2014 STRATEGIC AUDIT - DPS

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2014 STRATEGIC
AUDIT
BUSINESS 109 – SECTION 023
COMPETATIVE AND STRATEGIC ANALYIS
SCHOOL OF BUSINESS ADMINISTRATION
UNIVERSITY OF CALIFORNIA, RIVERSIDE
PROFESSOR: DR. SEAN D. JASSO
TEACHING ASSISTANT: ANDREW MONROE

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CREATED BY:
TEAM EXCELLENCE
TEAM LEADER: VICTORIAN BARNES
NATHAN ANDERSON
MATTHEW CHAVEZ
WILLIAM CRENSHAW
LAN GIANG
JACOB LEE
YALI LUO
DEBORAH NGHIEM
DANIEL PERRY
CHAWIT WEJJAKUL
BRANDON WILLIAMS

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TABLE OF CONTENTS
I. CURRENT SITUATION ....................................................... 1
A. History ........................................................................ 1
B. Current Performance .................................................... 3
C. Competitor Comparison ............................................... 5
D. Industry Comparison .................................................. 14
E. Strategic Posture ....................................................... 20
II. CORPORATE GOVERNANCE .......................................... 29
A. Board of Directors ..................................................... 29
B. Top Management ....................................................... 34
III. EXTERNAL ENVIRONMENT ........................................... 38
A. Natural Physical Environment ..................................... 38
B. Societal Environment ................................................. 40
C. Task Environment ...................................................... 45
D. Summary of External Factors ...................................... 49
IV. INTERNAL ENVIRONMENT............................................ 49
A. Core Competencies ................................................... 49
B. VRIO Analysis ............................................................ 51
C. Business Model.......................................................... 53
D. Value Chain ............................................................... 54
E. Corporate Structure ................................................... 59
F. Corporate Culture ...................................................... 61
G. Corporate Resources ................................................. 62
H. Summary of Internal Factors....................................... 85

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V. ANALYSIS OF STRATEGIC FACTORS............................... 86
A. Review of Mission and Objectives ............................... 86
VI. STRATEGIC ALTERNATIVES AND RECOMMENDED
STRATEGY .......................................................... 88
A. Tows Matrix .............................................................. 88
B. Strategic Alternatives ................................................ 88
C. Recommended Strategy ............................................. 93
VII. IMPLEMENTATION ...................................................... 94
A. Implementation Programs .......................................... 94
B. Procedures ................................................................ 95
C. Action Plans .............................................................. 95
D. Matrix of Change..................................................... 104
VIII. EVALUATION AND CONTROL ................................... 107
A. Measuring Performance............................................ 107
B. Balanced Scorecard.................................................. 108
IX. APPENDIXES .............................................................. 114
X. REFERENCES .............................................................. 118

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TABLE OF GRAPHS AND CHARTS
Ratio of Analysis ................................................................. 3
DPS Annual Financials .......................................................... 4
Coca-Cola Financial Reports................................................. 8
Pepsi 10-Year Revenue ...................................................... 10
PepsiCo Financial Reports.................................................. 11
Valuation Chart ................................................................. 66
Profitability Chart ............................................................. 66
Efficiency Chart................................................................. 66
Capital Structure Chart ...................................................... 66
Liquidity Chart .................................................................. 66
Comparison: Industry and Market ....................................... 66
Annual Income Statements ................................................. 66
TOWS Matrix..................................................................... 88
Matrix of Change Chart ................................................... 107
Balanced Scorecard Chart ................................................ 113
EFAS Chart ..................................................................... 114
IFAS Chart ...................................................................... 115
SFAS Chart ..................................................................... 116
IECP Chart ...................................................................... 117

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I. CURRENT SITUATION
A. History
The history of Dr. Pepper Snapple Group (DPS) goes all the way back to the
creation of the very first soft drink, through mergers, acquisitions and changes,
into the number one flavored beverage company.
The story begins in 1783, when Jean Jacob Schweppes invented the
very first soft drink when he perfected a way to make carbonated water,
leading to the creation of the original carbonated mineral water (DPS Website -
History, 2014).
In 1885, a pharmacist named Charles Alderton, in Waco, TX,
invented Dr. Pepper. Selling it at a pharmacy he was working for,
locals began calling the drink a “Waco” (DPS Website - History,
2014). The first official soft drink in the United States was
born. The beverage’s name would later be changed to Dr.
Pepper, after an alleged friend of the pharmacy owner, Dr.
Charles Pepper, although the actual story is one of much
debate and mythology (DPS Website - History, 2014).
In the early 1970s, three New York-area health clubs invented an apple
soda they named Snapple. Eventually, the company that owned the Snapple
beverage became the Snapple Beverage Company (DPS Website - History,
2014).
In 1969, the two companies would merge together forming Cadbury
Schweppes. In the next three decades, they would amass the third largest
share of the beverage market through various mergers and brand acquisitions
(DPS Website - History, 2014).

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In 1982, Cadbury Schweppes purchased the Duffy-Mott Company that
would later be known as Mott’s. Mott’s was one of the largest apple juice
producers in the world. Through the remainder of the decade, Cadbury would
purchase Canada Dry, a leading ginger ale brand, Sunkist sodas, and Crush
sodas (DPS Website - History, 2014).
In 1993, Cadbury Schweppes made another major purchase in the
beverage industry, purchasing the A&W Brands, which included the extremely
popular A&W root beers and cream sodas, along with Squirt and Vernors
ginger ale. Two years later, DPS made their most important purchase, buying
Dr. Pepper/ Seven Up, Inc. (DPS Website - History, 2014).
In 2003, Cadbury Schweppes once again made a major splash in the
beverage industry, buying the Snapple Beverage Company, including Snapple
beverages, RC Cola and Diet Rite, the original diet soda (DPS Website -
History, 2014).
In 2003, after the acquisition of
Snapple, all four of the beverage
companies owned by Cadbury
Schweppes: Snapple, Dr. Pepper/
Seven Up, Mott’s, and Bebidas
(Mexico), were combined into one
company, becoming Cadbury
Schweppes Americas Beverages (DPS Website - History, 2014).
By 2006, Cadbury Schweppes began expanding into the purchasing of
various large and small bottling companies, including Dr. Pepper/ Seven Up
Bottling Group (the largest independent bottler in the U.S.). The company

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soon after changed its name to the Dr. Pepper Snapple Group (DPS), after a
separation from Cadbury (DPS Website - History, 2014).
Now, in 2014, DPS is the number one flavored beverage company in
North America, driven by over 50 diverse and distinct brands. These brands
include 6 of the top 10 non-cola soft drinks and 13 of DPS’ 14 leading brands
are either number one or number two in their flavor categories (DPS Website -
History, 2014).
B. Current Performance
According to Hoover statistics, for
the fiscal year end of December 2013
the Dr. Pepper Snapple Group
declined in total net income and
operating income compared to the
previous year. With total net income
dropping from $629 million in 2012 to
$624 million 2013 and operating
income dropping from $1.09 billion to
$1.04 billion. DPS also reported
earnings of 0.74 USD per share in
comparison to 0.62 USD per share
from 2013. At the end of the financial
year, it has earned revenue of $6
billion, a gross profit of $3.5 billion,
operating income of $1.05 billion, a
net income of $624 million, and
diluted earnings per share of $3.05. In
Current Ratio 1.086
Quick (Acid Test) Ratio 0.892
Inventory to Net Working Capital 2.247
Cash Ratio 0.149
Net profit margin 11.09%
Gross Profit Margin 59.23%
Return on Assets 7.60%
Return on Equity 27.40%
Earnings Per Share $58.43
Inventory Turnover 2.92
Days of Inventory 29,209.87
Net working Capital Turnover 67.38
Asset Turnover 0.732
Fixed Asset Turnover 5.115
Average Collection Period 35
Accounts Receivable Turnover 10.42
Accounts Payable Period 1,621.56
Days of Cash 1,590.92
Debt to Asset Ratio 33%
Debt to Equity Ratio 120%
Long-term debt to capital structure 120%
Times Interest Earned 431.96
Coverage of fixed charges 429.01
Current liabilities to equity 27%
Price Earning Ratio 18.08
Dividend Payout Ratio 49%
Dividend yield on common stock 3%
1. Liquid Ratio
2. Profitibility Ratio
5. Other Ratios
4. Leverage Ratios
3. Activity Ratios
RATIO ANALYSIS

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general, the carbonated soft drinks industry has experienced a decline, as
consumption habits undergo drastic changes, but the Dr. Pepper Snapple
Group still remains profitable with a revenue growth of .03%, earnings per
share of 2.99%, and net profit margin of 10.41%. The company has reported a
Return on earnings of 27.39% and a Return on Asset of 7.29%, giving a market
cap of $10,371.29 million and shares outstanding of $197.40 million.

