Strategy, Cyber Security and Food Security

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Business Admin Capstone

Review Case Study 8: Dr. Pepper Snapple Group 2011: Fighting to Prosper in Highly Competitive Market found in attached PDF.

"Dr Pepper Snapple Group 2011: Fighting to Prosper in a Highly Competitive Market" Please respond to the following:

The case study outlines six specific strategies that the firm has chosen to support its strategic direction. Determine which strategy is most likely to benefit the firm. Explain your rationale.

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1) Business Admin Capstone Review Case Study 8: Dr. Pepper Snapple Group 2011: Fighting to Prosper in Highly Competitive Market found in attached PDF. "Dr Pepper Snapple Group 2011: Fighting to Prosper in a Highly Competitive Market" Please respond to the following: The case study outlines six specific strategies that the firm has chosen to support its strategic direction. Determine which strategy is most likely to benefit the firm. Explain your rationale. Briefly outline at least one other strategy the firm could take to support its strategic direction. Illustrate why this new strategy would be successful. Please answer above question here in 120 words or more. Please use the Attached Case study for this post 2) Business and Society we look at the role of Technology in Business and Society. We look at Cybersecurity, the loss of Privacy; we look at the Use of Robotics; we look at Genetically Engineered Food; we look at Scientific breakthroughs in the Human Genome & Biotechnology...and so much more! These are such important issues that we are all facing as a society, with so many awesome benefits and so many very real risks. I want you to look at these issues and I want YOU to develop questions about these issues. What questions do you have about these technologies (If you are living in the current, you must have questions! ). Please post your question about any of the topics. Then use your book or the Internet to provide some insight about your question. As always, posts must be at least 80 words; Please post the URL link of any Internet sources you use so your peers can review as needed. Please answer above question here in 80 or more. 3) Solution to global issue Feeding the World This week you learned that though there is, in fact, enough food available to feed the entire world every day, this is not happening for various reasons. Look at the community in which you live. If food became inaccessible to your community, how would that affect your day-to-day life? How would it affect the immediate community? Please answer above question here in 8-10 or more sentences. University of Richmond UR Scholarship Repository Robins Case Network Robins School of Business 6-2011 Dr Pepper Snapple Group: Fighting to Prosper In a Highly Competitive Market Joseph S. Harrison University of Richmond Follow this and additional works at: http://scholarship.richmond.edu/robins-case-network Part of the Business Administration, Management, and Operations Commons, Economics Commons, and the Marketing Commons Recommended Citation Harrison, Joseph S. Dr Pepper Snapple Group: Fighting to Prosper In a Highly Competitive Market. Case Study. University of Richmond: Robins School of Business, 2011. This Case Study is brought to you for free and open access by the Robins School of Business at UR Scholarship Repository. It has been accepted for inclusion in Robins Case Network by an authorized administrator of UR Scholarship Repository. For more information, please contact scholarshiprepository@richmond.edu. Dr  Pepper  Snapple  Group:   Fighting  to  Prosper  In  a  Highly  Competitive  Market   June  2011       Written  by  Joseph  S.  Harrison  under  the  direction  of  Jeffrey  S.  Harrison  at  the  Robins  School  of  Business,   University  of  Richmond.  Copyright  ©  Jeffrey  S.  Harrison.  This  case  was  written  for  the  purpose  of   classroom  discussion.  It  is  not  to  be  duplicated  or  cited  in  any  form  without  the  copyright  holder’s   express  permission.  For  permission  to  reproduce  or  cite  this  case,  contact  Jeff  Harrison  at   RCNcases@richmond.edu.  In  your  message,  state  your  name,  affiliation  and  the  intended  use  of  the   case.  Permission  for  classroom  use  will  be  granted  free  of  charge.  Other  cases  are  available  at:     http://robins.richmond.edu/centers/case-­‐network.html       Larry Young, President and CEO of Dr Pepper Snapple Group, Inc. (DPS) seemed to be on a roll. Named 2010 Beverage Executive of the Year by Beverage Industry Magazine, he led the company through three very difficult economic years since it separated from the London-based food and beverage giant Cadbury Schweppes. Reflecting on that time, he chuckled, “There couldn’t have been a worse year to go public.”1 Triggered by the collapse of mortgage-backed securities, the recession froze the credit markets and led to unprecedented commodities prices. In spite of adverse economic conditions and fierce competition, the company managed to obtain modest growth in sales in 2010. Perhaps most satisfying of all was the recent turnaround of the Snapple Brand, which had been struggling for