Transactional and Transformational Leadership

Harry works in a coal mine laboratory. At the start of each shift, Harry checks the work book which his supervisor completes, where clear instructions are given as to what task is required. Generally each task listed is the same each shift, and every task has a written procedure that must be followed in order to meet Quality Assurance Standards. At the end of each shift, Harry completes his shift report which is generally the same too. Harry has worked here for 25 years under the same supervisor. He knows the work isn’t stimulating but it pays well.The supervisor is always happy with Harry because he completes the tasks that are set, and never deviates from what is expected. Harry’s supervisor is a transactional leader – a rule follower who likes procedures with no deviations and expects nothing more than those written in the work book. Carly is a new employee at the laboratory. At the start of each shift she too checks the work book in hope that maybe something new or contrary to the norm has been written. Most days she will look for something extra to do but is often reprimanded for doing something that the next shift would do.Carly detests the supervisor, wishing the supervisor offered more. Carly dreams of a supervisor who is motivational, encouraging, one who appreciates an employee who goes above and beyond what is required and would appreciate suggested improvements to age old methods. Carly dreams of a transformational leader to provide inspiration, charisma, vision and promote intelligent thinking to an otherwise mundane regulated workplace. So what is transactional and transformational leadership and what can be expected from each style?The transactional leader works with the present cultural work environment within their organisation, following existing rules, procedures, expected outcomes and operating norms (Lindgreen, A et al. 2009). They have an exchange relationship (Erkutlu 2008) with their followers/subordinates/employees, where guidance and motivation is given to ‘their followers in the direction of established goals by clarifying role and task requirements’ (Robbins et al. 2011, p. 342). It can take the form of contingent reward, management by exception (active and passive) and laissez-faire (Xirasagar 2008).Contingent reward refers to an exchange of rewards (whether verbal or tangible) for effort and good performance (Xirasagar 2008). Management by exception (active) is taking corrective action when a follower deviates from established rules and standards (Robbins et al. 2011). Management by exception (passive) is intervention taken by the transactional leader ‘only if standards are not met’ (Robbins et al. 2011, p. 342). A transactional leader of laissez-faire character is one who ‘abdicates responsibility’ and ‘avoids making decisions’ (Robbins et al. 2011, p. 342).As transactional leadership focuses on established norms and protocols, and â₠¬Ëœresults in expected outcomes’ (Erkutlu 2008, p. 711), followers will not extend themselves by going ‘above and beyond the call of duty’ (Robbins et al. 2011, p. 343). In comparison, the transformational leader is ‘capable of having a profound and extraordinary effect on followers’ (Robbins et al. 2011, p. 342) through their charismatic, visionary, inspirational, intellectually stimulating characteristics and their concern for their followers (Erkutlu 2008). They are able to inspire their followers to rise above their own self-interests.Transformational leadership consists of four sub-constructs (individualised consideration, intellectual stimulation, inspirational motivation, idealised influence) which transformational leaders can use to invoke behaviour of followers that exceeds expectations ‘for the sake of the organisation’ (Robbins et al. 2011, p. 343). Individualised consideration is displayed to the follower by ‘giving per sonal attention’ (Robbins et al. 2011, p. 342) to their development needs, support and coaching (Erkutlu 2008). Intellectual stimulation ‘promotes intelligence, rationality and careful problem solving’ (Robbins et al. 2011, p. 342).Transformational leaders are able to demonstrate idealised influence by providing vision and a sense of mission, instilling pride and gaining respect and trust (Robbins et al. 2011) along with inspirational motivation by communicating ‘high expectations’ (Robbins et al. 2011, p. 342). Although a distinction between the two could be categorised as a difference in leadership flexibility, Robbins et al. (2011) maintains that each leadership style does not actually oppose the other; rather transformational leadership builds upon transactional leadership where levels of follower effort and performance exceed that of transactional leadership alone.However each style of leadership has its own individual strengths and weaknesses. Transformational leadership appears to be heralded as the superior leadership style; although transactional leadership does have its strengths. As ‘transactional leadership results in expected outcomes’ (Erkutlu 2008, p. 711), it is effective in organisations where the desired outcome is measured against ‘clear and precise financial measures, such as revenues per customer segment or the dollar volume of cross-selling’ (Lindgreen et al.2009, p. 26).Research conducted by Liu et al. (2011) has found that in occupations of low emotional labour, transactional leadership has made a positive