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C. Competitor Comparison
1. Coca-Cola
Dr. Pepper Snapple group’s sole objective, according to their mission
statement, is “to be the best beverage business in the
Americas.” Currently they are the third highest revenue grossing business

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in their industry. According to their mission of becoming the number one in
the beverages industry, DPS must focus their efforts toward superseding
the number one leader, which is currently Coca Cola. Globally recognized
for their iconic authentic flavored beverages, Coca Cola has established the
highest grossing revenue organization in the beverages industry. There are
a multitude of factors that play into Coca Cola’s long-lived success such as
their history, their brand, their innovation, etc. As CEO of DPS group, it is
vital that our energy is directed toward our mission of becoming number
one in the beverage business, doing so by learning from and overcoming
the number one competitor, Coca Cola.
Recognized in more than 200 countries worldwide, the iconic brand is an
American staple fulfilled with a renowned
foundation and history. As of the year 2000,
Coca Cola endured three different CEOs whilst
maintaining their status of being the number
one beverages business with a commanding
market share of 42.8%. Worldwide,
approximately 1.7 billion servings of Coca Cola products are consumed
daily, meaning nearly 4% of all flavored beverages consumed around the
globe are Coke products. Coca Cola has established a superior line of
products within their portfolio consisting of more than 3,500 beverages and
500 brands. Coca Cola is far ahead in the beverage industry because they
are worth more than other top competitors such as Budweiser, Pepsi,
Starbucks, and Red Bull combined at a net worth of approximately $74
billion. Coca Cola is purely focused on the beverages industry in order to
perfect and sustain their status as number one, although their rival PepsiCo

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generated 38% more in total revenues (2012), Coke produced more
revenue in regards to soft drinks at $28 billion in comparison to PepsiCo’s
$12 billion.
Coca Cola has strategically positioned themselves to reach the highest
amount of people possible through the innovation of vending
machines. With 2.8 million vending machines around the globe, Coke is
able to generate a vast amount of its revenue through automated
machines. One significant distinction that Coca Cola exudes from the rest
of its competition is their iconic brand;
the red and white logo is reported to
be recognized by 94% of the world’s
population meaning that their brand is
essentially a universal term such as
saying okay or hello. Coca Cola is
striving to be number one with their 33 different brands that gross over $1
billion in revenue worldwide; Coke owns nearly half of them. Coca Cola is
constantly geared toward providing people around the world with the
ability to enjoy their products. In terms of marketing, Coca Cola’s
advertising budget alone was $2.9 billion in comparison to other profound
organizations such as Microsoft and Apple combined at only $2
billion. Coke has established and sustains a secure and prosperous financial
position as you can see in their four year financial data reports and charts:

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Coca Cola assures that its product is made only with the highest quality
of authentic ingredients to keep their consumers’ loyal. Coca Cola spends
an extensive amount of time researching which markets of the world
consume the majority of their products and continuously provides
excellence to them. This is based on market research of consumer’s
preferences. As their biggest consumers, Mexico’s citizens drink on
average nearly 665 servings of Coke products annually. Coca Cola

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discovered through research that consumers in Mexico prefer their Coke
products because natural sugar is used opposed to artificial sweeteners. As
a consumer of 300,000 tons of aluminum for its cans annually, Coke assures
that its operations and productions are the highest efficiency for optimal
utilization of necessary commodities. Coca Cola sustains an array of
differentiating products within their portfolio of beverages aside from just
carbonated drinks, consisting of more than 1000 kinds of juice drink such as
Minute Maid, Fruitopia, Hi-C and Odwalla. With all areas Coca Cola is
currently building on; it is critical that Dr. Pepper Snapple group pay close
consideration to their vision in an effort to overtake the number one spot in
their industry, according to their mission.
2. PepsiCo, Inc.
PepsiCo, Inc. Dr. Pepper Snapple Group’s second largest competitor was
established in 1919; arguably not first because of the comparison between
companies is only based upon
beverage performances. They are a
global company providing consumer
goods to Europe, Asia, the Americas,
the Middle East and Africa. Their
headquarters are based in New York
and have an approximate 278,000
employees working for them. PepsiCo’s primary operations range from
marketing and sales, to production of snack and fast foods, and beverages-
both carbonated and non-carbonated. PepsiCo currently holds the 49th
position in the Fortune 500, with 2013 revenues at “$66,415,000,000” and

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net profits at “$6,787,000,000”. (PepsiCo Inc.: EBSCOhost, 2014) They
currently have approximately 75 subsidiaries and produce over 100 product
lines ranging from foods to beverages.
According to the Market Line Report, PepsiCo’s revenues by region that
Dr. Pepper Snapple Group operates in are as follows:
• “The US, PepsiCo's largest geographical market, accounted for 50.9%*
of the total revenues in FY2012. Revenues from the US reached
$33,348 million in FY2012, an increase of 0.9% over FY2011”.
(PepsiCo, Inc.: EBSCOhost, Market Line Report, 2014)
• Mexico accounted for 6% of the total revenues in FY2012. Revenues
from Mexico reached $3,955 million in FY2012, a decrease of 17.3%
compared to FY2011”. (PepsiCo, Inc.: EBSCOhost, Market Line Report,
2014)
• Canada accounted for 5% of the total revenues in FY2012. Revenues
from Canada reached $3,290 million in FY2012, a decrease of 2.2%
compared to FY2011”. (PepsiCo, Inc.: EBSCOhost, Market Line Report,
2014)
Out of PepsiCo’s $66,415,000,000 generated revenues for fiscal year (FY)
2012, the America’s
account for 61.9% of their
total revenues for FY
2012. This percentage
totals to the amount of
$41,110,885,000.00
generated revenue for
PepsiCo in the America’s alone. This however does not differentiate

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between their food, snack, and beverage products. However, it is a well-
known fact the in the United States PepsiCo commands the majority of
shelf-space for their beverages products in most stores across the United
States. As we can see, PepsiCo’s Revenues have increased over the last 10
years, from the high $20 billion to $66 billion.
(GuruFocus-Pep financial, 2014)
Earnings Est Current Qtr. Next Qtr. Current Year Next Year
14-Jun 14-Sep 14-Dec 15-Dec
Avg. Estimate 1.23 1.31 4.54 4.89
No. of Analysts 17 17 21 22
Low Estimate 1.19 1.28 4.5 4.66
High Estimate 1.26 1.36 4.6 5
Year Ago EPS 1.31 1.24 4.37 4.54
Revenue Est Current Qtr. Next Qtr. Current Year Next Year
Avg. Estimate 16.78B 17.23B 67.20B 69.93B
No. of Analysts 14 14 20 20
Low Estimate 16.57B 17.00B 66.58B 69.23B
High Estimate 17.01B 17.53B 68.20B 70.96B
Year Ago Sales 16.81B 16.91B 66.42B 67.20B
Sales Growth (year/est) -0.20% 1.90% 1.20% 4.10%
Earnings History 13-Jun 13-Sep 13-Dec 14-Mar
EPS Est 1.19 1.17 1.01 0.75
EPS Actual 1.31 1.24 1.05 0.83
Difference 0.12 0.07 0.04 0.08
Surprise % 10.10% 6.00% 4.00% 10.70%
EPS Trends Current Qtr. Next Qtr. Current Year Next Year
Current Estimate 1.23 1.31 4.54 4.89
7 Days Ago 1.23 1.31 4.54 4.88
30 Days Ago 1.23 1.31 4.54 4.89
60 Days Ago 1.28 1.31 4.53 4.9
90 Days Ago 1.28 1.31 4.52 4.89
PepsiCo Financial Statistics (Current and Estimates)

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PepsiCo Operations are a strong and diverse component of PepsiCo. They
have a strong network of manufacturing, bottling and distribution networks
spanning countries they operate in. They rely heavily upon PepsiCo owned
manufacturing plants, bottling plants and distribution networks; however, in
North America and South America PepsiCo relies heavily upon third party
distributors, bottlers, and manufactures. Their leadership considers this to
be a part of several reasons why their revenues have dropped in these
regions. (PepsiCo, Inc.: EBSCOhost, Market Line Report, 2014)
PepsiCo is currently holding a strong market position through
their diverse product portfolio and strong brand management that has built
enormous equity. They are currently focused on increasing local focus, the
changes in customer
preference for healthier
food and beverage
options, and focusing on
widening their presence
in emerging markets.
PepsiCo is currently
concerned with the
reduction and availability of fresh water supplies, sustainability for the
future, increased competition, labor cost, and consumer confidence over
recent controversies. Overall, under their current leadership and track
record, it is foreseeable that PepsiCo will remain a competent and
aggressive opponent in the market for years to come.
Let’s look from an outside perspective, concerning PepsiCo
competition with Dr. Pepper Snapple Group. First and foremost, we have to

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address the stigma- isn’t Dr. Pepper a PepsiCo Product? Due to our mass
connection with PepsiCo our brand has lost its ability to differentiate itself
from PepsiCo. Yes, DPS teamed up with PepsiCo to share in PepsiCo’s
manufacturing, bottling, and distribution networks; which are massive in the
United States compared to DPS. Secondly, DPS shares not only fountain
serving stations at restaurants, convenience stores, but also vending
machines. The effects of our collaboration with PepsiCo, is truly causing an
issue for DPS’s ability to maintain a strong customer position and distribute
DPS full line of products. Currently DPS only
commands 1:10th
of the shelf space in
convenience stores compared to PepsiCo.
In fact, DPS is commanding less shelf space
for all their beverage brands compared to
Arizona teas, Rock Star, and Monster. In
many cases, DPS products are shelved with
PepsiCo products and share the same marketing
visual aids in vending machines fountain, serving
stations, and store placements.
In many cases while PepsiCo is able to provide top selling items,
introductory items, and displays for consumer ease of access, DPS products
lines are limited to top selling items, and one slot to promote new product
lines. This is a problem because customers do not have full access to our
new product lines, due to shelf availability, and stock quantity of retailers.
DPS is in desperate need of brand management, a full re-facing of the
brand, and repositioning with customers and retailers, market
entrenchment, and further product exposure through mass availability.

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It may be wise for DPS to take on small competitors that currently
are not an immediate threat but are commanding relative market share of
the beverage industry. These small competitors have PepsiCo and Coke
worried because of their growing impact on the market. DPS is in desperate
need of developing their vending machine availability and a full separation
from PepsiCo, to combat their brand position with customers. While,
PepsiCo has offered availability opportunities at reduced costs, DPS is
losing more than PepsiCo gains from our partnership in the America’s.
Lastly DPS needs to take advantage of PepsiCo’s and DPS’s Core weakness
of third party manufacturers, distributors, and bottlers in north and south
America. This can be accomplished through acquisition of companies, to
combat PepsiCo, and turn the tables of lost revenues to third parties.
D. Industry Comparison
1. Carbonated Beverages
7-Up is a line of citrus non-caffeinated soft
drinks. Dr. Pepper Snapple Group releases
variations in diet form and also a ten-calorie
variant. With an extensive history, 7-Up became
the third highest selling soft drink in the world
by the late 1940’s. One of 7-Up’s biggest competitor is Sprite, which is
owned by Coca-Cola and controls a wider grasp of the market due to its
international operations.
Canada Dry’s rise in popularity during the
prohibition era was due to its pleasant
ability to mask the flavor of home-brewed

