Strategic Audit for Dr Pepper PDF

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Running Head: STRATEGIC AUDIT FOR KEURIG DR. PEPPER

Strategic Audit for Keurig Dr. Pepper

Student’s Name Institutional Affiliation Course Date

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Table of Contents Executive Summary.....................................................................................................................................3 Introduction.................................................................................................................................................3 Brief History.............................................................................................................................................3 Dr Pepper Business Model...........................................................................................................................4 Dr Pepper’s Competitors.............................................................................................................................4 PepsiCo....................................................................................................................................................4 Coca Cola.................................................................................................................................................5 Red Bull....................................................................................................................................................5 Analysis of the Macro-Environment............................................................................................................5 PESTEL Analysis........................................................................................................................................5 Threats facing the Beverages Industry.........................................................................................................7 Social Responsibility and Environment Concerns....................................................................................7 The plastic ban.........................................................................................................................................8 The awareness of health care concerns among consumers.....................................................................8 Global Pandemic like COVID 19...............................................................................................................8 Opportunities..........................................................................................................................................8 Strategical Analysis of the Industry..............................................................................................................8 PORTER’S five generic forces of Competitiveness....................................................................................9 Potential Profitability in the industry.........................................................................................................10 Critical Success Factors in the Industry......................................................................................................10 Organizations Measurement and Control System......................................................................................11 Financial Position...................................................................................................................................11 Financial Analysis of the competitors....................................................................................................12 Management Measurement and Control Systems....................................................................................13 Key Performance Indicators...................................................................................................................13 Analysis of the Organizations, mission, Vision, Goals and objectives........................................................13 Mission.................................................................................................................................................. 13 Vision.....................................................................................................................................................13 Dr Pepper’s Core Values.........................................................................................................................13 Operating Guidelines for Dr Pepper.......................................................................................................14

STRATEGIC AUDIT FOR KEURIG DR. PEPPER 3 Key Success Factors for Dr Peppers........................................................................................................14 Dr Pepper’s Specific Goals and Objectives.............................................................................................15 Analysis of the Business Strategies............................................................................................................15 SWOT Analysis for Dr Pepper.................................................................................................................15 Gap Analysis for Dr Pepper....................................................................................................................16 TOWS Analysis.......................................................................................................................................17 The Best Strategies to Adopt in Dr Pepper................................................................................................18 Functional Strategies.............................................................................................................................18 Conclusion and Recommendations...........................................................................................................18 References.................................................................................................................................................19

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Strategic Audit for Keurig Dr. Pepper

Executive Summary The soda production industry is among, the largest industries in the globe and they produce and manufacture soft drinks by combining different ingredients with carbonated water. Additionally, this industry produces energy beverages, juices, bottled water and ready to drink teas (AbuReidah,2020). Dr Pepper, conducts its operations in the United States and also internationally in companies like Mexico and Canada. Notably, the company’s operations are conducted through four segments that is beverage concentrates, Latin America Beverages coffee systems and packaged beverages. Ideally, the segment of Coffees systems provides Dr Pepper’s single serve brewers and specialty coffee to offices, restaurants, convenience stores and cafeterias. The company’ success can be attributed to a diverse portfolio of brands including; Snapple, Coconut water among many others. Although the company’s growth has been remarkable in the recent years, the company still faces challenges like competition and the essence of this report is to discuss extensively, the strategic model used by Dr Pepper to remain competitive in the market.

Introduction According to (Keiurig Dr Peppe,nd) Dr Snapple Group Inc is the third biggest beverage maker and liquids refreshment in the United States. Notably, the company produces different nonalcoholic beverages brands among the categories of non-carbonated and carbonated soft drink categories. The most prestige that Dr Pepper boasts of is the dominance in the non-cola and flavored market. Further, the company has introduced versions of brands with lower calories to the meet the evolving demand by consumers in the beverage industry. Ideally, the company’s success can be attributed to distinct flavors, entrepreneurial spirit and innovation. Therefore, this report will extensively analyze some of the strategies and tools used by Dr Pepper to maintain its survival in this competitive industry.

