CASE - COKE VERSUS PEPSI, 2001 TEAM MEMBERS - 陳柏誠、呂建輝、顏瑞甫、黃致嘉、端木偉葶、戴肇逸

CASE -COKEVERSUSPEPSI, 2001 TEAM MEMBERS -陳柏誠、呂建輝、顏瑞甫、黃致嘉、端木偉葶、戴肇逸

Agenda

Soft-Drinkmarket analysis • Porter five force Industry Competitor: High

V.S. Industry Competitor:

EVAAnalysis(1/4) • According toEVA formula: • EVA=NOPAT-WACC*TC • We can divide EVA into two parts • to analyze: • Profit part • Cost of capital part EVA=NOPAT - WACC*TC

EVAAnalysis(2/4) As for profit part : Because of Coca-Cola’s strategy, it’s expected return is better than Pepsi.

EVAAnalysis(3/4) As for Cost of capital part： WACC = Weight of Equity * Cost of Equity + Weight of Debt * Cost of Debt We can infer that Coca-Cola has a higher weight of equity. Coca-Cola’s weight of equity is higher , therefore its WACC is apparently higher than PepsiCo.

EVAAnalysis(4/4) Coca-Cola has higher EVA from 2001~2003 and we infer Coca-Cola still has a better forecast of EVA growth because of its continually successful mergerand acquisition strategy. In addition, Coke’s better dividend policy also encourage investors to have a better anticipation. According to both company’s performance, Coca-Cola would be a more attractive investment.

Analysis based on ROA • From 2001 ROA of COCA-COLA surpasses Pepsi, due to its organizational reforms and growing non-carbonated-beverages.

Analysis based on ROE • From 2001 ROE of COCA-COLA surpasses Pepsi, due to its organizational reforms and growing non-carbonated-beverages.

DuPont Analysis ROE = Profit Margin * Total Asset Turnover * Equity Multiplier ﹞ ﹞ • From DuPont identity, COCA-COLA’s high ROE is due to its high profit margin. • Compared to PEPSI, COCA-COLA’s higher profit margin is because it executes better on its overall pricing strategies and controls its costs more effectively.

Conclusion • The strategic plan that Coca-Cola implemented is viewed as a correct step to reform itself and to gain new competitive advantage. • We are upbeat about Coca-Cola’s prospects since the figures reveal that Coca-Cola would be the more attractive investment over the next few years.

Appendix(1/2)

Appendix(2/2)

CASE - COKE VERSUS PEPSI, 2001 TEAM MEMBERS - 陳柏誠、呂建輝、顏瑞甫、黃致嘉、端木偉葶、戴肇逸