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alcohol. DPS released variants including club soda, tonic water, sparkling
water and flavors such as pineapple and wild cherry. Its products reach all
parts of the world including North America, South America, Asia and
Europe.
Crush is a line of artificially flavored,
caffeine-free carbonated sodas. Its major
competitor is Coca-Cola’s Fanta, which
controls a larger portion of the market due
to its worldwide availability. Crush is
available in diet, grape, cherry, strawberry
and peach all over the nation. Acquired in
1989 from Cadbury through merger
acquisition.
Dr. Pepper is a considered brand of root beer most noted for its unique
23 flavors, but many place it in a
category all in itself. Dr. Pepper is
America’s oldest soft drink at 129
years old and holds a firm grip on the
market with brand variants being
distributed throughout the world. It
includes many brand variants such as
diet and regular as well as unique
flavors, which include cherry,
chocolate and vanilla.
Current issues with Dr. Pepper Snapple Group right now include that
many of their products are not distributed internationally. In order to grab a

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larger portion of the market and be seen as a serious competitor to top
brands producers such as Coca-Cola, DPS needs to operate internationally.
It needs to revise its mission of being the best beverage company in the
Americas and strive for bigger goals. With its small ambitions, Coca-Cola
and PepsiCo will remain in the lead with their international presence.
2. Non-Carbonated Beverages
There are many varieties of non-
carbonated beverages offered by DPS.
Clamato is a spicy drink that was the
first of its kind. Its creation resulted in
an entire new category of blended
juices called “seafood blends.”
Clamato has three flavor variations,
which include Clamato Original, Clamato Picante, and Clamato Shrimp
Tomato Cocktail. The original drink is made from tomato juice, clam broth
and spices.
Another non-carbonated beverage
that we choose to discuss is Peñafiel.
Peñafiel was created in 1938 in
Tehuacan, Puebla by the Peñafiel
family. The brand is popular in Mexico
and has been flourishing in that
market for years. Peñafiel contains 7
differences in flavor which

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include: Peñafiel Aqua, Peñafiel Fresca, Peñafiel Madarina, Peñafiel
Manzanita, Peñafiel Pina, Peñafiel Toronja, and Peñafiel Tuti Fruti.
In conclusion, Dr Pepper Snapple Group has a lot of non-carbonated
beverage products compared to other companies in the industry. Their
products such as Deja Blue, Peñafiel, and Clamato are well known in the
market of Mexico. Dr Pepper Snapple needs to improve non-carbonated
products to be well known in the U.S. For example, the company needs to
come up with a new brand of water such as Coca-Cola’s Dasani and
PepsiCo’s Aquafina. This will help the company gain more consumers and
increase their profits. Overall, DPS needs to improve their non-carbonated
products in order to become the best beverage company in the Americas.
3. Bottled Tea
One of the most popular products made by DPS is its Snapple line.
Consisting of various flavors of iced teas and juice beverages, Snapple is
one of the highest grossing brands in
the DPS lineup. Snapple is the #4
brand in the bottled and canned iced
tea industry, holding a 7.7% market
share (bevindusty.com, 2012).
Snapple gets its origins back in
1970’s, when health clubs began
selling an apple-flavored soda that
was named Snapple. In 1987,
Snapple began selling bottled iced teas, starting with the infamous Snapple
Lemon Iced Tea.

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Now, Snapple has over 70 different flavors of juices, iced teas, juice
beverages, and flavored waters; and is sold in all 50 states.
The primary competitors to Snapple are the Arizona Iced Tea brand
owning holding over 25% of the market share, owned by Arizona-
International, Lipton bottled iced teas owned by Unilever that hold 10.3%
of the market share, and Brisk Iced Tea, owned by PepsiCo, that holds
11.8% of the market share (bevindustry.com, 2012).
4. Others
Dr Pepper Snapple Group also has other products excluding carbonated
and noncarbonated beverages, such as Country Time Lemonade, Mott’s,
ReaLemon, Venom, and Yoo-Hoo.
Country Time Lemonade was first created as a powder mix in 1975,
signing a license with Kraft Foods. In 1982, it was introduced in cans and
bottles. The powder drink is still being
sold today by Kraft. Many additional
lineups were created after the first
lemonade, such as the Country Time
Pink Lemonade in 1995, Country Time
Iced Tea with Lemon in 2003, the
Country Time Strawberry Lemonade in
2004, and the Country Time Light
Lemonade in 2005. When the Country Time Strawberry Lemonade was
released in May 2004, it became a new favorite with its perfect blend of
sweet, sun ripened strawberries and lemonade. Although the Country Time

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Lemonade Drink Mix was released in 1975, it has become one of the top
selling lemonade products in the United States today.
Mott’s is currently the number one apple juice and number one
applesauce brand in the United States. Some of its products include apple
and other fruit juices such as Mott’s
Plus and Mott’s for Tots. The
products come in varieties ranging
from regular, unsweetened and
flavored. In April 2005, Mott’s Plus
for Kid’s Health and Mott’s Plus
Light was introduced. In 2007,
Mott’s for Tots was released, giving
a great tasting pre-diluted juice
drink that is made from one hundred percent juice and purified water that
contains forty percent less sugar compared to regular apple juice. In 2010,
Mott’s Medleys was added to the portfolio, containing full fruits and veggie
servings in every eight-ounce container, which helps moms to ensure her
kids are getting the fruits and veggies they need.
Since 1842, Mott’s has been dedicated to giving
moms easy ways to help their families be healthy.
Another DPS product that is not a carbonated
or non-carbonated product is ReaLemon Lemon
Juice From Concentrate was first introduced in
1934 by Irving Swartzburg. ReaLemon is basically
regular strength juice offered in a more convenient form that requires no
slicing or squeezing. ReaLime Juice from Concentrate was then created in

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1947 offering the same convenience as ReaLemon. Both ReaLemon and
ReaLime have been trusted by consumers ever since due to the premium
quality taste of lemons and limes. These products offer a more convenient,
more economical and more consistent taste compared to fresh fruits. The
two brands have grown to dominate their product category by the year of
2000. Today, these products are in distinctive; fruit shaped squeeze bottles
that are familiar and recognizable to consumers.
In conclusion, Dr Pepper Snapple Group has strong brand presence
outside of the carbonated and noncarbonated soft drink industry. Their
products such as Mott’s and ReaLemon are well known in the market
compared to other brands. Mott’s for example, is currently the number one
apple juice and sauce in the United States. ReaLemon and ReaLime, are well
known to consumers who frequently shop at grocery stores. Overall, DPS is
doing a splendid job at achieving its goal of becoming the best beverage
company in the Americas.
E. Strategic Posture
1. Background and Mission
A mission statement is a formal summary of what the company is aiming to
accomplish. The Dr Pepper Snapple
Group has been serving a delicious
taste of non-alcoholic refreshments
that varies from flavored
carbonated beverages to non-
carbonated beverages, such as tea
and juice. Their mission and vision has been to “be the best beverage

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business in the Americas.” DPS is the number one flavored carbonated soft
drink company in the Americas and a leading innovator and marketer of
functional or non-carbonated beverages. It serves its consumers throughout
North America via a broad and flexible route to market, which includes a
combination of direct store delivery and warehouse delivery capabilities
supported by their twenty-one manufacturing centers and more than 115
distribution centers across North America, in addition to their operations of
hundreds of third-party bottlers and distributors. Therefore, the company is
in the manufacturing business. A manufacturer takes raw materials and
creates a product from the raw materials, or assembles pre-made
components into a product, like car manufacturers. A manufacturer may
also sell its products directly to its customers, or it can outsource sales to
another company. In this case, Dr. Pepper Snapple Group mixes its own
formulas and packages the product into bulk or wholesale to distributors
such as superstores or vending machines.
2. Objectives
As previously stated, the corporate objective is to create a better
environment and better serve its consumers and their well-being. The
company’s mission is to be the best beverage business in the Americas, and
in order to do that, it must first win the hearts of its consumers. By
protecting and attempting to create a better world for everyone, the
company is able to persuade their consumers that their products are
created in the consumer’s best interest. Consumers are slow to believe that
Dr Pepper Snapple Group’s products are beneficial, or at least more
beneficial than other competitive brands. Helping consumers believe that
the company is not only profit based, but it is also consumer based, will

22

result in DPS reaching its goal of becoming the best in the Americas. A
company is only best if the consumers believe it is the best. Dr Pepper
Snapple Group created a five-year plan for their corporate social
responsibility in 2010 to implement their objective of serving the needs of
the society that we all share. “Setting and achieving long-term goals to
improve our environment and social performance is a vital part of achieving
sustainable growth, because these goals reflect the best interests of the
people who make, sell, buy, invest in, and enjoy our brands everyday,” says
Larry Young, DPS president and chief executive officer. The company’s
objectives focus on the areas of environmental sustainability, health and
wellness, philanthropy, workplace environment and ethical sourcing.
Environmental sustainability focuses on improving energy efficiency
while reducing water usage and wastewater release ratio in manufacturing
operations by ten percent per gallon of completed product, increasing
product shipment per gallon of fuel by twenty percent, replacing roughly
sixty thousand vending machines and
coolers with Energy-Star rated
equipment; leading towards around
thirty percent more energy efficiency,
recycling eighty percent of solid waste
in manufacturing, and sustaining more
than sixty million pounds of PET plastic
through package reengineering by growing the usage of post-consumer
recycled material. Health and wellness focuses on providing a full variety of
products with fifty percent of product innovation in the channel focused on
reducing calories, offering smaller sizes and refining nutrition; while

23

supporting local and national programs that inspire active routines and
fitness. The company’s philanthropy bases itself on contributing a total of
one hundred thousand volunteer hours and conquering an annual giving
level of ten million dollars in charitable cash donations, with the
mainstream of support focused on fit and active lifestyles,
environmental sustainability, emergency assistance and
communal celebration. In the workplace atmosphere,
DPS plans to preserve team leader engagement
scores comparable to or better than those of other
high-performing companies, and to lessen lost time to
injury incidence rate by twenty five percent. Ethical sourcing is also an
imperative part of the five-year plan, the company’s objective is to conduct
annual third-party risk valuations of all providers and review any high-risk
suppliers to guarantee complete compliance with our Ethical Sourcing Code
of Conduct.
3. Current Strategies
As Jack Welch mentioned in his book “Winning,” you create strategies and
then implement it like hell, and that is what Dr Pepper Snapple Group did.
The company created a list of strategies and continued to implement it,
which clearly reflects upon their success today.
1. Building and enhancing our leading brands
2. Pursuing profitable channels, packages and categories
3. Leveraging our integrated business models
4. Strengthening our route to market
5. Improving operating efficiency