contribution to team innovation. Whilst Wells & Peachey (2011, p. 5) have found that there is a negative relationship ‘between transactional leadership and voluntary organizational turnover intentions’. The application of equity theory’s procedural justice (‘the perceived fairness of the process used to determine the distribution of rewards’ (R obbins et al. 2011, p.191) and distributive justice (‘perceived fairness of the amount and allocation of rewards among individuals’ (Robbins et al. 2011, p. 191) may explain this negative relationship (Wells & Peachey 2011). Conversely, transactional leadership is not without its weaknesses.Subordinates of transactional leaders may feel a lower sense of organisation commitment and job satisfaction or commit sabotage against the organisation (Erkutlu 2008). As transactional leadership relies upon defined outcomes with leaders possibly dealing with deviations from the norm ‘with harsh criticisms’ (Liu et al.2010, p. 284), subordinate performance beyond what the leader has requested should not be expected; nor the discovery of new methods of problem solving as subordinates continue using tried and tested solutions ‘for fear of reproach’ (Liu et al. 2010, p. 284).Innovation amongst employees employed in high emotional labour positions is also likel y to be depressed under a transactional leader (Liu et al. 2010). Transactional leadership doesn’t allow for followers’ self-actualisation needs to be met; therefore followers may not reach their full ‘potential and self-fulfilment’ (Robbins et al.2011, p. 177).Where transactional leadership has clear weaknesses in respect of followers performance, transformational leadership builds upon this and bolsters followers’ willingness to perform above what is required. Transformational leadership can be thought of what transactional leadership is not. Transformational leaders are acutely aware of the organisations present culture but have a definite vision for the future. They enable this vision by changing the fundamental ‘values, goals, and aspirations of followers’ (Lindgreen et al. 2009, p.15) as the followers embrace the leader’s values.The result is that the followers perform their respective duties not because they expect to be r ewarded, but because it is in agreement with their new found values (Lindgreen et al. 2009). By strategically using positive emotions, the leader is able to encourage ‘optimism and positive approaches to group tasks’ (Mitchell & Boyle 2009, p. 463). Followers of transformational leadership experience heightened motivation through their leaders’ inspirational motivation and individualised consideration.Mitchell & Boyle’s (2009, p.462) research states that this ‘increases their cognitive flexibility to accept new ideas and comments from others’. Transformational leadership has proven advantageous where customer relationship development is important, for example formal customer introductions and personal selling (Lindgreen et al. 2009). Research conducted by Camps & Rodriguez (2011) established that employees working under a transformational leader within an organisation that fostered employee learning and skill improvement did not drive the foll ower to seek employment elsewhere because of their increased skill set.‘On the contrary, they see this as a commitment to the employer that has trusted and invested in them’ (Camps & Rodriguez 2011, p. 437). Although flaunted as the preferred leadership style in comparison to transactional leadership, there are weaknesses of transformational leadership. The charismatic elements of transformational leaders are difficult to reproduce if not naturally present in the personality of the leader. Therefore, organisations seeking applicants to lead in a transformational fashion are instantly subjected to a limited pool of suitable applicants (Muijs 2011).Even when the applicant is of strong transformational personality, a poor organisation fit will fail the applicant. So too will organisational structures that impede ‘the extent to which leaders can be truly transformational’ (Muijs 2011, p. 50). Over zealous transformational leaders can also incite passive resista nce from subordinates. In this situation, the subordinates will simply wait for the leader to ‘move on’ (Muijs 2011, p. 51). This type of resistance is prevalent in organisations that have ‘rapid management turnover’ (Muijs 2011, p.51).Transactional and transformational leadership are two contemporary styles of leadership that have their own strengths and weaknesses. Transactional leadership focuses on providing followers clarified tasks requirements in order to achieve desired outcomes, whereas transformational leadership involves the ability of the leader to motivate, inspire, influence and consider their followers in order for the follower to take on the leader’s vision and perform above and beyond what is expected.Transactional leadership is effective in organisations where the desired outcome is definitive however is not conductive in promoting innovation amongst high emotional labour employees or allowing for self-actualisation needs to be met. Transformational leadership is effective in empowering followers and producing results such as employees performing above and beyond what is required. However it can be overbearing for employees who have not embraced transformational leadership exercising passive resistance to such a contemporary style of leadership.