Brief History According to (Bellis, 2019) Pepper company which was formerly called Keurig Green mountain and also previously green mountain coffess Roasters is a beverage company that is publicly traded Headquartered in Burlington Massachusetts in the United State. The company was founded in 1885 by Bob Stiller in Waitsfield Vermont United States. Afterwards, in 2008,

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became publicly independent company under the New York Exchange. Ideally, one of the Unique histories associated with Dr Pepper is the rich history for instance the birth of the soft drink in 1783. This was when Jacob Schweppe’s achieved success in the process of carbonating water and became the world’s first creator of carbonated mineral water. Also Dr Pepper name was derived from the oldest drink in the United States which was known as Waco. The company expanded significantly during the 20th century until now where it is led by In terms of leadership, the CEO for Dr Pepper and the executive chairman of the board is Robert Bob Gamgort. Gamgort attended the school of management at Northwestern University, London School of Economics and Bucknell University. Further, Ozan Dokmecioglu is the chief financial officer and holds a BS in Business Administration from MEATU and a certificate in Project Investment and appraisal from Harvard University.

Dr Pepper Business Model Dr Pepper’s products reach the customers segment through foodservice outlet, retailers, distributors and wholesalers. The customer segment for Dr Pepper include; the Walmart, Target corporation, Publix Super markets, the Kroger Company’ food services firms like wendy’, Subway and Burger King. Further, the company has an outstanding reputation, wider products and brands portfolio and adopts a customer centered busines model (Cleverism, nd). Globalization has been of significant essence for Dr Pepper. This is because through increased demand for soft drinks and beverages globally, the company has become innovative by utilizing technology and research to come up with products that fulfill the customer’s demands.

Dr Pepper’s Competitors PepsiCo PepsiCo is among the largest market leaders and players in the sods industry globally (Errandonea,etal.,). Ideally, PepsiCo was formed after the merger of Frito Lay and Pepsi. Ideally, PepsiCo has experienced significant growth in organic revenue in 2017. Also, its product portfolio has 20-million-dollar brands. Further, the United States is its biggest market and it engages with fierce competition with Dr Pepper Snaple and Coca Cola. As at 2017, the net revenue for PepsiCo was 63.5 billion Dollars with a gross income of more than 28.8 Billion US dollars. In comparison with the employee capacity; PepsiCo employs more than 267,000

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individuals while Dr Pepper employs 25,000 employees. In terms of valuation, Dr Pepper is valued at 217 Billion and Dr Pepper is valued at 48 Billion dollars.

Coca Cola As noted by (Cutelo,2018)Coca Cola is a global brand with an enormous network distribution of its products around the globe. This makes it one of the longest leading soda brands in the globe by owning more than 500 brands. Despite selling soda beverages in different flavors, Coca Cola distributes energy drinks juices, bottled water, low calorie sods drinks and juices. Further, the company has its operations based in more than 200 countries. Notably, Coca Cola is a close competitor for Dr Snapple due to its large product portfolio and global brand image.

Red Bull Despite’s Red Bull’s Limitation in terms of product portfolio, Red Bull remains to be a major competitor to Dr Pepper. Notably, Red Bull is a popular brand that sells its products to more than 171 nations and sis now retargeting USA and western Europe to accelerate its growth. Notably, the company sold more than 6.3 billion cans to make a turnover of 6.28 billion Euros. In comparison Dr Pepper, Red Bull has few products and this enables the company to focus on growth and innovation of few products unlike Dr Pepper. Further, Red Bull has managed to penetrate some big emerging markets like Netherlands, UK, Turkey and India. This makes Red Bull a fierce competitor to Dr Pepper.

Analysis of the Macro-Environment In the contemporary world of business, changes happen overnight in industries and this poses a vital influence in industries. Therefore, these reports adopt strategical tools like PESTEL analysis and PORTER’S generic competitive forces to analyze the macro environment of the Sods and Beverage industry.