24

A functional strategy is an approach taken by a functional area such
as Research and Development, Marketing, or Operational to achieve
corporate and business unit objectives and strategies by maximizing
resource productivity. Every successful company has a type or mix of
strategies that they follow and implement, which has lead to their success
today. Business strategies usually occur at the business unit or product
level, and it emphasizes improvement in the competitive position of a
corporation’s products or services in the specific industry market segment
served by that business unit. The
Dr Pepper Snapple Group follows
six key elements of their business
strategy: to build and enhance
leading brands, to focus on
opportunities in high growth and
high margin categories, to
increase presence in high margin
channels and packages, to leverage our integrated business model, to
strengthen our route to market through acquisitions, and to improve
operating efficiency. In order to build and enhance leading brands, the Dr
Pepper Snapple Group identifies key brands that they believe to have the
greatest potential for profitable sales growth by strengthening consumer
awareness, developing innovative products and brands extensions to take
advantage of evolving consumer trends, improving distribution and
increasing promotional effectiveness. The company also plans to focus on
profitable and emerging categories such as energy drinks, ready to drink
teas and other functional beverages to capitalize on opportunities through

25

brand extensions, new product launches and selective acquisition of brand
and distribution rights. DPS strategizes on improving product presence in
high margin channels such as convenience stores and vending machines
through increased selling activity and investments in cold drink equipment,
while attempting to increase consumer demand by increasing promotions
and innovations.
Corporate strategy describes a company’s overall direction in terms
of its general attitude toward growth and the management of its various
businesses and product lines. Dr Pepper Snapple Group believes that their
integrated brand ownership, bottling and
distribution business model is a great
opportunity to generate net sales and
profit growth by aligning economic
interests of their brand ownership with
their bottling and distribution businesses.
Therefore, the fourth key element to their
business strategy is to leverage their
integrated business model to reduce costs by creating greater geographic
manufacturing and distribution coverage and to be more flexible and
responsive to the changing needs of their large retail customers by
coordinating sales, service, distribution, promotions and product launches.
The company also plans to strengthen their route to market through their
long-term initiative from acquisition and creation of their Bottling Group
because the additional acquisitions of regional bottling companies will
broaden their geographic coverage and enhance coordination with their
large retail customers. Lastly, since the integration of recent acquisitions

26

into their Bottling Group has created the opportunity to improve their
manufacturing, warehousing and distribution operations, DPS believes that
their recent announced restructuring will reduce their selling, general and
administrative expenses and improve their operating efficiency. Overall, the
six key strategies consistently work with each other to help DPS become
the best beverage business in the Americas through building its business
and strengthening its brand among consumers. With the five-year plan and
objectives of making the planet a better place for all, these strategies are
slowly implemented and achievable, helping the consumers while helping
the company. While the corporate objective aims to improve the company’s
growth and management through expansion of distribution centers and
leading brands, the business objectives aim to improve against its
competitors. DPS business objectives are to increase their marketing
through a new marketing campaign that aims to increase their
advertisements to make their leading brands better known.
4. Policies
Dr Pepper Snapple Group has a Human Rights Policy that lives on their
philosophy of respecting the rights of their employees and the people with
which they do business. It is their fundamental way of conducting their
operations. The philosophy and values of their workplace, as well as their
accountability for sustaining the environment and strengthening the
communities where they operate is guided by the United Nation’s Universal
Declaration of Human Rights. As for the employees, the company respects
the rights of their employees in the workplace, and they strive to ensure a
safe and healthy work environment that is free from harassment of any kind.

27

They work to ensure equal opportunity for all employees and comply with
all applicable laws and regulations wherever they operate or work. DPS
broadly communicates their Human Rights Policy as part of their annual
Core Business Policies or Code of Conduct training to enable their business
to operate in a responsible manner. To their suppliers, the company
ensures that their suppliers operate businesses in a manner that supports
their Supplier Code of Conduct. As part of DPS responsible and sustainable
sourcing strategy, they are committed to working in partnership with their
suppliers to ensure compliance with the supplier code of conduct and to
minimize risks in their supply chain.
Aside from the Human Rights Policy, Dr Pepper Snapple Group also has
a Privacy Policy linking the information collected through web sites, web
pages, interactive features, applications, widgets, blogs, Facebook, Twitter,
and so on. The Privacy Policy explains what information may be collected
through the sites, how such information may be used or shared with others,
and how the information is safeguarded. DPS automatically collects
information from cookies and web beacons. The company uses cookies to
collect data files placed on devices when it is used to visit the sites. Web
beacons help monitor how users navigate the sites, while also counting how
many emails sent to consumers were actually opened or viewed. Some of
the rules included in the policy are that no personal information will be
shared or provided to third parties without the consumer’s consent. But,
the company may share non-personal information such as aggregate user
statistics, demographic information, and usage information. Consumers will
always have the right to disable DPS from sharing their personal
information with third parties, to send them information and offers, and to

28

send newsletters through any communication methods. DPS may also have
third party advertisements, where the advertisements may have their own
cookies and web beacons. Consumers will also always have the option to go
through a procedure to opt out of certain third party ad servers the
company may use on their site. The company does not collect every
consumer’s information. Children who are under the age of thirteen will not
have their information collected. Upon collection, if the consumer is
identified, as under the age of thirteen, their information will not be
maintained without their parent’s consents, which without consent will be
deleted from the system. Dr Pepper Snapple’s policies are definitely
consistent with each other, which links to their guarantee of satisfying
customers, employees, and partners. Through satisfying consumer’s needs,
DPS is another step closer to its mission of being the best beverage
business in the Americas. Overall, when everyone is satisfied, the company
is operating at its best. As Welch stated in his book Winning, when the
people are doing well, the company is doing well, and vice versa.

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II. CORPORATE GOVERNANCE
A. Board of Directors
Wayne Sanders – Chairman
Mr. Sanders has been with The Dr. Pepper
Snapple Group (DPS) since May, 2008 and is
currently the chairman of the board of directors,
serving as an external member. In addition to
being the chairman of the board Mr. Sanders is
also the chairman of the corporate governance
nominating committee. Mr. Sanders dealings
outside of DPS includes serving on the board of
Texas Instruments and the board of the Belo
Corporation. The Belo Corporation owns and
operates many television stations throughout the
state of Texas and the Mid-west. (DPS Website -
Directors)
John Adams
Mr. Adams has been a member of the DPS board
of directors since April 2008 and is a member of
the audit committee, serving as an external
employee. Before he was part of the DPS team
he served as the executive vice president of
Trinity Industries, Inc. from January 1999 to June
2005. Trinity Industries, Inc. is one of North
America’s largest manufacturers of
transportation, construction and industrial
products. Mr. Adams is still serving on the boards
of Trinity Industries, Inc. and Group 1
Automotive. Mr. Adams also brings a plethora of
knowledge from his time served on the boards of
American Express Bank Ltd. and the Phillips Gas
Company. (DPS Website - Directors)

30

David Alexander
Mr. Alexander has been a member of the DPS
family since November 2008. He is currently
serving as an external employee and is the
chairman of the audit committee. Like the other
members of the board Mr. Alexander brings
invaluable experience from his extensive job
resume that includes time as a national trustee
on the board of Boys & Girls Clubs of America
and as a board member of the American Heart
Association. Furthermore, Mr. Alexander has
served as an executive member on the board of
Southern Methodist University’s Cox Business
School giving him insight into the quality of
business students that entering the work force.
(DPS Website - Directors)
Pamela H. Patsley
Ms. Patsley has served as an external member of
DPS board of directors since April 2008 and is a
member of the audit committee. She is presently
serving as the CEO of MoneyGram International,
bringing needed leadership skills to the DPS. Ms.
Patsley serves with Wayne Sanders on the board
of directors for Texas Instruments, Inc. and is the
chair of the audit committee. A skill that Ms.
Patsley brings to the DPS group is her time spent
on the board of Molson Coors Brewing Company
from 1996 – 2009. This experience could prove to
be invaluable if DPS chooses to expand its
portfolio into the alcoholic beverage industry.

31

Joyce Roche`
Ms. Roche` has served as an external member of
DPS groups board of directors since February
2008 and is a member of the compensation
committee. Ms. Roche` brings valuable
experience from her time as president and CEO
of Girls, Inc. which she was a part of from 2000 –
2010. Additionally Ms. Roche` brings marketing
experience from her time spent on senior
marketing positions with Carson Products
Company, Revlon, Inc. and Avon, Inc. Like Ms.
Patsley, she brings experience in the alcoholic
beverage industry from her time spent on the
board of Anheuser-Busch Companies From 1998
– 2008. (DPS Website - Directors)
Ronald Rogers
Mr. Rogers has been an external employee
serving on the board of directors at DPS since
May 2008. He is currently a member of the
compensation committee and draws from his
time spent in various positions with the Bank of
Montreal from 1972 – 2005. Considering that
DPS’s primary market is North and South
America, it is very important for DPS to have
directors with international experience. (DPS
Website - Directors)

32

Jack Stahl
Mr. Stahl has been serving on the DPS group’s
board of directors as an external employee since
May 2008. He is currently a member of the
corporate governance and nominating
committee and brings valuable experience from
serving on the board of one of DPS group’s
competitors. Mr. Stahl Was the president and
CEO of The Coca-Cola Company from February
2000 to Mach 2001 and before that he was
president of the Coca-Cola Company’s Americas
group and the CFO of The Coca-Cola Company.
When building a strategy to combat the huge
portion of the carbonated soft drink industry that
Coca-Cola has a firm grasp on, Mr. Stahl will be a
valuable DPS asset, having first and knowledge
of their operations. (DPS Website - Directors)
M. Anne Szostak
Ms. Szoztak has been a member of the DPS
group since May, 2008 and has been serving as
an external employee on the board of directors
and also been the chairman of the compensation
committee. Ms. Szoztak brings a strong financial
background to the DPS group from her time
spent with FleetBoston Financial Corporation
(now Bank of America) from 1998 until her
retirement in 2004. She is currently also governor
and chairperson emeritus of the Boys & Girls
Clubs of America, a chairperson of the Women
and Infants’ Hospital of Rhode Island as well as,
serving as a member on numerous board
committees of the Rhode Island Foundation.