Minute Clinic Essay

1) There are four promotion strategies for the intangible services. The first one is stressing tangible cues. A tangible cue is a concrete symbol of the service offering. The facilities that customers visit or from which services are delivered, are a critical tangible part of the total service offering. Minute Clinic healthcare centers are open seven days a week with later hours than traditional doctors have. They don’t require appointments and can provide patients with a diagnosis and prescription within 15-45 minutes; in this way the long waits are avoided. They are located in convenient retail settings. The second promotion strategy is the use of personal information sources. A personal information source is someone consumers are familiar with or someone they admire or can relate to personally. Minute Clinic is an innovator in the â€Å"retailization of healthcare†. The company is expanding very quickly as there’s a need for cheaper and more accessible healthcare. In addition more than 80% of the patients are satisfied with the convenience of the retail clinic, and with the quality and the cost of services. The third promotion strategy is the creation of a strong organizational image. One way to implement it is to manage the evidence, including the physical environment of the service facility, the appearance of the service employees, and the tangible items associated with a service. MinuteClinic is staffed by nurse practitioners and physician assistants who specialize in family healthcare. It offers cheap and accessible healthcare. It provides basic medical services for common ailments, offers vaccines, physicals and electronic records. The last promotion strategy is the engagement in post purchase communication. It refers to the follow-up activities that a service might engage in after a customer transaction. For example in 2006 the Harris Interactive poll was held and in the end the response to the clinics has been positive. 2) Customized services are more flexible, respond to individual customers’ needs and usually command a higher price. The standardized services are more efficient and cost less. The mass customization instead uses technology to deliver customized services on a mass basis, which results in giving each customer whatever she or he asks for. MinuteClinic‘s services are standardized as they are efficient and cost less. Nevertheless they do incorporate elements of mass customization as they use the electronic medical records system for the needs of each single patient and on a mass basis. 3) Customers evaluate service quality by five components: reliability, responsiveness, assurance, empathy and tangibles. MinuteClinic demonstrated reliability and responsiveness during the flu outbreak in Minnesota by implementing a hub-and-spoke approach for better inventory control, offering the shots in only eight MinuteClinic locations. They hired supplemental nursing staff and administered up to 300 shots a day each. MinuteClinic performed the service dependably, accurately, consistently and promptly. During the flu outbreak the lines became very long so MinuteClinic created children’s areas, added televisions, videos and coloring books to keep kids entertained and make the wait easier for families. This was the technique MinuteClinic used to impress customers with tangible physical evidence that the clinics care about them. 4) Place (Distribution) strategies for service organizations must focus on such issues as convenience, number of outlets, direct versus indirect distribution, location and scheduling. Thanks to this strategy the company was successful among patients and expanded quickly. With its marketing mix MinuteClinic focuses on place, pricing and distribution. The fact that the clinic is located in convenient retail settings adds to its growing appeal. As the prices are affordable, the distribution is direct and fast the company expands very quickly.

5 Coke vs Pepsi 21st Century Case Study

In a â€Å"carefully waged competitive struggle,† from 1975 to 1995 both Coke and Pepsi achieved average annual growth of around 10% as both U. S. nd worldwide CSD consumption consistently rose. According to Roger Enrico, former CEO of Pepsi-Cola: No The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn’t exist, we’d pray for someone to invent them. And on the other side of the fence, I’m sure the folks at Coke would say that nothing contributes as much to the present-day success of the Coca-Cola company than . . . Pepsi. 1 This cozy relationship was threatened in the late 1990s, however, when U. S. CSD consumption dropped for two consecutive years and worldwide shipments slowed for both Coke and Pepsi. In response, both firms began to modify their bottling, pricing, and brand strategies. They also looked to emerging international markets to fuel growth and broadened their brand portfolios to include non-carbonated beverages like tea, juice, sports drinks, and bottled water. Do As the cola wars continued into the twenty-first century, the cola giants faced new challenges: Could they boost flagging domestic cola sales? Where could they find new revenue streams? Was their era of sustained growth and profitability coming to a close, or was this apparent slowdown just another blip in the course of Coke’s and Pepsi’s enviable performance? 