthy
existing Innovative
products) drinks)

NO OPPORTUNITIES Weight AS TAS AS TAS

1 Dr Pepper’s senior management estimates that 0.10 4 0.40 1 0.10
DPS is only serving approximately 15% of
international market they could possibly be
serving with 85% of their revenue coming from
North America
2 Due to the recovery from the depression of 2009 0.05 4 0.20 2 0.10
people have more discretionary income
3 With more acquisitions in other parts of the world 0.06 4 0.24 1 0.06
or with more alliances, the company can enhance
its revenue
4 Increase in the production of bottled water to 0.04 1 0.04 4 0.16
meet the demand of the growing market
5 DPS can explore new emerging market such as 0.06 4 0.24 1 0.04
the fast growing BRIC nations (Brazil, Russia,
India and China) with a steadily growing appetite
for carbonated drinks, water and low calorie
drinks
6 Introduction of more innovative products other 0.03 1 0.03 4 0.12
than beverages according to the taste and demand
of native people
7 With other healthy products from DPS, they can 0.08 1 0.08 4 0.32
enhance the reputation of the company among
health conscious groups such as justices and non-
carbonated drinks
8 The growing use of electronic technological 0.05 4 0.20 2 0.10
innovations, global communication is rapidly
increasing. This allows firms to collaborate
within the country market and expand
internationally into world markets
9 Growing energy drink and shots market 0.03 1 0.03 4 0.12

NO THREATS Weight AS TAS AS TAS

1 Government policies and regulations affect business 0.03 1 0.03 4 0.12

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 development and growth. Products have to be
consistent with the USDA’s dietary guidelines and
adhere to the FDA’s standards for health claims.
2 Due to the current post recession economy, growth is 0.03 1 0.03 4 0.12
expected to be slow since existing demand patterns
are expected to change as consumers become more
health conscious
3 The biggest rival DPS in the field of carbonated 0.06 3 0.18 1 0.06
drink is Pepsi and Coca Cola
4 Coca Cola drew in a revenue of $35.119 billion by 0.10 4 0.30 1 0.10
the end of 2010, Pepsi co increased revenue over
30% in 2010 and DPS increasing revenue by meagre
1.89% in 2010
5 Reduced use of carbonated drinks can also decrease 0.05 1 0.05 4 0.20
revenues for the company
6 Limited market opportunities in North America can 0.05 4 0.05 2 0.10
also affect the sales of company
7 Loss of partner bottlers and distribution with 40% of 0.10 0 0.00 0 0.00
their distribution network in the hands of competitors
8 Socio cultural trend towards healthier lifestyles 0.05 2 0.10 4 0.20
9 Increasing prices of fuel along with increase in prices 0.03 0 0.00 0 0.00
of other commodities also affect the price of products
of the company

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NO STRENGTHS Weight AS TAS AS TAS
1 Management team with a wealth of experience in LRB 0.03 4 0.12 2 0.06
Industry
2 Separation from Cadbury Schweppes allows continued 0.07 2 0.14 3 0.21
ability to focus resources on their beverage business
3 Strong relationships with key customers 0.03 4 0.12 3 0.09
4 Strong, recognizable beverage brands in a number of 0.10 4 0.40 1 0.10
markets (most brands are #1 or # 2 in their product
category)
5 Integrated business model allows for alignment of company 0.07 3 0.21 2 0.14
goals at multiple levels of operations
6 Strong market position built on strong band portfolio 0.10 4 0.40 1 0.10
7 Strong focus on research and development 0.06 2 0.12 4 0.24
8 Strong operating margins and significant, stable cash flows 0.08 3 0.24 1 0.08

NO WEAKNESSES Weight AS TAS AS TAS

1 Continued focus on carbonated soft drinks rather than 0.01 1 0.10 4 0.40
alternative and functional beverages
2 Considerably smaller in size than their two major 0.12 3 0.36 1 0.12
competitors Coca Cola and PepsiCo
3 Lack of international exposure 0.10 4 0.40 2 0.20
4 Excessive dependence on few market players 0.08 0 0.00 0 0.00
5 DPS acquired 85% of their revenues from North America 0.10 4 0.40 2 0.20
that includes Canada, USA and Mexico only
TOTAL 5.21 3.96

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Recommendation

DPS should initiate a strategy to tackle its distribution problems and make available it products
in the international market by developing system for third party bottlers and distribution to help
DPS maintain in priority for their brands in other companies systems. DPS should also focus on
opportunities in high growth and high margin categories.
DPS should enter in the new market of energy beverages. The target group of population should
be males, between the age of 12 and 34, and adults from 34 to 55 because this target group is the
heaviest users of energy drinks now days.
DPS should include possibility to include head to head position against competitors. The best
way to compete is through good quality of beverage and attractive packing.
For distribution channel should be focused on convenience store, supermarkets and mass
merchandise.
Increase advertising by $200M marketing the health benefits of Snapple teas.
Increase R&D by $200M to develop an energy drink.
Increase advertising by $300M for Canada Dry, A&W and other non-cola flavoured soft drinks
Build a new bottling plant in Croatia for $100M.
Increase advertising by $100M for Snapple juice and tea products.
Develop a line of flavoured waters without sugar in plastic bottles only for $100M.
Develop a line of Christmas themed hot coco and ciders for $100M.

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