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1. DPS B.O.D. Sustainability
The Dr. Pepper Snapple Group (DPS) board of directors have taken huge
steps towards environmental sustainability and set stringent goals based on
their simple principle, “Say what you’re going to do, and do what you say”
(DPS Website - Sustainability, 2014). DPS’s first sustainability report was put
forth in 2010 and with it a number of goals.
The first goals were to “improve energy efficiency and reduce CO2 from
emissions in manufacturing by 10% per gallon of finished product,” and to
“increase product shipments per gallon of fuel used by 20%” (DPS Website
- Sustainability, 2014). DPS has been striving towards this goal by devoting
resources to aligning operations with customers efficiently, resulting in a
reduction in energy and fuel consumption. Next comes a goal that is
focused solely on energy consumption, which is to “replace 60,000 vending
machines and coolers with Energy Star-rated equipment” (DPS Website -
Sustainability, 2014). The exchange of these coolers will boast a 30% higher
rate of energy-efficiency.
Additionally DPS has set large goals to recycle “90% of solid waste,”
and to “reduce manufacturing water use and wastewater discharge by 10%
per gallon of finished product (DPS Website - Sustainability, 2014). The
recycling of solid waste is being implemented with a multi tier approach
that ranges from delivery drivers to warehouse employees all participating
in the push to recycle solid waste. In regards to water consumption, DPS
started tracking wastewater discharge in 2008 to use as a guide to reach
the 2015 goal. Finally, DPS plans to “conserve more than 60 million pounds
of plastic through PET package light weighting and redesigns.” (DPS
Website - Sustainability, 2014). This goal is being pursued through
alignment with other producers within the carbonated soft drink (CSD)
industry in the “Full Circle Recycling Initiative” (DPS Website -
Sustainability, 2014). Also, DPS is investing resources into designing new
and innovative packages that will reduce plastic consumption.

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B. Top Management
Larry D. Young - Chief Executive Officer (CEO) and President
Mr. Young has been the President and CEO of
DPS since 2007, after serving as the CEO of the
Bottling Group division starting in 2005. Mr.
Young played a central role transitioning the
company’s business model into that of a fully
integrated beverage company; allowing DPS to
have a more reliable, sustainable and secure
route to market through the integration of the
bottling group and several smaller bottling
companies into DPS.
Mr. Young has over 30 years of experience
in the beverage industry, working within the
United States, Russia, and many different European countries. Before being
hired by DPS, Mr. Young was an employee of PepsiCo for over 25 years,
starting as a truck driver and working his way up to CEO and President of
PepsiAmericas. In 2008, Mr. Young was inducted into the Beverage World Soft
Drink Hall of Fame and was named as the Executive of the Year by Beverage
Industry magazine in 2010. This extensive experience as a worker through all
levels of the beverage industry will help propel DPS into the next level of
beverage excellence. (DPS Website - Leadership)
Marty Ellen - Chief Financial Officer (CFO)
Mr. Ellen has been the CFO for DPS since 2010,
being responsible for DPS’ finances and IT
departments.
Mr. Ellen has over 25 years of corporate
experience; serving as the CFO for companies in
the manufacturing, distribution, franchising, and
services industries. Prior to becoming the CFO of
DPS, Mr. Ellen was the CFO and senior vice
president (VP) for Snap-On Incorporated, a global
manufacturer of tools, diagnostics, equipment, and
software for professionals. Mr. Ellen also brings
previous experience in the beverage company,

35

having served as the senior VP and CFO of Whitman Corporation, which at the
time owned Pepsi Cola General Bottlers, Inc. Mr. Ellen began his career as a
senior audit manager at the international accounting firm, Price Waterhouse.
(DPS Website - Leadership)
Jim Baldwin - Executive Vice President and General Counsel
Mr. Baldwin has served as the executive VP and
general counsel for DPS since 2003, and is
responsible for all legal issues facing the company.
Mr. Baldwin started with DPS in 1997 as
assistant general counsel, providing support to the
Licensing department. In 1998 he was promoted
to general counsel of Mott’s, overseeing all legal
aspects of the finished goods. In 2002, he was
relocated to the corporate headquarters in Dallas
to run the legal department for Dr Pepper/ Seven
Up as senior VP and general counsel. The next
year he was promoted to his current position.
Prior to working for DPS, Mr. Baldwin was a
partner of the Houston based law firm, Hutcheson
& Grundy. Mr. Baldwin began his career with the law firm Berman, Mitchell,
Yeager and Gerber. (DPS Website - Leadership)
Rodger Collins - President of Packaged Beverages
Mr. Collins has been the president of packaged
beverages since 2007, and is responsible for all
company owned routes to the market for both
direct to stores delivery (DSD) and warehouse
direct businesses. Additionally, Mr. Collins leads
the national account selling teams and all related
support groups.
Mr. Collins has been with DPS for his entire
career, dating back to 1978, working in route
sales. From 1991 to 2005, Mr. Collins held regional
VP and division VP roles in different locations and
departments of the companies that now make up
the Dr Pepper Snapple Group. In 2005 he was
promoted to the president of the Midwest division, being promoted again in
2007 to his current position. Mr. Collins has also served in various other

36

management positions in sales and marketing within DPS. His experience in all
of the different levels of DPS and its subsidiaries makes him the ideal person to
run the packaged beverages division. (DPS Website - Leadership)
Derry Hobson - Executive Vice President of Supply Chain
Mr. Hobson has held the role of executive VP of
supply chain since 2007. He is responsible for all
supply chain functions; including but not limited to
manufacturing, engineering, packaging,
environmental health and safety, and logistics.
Mr. Hobson has more than 40 years of
senior operations and general management
experience, having been with DPS since 1999,
when he served as executive VP of supply chain
for the Dr Pepper/ Seven Up Bottling
Group. Before working for DPS, Mr. Hobson was
the CEO and President of Sequoia Pacific
Systems, which developed election systems used in elections around the
world. Mr. Hobson also has extensive experience in the beverage industry
prior to his employment with DPS. Before working for Sequoia Pacific
Systems, he held the roles of VP of operations for Coca-Cola Enterprises and
also managed manufacturing for the Southern region of Pepsi-Cola Bottling
Group. Mr. Hobson began his operations career in 1974 working for Kellogg.
Mr. Hobson’s extensive experience in the beverage industry, primarily with the
main competition, as well as a long list of management experience makes him
the right man to oversee our manufacturing, bottling and distribution
departments. (DPS Website - Leadership)
James Johnston - President of Beverage Concentrates and Latin
American Beverages
Mr. Johnston has served as the president of beverage
concentrates since 2007 and president of Latin
American Beverages since 2009. He is responsible for
the route-to-market and fountain foodservice teams in
the U.S. and Canada; while also being responsible for
all brands and business in Latin America.
Mr. Johnston joined DPS in 1992, hired as the
manager of marketing services. From 1992 until 2005,
he progressed through the company as division

37

marketing manager and VP of field marketing, before being promoted to
senior VP over system marketing, franchise and licensing strategy. In 2005, he
was again promoted to executive VP of sales. Before being hired by DPS, Mr.
Johnston spent 14 years with New York 7-UP Bottling Company, working in
sales and marketing. (DPS Website - Leadership)
Lain Hancock - Executive Vice President of Human Resources (HR)
Mr. Hancock has served as executive VP of HR
since 2012. He is responsible for DPS’ HR
department.
Mr. Hancock has been with DPS since 2007,
when he was hired in the supply chain department,
where he focused on improving safety, product
quality and productivity. From 2007 to 2012, Mr.
Hancock served as senior leadership for different
departments such as supply chain strategy,
manufacturing operations, and procurement. Prior
to his employment at DPS, Mr. Hancock served in
the United States Army as an officer after
graduating from the West Point Military
Academy. After his time in the Army, Mr. Hancock worked as a consultant for
McKinsey and Company. (DPS Website - Leadership)
David Thomas - Executive Vice President of Research and
Development (R&D)
Mr. Thomas has served as the executive VP of R&D
since 2010. He is responsible for all aspects of
research and development, including product
development, nutrition, and flavor and concentrate
technology.
Mr. Thomas has been with DPS since 2006,
when he was hired as the senior VP of R&D. Mr.
Thomas has extensive experience in research and
development, having served R&D roles for Gerber
Products Company, General Mills, Pillsbury, and
Unilever; progressing from project leader roles into
senior director positions.
Mr. Thomas’ experience in R&D has led to him holding 15 patents across a
range of ingredients, processes, and product related technologies. He holds a

38

B.S. in microbiology as well as a M.S. and Ph.D. in food science, concentrating
in flavor biochemistry. He also serves on the Board of Advisors for the Center
of Food Safety. (DPS Website - Leadership)
James Trebilcock - Executive Vice President of Marketing
Mr. Trebilcock has held the position of executive VP
of marketing since 2008. He is responsible for all
areas of brand management and marketing;
including market research, graphics, merchandising,
and advertising.
Mr. Tebilcock has been with DPS for 27 years,
starting in 1987 as the Cherry 7UP brand
manager. Since then, he has progressed through
the company serving as the director of promotions,
VP of marketing, and senior VP of marketing
services. In 2003, Mr. Trebilcock was promoted to
senior VP of consumer marketing; being responsible for all consumer-
marketing operations for the entire portfolio of brands. Prior to joining DPS,
Mr. Trebilcock held numerous different marketing and sales positions with
Coca-Cola Bottling Company. Mr. Terbilcock began his marketing career with
General Mills Inc. (DPS Website - Leadership)
III. EXTERNAL ENVIRONMENT: Opportunities and
Threats (SWOT) (See Appendix A for EFAS Chart)
A. Natural Physical Environment: Sustainability Issues
The Dr Pepper Snapple Group warehouses are located directly next to bottling
plants. This works to the company’s advantage by providing a great
opportunity for the firm to quickly produce products for their customers. This
guarantees high product efficiency to meet the customer demand. The Dr.
Pepper Snapple Group warehouses are located in St. Paul Minnesota. Due to
this, warehouses are in risk of being damaged due to floods, tornadoes, and
wildfires. Solar panel technology is very popular in Minnesota. In fact the
financial assistance company NCB launched a solar electric project on August

39

2008, which used 525 solar panels in the process. Dr. Pepper Snapple Inc.
would easily be able to benefit from the use of solar panel technology in
Minnesota.
These factors have different effects on other regions of the world. The
Dr Pepper Snapple warehouses are located safely within the United States,
more specifically in St. Paul, Minnesota. However, other areas around the world
may suffer from natural disasters. For example, warehouses placed in Japan
are in risk of falling victim to tsunamis or earthquakes, while warehouses on the
east coast of the United States may fall victim to tornados.

