Total Quality Management Benchmarking at

Pepsi Cola
Pepsi An Introduction
Introduction
PepsiCo, Inc., major producer of carbonated soft drinks, other beverages, and snack foods.
Its beverage division, Pepsi-Cola Company, bottles and markets several popular brands of
soft drinks in the United States and throughout the world. PepsiCo also owns Frito-Lay
Company, the leading snack-food maker in the United States. PepsiCo is based in Purchase,
New York.
PepsiCos soft drink products include Pepsi, Diet Pepsi, and Mountain Dew. Other
beverages include Lipton Brisk and Liptons Brew iced teas, All Sport athletic drink, and
Aquafina bottled water. Frito-Lay products include Lays and Ruffles Potato Chips, Fritos
and Doritos Corn Chips, Chee tos Cheese Snacks, Tostitos Tortilla Chips, Rold Gold Pretzels,
and Grandmas Cookies.
Early History
PepsiCo traces its origins to 1898 when Caleb Bra dham, a pharmacist in New Bern, North
Carolina, created a curative drink for dyspepsia called Pepsi-Cola. Pepsi-Cola, later referred
to simply as Pepsi, was a mixture of carbonated water, cane-sugar syrup, and an extract
from tropical kola nuts. To sell his product, Bradham formed the Pepsi-Cola Company in
1903. In addition to selling the drink at drugstore counters, Bradham bottled Pepsi for sale
on store shelves. At this time, bottling was a new innovation in food packaging.
However, due to major increases in the price of sugar, Bradham began to lose money on
Pepsi, and in 1923 he filed for bankruptcy. The Craven Holding Company of Craven County,
North Carolina, purchased the companys assets. In 1931 Charles G. Guth of the Loft Candy
Company in New York City purchased Pepsi-Cola from the holding company. Guth had
difficulty getting the business going again, but he increased sales by selling larger bottles at
an unchanged price. By 1933 Pepsi-Cola was sold by 313 franchised U.S. dealers; bottled in
the United States, Cuba, and England; and sold in 83 countries.
PepsiCos snack-food business dates from 1932 when ice-cream seller Elmer Doolin of San
Antonio, Texas, developed a business idea after eating a package of Mexican-made fried
corn chips. He purchased a recipe for the chips and established the Frito Company in 1932.
Originally, Doolin produced Fritos corn chips in his mothers kitchen. He later mechanized
production and moved operations to Dallas, Texas, in 1933. Around the same time, Herman
Lay of Nashville, Tennessee, developed a business distributing potato chips made by an
Atlanta manufacturer. In 1938 Lay bought the manufacturing company, renaming it H. W.
Lay & Company. The company prospered, becoming one of the largest producers and
distributors of snack foods in the southeastern United States. The company made and sold
many snack foods, but its best-seller was its brand of potato chips, known as Lays. In 1945
the Frito Company gave H. W. Lay & Company exclusive Southeast distribution rights for
Fritos corn chips, a market both companies hoped to expand nationwide. After continuing
their close business association for over 15 years, the two companies merged in 1961 to
become Frito-Lay, Inc., with headquarters in Texas.
Growth
The Pepsi-Cola Company, meanwhile, had changed hands several times and grown greatly
since 1933. The Loft Candy Company merged with the company in 1941, keeping the Pepsi-
Cola name. About this time, Pepsi became the second-best selling soft drink in America
behind its chief market rival, Coca-Cola (popularly known as Coke). In 1948 the Pepsi-Cola
Company began canning drinks in addition to selling them in bottles. Alfred Steele, formerly
an executive with the Coca-Cola Company, became president of the Pepsi-Cola Company in
1950. Former amateur boxer Donald Kendall took over as company president and chief
executive officer (CEO) in 1963 and began marketing Pepsi to young people in an
advertising campaign called The Pepsi Generation. The company acquired another
popular soft drink, Mountain Dew, in 1964. In 1965 the Pepsi-Cola Company merged with
Frito-Lay, Inc., to become PepsiCo, Inc., based in New York City. As president and CEO of
the newly merged company, Kendall later moved the corporate headquarters to its current
home in Purchase, New York.
In 1972 PepsiCo struck a deal with the Union of Soviet Socialist Republics (USSR), allowing
the company to distribute Stolichnaya vodka in the United States and to build soft-drink
bottling facilities in the USSR. Pepsi thus became one of the first American products to be
made and sold in the Soviet Union. In the late 1970s the company began to purchase fast-
food chains. It acquired Pizza Hut in 1977, Taco Bell in 1978, and Kentucky Fried Chicken
(later named KFC) in 1986.