PESTEL Analysis PESTEL analysis in the Soda industry means Political, Economic, Social, Technological, Environmental and Legal factors that influence the macro-environment of the beverage industry (Dockalikova, 2014). PESTEL analysis provides an extensive information regarding the challenges faced by the beverage industry and how to remain prevalent in the macro

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environment. In this industry, there is intense competition and health issues regarding the preservatives and calories in drinks. Political Factors 

Political Stability

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Corruption

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Intellectual Property Protection

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Pricing regulations

 Taxation Economic 

Inflation Rate in the economy

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Business cycle stages

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The level of unemployment in a country

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The level of income

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Exchange rates and stability of country’s currency

Social 

The culture including social conventions and gender roles

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The nature of the society in terms of entrepreneurial drive

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The power, structure, class and hierarchy

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Age distribution, population and demographics

Technological 

Current technological advancements

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The impact of technology in product offering

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Technological diffusion rate

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Implications of technology on cost structure of beverages

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Environmental 

Government laws that regulate the pollution of the environment

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Risk of the endangered species

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Climate and weather change

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Water and Air regulations

 Global Pandemic like COVID 19 Legal 

Antitrust laws in Soda and Beverages

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Discrimination laws

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Intellectual property, patents and copyrights

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E-commerce and Consumer protection

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Safety and Health Laws

Figure 1: PESTEL Analysis For the Beverage industry

Threats facing the Beverages Industry Social Responsibility and Environment Concerns According to (Ali,2021) since the beverage industry is a manufacturing industry and emits fuels to the environment these fuels pose a vital risk to climate changes like water crisis, endangered species and ecosystem collapse. This leads to revolts from the public, NGOs and the government regarding closure of the beverage industries.

The plastic ban As (Conte, 2018) writes,the ban for the use of plastic bags has been there for a long time and following industrialization and globalization, this policy has been implemented in most countries. This is following improper disposal of the bags thus bringing challenges to the beverage industry.

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The awareness of health care concerns among consumers Following research conducted on health disorders from drinks, companies in this industry has been forced to make healthy drinks free from preservatives and calories (Arora, nd). This has led to decrease in demand for these drinks.

Global Pandemic like COVID 19 Following the eruption of the pandemic early 2020, businesses including the beverage companies has been crashed down leaving them staggering from drastic loses. This is following restriction of movements, curfew and lock downs.

Opportunities Technology, has made the operations of companies in the beverage industry easier and more efficient since companies can launch new items that meet customers tastes and preferences 

Increased demand for local products

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Online marketing and advertisement

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The emergence of cashless payments

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Pressure by stakeholders regarding environmentally friendly production

Strategical Analysis of the Industry In terms of strategical analysis, the strategical group that Dr Pepper falls into is non-alcoholic beverages which are further subdivided into carbon and non-carbon. Some of the main brand competitors in under this strategic group include, Coca Cola, PepsiCo, Red bull and other energy drinks like monster. The fiercest competitors and the market leaders are PepsiCo and Coca Cola. These two markets has the largest market share in US and the globe.

PORTER’S five generic forces of Competitiveness According to (Ormanidhi & Stringa,2008) Porters five forces is a strategical model that determines the five forces of competition in companies. After, recognizing the strengths, these forces are used by companies to achieve a competitive advantage. Further, Michael Porter’s model explains strategies to be adopted by companies to gain a competitive advantage. Forces

Level of Risk

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Bargaining power of the buyers 

Large number of customers leading to insignificant purchases

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Homemade manufacturing of drinks is inconvenient

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Customers are sensitive to price and shift brands due to expensiveness

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The beverage industry has unique products thus loyalty

Bargaining power of Suppliers 

All the supplier provides similar products and services

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There are many suppliers in the industry

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The job of the supplier is easy

Threat of New Entrants 

New entrants lack a distribution and channel startup

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Flavors and brands are patented

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There is dominance by the current players

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High intensive initial capital

Threat of Substitutes 

Substitutes are cheap and people opt to consume main product

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Significant cost associated with substituting

Rivalry Among Key Leaders 

Slow growth in the industry

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Customers would incur extra costs while switching to other players

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There is brand loyalty and recognition

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Lower prices from the key players

Figure 2: PORTER’S five generic forces of the beverage industry

MEDIUM

LOW

LOW

MEDIUM

HIGH

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Potential Profitability in the industry Technology is the next determinant of profitability in the beverage industry. Internet and social media will be excellent platforms for the beverage companies to understand consumer preferences, trends and demand by reviewing customer patterns and behaviors (Tuten, 2020). This will enable companies to produce enough to meet the demands of their consumers. Further, technology has led to the adoption of digital marketing thus using integrated digital marketing channels by companies will enable reach a wider market thus increasing sales and profi...