1Roger Enrico, The Other Guy Blinked and Other Dispatches from the Cola Wars (New York: Bantam Books, 1988). ________________________________________________________________________________________________________________ Research Associate Yusi Wang prepared this case from published sources under the supervision of Professor David B. Yoffie. Parts of this case borrow from previous cases prepared by Professors David Yoffie and Michael Porter. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright  © 2002 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www. hbsp. harvard. edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 Economics of the U. S. CSD Industry Americans consumed 23 gallons of CSD annually in 1970 and consumption grew by an average of 3% per year over the next 30 years (see Exhibit 1). This growth was fueled by increasing availability as well as by the introduction and popularity of diet and flavored CSDs. Through the mid-1990s, the real price of CSDs fell, and consumer demand appeared responsive to declining prices. 2 Many alternatives to CSDs existed, including beer, milk, coffee, bottled water, juices, tea, powdered drinks, wine, sports drinks, distilled spirits, and tap water. Yet Americans drank more soda than any other beverage. At 60%-70% market share, the cola segment of the CSD industry maintained its dominance throughout the 1990s, followed by lemon/lime, citrus, pepper, root beer, orange, and other flavors. C CSD consisted of a flavor base, a sweetener, and carbonated water. Four major participants were involved in the production and distribution of CSDs: 1) concentrate producers; 2) bottlers; 3) retail channels; and 4) suppliers. 3 Concentrate Producers The concentrate producer blended raw material ingredients (excluding sugar or high fructose corn syru p), packaged it in plastic canisters, and shipped the blended ingredients to the bottler. The concentrate producer added artificial sweetener to make diet soda concentrate, while bottlers added sugar or high fructose corn syrup themselves. The process involved little capital investment in machinery, overhead, or labor. A typical concentrate manufacturing plant cost approximately $25 million to $50 million to build, and one plant could serve the entire United States. No A concentrate producer’s most significant costs were for advertising, promotion, market research, and bottler relations. Marketing programs were jointly implemented and financed by concentrate producers and bottlers. Concentrate producers usually took the lead in developing the programs, particularly in product planning, market research, and advertising. They invested heavily in their trademarks over time, with innovative and sophisticated marketing campaigns (see Exhibit 2). Bottlers assumed a larger role in developing trade and consumer promotions, and paid an agreed percentage—typically 50% or more—of promotional and advertising costs. Concentrate producers employed extensive sales and marketing support staff to work with and help improve the performance of their bottlers, setting standards and suggesting operating procedures. Concentrate producers also negotiated directly with the bottlers’ major suppliers—particularly sweetener and packaging suppliers—to encourage reliable supply, faster delivery, and lower prices. Do Once a fragmented business with hundreds of local manufacturers, the landscape of the U. S. soft drink industry had changed dramatically over time. Among national concentrate producers, CocaCola and Pepsi-Cola, the soft drink unit of PepsiCo, claimed a combined 76% of the U. S. CSD market in sales volume in 2000, followed by Cadbury Schweppes and Cott Corporation (see Exhibit 3). There were also private label brand manufacturers and several dozen other national and regional producers. Exhibit 4 gives financial data for Coke and Pepsi and their top affiliated bottlers. 2 Robert Tollison et al. , Competition and Concentration (Lexington Books, 1991), p. 11. 3 The production and distribution of non-carbonated soft drinks and bottled water will be discussed in a later section. 2 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. 702-442 op y Cola Wars Continue: Coke and Pepsi in the Twenty-First Century Bottlers Bottlers purchased concentrate, added carbonated water and high fructose corn syrup, bottled or canned the CSD, and delivered it to customer accounts. Coke and Pepsi bottlers offered â€Å"direct store door† (DSD) delivery, which involved route delivery sales people physically placing and managing the CSD brand in the store. Smaller national brands, such as Shasta and Faygo, distributed through food store warehouses. DSD entailed managing the shelf space by stacking the product, positioning the trademarked label, cleaning the packages and shelves, and setting up point-of-purchase displays and end-of-aisle displays. The importance of the bottler’s relationship with the retail trade was crucial to continual brand availability and maintenance. Cooperative merchandising agreements between retailers and bottlers were used to promote soft drink sales. Retailers agreed to specified promotional activity and discount levels in exchange for a payment from the bottler. tC The bottling process was capital-intensive and involved specialized, high-speed lines. Lines were interchangeable only for packages of similar size and construction. Bottling and canning lines cost from $4 million to $10 million each, depending on volume and package type. The minimum cost to build a small bottling plant, with warehouse and office space, was $25million to $35 million. The cost of an efficient large plant, with four lines, automated warehousing, and a capacity of 40 million cases, was $75 million in 1998. 