The Cola wars
PepsiCos leading soft drink, Pepsi-Cola, and its chief rival, Coke, have dominated the soft-
drink market for decades, although Pepsi has traditionally remained behind Coke. In 1950
Coke outsold Pepsi by 500 percent worldwide. But Pepsis aggressive advertising campaigns
aimed at young consumers and major bottling and marketing deals made Pepsi a close rival
to Coke by the 1980s. PepsiCo has also enjoyed great success with its canned and bottled
Lipton brand iced teas, earning higher sales than the Coca-Cola Companys Nestea products.
Also, in the United States, Pepsi had virtually an even market share with Coke in the mid-
1980s, when the Coca-Cola Company changed the formula for Coke. (It later reintroduced
the original formula under a new name, Coke Classic.) However, as Coke regained
popularity worldwide in the late 1980s and into the 1990s, it again became the global soft-
drink leader. In 1996 Pepsi-Cola International, PepsiCos international beverage production
and marketing division, suffered difficulties in Latin America, one of its most important
markets. The company was particularly hurt by the loss of a bottling plant to the Coca-Cola
Company in Venezuela.
Snack food Market Dominance
Many of PepsiCos other products continued to dominate their markets in the 1990s. Sales
of Frito-Lay products accounted for about 40 percent of PepsiCos total profits. By the mid-
1990s Frito-Lay products made up more than half of the U.S. market for snack chips, and
the company owned eight of the top ten chip brands. In 1995 U.S. consumers bought the
companys original potato chip brand, Lays, at a rate of 4.5 kg (10 lb) a second. The
companys leading product, Doritos tortilla chips, was the best-selling salty snack
(packaged) food in America in the mid-1990s. Salty snack foods include chips, pretzels, and
nuts, as opposed to nonsalty snack foods such as cookies and cakes. In 1994 Frito-Lay began
producing several baked and low-fat versions of some of their snack foodssuch as Baked
Lays potato chips and Baked Tostitos tortilla chipswhich soon dominated the companys
sales growth.
Recent Developments
By the mid-1990s PepsiCos restaurant business consisted of 28,000 outlets worldwide,
more than were owned by any other company. The company also supplied its own
restaurants through a separate division, PepsiCo Food Systems (PFS). In 1997 PepsiCo sold
PFS. Also that year, PepsiCo spun off its restaurant chains to form a new company. The
move enabled PepsiCo to focus on its beverages and snack foods. In 2001 PepsiCo acquired
The Quaker Oats Company, a food and Beverage Company.
Pepsi cola in Pakistan
In Pakistan, there have been consumed different types of soft drinks but Pepsi is the most
frequently consumed soft drink. It is very much popular in the consumer; it has got big
target market and is competing with the other companies of soft drinks. 10 units of Pepsi
cola have been installed, in the different places of Pakistan i.e., Lahore, Multan, Gujranwala,
etc., and working with the best utilization of their resources in the optimum way. Each of
these units is owned by the different parties, which are strictly following the rules of the
parent company. The company to made production has licensed each unit. These units have
their own areas of selling and have different target markets. All these units are considered as
separate firms, which are the franchisees of Pepsi cola international.
Pepsi in Multan
Shamim & Company
History
SHAMIM & Co. was established in 1967 as a private limited company. It started its business
in 1968. Allah Nawaz Khan Tareen (Ret. DIG) got license of 7-up franchise and was producing only
one product, 7-up. But in 1973, it became Pepsi Cola franchise. Now a day MD of SHAMIM & Co.
is Alamgeer Khan Tareen son of Allah Nawaz Khan Tareen.
Total production of that plant was 600 crates per 24 hours. Now Factory has 5 plants, which
can produce 110,000 crates per 24 hours.
In start Pepsi in Multan imported the material from USA & Ireland but due the problems of
shipment, time and availability, Pepsi Pakistan made the plant in HariPur Hadar where they
import the material from USA & Ireland. And now Pepsi in Multan takes Pepsi Concentrate
from the HariPur plant.
Along with the concentrate, Pepsi in Multan also imports the Sugar from Sheikho Sugar mill
& from Shaker Kunj. The bottles are manufactured by Tariq Glass in Lahore under licensed
by PEPSI Pakistan. The gases which are used in PEPSI are made by Multan Factory itself
but in case of shortage Factory buys it from Supreme Gas & Pak Gas. The caps and crowns
are imported from Imran Cork, Mehran Karachi and Wincloa Lahore.