many years.2 Sales volume for the brand grew 10 percent in 2010, fueled by new products, packages and distribution. In addition, Dr Pepper, Canada Dry, Crush, Mott’s and Hawaiian Punch all experienced increases in demand. A healthy cash flow allowed the company to pay down its debt, increase dividends and repurchase shares. A question remained as to whether the company was simply taking advantage of some fairly obvious opportunities that it could not pursue when it was under Cadbury Schweppes ownership, or whether this number three firm could actually begin to prosper in an industry dominated by two of the strongest brands in the world. After all, although DPS sales were up almost 2 percent in 2010, profits were lower than in 2009. In comparison, Coca Cola Company experienced growth in revenues of 13.3 percent in 2010, with operating income increasing by 2.7 percent. During the same time period, PepsiCo had revenue growth of 33.8 percent and growth in operating profit of 3.6 percent. THE DR PEPPER SNAPPLE STORY The original Dr Pepper soft drink was invented in 1885 by a young pharmacist named Charles Alderton. At the time, Alderton was working at Morrison’s Old Corner Drug Store in Waco Texas, which served carbonated soft drinks from a soda fountain. Using that resource, Alderton began to experiment with his own recipes and soon discovered that one particular drink, referred to as “the Waco,” was gaining popularity among his customers. As demand grew, Alderton and Morrison brought in a third partner to help with the manufacture and bottling of the soft drink. The partner was Robert S Lazenby, owner of the Circle “A” Ginger Ale Company. Alderton left the business shortly thereafter, but Morrison and Lazenby continued on to form what would come to be known as the Dr Pepper Company, named after a friend of Morrison. The company was introduced to the general public in 1904 at the World’s Fair Exposition in St. Louis.3 From its humble beginnings in Morrison’s Old Corner Drug Store, the company Alderton and Morrison started has become one of the largest beverage manufacturers in North America. The current product portfolio of DPS is closely tied to the history of mergers and acquisitions of its one time parent company, Cadbury Schweppes plc (Cadbury Schweppes). Cadbury Schweppes emerged in 1969 from the merger of Cadbury plc, a British confectionary and soft drink company, and Schweppes, an international beverage brand. In the three decades that followed, Cadbury Schweppes gained the third largest share of the beverage market in North America through strategic acquisitions. Some notable acquisitions included the Duffy-Mott Company (later known as Mott’s), Canada Dry, Sunkist, Crush and Sun Drop in the 1980s. In 1993 the company bought the A&W Brands Squirt and Vernors as well as its signature root beer and cream soda flavors. Cadbury finally purchased Dr Pepper/Seven Up, Inc in 1995, in an 1 acquisition that brought Dr Pepper, 7UP, IBC Root Beer and the Welch’s soft drink line into the company portfolio.4 In 2000, Cadbury Schweppes acquired the Snapple Beverage Group (Snapple). Snapple had previously been part of a failed acquisition by Quaker in 1994. The acquisition had been intended to help Quaker strengthen its beverage division, which included Gatorade at the time. However, after a failure to successfully integrate the contrasting corporate cultures, Snapple was acquired by Triarc Companies in 1997, an investment company with a history of purchasing struggling assets.5 It was from Triarc that Cadbury Schweppes ultimately acquired Snapple. Three years after the acquisition of Snapple, Cadbury Schweppes combined its four North American beverage companies—Dr Pepper/Seven Up, Snapple, Mott’s, and Bebidas Mexico— into Cadbury Schweppes Americas Beverages (CSAB). By 2006, CSAB had developed a common vision, business strategy and management structure, as well as establishing its own bottling and distribution network. Finally in May 2008, under the direction of Larry Young, CSAB officially spun-off from Cadbury’s confectionary manufacturing division and became known as Dr Pepper/Snapple Group, Inc (NYSE=DPS).6 Today, DPS manufactures, markets, and distributes over 50 brands of carbonated soft drinks, juices, mixers, teas, and other beverages. In addition to Dr Pepper and Snapple brand drinks, DPS products include Mott’s juices, 7UP, A&W, RC Cola, Squirt, Sunkist soda, Canada Dry, Schweppes, Hawaiian Punch, Yoo-hoo, and other well-known beverages.7 It has market share of over 40 percent in the non-cola carbonated soft drink category. THE COMPANY Dr Pepper/Snapple Group, Inc (DPS) is a major beverage company with an integrated business model including brand ownership, bottling, and distribution of nonalcoholic beverages in the US, Canada and Mexico. The company’s portfolio includes dozens of brands of flavored (non-cola) carbonated soft drinks and noncarbonated beverages like mixers, juice drinks, and ready-to-drink teas and juices. Since the spinoff of Cadbury in May 2008 the company has established itself as the top non-cola carbonated soft drink company in the US, and has maintained the number three spot in the broader beverage industry in North America.8 The Management Team Current DPS management