Microeconomics Group - Microeconomics Unit 5 Group Project...

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Microeconomics Unit 5 Group Project 1 Microeconomics Unit 4 Individual Project Warren Synecky ECON220-1002B-13 May 29th, 2010
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Microeconomics Unit 5 Group Project 2 Abstract In this paper we will be evaluating the merger between PepsiCo Inc (Pepsi) and Pepsi Bottling Group (PBG). Pepsi is the number 2 producer of non alcoholic beverages in the world, and the PBG was the number one bottler for Pepsi before the merger. We will discuss the companies, the benefits of the merger, and the affect it will have on the industry.
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Microeconomics Unit 5 Group Project 3 Pepsi is a major player in the world of convenient snacks, foods, and beverages. It has three major families; PepsiCo Americas Beverages, PepsiCo Americas Foods, and PepsiCo International as well as hundreds of brands worldwide. For purposes of comparison, this paper will only focus on PepsiCo beverage products. Pepsi produces a wide variety of beverages both carbonated and non-carbonated. They offer a line of regular beverages, low calorie beverages, energy drinks as well as a line of waters and coffees. According to Pepsi’s annual report for 2009 their net revenue was $43,232,000,000. This does however includes all of their products not just their beverage products. Their operations span to every corner of the world. Their products are distributed in 200 countries on every continent except Antarctica. From PepsiCo’s perspective it makes sense to merge because they will not need to pay an outside source to do their bottling and shipping, it can all be housed internally now. This will give them more control over the price of their product as they won’t have to pay someone else to bottle it and ship it. It also gives them more control over distribution cost as they can choose the distributor instead of Pepsi Bottling choosing the distributor. As cited by PepsiCo there are other benefits they considered when deciding to merge with the PBG. Consolidation of 80 percent of the North American beverage volume will speed the decision-making process and
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Microeconomics Unit 5 Group Project 4 eliminate friction points. Offering more compelling bundles across food and beverage and providing enhanced customer service nationally, taking the "Power of One" to the next level, consolidation of manufacturing networks will provide cost benefits and also optimize our
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Microeconomics Group - Microeconomics Unit 5 Group Project...

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