40

B. Societal Environment
At Dr Pepper Snapple group, we strive to provide excellence to our consumers
as well as the rest of the world in any way we can. We understand that what
we do as a business has a tremendous impact on the environment in which we
practice. One of our core action plans we abide by as an organization is the
STEEP concept. STEEP is acronym that stands for all the dynamics of our
environmental concerns including: Social, Technological, Economical,
Environmental, and Political (Hunger & Wheelen, 2012). This allows us to take a
macro approach to dealing with the external environment in which we do
business.
We start with S (social) which correlates directly to what we exude the
most here at DPS, social developments in areas as demographics, social value,
individual lifestyles, cultural values, consumer behaviors, and even
advertising. It is our priority to sustain a healthy social environment as an
organization and therefore it is our first letter in STEEP. Innovation is always a
dynamic for institutions to expand from and here at DPS we strive on it
(Hunger & Wheelen, 2012).
The next letter of the STEEP analysis is T (technology). The rate at which
technological development is executed here at DPS is vital to our business to
keep up with an evolving marketplace. In general we understand that the
speed of technological innovation is very rapid and therefore we make it one of
our leading priorities to sustain. Essentially every day new services and
products have an immense impact on the way we do business and learn,
therefore, changes in technology greatly influences economical, social, and the
political fields. When we think about technology, we consider factors such as

41

innovation, energy, transportation, communication, research, and development
A more moderate dynamic of the STEEP analysis which we abide by is E
(economical). Here at DPS, although we are vastly concerned with who in the
economy is prevailing, we understand we have less of an impact on major
economical factors such as interest rates, taxes, international trade, availability
of jobs, and entrepreneurship. Therefore while we do our best to prepare for
economic hardships, we try not to be steered away from what we do as a
business by not investing all our energy in this aspect being that the economic
situation is directly correlated to the buying position the consumer (Hunger &
Wheelen, 2012).
Our next E (environmental) is another factor of the STEEP analysis in
which we have little control over. Generally environmental concerns are
ecosystem related such as soil, water, food, and energy which although a vital
dynamic in our business, we realize that we cannot dedicate most of our efforts
toward this field as we have little control over it. Rather we steer our energy
regarding this factor toward abiding by it rather than trying to reshape it
Lastly, there is P (political). Political developments can definitely
influence our consumers as well as the rest of the world in which we do
business. The political landscape changes dramatically as other political parties
gain power and therefore, at DPS we make sure to keep up to date with what’s
going on in our government in effort to combat any sudden changes or new
laws to abide by. We make it our priority to consistently be aware of possible
upcoming shifts in power during elections in all dynamics of politics. Political
developments affect different types of laws for example anti-trust,

42

environmental, trade markets, and financial markets (Hunger & Wheelen,
2012).
1. Economic
The corporation and industries in which Dr. Pepper Snapple group
competes is least affected by its current economic standing. General
environmental forces such as the consumers within the regions that DPS
serves are more than likely to continuously buy their beverages. In fact,
DPS will inevitably grow as our economy grows as a whole being that
population growth rate in America is nearly one percent, therefore more
people means more growth for DPS. The Economy within the regions that
DPS serves is all
in the Americas,
which mostly
consist of strong
standing
economies. The
consumers of DPS
consist of a broad
range of
demographics
including people of all ages and race. Some threats imposed by the
economies within the areas DPS serves are the fact that if DPS wants to
further expand its organization worldwide then it has to consider that there
are a multitude of poor economies outside the Americas. Poor economic
standing countries could significantly impact DPS in a negative way being

43

that their #1 competitor is globally superior. Competition amongst DPS can
easily overpower their products outside the Americas being that their
beverages are already well established and DPS main products are more
unique as oppose to what is generally accepted by consumers.
2. Technological
In effort to continuously grow Dr. Pepper Snapple group’s main objective
currently is to expand their products through technological innovations
such as utilizing the latest and greatest vending machines to directly sell
their beverages and keeping their manufacturing facilities up to date with
the most efficient method of producing their products. DPS developed its
own delivery system, which enables for immediate delivery of their
beverages as they are produced from the manufacturing sites throughout
the Americas. The opportunity presents itself to increase productivity by
means of technologically advancing both their delivery system to work
more effectively with their manufacturing process.
3. Political-legal
The political-legal aspect with regards to Dr Pepper Snapple group is not so
much of a threat in comparison to the other societal environment
issues. Therefore, DPS is not necessarily concerned with potential threats
and opportunities concerning political-legal attributes. At DPS one of the
pillars of integrity is to undoubtedly abide by all the legal codes associated
to their bottling services. DPS has not had any major issues regarding legal
mishaps within the last ten years. Any mistake within the political-legal

44

aspect of their organization could definitely pose a threat to DPS therefore
they understand good intentions lead to a superior integrity status.
4. Sociocultural
Dr. Pepper Snapple group has dedicated a vast amount of funding toward
campaigns geared to positively impact their consumers. DPS understands
that their consumers’
loyalty is dire in
terms of competing
with other beverages
that offer completely
different qualities
and taste. DPS has
established a social aspect that exudes positive outcomes and energy from
the consumption of their products. DPS products are consumed amongst a
wide variety of social dynamics that all share the same needs, which is a
unique product.
DPS can be negatively impacted within their sociocultural standing if
they do not sustain their positive energy focused means of advertising,
which brings people of any demographic together in the sense that they all
enjoy a unique tasting beverage. With their two main competitors gaining
the relationships of many consumers, DPS needs to overcome this threat by
creating opportunities to build long lasting relationships to establish
lifelong customers.
Although Dr Pepper Snapple group is constantly focused toward
superseding the issues that come along with the Societal environment in

45

which it operates, globally DPS is not necessarily affected by these
objectives concerning environmental, societal, political, and
technological. The fact that DPS is currently geared purely toward being
the best beverage business in the Americas, they are not in conflict with the
rest of the world. Therefore, these forces are essentially non-existent in the
rest of the world. However, if DPS wants to become the greatest then
these factors would have to become the focal point.
C. Task Environment
1. Threat of New Entrants: Low. Well-established companies, such as
Coca-Cola, PepsiCo., Nestle, other food brands, and DPS make it hard for any
new business to enter the market when these other leading brands already
have advanced technology and high profits. (O)
2. Bargaining Power of Suppliers: High. DPS relies heavily on
commodities, such as sugar, plastic and aluminum. The bargaining power of
suppliers is high because DPS does not have many alternatives if suppliers
choose to raise prices. (T)
3. Threat of substitute products or services: High. Consumers may
not be in the mood for a Dr Pepper or 7-Up, but may prefer a coke from either
Coca-Cola or Pepsi Co, simply because they prefer the tastes to those
opposed to what DPS offers. (T)
4. Bargaining power of Buyers: High. Consumers can just as easily pick
another soda brand purely by the availability in stores. Since Coke and Pepsi
dominate most of the shelf-space in stores, Dr Pepper Snapple depends on its
customer’s loyalty. Aside from consumers, DPS also depends on bottlers and
distributors; and retailers. (T)

46

5. Rivalry Among Existing Firms: High. Coca-Cola and PepsiCo., have a
larger consumer base than DPS. Their drinks are more sought after and
preferred by consumers versus DPS’s own Dr Pepper drink, 7-Up or other
brands. (T)
6. 6th
Force (Stakeholders): High. In recent years, DPS’s cash flows have
increased, allowing them to invest in their business, repurchase shares of their
common stock, and pay dividends to stockholders to reduce debt. In 2013
particularly, DPS had planned productivity to be $150 million through
reductions by laughing Rapid Continuous Improvement (RCI). They exceeded
their goal, which allowed DPS to increase amount of cash returned to
stockholders. (O) (DPS, 2013 annual report)
With today’s generation geared
toward a healthier lifestyle, Dr
Pepper Snapple Group has
recently dedicated an extensive
amount of funding toward
research and development of
health conscious beverages such
as the new 10-line. The new 10-
line is a set of their more
popular brands with a drastic
drop in calories, therefore
making a healthier choice of
beverage. Customers in this sense pose a future threat because there are a
multitude of other substitutes to choose from. This allows the opportunity to

47

develop and add to our portfolio new beverages and more customer oriented
products such as low calorie drinks.
Dr Pepper Snapple Group has made a strong commitment to environmental
stewardship on every level of their business. Creating and distributing such a
wide portfolio of brands from their locations across North America gives them
an opportunity to make a real difference. Over the past five years, the
company has invested resources into aligning and integrating their operations
to serve their customers and consumers more efficiently and consequently
reducing their energy and fuel consumption per unit of production. At the
same time, they have pursued a multi tier approach to reducing waste by
ramping up recycling, developing innovative packaging solutions and
collaborating with the industry on the Full Circle Recycling Initiative. Water
conservation has also been one of their primary concerns, and in 2008 they
began tracking their consumption and wastewater discharge to help them
measure the success of their ongoing production and facility improvements. In
their first sustainability report in 2010, they set big goals in a number of
categories – fuel conservation, energy consumption, recycling, reducing waste
with innovative packaging, water conservation, and creating sustainable
processes in all their manufacturing locations.
Competitors pose a huge threat toward Dr Pepper Snapple group for
the sheer fact that their two superior rivals are in a position to produce what
DPS produces. DPS holds a unique portfolio of beverages however; both
PepsiCo and Coca Cola possess many, if not all similar tasting
beverages. Their competitors are focused toward a worldwide approach, while
DPS is currently geared toward the Americas. DPS lacks the ability to branch
out to the rest of the world because their portfolio of beverages are easily

48

mocked and therefore a substantial establishment has not been made
throughout the rest of the globe. In consideration to the competitors strong
array of beverages offered, such as sports drinks and vitamin drinks, DPS holds
the opportunity to develop similar products in an effort to combat it’s
competition. In doing so, DPS opens up a wide range of beneficial possibilities
such as marketing to the sports industry, where sports drinks are number one.
At DPS, they owe the quality,
strength and integrity of their
company and brands largely to
the people who support their
business. This includes their
19,000 employees across North America and the Caribbean as well as the
people working for companies around the world who supply them with the
materials, ingredients, resources and equipment that bring their brands to life.
Now more than ever, beverage consumers are holding products to a higher
standard. Not only do they base their purchasing decisions on whether
beverages are safe and of the highest quality, but increasingly, they’re also
focused on whether the ingredients and packaging materials are ethically
sourced.
DPS is committed to upholding what they expect of their suppliers. They
ensure their brands are produced at high standards of quality and safety
throughout their supply chain and are committed to using suppliers that
operate in a way that provides safe working conditions, dignity and respect for
their employees. We seek commitment to their Ethical Sourcing code of
conduct and require their suppliers to adhere to this code or participate in the
Supplier Ethical Data Exchange (SedEx).