includes seasoned professionals with decades of experience in the food and beverage industry. Most notable in the organization are president and CEO Larry Young, chief financial officer Martin Ellen, and President of Packaged Beverages Rodger L. Collins.9 President and CEO: Larry Young. Larry Young has been president and CEO of the company since October 2007 and led the separation of DPS from Cadbury in 2008. Before coming to the company, Young had worked for more than 25 years in the Pepsi system, where he began as a truck driver and worked his way up to president and CEO of Pepsi-Cola General Bottlers. In 2005, he joined the Dr Pepper/Seven Up Bottling Group, again as president and CEO. Young finally joined Cadbury Schweppes in April 2006 when it acquired Dr Pepper/Seven Up. 2 Chief Financial Officer: Martin Ellen. Martin Ellen joined DPS in April 2010. He has 25 years of experience as chief financial officer in companies in manufacturing, franchising, distribution and service industries. His previous appointment was at Snap-on Inc., a manufacturer and marketer of professional tools, equipment and software. His beverage-industry experience was obtained at Whitman Corporation, owner of Pepsi Cola General Bottlers, where he helped realign and expand Pepsi bottling territories in the U.S. and Europe. President of Packaged Beverages: Rodger L. Collins. Rodger Collins has been affiliated with the bottling group of Dr Pepper Snapple or its predecessors for more than 30 years, having survived numerous acquisitions, restructurings and the spin off of DPS from Cadbury Schweppes. In his current role, he manages a coast-to-coast sales force and fleet with responsibility for direct-to-store delivery and warehouse distribution. Board of Directors As a publicly traded company, DPS management is directed by a Board of Directors chaired by Wayne Sanders, who served as Chairman and CEO of Kimberly-Clark Corporation until retiring in 2003.10 As stated in the company’s Corporate Governance Guidelines, the responsibility of the board is to manage the business affairs of the company, including regular evaluation of strategic direction, policies and procedures, and top management. They must ensure that the company’s managers act in the best interests of the company and its stockholders and maintain a high level of ethical conduct.11 In addition to Chairman Sanders, the Board of Directors has eight other directors, including John Adams formerly of Trinity Industries and Texas Commercial Bank, Terence Martin former senior vice president and CFO of Quaker Oats, and DPS CEO Larry Young. 12 (For full information on directors, see Exhibit 1). Company Strategies Since it was spun off from Cadbury Schweppes, DPS management has concentrated a great deal of time and attention on strategy development and implementation. Through focused strategic development, management has sought to establish itself as a leader in the higher margin segments of the nonalcoholic beverage industry. Consistent with this strategic direction, management has established six specific strategies: • Build and enhance leading brands. • Focus on opportunities in high growth and high margin categories. • Increase presence in high margin channels and packages. • Leverage its integrated business model. • Strengthen its distribution channels through acquisitions. • Improve operating efficiency While most of the strategies are centered on internal development, management is attempting to broaden its market through continued acquisition activity and contractual agreements with other organizations.13 Whether internally or externally focused, however, the key to implementing 3 each of these strategies has been a focus on marketing. (For a detailed explanation of DPS strategies, see Exhibit 2). Marketing Shortly after DPS demerged from Cadbury, the economy in the United States began to struggle and discretionary spending was constricted. As a result, sales in the industry tanked, leading many companies within the industry to drastically cut marketing budgets. In contrast to the mainstream reaction, DPS intensified its focus on marketing and advertising. The decision was based on an analysis of the recession in the early 1980s, performed by Nielson, a major marketing research company and a partner of DPS. The analysis looked at brands across multiple consumer categories from 1983 to 1984, and found that the most successful brands all participated in one common strategy—continued investment in core brands. Consequently, DPS dramatically increased its marketing budget for its core brands and focused its marketing money on brand development, availability, and advertising.14 Brand Development Despite slow sales in the overall non-cola carbonated soft drink market, many top managers within the company believe that flavored soft drinks show room for growth. As Young put it, they believe that while consumers are growing tired of colas, flavored soft drinks are the “sweet spot” in the industry. By developing its flavored brands like Dr Pepper, Sunkist, and A&W, DPS believes it has the potential to gain market share over its rivals.15 DPS has made a number of changes to its soft drink brands, including the addition of a new Green Tea Ginger Ale to the Canada Dry line, the extension of a 7UP line with added antioxidants, an updated recipe for A&W Root Beer that includes aged vanilla, and the development of Dr Pepper Cherry, for consumers who prefer a lighter tasting Dr Pepper.16 In addition to soft drink development, the company participates in investment and development to recover lost distribution in healthier flavored water and energy drinks. For example, it invested in Hydrive Energy LLC, a small energy drink maker, and created Snapple Antioxidant water to compensate for the loss of Vitaminwater to Coca-Cola.17 Also, DPS created Venom, a new energy drink to recover losses from two previous brands. 