Introduction
In Pakistan, at present SHAMIM & Co. is the largest production unit out of 11 franchisees.
SHAMIM & Co. covers the area of Southern Punjab which consists of Multan, Bahawalpur,
Bahwalnagar, Dera Ghazi Khan, Sahiwal, Khanewal, Rajan Pur, Taunsa, Okara, Rahimyar
Khan and Layyah. The company is properly serving all these areas with quality products.
Honors
In Pakistan, SHAMIM & Co. is in the list of top three out of eleven showing financial and
sales growth according to their relative volume size basis. When franchise cross a certain
volume, plant is classified as, Mega Plant Status. SHAMIM & Co. has achieved this status
in 2000 and 2001. Also it has ISO 9002 Certification and for year 2005 Shamim and
Company won the award of best quality unit among the eleven 11 units in Pakistan.
Mission Statement
To earn profit by meeting the customers needs with quality products.
Organization
Managing Director
He is the owner of this company and final operational authority to manage all departments
of the company. All departments heads are responsible to report him all about their
performances and matters.
General Manager Sales
G. Manager Sales is responsible for the performance of his department and to achieve the
objectives assigned to him such as marketing, sales, distribution. To carry out his duties
more efficiently he has four Regional Managers, 15 Area Sales Managers.
General Manager Operation
He is responsible for the whole administrative, shipping, workshop related activities to
smooth on the factory operations without any hindrances.
General Manager Technical
He is unlike Sales department performs key role as to manage Production Department
producing quality Products as per need of the sales department. Quality Control
Department also works under him.
G. Manager Finance
Finance, Accounts and MIS departments work under his control. He is responsible to make
major company financial policies to meet the needs of the each and every department
regarding budgets etc.
Organizational Chart

Global strategy
Pepsi has divided the total international market on the basis of taste constituting into three
zones.
Asian zone
European zone
African zone
Pepsi is using the licensing strategy to go abroad. SHAMIM & Co. is also a Licensee.
Competitive priorities
The competitive priorities are the operating advantages that firms processes must possess
to outperform its competitors.
Shamim & Co. has the competitive priorities of high-performance design and consistent
quality.
High-Performance design
Actually Pepsi is getting the competitive edge in our region on the basis of its quality and the
quality is its taste. Through a complete marketing research they found that sweet taste is
liked more by this region. Thats why in Pakistan Pepsi is dominant soft drink and it has
almost 75% shares in this market. On the other hand when we look internationality then
Coca Cola is the leading company. So Pakistan is a big market for the Pepsi, where Pepsi is
generating a lot of revenues.
Consistent Quality
Another major and the strong aspect of the Pepsi in Multan is that they are producing a
consistent quality according to the PCI standards. The low quality bottles and the damaged
bottles are not dispatched towards the market. Pepsi has a lot of checks and balances on its
output level.
MANUFACTURING AND SERVICES STRATEGIES
Make-To-Stock Strategy
In Pepsi, Make-To-Stock manufacturing strategy is used. Bottles are produced in a
standardized process because the competitive priority is consistent quality. Firstly,
marketing department forecasts the demand then according to this forecasting MPS is made
and after making bottles Pepsi distribute these bottles to the market.
DEPARTMENTALIZATION
As it is a formalized company therefore there is a hierarchy of employees and the division of
departments in the organization. Following are the departments working in the
organization.
Production Department
Administration and Personnel department
Sales/ marketing Department
Finance Department
Shipping Department
Purchase Department
Excise Department
Computer Department
Each manager of a department is responsible for overall working of the department. A
manager has an assistant manager and after this there are shift in charge in production and
supervisors in sales. They control the activities of operatives.
Brief introduction of the working of these major departments
Production department
As we can see with the name of the department the working of this department is to control
the production process i.e., to get raw material and process them and convert them into
finished goods.
Administration department
The major function of this department is to manage the employees and to made recruitment
of new employees. Assign them their according jobs. And government affairs if employees
are working effectively or not and what are the government recent policies
And what is the impact of these policies on the organization. These are the few matters
where administration plays its role.
Publicity problems
Some government policies directly affect organizational expenses like the tax on different
campaigns that is tax on cap, banners, shirts, and as many taxes on different publicity
methods about which organization come tow know at the end of the year.
Sales/marketing department
The marketing department of this organization is assigned to make public dealing. The
marketing department is responsible to make advertisements of the company products and
get them sold. Advertise through road site Painting, Wall Chalking, Billboard, TV adds etc.