4 Roughly 80-85 plants were required for full distribution across the United States. Among top bottlers in 1998, packaging accounted for approximately half of bottlers’ cost of goods sold, concentrate for one-third, and nutritive sweeteners for one-tenth. Labor accounted for most of the remaining variable costs. Bottlers also invested capital in trucks and distribution networks. Bottlers’ gross profits often exceeded 40%, but operating margins were razor thin. See Exhibit 5 for the cost structures of a typical concentrate producer and bottler. Do No The number of U. S. soft drink bottlers had fallen, from over 2,000 in 1970 to less than 300 in 2000. 6 Historically, Coca-Cola was the first concentrate producer to build nation-wide franchised bottling networks, a move that Pepsi and Cadbury Schweppes followed. The typical franchised bottler owned a manufacturing and sales operation in an exclusive geographic territory, with rights granted in perpetuity by the franchiser. In the case of Coca-Cola, territorial rights did not extend to fountain accounts—Coke delivered to its fountain accounts directly, not through its bottlers. The rights granted to the bottlers were subject to termination only in the event of default by the bottler. The original Coca-Cola franchise contract, written in 1899, was a fixed-price contract that did not provide for contract renegotiation even if ingredient costs changed. With considerable effort, often involving bitter legal disputes, Coca-Cola amended the contract in 1921, 1978, and 1987 to adjust concentrate price. By 1999, over 81% of Coke’s U. S. volume was covered by the 1987 Master Bottler Contract, which granted Coke the right to determine concentrate price and other terms of sale. Under the terms of this contract, Coke was not obligated to share advertising and marketing expenditures with the bottlers; however, the company often did in order to ensure quality and proper distribution of marketing. In 2000, Coke contributed $766 million in marketing support and $223 million in infrastructure support to its top bottler alone. The 1987 contract did not give complete pricing control to Coke, but rather used a pricing formula that adjusted quarterly for changes in sweetener prices and stated a maximum price. This contract differed from Pepsi’s Master Bottling Agreement with its top bottler, which granted the bottler 4 â€Å"Louisiana Coca-Cola Reveals Crown Jewel,† Beverage Industry, January 1999. 5 Calculated from M. Dolan et al. , â€Å"Coca-Cola Beverages,† Merrill Lynch Capital Markets, July 6, 1998. Timothy Muris et al. , Strategy, Structure, and Antitrust in the Carbonated Soft-Drink Industry, (Quorum Books, 1993), p. 63; John C. Maxwell, ed. Beverage Digest Fact Book 2001. 3 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 perpet ual rights to distribute Pepsi cola products while at the same time required it to purchase its raw materials from Pepsi at prices, and on terms and conditions, determined by Pepsi. Pepsi negotiated concentrate prices with its bottling association, and normally based price increases on the CPI. Coke and Pepsi both raised concentrate prices throughout the 1980s and early 1990s, even as the real (inflation-adjusted) retail prices for CSD were down (see Exhibit 6). tC Coca-Cola and Pepsi franchise agreements allowed bottlers to handle the non-cola brands of other concentrate producers. Franchise agreements also allowed bottlers to choose whether or not to market new beverages introduced by the concentrate producer. Some restrictions applied, however, as bottlers could not carry directly competitive brands. For example, a Coca-Cola bottler could not sell Royal Crown Cola, but it could distribute Seven-Up, if it decided not to carry Sprite. Franchised bottlers had the freedom to participate in or reject new package introductions, local advertising campaigns and promotions, and test marketing. The bottlers also had the final say in decisions concerning retail pricing, new packaging, selling, advertising, and promotions in its territory, though they could only use packages authorized by the franchiser. In 1971, the Federal Trade Commission initiated action against eight major CPs, charging that exclusive territories granted to franchised bottlers prevented intrabrand competition (two or more bottlers competing in the same area with the same beverage). The CPs argued that interbrand competition was sufficiently strong to warrant continuation of the existing territorial agreements. After nine years of litigation, Congress enacted the â€Å"Soft Drink Interbrand Competition Act† in 1980, preserving the right of CPs to grant exclusive territories. Retail Channels No In 2000, the distribution of CSDs in the United States took place through food stores (35%), fountain outlets7 (23%), vending machines (14%), convenience stores (9%), and other outlets (20%). Mass merchandisers, warehouse clubs, and drug stores made up most of the last category. Bottlers’ profitability by type of retail outlet is shown in Exhibit 7. Costs were affected by delivery method and frequency, drop size, advertising, and marketing. The main distribution channel for soft drinks was the supermarket. CSDs were among the five largest selling product lines sold by supermarkets, raditionally yielding a 15%-20% gross margin (about average for food products) and accounting for 3%-4% of food store revenues. 