49

D. Summary of External Factors
A moderately important factor to the Dr. Pepper Snapple Group is the threat
of new entrants into the market. At the moment, it is somewhat easy for new
competitors to enter and compete in the marketplace and to challenge the Dr.
Pepper Snapple brand name. An even heavier threat at the moment is the
threat of substitutes. There are many alternatives to the Dr. Pepper Snapple
products. Consumers can buy bottled water, fruit juices, sports and energy
drinks, or other carbonated drinks out of the Dr. Pepper Snapple’s target
market. The most important factor that the Dr. Pepper Snapple Group should
keep in mind is the threat of their target audience shifting to the healthy drink
market. The world, especially America, is becoming more health conscious and
this will be reflected in the items that they purchase which will be healthy
drinks, which are outside of Dr. Pepper Snapple’s target product range. So as a
result, if the Dr. Pepper Snapple group wishes to compete in the near future, it
should invest in producing health drinks.
IV. INTERNAL ENVIRONMENT: Strengths and Weaknesses
(SWOT) (See Appendix B for IFAS Chart)
A. Core Competencies
Core competencies, described by Wheelen and Hunger, is a collection of
corporate capabilities that cross divisional borders and are widespread within a
corporation, and is something that a corporation can do exceedingly well

50

1. R&D Spending:
In the past three years (2013, 2012, and 2011) DPS allocated $15 million
dedicated to just R&D. The focus of such spending helps DPS develop
better product development, process engineering, and nutrition, which in
turn helps the research team to experiment with new flavors and enhance
already established products.
2. Manufacturing:
In addition to concocting their own flavors, DPS also manufactures their
own drinks. As of now, DPS has 18 manufacturing locations and 113
principal distribution centers in the U.S., as well as two manufacturing
facilities and eight principal distribution centers and warehouses in Mexico.
(DPS annual report, 2013).
3. Flavors:
With a focus in research and development, DPS has shown an expertise in
sweeteners and beverage flavors that gives their products unique flavor
and styles. DPS puts much of its time and
effort into enhancing and creating
delicious flavors for their consumers.
The company does well with its
consumers for its likeability,
uniqueness and value, performing
well in brand relevance, brand
strength and brand equality among CSD consumers in 2013. In the last
year, DPS launched their 10-calorie version of their top 4 flavors- 7UP TEN,
A&W TEN, Sunkist TEN soda, and Canada Dry TEN, which has successfully

51

started bringing back consumers who had previously stopped drinking soft
drinks or were drinking fewer servings. (DPS annual report, 2013)
4. Management Team:
Experienced executive management team. DPS’s crew has over 200 years
of experience in the food and
beverage industry. They have broad
experience in brand ownership,
manufacturing and distribution, and
enjoy strong relationships both in the
industry and with customers (DPS
annual report, 2013).
B. VRIO Analysis
1. Value
DPS provides customers value by ensuring that products are always
conveniently located at local retailers. This is made possible by DPS’s
“geographic manufacturing and distribution coverage.” (DPS SWOT, 2014)
Currently, DPS has “18 manufacturing facilities and 113 principal
distribution centers and warehouse facilities in the US.” (DPS SWOT, 2014)
Additionally there are two manufacturing facilities, with eight distribution
centers in Mexico. All of these facilities and warehouses are geographically
dispersed in a manner that allows DPS to have their products available to
consumers with minimal travel time. The manufacturing plants are all next
to a distribution warehouse and from there “DPS utilizes its own fleet of

52

approximately 6,000 delivery trucks,” to get the product to market. (DPS
SWOT, 2014)
2. Rareness
Other competitors produce similar products to DPS’ but 14 of DPS’s
beverages are number one or two in their respective flavor category. For
example, the “Dr. Pepper brand holds the number one position in its flavor
category and number two position in overall flavored CSD. (DPS
SWOT,2014) A&W, Sunkist and Squirt also maintain leading positions in
their flavor categories. However even though they lead many of the flavor
categories in the CSD industry, there are still major competitors for many of
their flavors. To stay ahead of other companies within the CSD industry,
DPS allocated “$15 million on research and development during FY 2013.”
(DPS SWOT, 2014) Research and development is one of DPS’s competitive
advantages and employs a range of disciplines including “product
development, microbiology, analytical chemistry, process engineering,
sensory science, nutrition, knowledge management and regulatory
compliance.” (DPS SWOT, 2014)
3. Imitability
It is relatively easy for companies to make alternatives to DPS’s products.
Giants like Pepsi and Coca-Cola “together represent about 60% of the
liquid refreshment beverages market by volume. (DPS SWOT, 2014) Within
the large portion of the market they command, there are substitutes for
many of DPS’s products. Fortunately for DPS, much of their sales are
dependent on consumer preferences. No matter how close the substitute
is, there is always a noticeable difference between the two products and

53

that differentiation is what propels DPS into the first and second spots in
their flavor categories.
4. Organization
DPS uses all resources to its advantage
during business operations. For example,
the wide geographic coverage of its
manufacturing and distribution network,
coupled with its own fleet of 6000 trucks,
maximizes DPS’s ability to get products
to market quickly and efficiently. The strategically placed infrastructure
allows “DPS to coordinate new product launches in an effective way.” (DPS
SWOT, 2014) For example, DPS’s “TEN” line of products did not take long
to get to market because of the strong distribution network DPS has
established.
C. Business Model
According to Wheelen and Hunger, a business model is the mix of activities a
company performs to earn a profit. Put simply, the business model explains
how a firm earns revenue and makes money. The simplest model, which is the
one DPS operates under, explains how the company provides goods that can
be sold, so that revenues exceed costs and expenses (Hunger & Wheelen,
2012).
Dr Pepper Snapple Group maintains an integrated business model. The
business model includes both company-owned direct-store-delivery (DSD)
distribution, as well as third-party distribution. Within the model,

54

approximately 40 percent of the company’s volume is distributed through
company-owned networks, another 40 percent through third-party distributors
in the Coca-Cola, Pepsi-Cola and independent bottler systems, and the
remaining portion is split between warehouse
direct and foodservice distributors. Dr Pepper
Snapple groups serves consumers and
businesses around the Americas, from bottlers
and distributors to national retailers, large food
service and convenience store customers,
different carbonated soft drinks and non-carbonated soft drinks. 88% of the
company’s consumers are located in the U.S. Individuals of all ages and
backgrounds enjoy DPS’s products. DPS differentiates and sustains a
competitive advantage through its expertise in sweeteners, which create
distinctly flavored soft drinks. Essentially, DPS follows a simple business model.
D. Value Chain
Value chain is a linked set of value-creating activities that begin with basic raw
materials coming from suppliers, moving on to a series of value-added
activities involved in producing and marketing a product or service, and ending
with distributors getting the final goods into the hands of the ultimate
consumer. The focus of value chain analysis is to examine the corporation in
the context of the overall chain of value-creating activities, of which the firm

55

may be only a small part. Value chain can be separated into two parts the
primary activities and support activities.
1. Primary activities:
a. Inbound logistics:(raw materials, handling and warehouses)
Aluminum cans, glass bottles, PET bottles and caps, paper products,
sweeteners, juice, fruit, water and other ingredients are the raw
materials for DPS. Although the company has contracts with a relatively
small number of suppliers, it has generally not experienced any
difficulties in obtaining the required amount of raw materials. And
keeping suppliers in a small amount help the company to ensure the
quality of raw materials.
b. Operations: (machining, assembling, testing)
DPS is a highly automated manufacturer with limited employees and
support staffs. DPS
requires the same up to
date automated systems
of its select third-party
bottlers. This automotive
system requires a
relatively low number of
employees to feed it raw
materials and resources to produce the end product. These systems
allow employees to keep a high level of supervision of manufacturing of
their products and also increase the efficiency and lower the costs.

56

c. Outbound logistics: (warehousing and distribution of finished
products)
The company has 21
manufacturing centers and
more than 115 distribution
center across North
America. Our warehouses
are generally located at or
near our hundreds of third-
party bottlers and
distributors in the U.S. Moreover, we actively manage the sale,
merchandising and transportation of our products using a combination
of our own fleet of approximately 6,000 delivery vehicles and third party
logistics providers.
DPS’s manufacturing/bottling plants and distribution networks
are vulnerable to many weather conditions, from floods, earthquake,
tornadoes, and hurricanes to heavy rain. The company has set
contingencies for such vulnerabilities to ensure high levels of product
availability.
d. Marketing and Sales: (advertising, promotions, pricing,
channel relations)
Our marketing strategy is to grow our brands through continuously
providing new solutions to meet consumers’ changing preferences and
needs. They are working hard in providing customers with new
beverages, which are healthier, and taste better. Also, the company is

57

now working with some of their retailers to
come up with promotions to increase the
volume sales. They are now focusing mostly
on the dollar channels, which are the fastest
growing channel in the past year, to win the
shelf space from other competitors and also earn profits.
e. Service:(installation, repair, parts)
As a beverage company, there is no need for installation or repair.
2. Support Activities:
a. Firm infrastructure:(general management, accounting,
finance, strategic planning)
DPS was facing a decline of net income years before. Despite that the
company is still in good standing considering its gross profit has not
declined since last year and remains at an impressive $3.5 billion. For
strategies, the main strategy for the company in the following year is to
enhance the leading brands by investments to chase the customer’s
loyalty for the company.
b. Human resource management: (recruiting, training,
development)
Dr Pepper Snapple group has workshops to train and
learn before they start working with the company in
order to create good employees with high skills
and moral. The company is managing the diversity

58

of its workforce very well by creating an equal opportunity for their
employees and leaders to be involved in the business. Employees are
recruited regardless of gender, race or belief and everyone has the
same chance of promotion as long as they work hard.
c. Technology development: (R&D, product and process
improvement)
The Research and Development team is composed of scientists and
engineers, which ensures the corporation is creating new flavors and
perfecting its current line of drinks to make them healthier, lowering the
calories while still retaining great taste. DPS uses a variety of IT systems
and networks configured to meet our business needs. DPS developed its
own delivery system, which enables for immediate delivery of their
beverages as they are produced from manufacturing sites. Also, the
company utilizes the latest and greatest vending machines to maintain
efficiency.
d. Procurement: (purchasing of raw materials, machines,
supplies)
DPS has few suppliers for raw materials but they are not facing
problems of purchasing raw materials since their materials are easily
found in the market. In addition, to emphasize on the environmental
protection, DPS uses various refillable and non-refillable, recyclable
bottles and cans. DPS is not the kind of company that requires high-level
technology.