They are given yearly sales targets and they are liable to achieve that. They use different
schemes and offer different discounts etc. to achieve those targets. Schemes like:
Prize Winning Schemes
Pepsi Ramzan Offer
Haj scheme
Omera scheme
And many more schemes
Finance department
This is one of the most important departments of this organization. This department makes
the financial plans of the organization; they analyze their resources and then compile other
reports and give the whole budget the organization can afford. Another job of this
department is to make the complete record all financial and non-financial transactions
made inside as well as outside the organization.
Purchase department
The whole processing of production department is based on the availability of raw material
and all the dealing regarding raw material is under purchase department. They made
purchases from their contractors i.e., bottles, caps ingredients etc.
Computer department
Pepsi-Cola uses a software package (Road Net) to facilitate the design of efficient routes and
schedules for the delivery of bottled and canned products to customers assigned to a given
location. In order for automated routing and scheduling to achieve maximum benefit,
however, the set of customers assigned to each warehouse and bottling facility must be
appropriate. During the course of this project the students developed a procedure based on
cluster analysis to assign customers to bottling facilities and integrated this analysis into a
Geographic Information System.
















PRODUCTION PROCESS

Water Treatment Plant
















Pepsi Bottles Filling Process




Purchasing and washing of bottles
First step regarding the production is the purchasing and washing of bottles. Mainly
company use the bottles returned from the market but if it needed more bottles, then these
are purchased from the glass company, Lahore.
These bottles are placed on conveyer and washed through an automatic plant. Caustic Soda
and boiled water is used for washing of bottles.
Water Traeatment
Raw water is treated to remove its hardness. Here raw water with the Lime, Feso4, and
Chlorine comes to the Coagulation Tank where the initial sludge is removed then this water
is moved to Buffer Tank where it is kept for a certain period in order to stable it. Then this
water comes to the Sand Filter and passes through the Sand and Gravel bed, and then this
half treated water comes to the Carbon Filter and passed through the Carbon and Gravel
bed for more purification. After that it is moved to the Purifix Carbon Filter and then to the
Spool Polisher where the filter papers are used to remove the sludge and then to Water
Polisher and then to Ultra Violet Filter where Ultra Violet rays passes through the water in
order to eliminate the future growth of bacteria and lastly this treated water passed through
the Thread Type Filter. After passing through this complex process water is completely free
from sludge and bacteria and other hazardous waste.
After that this water comes to the Water Softer Tank and passed thorough the Gravel Bed
and this soft water is used for the syrup making.
Preparation of Simple Syrup
In the sugar weight room sugar is weighted for different brands, because each brand
requires different quantity of sugar, then this weighted sugar is passed to the syrup storage
room, where the sugar and water in equal quantity processed in Pasteurizer Tanks, and
heated up to 85 C where Activated Carbon is used to remove the bacteria, and Chlorine and
TSP (Tri Sodium Phosphate) used to remove the smell and color of the sugar. Chlorine and
TSP is also stored in different tanks. After that this mixture of water and sugar is cooled
down up to 20C in order to prevent from the further growth of bacteria, after that in this
mixture Concentrate of each brand is added as per requirement.
Washing of Bottles
The empty bottles that come from the market are brought into the washing room of bottles
where different employees first check the initial damages to the bottles. Damaged bottles are
screened out from the lot. Only the acceptable lot is allowed going towards the bottle washer
machine. The bottles remain 45 minute in this washer machine so that only the good quality
bottles that are free from sludge and breakage can be passed to the filling room.
Filling of Bottles
Mixing of CO2 Gas in Syrup
Syrup is sent to carbon coolers, Ammonia, Carbon Powder and Carbon Granular are mixed
in the syrup.
In the filling room the syrup and CO2 comes from syrup and CO2 room. From Carbon
cooler syrup goes to the filler and from other side empty bottles and then crown cock or cap
cocks are fixed on the bottles. Here operator looks after the production process.
Filled bottles are then passed thorough light room where quality of bottles is checked. Here
under filled or, over filled bottles or dirty bottles are separated. There are two light rooms
and in each room one employee is placed to trace out the dirty bottles.
After passing through light room the code is printed on the bottles, which contain the
manufacturing date, machine number and time of manufacturing and the batch number.
After all this checking process bottles are placed in the crates. The whole process of
production is automatic. Only supervision is required. Then these crates are sent to the
output warehouse.



QUALITY CONTROL
It has become crystal clear that high quality products have a distinct advantage in the
market place, that market share can be gained or lost over the quality issue. Therefore
quality is a competitive priority.