8 CSDs represented a large percentage of a supermarket’s business, and were also a big traffic draw. Bottlers fought for retail shelf space to ensure visibility and accessibility for their products, and looked for new locations to increase impulse purchases, such as placing coolers at checkout counters. The proliferation of products and packaging types created intense shelf space pressures. Do Discount retailers, warehouse clubs, and drug stores accounted about 15% of CSD sales in the late 1990s. These firms often had their own private label CSD, or they sold a generic label such as President’s Choice. Private label CSDs were usually delivered to a retailer’s warehouse, while branded CSDs were delivered directly to the store. With the warehouse delivery method, the retailer was responsible for storage, transportation, merchandising, and stocking the shelves, thus incurring additional costs. The word â€Å"fountain outlets† traditionally referred to soda fountains, but was later used also for restaurants, cafeterias, and other establishments that served soft drinks by the glass using fountain dispensers. 8 Progressive Grocer 1998 Sales Manual Databook, July 1998, p. 68. 4 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. 702-442 op y Cola Wars Continue: Coke and Pepsi in the Twenty-First Century tC Hi storically, Pepsi had focused on sales through retail outlets, while Coke had dominated fountain sales. Coca-Cola had a 65% share of the fountain market in 2000, while Pepsi had 21%. Competition for fountain sales was intense. National fountain accounts were essentially â€Å"paid sampling,† with CSD companies earning pretax operating margins of around 2%. For restaurants, by contrast, fountain sales were extremely profitable—about 80 cents out of every dollar spent stayed with the restaurant retailers. In 1999, for example, Burger King franchisees were believed to pay about $6. 20 per gallon for Coke syrup, but they received a substantial rebate on each gallon in the form of a check; one large Midwestern Burger King franchisee said his annual rebate ran $1. 45 per gallon, or about 23%. Coke and Pepsi also invested in the development of fountain equipment, such as service dispensers, and provided their fountain customers with cups, point-of-sale material, advertising, and in-store promotions to increase brand presence. After Pepsi entered the fast-food restaurant business with the acquisitions of Pizza Hut (1978), Taco Bell (1986), and Kentucky Frie d Chicken (1986), Coca-Cola persuaded other chains such as Wendy’s and Burger King to switch to Coke. PepsiCo spun its restaurant business off to the public in 1997 under the name Tricon, while retaining the Frito-Lay snack food business. In 2000, fountain â€Å"pouring rights† remained split along pre-Tricon lines, as Pepsi supplied all of Taco Bell’s and KFC’s, and the overwhelming majority of Pizza Hut restaurants. Coke retained exclusivity deals with McDonald’s and Burger King. No Coke and Cadbury Schweppes handled fountain accounts from their national franchisor companies. Employees of the franchisee companies negotiated and signed pouring rights contracts which, in the case of big restaurant chains, could cover the entire United States or even the world. The accounts were actually serviced by employees of the franchisors’ fountain divisions, local bottlers, or both. Local bottlers, when they were used, were paid service fees for delivering syrup and fixing and placing machines. Historically, PepsiCo could only sell directly to end-user national accounts. By 1999, Pepsi had persuaded most of its bottlers to modify their franchise agreements to allow Pepsi to sell fountain syrup via restaurant commissary companies, which sell a range of supplies to restaurants. Concentrate producers offered bottlers rebates to encourage them to purchase and install vending machines. The owners of the property on which vending equipment was located usually received a sales commission. Coke and Pepsi were the largest suppliers of CSDs to the vending channel. Juice, tea, sports drinks, lemonade, and water were also available through vending machines. Suppliers to Concentrate Producers and Bottlers Do Concentrate producers required few inputs: the concentrate for most regular colas consisted of caramel coloring, phosphoric and/or citric acid, natural flavors, and caffeine. 10 Bottlers purchased two major inputs: packaging, which included $3. 4 billion in cans, $1. 3 billion in plastic bottles, and $0. 6 billion in glass; and sweeteners, which included $1. 1 billion in sugar and high fructose corn syrup, and $1. billion in artificial sweetener (predominantly aspartame). The majority of U. S. CSDs were packaged in metal cans (60%), then plastic bottles (38%), and glass bottles (2%). Cans were an attractive packaging material because they were easily handled, stocked, and displayed, weighed little, and were durable and recyclable. Plastic bottles, introduced in 1978, bo osted home consumption of CSDs because of their larger 1-liter, 2-liter, and 3-liter sizes. Single-serve 20-oz. PET bottles quickly gained popularity and represented 35% of vended drinks and 3% of grocery drinks in 2000. Nikhil Deogun and Richard Gibson, â€Å"Coke Beats Out Pepsi for Contracts With Burger King, Domino’s,† The Wall Street Journal, April 15, 1999. 