18 More than just adding and investing in new product line extensions, DPS also refocused its efforts related to existing products. The most dramatic change occurred within its Snapple Brand, which had been struggling before the separation from Cadbury. For instance, in the third quarter of 2008, Snapple sales had fallen 10 percent, contributing greatly to the company’s 31 percent drop in profits for that quarter. 19 In response to the drop in sales in 2008, DPS changed everything about the product—from its packaging and look, to its taste, to the marketing thrust associated with the brand. The new Snapple included new formulations for its teas to increase consumer interest, and began to focus on the health benefits of the product. DPS also began to distribute Snapple juices and lemonades in sleek 16-ounce glass bottles with labels indicating their health benefits.20 These and other changes paid off, as sales of Snapple actually increased in 2010, in spite of a poor economic climate. 4 Increasing Advertising and Availability Despite the company’s strong history of brand development, many of its brands, such as Mott's, A&W and Canada Dry, had not received any serious advertising investment since the end of the 1990s.21 Beyond developing the brands, the company recognized the need to increase its efforts in advertising and distribution. Marketing Chief Jim Trebilcock explained the strategy: We have, in our portfolio, a host of brands that are very trusted, high-quality brands and at times like these, we believe if we invest in them…we can make a pretty significant impact on our business moving forward and actually strengthen and position ourselves for consistent growth when we come out of this economic downturn.22 Most notable among the changes in advertising was the use of celebrities, a strategy that had worked for Snapple in the late 80s and early 90s.23 In connection with Dr Pepper, DPS’s most heavily supported brand, the company launched a television commercial campaign including celebrities like the rapper/producer Dr Dre and Gene Simmons of the rock band Kiss. In the commercials, the celebrities endorse Dr Pepper by referring to its superior taste and flavor and then simply stating, “Trust me, I’m a doctor.” In addition to television commercials, DPS also began to target specific demographic segments through online viral marketing. In 2009, for example, the entire budget for Sunkist was to be allocated to a viral campaign targeted towards teenagers and 20 percent of the budget for Dr Pepper was allocated to Internet advertising. Although this was a fairly significant change compared to earlier DPS marketing strategies, management believed that reaching out through the Internet would help the company connect to its markets in a more relevant way.24 To supplement the increase in advertising, DPS also focused more attention on distribution. One of the major methods for increasing distribution was by investing in coolers, vending machines, and fast-food fountains containing DPS products. In 2008, DPS added 31,000 fountain placements in fast-food restaurants throughout the US. In 2009, the company announced that it would add its products to 14,000 McDonald’s franchises in order to increase its availability in that chain from 60 to 100 percent. In that same year, the company also outlined a strategy that would add 175,000 coolers and vending machines throughout the country over a five-year period.25 Again, Trebilcock commented on the strategy: If you have people drinking your products at work, at play, when they go into the grocery store, they’re going to buy that pro ...
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Strategy, Cyber Security and Food Security
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1) Business Admin Capstone

Review Case Study 8: Dr. Pepper Snapple Group 2011: Fighting to Prosper in Highly
Competitive Market found in attached PDF.
"Dr Pepper Snapple Group 2011: Fighting to Prosper in a Highly Competitive Market"
Please respond to the following:
The case study outlines six specific strategies that the firm has chosen to support its strategic
direction. Determine which strategy is most likely to benefit the firm. Explain your rationale.
Briefly outline at least one other strategy the firm could take to support its strategic direction.
Illustrate why this new strategy would be successful.

The best strategy for Dr Pepper Snapple Group 2011 is that of focusing on opportunities in
high growth and high margin categories. From a SWOT analysis point of view the firm has
several e...

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