Quality is important due to the following reasons:
Cost and market share
Companys reputation
Product liability
International implications
SHAMIM & COMPANY (PVT) LTD takes effective measures for the quality control.
Production of the company is according to the standards set by PCI. So the company is very
much concerned about quality. Quality of raw material as well as of end product is checked.
Following are the main steps taken by the company for quality control.
Testing of Raw Material
Raw material used in production, comprises of the following items.
Concentrate
Sugar
Treated Water
Empty Bottles
Carbon Dioxide
Crown
From the above items, previously the franchiser from USA provided concentrate. Now it has
plant at Haripur and SHAMIM & COMPANY (PVT) LTD purchase the concentrate from
there. Because the franchiser provides concentrate, so there is no question about its quality.
All other raw material purchased by the company itself.
Sugar Testing
The company from sugar mills purchases sugar. After the arrival of sugar at the plant, it has
to pass through a strict quality check. It should be free from moisture.
First of all supervisor checks the quality of sugar. After this checking, a randomly selected
sample from sugar bag is sent to laboratory for testing. After this testing, if the quality of
sugar is according to the standards, then this sugar is stored for further processing. If the
sugar quality is not up to the mark, then it is sent back to the sugar mill.
Water Treatment Testing
The company has four containers to meet the requirement of water. The water is treated for
the use in final processing. At different stages, different treatment tests are done.
These tests include:
Upper top test
Sand filter and carbon purifier test
Water softness test
Company also keeps the record of these tests. If some abnormality is observed by the shift in
charge, then he stops the supply of water from the container. The supply of water is made
from other container. These containers are also washed at regular basis.
Syrup Testing
Mixing of sugar and water into concentrate produces syrup. This mixture is treated at 90oc
and then it is stored in the tanks. This is called simple syrup. This syrup is also tested in the
lab. Then carbon dioxide and ammonia are mixed into the syrup. Now this is final syrup this
is also tested in the lab. If this syrup is not according to standards, then new syrup is
prepared for production.
Finished Product Testing
When bottles are filled, a chemist also takes the sample and checks the quality. Here
preservation and ingredients ratios are also checked. If any deviation from the standard is
found, the whole batch is drained before going in market.
These finished bottles are also passed through light room to control the quality. Here if the
bottle is low filled or dirty, then it is sorted out. The quality of glass, size of neck and size of
bottom should be according to the given standards.
Internal Audit
The firm has hired an internal audit team. And the purpose of this audit team is to make
periodic inspection of output after every 30 minuets. And if they find any laziness from the
employees side they immediately inform to the operation manager, so that right action can
be taken.
External Audit
Similarly there are some external auditors from Dubai, they take the random sample of
bottle from market and check the quality of beverages according to their standards. In the
past 4 to 5 years the Pepsi Multan has proved good quality and got a lot of reward from
international auditors.
Pepsi cola international also plays an important role in maintaining the quality. Sample
from different markets at different selling points at different times, are collected and quality
of these samples are checked.
Coding is also done on the caps of the bottles. In this coding manufacturing date, machine
number and time is printed. So from the above testing, we can conclude that the company
has very rigid quality control system.
Capacity
Capacity is the limiting capability of a productive unit to produce within a stated time
period, normally expressed in terms of out put units per unit of time.
This is actually the intensity with which a facility is used. This intensity is increased through
overtime. Other way of increasing the capacity is to engage in subcontracting when it is
feasible.
In Pepsi, the capacity measure in out put form is the number of crates produced. There are
two production units having different lines. The first unit contains 3 lines and allocated for
250 ml. Pepsi, 7UP, Dew & Marinda. The second unit contains 2 lines and produces 1 & 1.5
litre bottles. These lines are flexible in a sense that through one line you can produce
multiple brands having a set-up time of 2 hrs. They are not fully utilized. The capacity of one
line is 1100 bottles per minute but it is being operated at 800 to 900 bottles per minute. The
reason is that, the bottles move very fast that may cause serious accidents by breaking into
small pieces. There are 3 shifts working in Pepsi cola. The total capacity of 5 lines is 160,000
crates per day. But the average utilization of 5 lines is 100,000 crates per day in peek
season.
Planning Strategies
Chase Strategy
A chase strategy matches demand during the planning horizon by varying either (1) the
workforce level or (2) the output rate.
Pepsi is also following the Chase policy. When higher production is required in the peak
season, company hires the new workers, and during low production the workers are fired
from the company to prevent from unnecessary cost. Company also tries to increase
demand through advertising, price cuts and by giving different incentives.]