10 Based on ingredients lists, Coke Classic and Pepsi-Cola, 2001. 5 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 The concentrate producers’ strategy towards can manufacturers was typical of their supplier relationships. Coke and Pepsi negotiated on behalf of their bottling networks, and were among the metal can industry’s largest customers. Since the can constituted about 40% of the total cost of a packaged beverage, bottlers and concentrate producers often maintained relationships with more than one supplier. In the 1960s and 1970s, Coke and Pepsi backward integrated to make some of their own cans, but largely exited the business by 1990. In 1994, Coke and Pepsi instead sought to establish stable long-term relationships with their suppliers. Major can producers included American National Can, Crown Cork Seal, and Reynolds Metals. Metal cans were viewed as commodities, and there was chronic excess supply in the industry. Often two or three can manufacturers competed for a single contract. Early History11 tC The Evolution of the U. S. Soft Drink Industry Coca-Cola was formulated in 1886 by John Pemberton, a pharmacist in Atlanta, Georgia, who sold it at drug store soda fountains as a â€Å"potion for mental and physical disorders. † A few years later, Asa Candler acquired the formula, established a sales force, and began brand advertising of Coca-Cola. Tightly guarded in an Atlanta bank vault, the formula for Coca-Cola syrup, known as â€Å"Merchandise 7X,† remained a well-protected secret. Candler granted Coca-Cola’s first bottling franchise in 1899 for a nominal one dollar, believing that the future of the drink rested with soda fountains. The company’s bottling network grew quickly, however, reaching 370 franchisees by 1910. No In its early years, Coke was constantly plagued by imitations and counterfeits, which the company aggressively fought in court. In 1916 alone, courts barred 153 imitations of Coca-Cola, including the brands Coca-Kola, Koca-Nola, Cold-Cola, and the like. Coke introduced and patented a unique 6. 5ounce â€Å"skirt† bottle to be used by its franchisees that subsequently became an American icon. Robert Woodruff, who became CEO in 1923, began working with franchised bottlers to make Coke available wherever and whenever a consumer might want it. He pushed the bottlers to place the beverage â€Å"in arm’s reach of desire,† and argued that if Coke were not conveniently available when the consumer was thirsty, the sale would be lost forever. During the 1920s and 1930s, Coke pioneered open-top coolers to storekeepers, developed automatic fountain dispensers, and introduced vending machines. Woodruff also initiated â€Å"lifestyle† advertising for Coca-Cola, emphasizing the role of Coke in a consumer’s life. Do Woodruff also developed Coke’s international business. In the onset of World War II, at the request of General Eisenhower, he promised that â€Å"every man in uniform gets a bottle of Coca-Cola for five cents wherever he is and whatever it costs the company. † Beginning in 1942, Coke was exempted from wartime sugar rationing whenever the product was destined for the military or retailers serving soldiers. Coca-Cola bottling plants followed the movements of American troops; 64 bottling plants were set up during the war—largely at government expense. This contributed to Coke’s dominant market shares in most European and Asian countries. Pepsi-Cola was invented in 1893 in New Bern, North Carolina by pharmacist Caleb Bradham. Like Coke, Pepsi adopted a franchise bottling system, and by 1910 it had built a network of 270 11 See J. C. Louis and Harvey Yazijian, The Cola Wars (Everest House, 1980); Mark Pendergrast, For God, Country, and Coca-Cola (Charles Scribner’s, 1993); David Greising, I’d Like the World to Buy a Coke (John Wiley Sons, 1997). 6 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. du or 617-783-7860. 702-442 op y Cola Wars Continue: Coke and Pepsi in the Twenty-First Century franchised bottlers. Pepsi struggled, however, declaring bankruptcy in 1923 and again in 1932. Business began to pick up in the midst of the Great Depression, when Pepsi lowered the price for its 12-ounce bottle to a nickel, the same price Coke charged for its 6. 5-ounce bottle. When Pepsi tried to expand its bottling network in the late 1930s, its choices were small local bottlers striving to compete with wealthy Coke franchisees. 12 Pepsi nevertheless began to gain market share. In 1938, Coke filed suit against Pepsi, claiming that Pepsi-Cola was an infringement on the CocaCola trademark. The court ruled in favor of Pepsi in 1941, ending a series of suits and countersuits between the two companies. With its famous radio jingle, â€Å"Twice as Much, for Nickel Too,† Pepsi’s U. S. sales surpassed those of Royal Crown and Dr Pepper in the 1940s, trailing only Coca-Cola. In 1950, Coke’s share of the U. S. CSD market was 47% and Pepsi’s was 10%; hundreds of regional CSD companies continued to produce a wide assortment of flavors. tC The Cola Wars Begin In 1950, Alfred Steele, a former Coca-Cola marketing executive, became Pepsi’s CEO. Steele made â€Å"Beat Coke† his theme and encouraged bottlers to focus on take-home sales through supermarkets. The company introduced the first 26-ounce bottles to the market, targeting family consumption, while Coke stayed with its 6. 