59

E. Corporate Structure
After the corporate restructuring of 2008, which lead to “the creation of Dr
Pepper Snapple Group as a separate entity,” DPS reorganized into three
operating segments; manufacturing, distributing and marketing. (Cadbury,
2008) Currently there are 21 manufacturing centers in the U.S., accompanied
by 115 distribution centers, being operated by approximately 19,000
employees. (DPS Website, 2014) A rigorous marketing campaign is being
undertaken by DPS, including the new health conscious beverages of the “TEN
Line,” which is DPS’s leading brands being offered in a low ten calorie
alternative to the full flavored counterparts.
Decision making for DPS was previously carried out by the board of
Cadbury-Schweppes, however since the corporation split in 2008 “ DPS’
independent board has been charged with “regularly
evaluating the strategic direction of the Company,
management's policies and the effectiveness with which
management implements its policies and overseeing
compliance with legal and regulatory requirements.” (DPS
Website, 2014) DPS is organized on the basis of
geography and projects. It is based on geography
because as DPS strives to“ be the best beverage business
in the Americas,” it is constantly growing manufacturing
and distribution operations through acquisitions and mergers of existing
bottling companies and distribution centers.
The corporate structure is clearly understood from top to bottom of
DPS through it’s “call to ACTION” plan (DPS Website, 2014) Within this “Call
to ACTION,” DPS outlines for its employees guidelines to drive towards

60

efficient business operations and includes; being accountable, customer-
centric, transparent and honest, to inspect what we expect, own decisions that
are made and no blame fixing. DPS being accountable means “we say what we
are going to do and we do what we say,” which builds into being customer-
centric where employees focus on customers’ and consumers’ needs. (DPS
Website, 2014) Being transparent and honest means that DPS operates by
sharing knowledge and information and never maintains a hidden agenda.
Inspect what we expect is an accountability measure and states that
expectations are set forth by DPS and the progress and results are evaluated
internally. Owning decisions that are made exemplifies DPS’s confidence in
decisions because they are not made lightly and rely heavily on facts and input.
No blame fixing is DPSs motto for when something goes wrong, instead of
pointing fingers at whose fault it is, DPS strives toward finding a solution to
remedy the situation.
This corporate structure is consistent with corporate strategies, which
are “building and enhancing leading brands, pursuing profitable channels,
packages and categories, strengthening route to market and improving
operating efficiency.” (DPS Website, 2014) Marketing caters to building and
enhancing leading brands. Pursuing profitable channels, packages and
categories, strengthening route to market and improving operating efficiency,
are all supported by the corporate structure of manufacturing and distributing.
Internationally, DPS only operates in North and South America and outside of
the U.S. DPS relies heavily on third party manufacturers and distributors.

61

F. Corporate Culture
The culture of a business revolves around all the values it instills within all of its
employees. The culture of a corporation could include its mission, objectives or
even values. With DPS, there is a well-defined or emerging culture composed
of shared beliefs, expectations and values. This is done by encouraging each
employee to take effective action, minimize environmental impacts and
transforming society to
have positive impacts. The
culture is consistent with
the current objective,
strategies, policies and
programs because Dr
Pepper Snapple Group
strives to implement a
culture that revolves around what they refer to as “action”. This belief is
derived from each and every aspect of the business down to society, which
include employer, manufacturer, marketer and neighbor.
As of environmental sustainability, the company currently is initiating
their five-year plan that started back in 2007 to help the environment and their
consumers. According to the company, since we all share this Earth, their goal
is to help everyone live better by creating a better environment for everyone
to live in, and by creating products that will benefit consumer’s health and
lifestyle. The company has made a strong commitment to environmental
stewardship on every level of their business. Over the past five years, DPS has
been working towards reducing their usage on energy and fuel per unit of
production. They are also pursuing a multi-tier approach to reduce waste by

62

increasing their recycling rate through developing packages that are better for
the environment by collaborating with the industry on Full Circle Recycling
Initiative. Overall, DPS sets big goals in a number of categories ranging
through fuel conservation, energy consumption, recycling, reducing waste with
innovative packaging, water conservation, and creating sustainable processes
in all manufacturing locations.
Dr Pepper Snapple Group understands the influence it has on many
different aspects and strives to positively influence each point. It prioritizes
environmental sustainability and corporate responsibility. It moves towards
protecting the environment through strategically controlling production to
maintaining efficient transportation. It maximizes resources through strategic
inventory management, manufacturing formulas and handling efficient
transportation to and from warehouse to distribution centers and finally
distribution to retailers. Dr Pepper Snapple group encourages employees to
take appropriate action in all situations. They are responsible for their own
work all the way from employees to top management. “Say what you’re going
to do, and do what you say” is a simple principle employees are supposed to
live by. Currently, Dr Pepper Snapple Group handles its operations only in
North America and Mexico.
G. Corporate Resources
1. Marketing
DPS is focused on providing all kinds of beverages in the U.S., Canada and
Mexico. Their products are average price but high quality in both taste and
nutrition. They do not have typical groups of target consumers since they
provide tons of choices, but each of their product lines may concentrate on

63

a certain group. For example, TEN lines focus on people who care a lot
about healthy lifestyles and pay much attention to their calorie intake.
According to the product life
cycle, the company is mature
but there are still many small
brands, which are growing or
facing the decline. That is the
reason why DPS built their
strategy to enhance the
leading brands in the
following year.
The marketing strategy of
DPS is to “grow their brands through continuously providing new solutions
to meet consumers’ changing preferences and needs.” In recent years, with
customers’ growing concentration on healthy diets, beverage companies
are faced with a severe test to adjust the calorie content of products. DPS,
however, provided the consumers with a brand new idea to adopt active
lifestyles by balancing their calorie intake. The company produces a large
amount of beverages aiming at low-calories, including the TEN Line for men
and Diet Dr Pepper for woman. They continue to expand product lines into
different categories, but the tendency that non-carbonated beverages, like
water and juice, have higher sales makes the overall sales of the company
suffer a lot. Compared with its competitors’ strategies to expand the
market outside the U.S, DPS is having trouble to do so since they never
reached the market outside North America. They have to find a way out of
this social stress. It will take a lot of effort to reach the market outside since

64

they have no idea of the consumers’ preference in Asia or Europe. The
company should also make an effort to launch new non-carbonated
beverage products.
By following the strategy to “increase presence in high margin channels
and packages”, DPS did a great job in manufacturing and distribution
coverage. Before Dec. 31st, 2013, the company owned 115 distribution
centers in its operational front United States. Moreover, these warehouses
are usually near the bottling factories to reduce the fee of transportation.
Also, they have multi-product producing facilities to reduce the fees
from transportation and co-packing process. However, bottling remains to
be a severe problem for the group because they are not independent
enough in this area. Bottler systems affiliated to Coca-Cola or PepsiCo are
undertaking 63% of the distribution assignment for DPS, which makes the
company less proactive in business. Since cooperative strategies are
unlikely to appear due to the conflict of interest among these three top
companies. Bottling system are powerful methods for Coca-Cola, as well as
PepsiCo, to restrict the development of DPS.
Also the company works closely with their retail partners in increasing
sales. DPS sells their products in millions of stores all around, but they still
keep an excellent relation with the main retailers. For example, in 2013,
DPS worked with Sam’s Club to provide promotions and, in return, earned
nearly 4% more of the volume sales that year. Another major channel for
the corporation is the dollar channel including the Dollar General and so on.
Due to the economic situation, which remains pessimistic, the dollar channel
turns out to be the fastest-growing channel for the company. Hence, the

65

company is working on providing more flavor lineups in these kinds of store
to increase sales.
However, consumers’ loyalty has been a great competitive advantage
for DPS to continue their market performance. Being #1 in the U.S.
flavored CSD beverage industry; DPS always receives high scores from
questionnaires for its likeability, uniqueness and value. Even though, DPS’s
market share is much lower than Coca-Cola and PepsiCo, they still get
credit by providing a variety of products including ready- to-drink tea, low-
calories alternatives and so on. The TEN Line is a huge success for DPS
since it brings back many consumers who already abandoned soft drinks for
the sake of health. Therefore, the following year, they are ready to “build
and enhance the leading brands ” and they want to strengthen position in
the minds of consumers and push other brands forwards.
2. Finance

66

According to Wheelen and Hunger’s Strategic Management and Business
Policy, the financial manager is responsible for allocating funds to the best
and most appropriate resources and areas of the business. Finance deals
with all strategic issues and controls the funds that go into as well as out of
the business. A firm must use financial leverage, which is the ratio of total
debt to total assets, in determining how debt is used to increase the
Company Industry Median Market Median
Price/Sales Ratio 1.92 2.39 1.47
Price/Earnings Ratio 17.18 20.53 20.83
Price/Book Ratio 5.03 5.01 2.27
Price/Cash Flow Ratio 12.59 4.85 11.59
Comparison to Industry & Market
13-Dec 12-Dec 11-Dec
Revenue $6.00B $6.00B $5.90B
Gross Profit $3.50B $3.50B $3.42B
Operating Income $1.05B $1.09B $1.02B
Total Net Income $624.00M $629.00M $606.00M
Diluted EPS (Net Income) 3.05 2.96 2.74
Annual Income Statements

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