FORECASTING
Planning and control for operations requires an estimate of the demand for the product or
the service that an organization expects to provide in the future. Since forecasting should be
an integral part of planning and decision making, the choice of a forecasting horizon (a week
or a month, for example), a forecasting method with desired accuracy, and the unit of
forecasting (dollar sales, individual product demand.) should be based on a clear
understanding of how the output of the forecast will be used in the decision process.
SHAMIM & COMPANY (PVT) LTD uses the historical data for forecasting demand. As the
company has seasonal business so the demand is high in the month of March, April, May,
June, July, August and September. Sixty percent sale of the company takes place in these
months. This is the peak season for the company.
Company makes the sales forecast on the basis of historical data. For example, if a company
wants to forecast the sale for June 2005. They will take the data of last five year in order to
forecast the sale for June 2005. They also take into account the current trend factor.
Level of Forecast
The Pepsi cola forecast the demand for their products on aggregate level. Then they forecast
demand for Pepsi, 7up, Mountain Dew and Miranda individually.
Unit of measurement
They forecast the demand in crates instead of bottles. Pepsi normally forecast the demand
in 250ml.
Forecasting error
It is difficult to reduce the error of forecast demand. They say that the six to eight months
are required to install a new plant. And they lose the market for this particular period.
Inventory Management
Inventory is very important to every company because it helps the company to respond
quickly to customer demand, which is an important element of competitive strategy. The
more effective a companys inventory system is helped full in manage the companys
resources.
In SHAMIM & COMPANY the inventory is divided in to two main categories:
Critical material
Non-critical material
Critical Material
Critical material is that which is directly related to the production so management gives full
concentration to critical material to avoid irregularity in operation. The critical materials
include:
CONCENTRATE
SUGAR
CO2 GAS
EMPTY BOTTLES
CROWN CORK
CAUSTIC SODA
The store provides a daily stock report of critical material with balance. If that material is
reach at reorder point then they write that material in the daily stock in the column of
urgent. If any material is going to be reordered, it is highlight with red pen. The
procurement manager physically checks the stock and place order. They are managing high
inventory in which order for concentrate is placed for 3 months and the order for the rest of
the material is placed for 1 month.
The reason for maintaining high inventory is;
Customer satisfaction, to prevent from stock-outs and back-order situation
Low ordering cost
Labor and equipment utilization
Low transportation cost
Non-Critical Material
In Pepsi cola the non-critical material are those material which is not directly related to the
production. The storekeepers inform the procurement manager. When there is need. The
non-critical material consists of stationery, Greece, and supplies etc.
Selection of Supplier
The co. purchase material from those suppliers, which provide the material at least cost, on
time delivery and meets the specification of the quality control department
In start Pepsi in Multan imported the material from USA & Ireland but due the problems of
shipment, time and availability, Pepsi Pakistan made the plant in HariPur Hadar where they
import the material from USA & Ireland. And now Pepsi in Multan takes Pepsi Concentrate
from the HariPur plant.
Along with the concentrate, Pepsi in Multan also imports the Sugar from Sheikho Sugar mill
& from Shaker Kunj. The bottles are manufactured by Tariq Glass, Toynasic and BGL under
licensed of PEPSI Pakistan. The gases which are used in PEPSI are made by Multan Factory
itself but in case of shortage Factory buys it from Supreme Gas & Pak Gas. The caps and
crowns are imported from Imran Cork, Mehran Karachi and Wincloa Lahore.
Distribution
In Shamim & company, major item of inventory is finished product. There are two ways to
distribute that finish inventory, the first method is direct and second is indirect method. In
direct method they provide crates of bottles to their dealers at the required destination
through their own transport, in indirect method the dealers have their own transport for
distribution.
PEPSI is just one link in a customer value delivery system that includes thousands of
dealers. It is a winner in this part of the world because they have superior dealer networks.
Also the wholesalers and retailers involved are doing well because PEPSI supplies superior
beverages. PEPSI also focuses on placement of their product such that the consumer can
buy a PEPSI from nearby location. PEPSI also takes immediate action in delivering its
products to market. Overall PEPSI is focusing on fastest delivery and great assortment.
PEPSI Multan is obtaining strong trade cooperation and support from resellers. The
marketing department commands unusual cooperation from resellers regarding displays,
shelf space, promotions and price policies.
Benchmarking
The bench marking is a continuous process of comparing a companys strategy, products
and processes with those of world leaders and in best-in-class organizations in order to
learn how they achieve excellence and then setting out to match and even surpass it.
Comparative analysis of Pepsi & Coca-Cola
We will compare these two companies in regard of shares. The shares can be described in
two ways:
Market shares
Volume shares
Market Shares
The market share of a company represents the portion of accounts that the company holds
from the 100% accounts of the market. The market share distribution of Pepsi and Coca-
Cola is more than 80% and remaining respectively. For Instance if the total market
comprises of 100 consuming accounts then 80 accounts are being served by Pepsi and rest
are being server by Coca-Cola and others. Pepsi has been focusing to increase its market
share, which represents the long-term approach of organization because majority of the
customers of the Pepsi are low volume purchase and if someone will switch towards the
other brand then it would not be a big loss for the firm. But on the other hand Coca cola is
focusing on the short-run approach, it is dealing with the institutional customers, which are
high volume purchaser. But the major disadvantage of this approach is that if Coca-Cola will
lose any one customer among these 20 then it would be a great loss for the firm but in case
for it.
Volume Shares
The volume share of a company represents the portion of sales volume that the company
holds form the 100% sales volume of the market. The volume share distribution of Pepsi
and Coca Cola is 65% and 34% respectively. For instance if total market demand is 100
units then Pepsi is supplying 65 units while Coca-Cola is supplying 34 units and remaining 1
unit is supplied by other beverages companies of Pakistan.
Benchmarking in Pepsi
In 1970s Pepsi was the follower and Coca-Cola was the leader here in Pakistan as well. At
that time Pepsi used to benchmark the Coca-Cola in order to prosper and progress. But after
1970s Pepsi stopped benchmarking strategies and procedures of Coca-Cola and adopted an
idea ofOut-of Box thinking.
Thinking Outside The Box
Thinking Outside the Box means thinking beyond the parameters of human consciousness
and experience - to see beyond the norm - to be a visionary - to activate your DNA. We exist
inside the box - the physical plane - but we soon evolve our conscious awareness back to its
source of creation - outside the box.
Are you trapped inside the box - the emotions of the game?
Thinking 'outside the box' means balancing lower frequency emotions - fear, anger, etc.
With higher frequency emotions and therefore not being controlled by your emotions.
Let it all go ... it's just an illusion in time.

Humanity is evolving out of the box and into the light of creation.
What PEPSI found out from out-of-box thinking?
Pepsi got following findings from this idea:
Cricket is the most Popular game in Pakistan.
Pakistan is an immature market.
The tactics that Pepsi derived from above ideas are:
1. Contract with PCB
It is an admitted fact that there is a craze of cricket in Pakistani Nation irrespective of age
factor. So the Pepsi thought to take the benefit from it and made a contract with PCB in mid
70s. This created a fantasy in the minds of people and market shares of Pepsi Cola started
increasing. It gave real boost up to repute of Pepsi in world-cup 1992 and in very short span
of time; Pepsi was able to double its sales.
2. Extensive advertisement and Penetration
In view of the lack of knowledge and immature market of Pakistan Pepsi adopted the
aggressive strategies of distribution and advertisement. This also was proved to be an
effective move towards the growth of the company. They are using almost all modes of
advertisement and are using them extensively right now such as:
Electronic Media
Print Media
Display Media
It is the task of the sales and marketing officer of Pepsi Cola that whenever and wherever a
departmental store will open they have to capture it and have to convince the shopkeeper to
make an agreement by meeting his requirements.
Benchmarking PCI
As we already mentioned that in sub-continent Pepsi is the leader so here in Pakistan Pepsi
is not benchmarking Cola-Colas standards rather Coca-Cola is benchmarking Pepsi here
such as in pricing, advertisement (Celebrity Hiring) and aggressive distribution. Pepsi
benchmark its parent company for technical, quality and for human resource
considerations.
Quality issues
Shamim & Company infect adopt the standards of PCI such as about the proportion of
ingredients. Such as the standard for CO2 in 7up was set 3.5 to 3.9 but to become more
efficient in quality issues the Shamim and Company redefined it as 3.6 to 3.8. However the
ideal standard for CO2 is 3.7. Similarly for the Marinda they refined the standard for getting
much and much closer to the ideal standard.
Technology
Pepsi in Pakistan always benchmarks its parent Company for the sake of technology
improvement. For instance they are going to start a new plant in Lahore, which would have
the capacity to fulfill the total demand of Lahore district. And it would require only 3
operatives to operate this plant.
Celebrity Hiring:
In our culture cricketers and film stars have much influence on people. Pepsi is using both
the vehicles to advertise its brands. It has established the contract with prominent film star
Reema as a brand representative for Pepsi. Similarly contracts have been established with
Inzamam-ul-Haq and other cricketers.
Employee policies
Earlier Pepsi was not focusing too much on employees benefits and facilities. Then it
adopted the idea that result and rewards have a positive co-relation. Shamim & Company
took this idea from PCI that if employees and satisfied and motivated towards the
achievement of the Goals only then organization can better grow. In early 90s Pepsi adopted
a new benefit plan for its employees and management. Now in employee in the marketing
department has a car, having the medical facilities, insurance and a good compensation. So
these policies regarding the employees helped the organization to achieve its target related
to sales, growth and image of highly committed organization.
Collecting Feedback from customers
Actually, Pepsi is using two ways to collect the feedback from its customers.
Direct Method
Indirect Method
Direct Method
In direct method they collect feedback from its distributors, business customers and
retailers about demand, market situation, consumer behavior and on other issues through
its Sales Information System (SIS). For example they take vehicle plan from the
distributors.
And Pepsi measures the performance of its distributors and other customers through
collecting the data about
Targets
Inventory Level
Repute
Daily, monthly and yearly sales Report
Indirect Method
This method is specifically used to judge the consumer behavior. In this method Pepsi uses
the services of ACNELSON Company, which is basically a biggest and authentic most
research organization in Pakistan.
Vehicle to change organizational culture
They use two vehicles focus and employees policies to incorporate the quality culture. For
the urgent and most important issues they make employees policies and make sure these
policies are being followed with considerate supervision. And for less urgent issues they use
focus strategy and arrange lectures, presentations, conferences and excessive training
programs.
Agreement with the Competitors
Pepsi has NO agreement with Coca-Cola on pricing and other strategic issues. And the
major reason of recent increase in prices has been reported to be the revision of tax policy of
the Government.
ISO 9000
Now the situation has been changed. Products of low standards are not acceptable in
international markets. These standards are ISO-9000 i.e., International Standard
Organization. Now as the world has become a global village, therefore, there is a very tough
competition among the companies. Especially for the companies of developing countries,
they have to do much more smart work than the companies of developed countries because
they have strong economy and their products are widely acceptable in the international
market. For this purpose almost all organizations are doing struggle for getting ISO-9000
certificate. Shamim & Company (PVT) Ltd is one of those Pakistani organizations that
struggled for ISO-9000 and awarded. They have been awarded ISO-9002 certificate.
The management and labor of Pepsi is committed with their responsibilities. The evidence
of this the company has certified as international standard organization. They had to fulfill
the 20 clauses of ISO 9000. In this way they got ISO 9002 certificate. The company is
franchisee so; they have no authority to design a product.
They up date their records on daily basis. In Pakistan no one have authority for inspection
for ISO 9000. The company has selected SGS Malaysia for inspection of their records. This
is a continuous process the auditors come after six month and check the records.
SWOT Analysis
1- Strength
Activities the firm does well or resources it controls are called strength. Resources that a
company contains, size of organization, size of market, loyalty of the organizations
products, sales point of product of the company shows the company strength.
The strength of PEPSI lies in the loyalty of the product, their market share, size of market,
having numerous sales points and efficient delivery system.
2- Weaknesses
Activities the firm does not do well or resources it needs but does not possess. Such
activities that a firm does not perform or not have some resources those other competitors
have.
Locally, PEPSI is enjoying its position in the market. Internationally, PEPSI faces some
tough competition from Coca-Cola. Their weakness is the lack of relationship marketing in
some parts of the world. And also in Pakistan they are facing some serious problems in
building the relationship with institutional customers.
3- Opportunities
A combination of favorable circumstances or situations for organizations product/s such as
loyalty of customer about your products, social environment, size of target market, size of
organization, advantages over other competitors etc.
Opportunities are coming in the market day by day in the shape of new retailers. PEPSI has
a big research department; they try to capture each new retailer who comes in the market.
Pakistan population size is rapidly increasing with the passage of time so opportunities are
there for Pepsi to enhance its sales volume more than others.
4- Threats
Unfavorable circumstances that a company faces time by time to achieve its goals are called
threats. Some times small companies introduce the same products with low quality and low
price that the company did not produce.
Locally, PEPSI stands second to none. Internationally, Pepsi is facing heavy competition
from its rival Coca-Cola. Coca-Cola is focusing global market while PEPSI is somehow
lagging behind. The situation can become a serious threat to PEPSI globally.