5-ounce bottle. Pepsi’s growth soon began tracking the growth of supermarkets and convenience stores in the United States: There were about 10,000 supermarkets in 1945, 15,000 in 1955, and 32,000 at the peak in 1962. No In 1963, under the leadership of new CEO Donald Kendall, Pepsi launched its â€Å"Pepsi Generation† campaign that targeted the young and â€Å"young at heart. † Pepsi’s ad agency created an intense commercial using sports cars, motorcycles, helicopters, and a catchy slogan. The campaign helped Pepsi narrow Coke’s lead to a 2-to-1 margin. At the same time, Pepsi worked with its bottlers to modernize plants and improve store delivery services. By 1970, Pepsi’s franchise bottlers were generally larger compared to Coke bottlers. Coke’s bottling network remained fragmented, with more than 800 independent franchised bottlers that focused mostly on U. S. cities of 50,000 or less. 13 Throughout this period, Pepsi sold concentrate to its bottlers at a price approximately 20% lower than Coke. In the early 1970s, Pepsi increased the concentrate price to equal that of Coke. To overcome bottlers’ opposition, Pepsi promised to use the extra margin to increase advertising and promotion. Do Coca-Cola and Pepsi-Cola began to experiment with new cola and non-cola flavors and a variety of packaging options in the 1960s. Before then, the two companies had adopted a single product strategy, selling only their flagship brand. Coke introduced Fanta (1960), Sprite (1961), and lowcalorie Tab (1963). Pepsi countered with Teem (1960), Mountain Dew (1964), and Diet Pepsi (1964). Each introduced non-returnable glass bottles and 12-ounce metal cans in various packages. Coke and Pepsi also diversified into non-soft-drink industries. Coke purchased Minute Maid (fruit juice), Duncan Foods (coffee, tea, hot chocolate), and Belmont Springs Water. Pepsi merged with snackfood giant Frito-Lay in 1965 to become PepsiCo, claiming synergies based on shared customer targets, store-door delivery systems, and marketing orientations. In the late 1950s, Coca-Cola, still under Robert Woodruff’s leadership, began using advertising that finally recognized the existence of competitors, such as â€Å"American’s Preferred Taste† (1955) and â€Å"No Wonder Coke Refreshes Best† (1960). In meetings with Coca-Cola bottlers, however, executives only discussed the growth of their own brand and never referred to its closest competitor by name. 2 Louis and Yazijian, p,. 23. 13 Pendergrast, p. 310. 7 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 During the 1960s, Coke primarily focused on overseas markets, apparently believing that domestic soft drink consumption had neared saturation at 22. 7 ga llons per capita in 1970. 14 Pepsi meanwhile battled aggressively in the United States, doubling its share between 1950 and 1970. The Pepsi Challenge In 1974, Pepsi launched the â€Å"Pepsi Challenge† in Dallas, Texas. Coke was the dominant brand in the city and Pepsi ran a distant third behind Dr Pepper. In blind taste tests hosted by Pepsi’s small local bottler, the company tried to demonstrate that consumers in fact preferred Pepsi to Coke. After its sales shot up in Dallas, Pepsi started to roll out the campaign nationwide, although many of its franchise bottlers were initially reluctant to join. tC Coke countered with rebates, rival claims, retail price cuts, and a series of advertisements questioning the tests’ validity. In particular, Coke used retail price discounts selectively in markets where the Coke bottler was company owned and the Pepsi bottler was an independent franchisee. Nonetheless, the Pepsi Challenge successfully eroded Coke’s market share. In 1979, Pepsi passed Coke in food store sales for the first time with a 1. 4 share point lead. Breaking precedent, Brian Dyson, president of Coca-Cola, inadvertently uttered the name â€Å"Pepsi† in front of Coke’s bottlers at the 1979 bottlers conference. No During the same period, Coke was renegotiating its franchise bottling contract to obtain greater flexibility in pricing concentrate and syrups. Bottlers approved the new contract in 1978 only after Coke conceded to link concentrate price changes to the CPI, adjust the price to reflect any cost savings associated with a modification of ingredients, and supply unsweetened concentrate to bottlers who preferred to purchase their own sweetener on the open market. 15 This brought Coke’s policies in line with Pepsi, which traditionally sold its concentrate unsweetened to its bottlers. Immediately after securing bottler approval, Coke announced a significant concentrate price hike. Pepsi followed with a 15% price increase of its own. Cola Wars Heat Up In 1980, Cuban-born Roberto Goizueta was named CEO and Don Keough president of Coca-Cola. In the same year, Coke switched from sugar to the lower-priced high fructose corn syrup, a move Pepsi emulated three years later. Coke also intensified its marketing effort, increasing advertising spending from $74 million to $181 million between 1981 and 1984. Pepsi elevated its advertising expenditure from $66 million to $125 million over the same period. Goizueta sold off most of the non-CSD businesses he had inherited, including wine, coffee, tea, and industrial water treatment, while keeping Minute Maid. Do Diet Coke was introduced in 1982 as the first extension of the â€Å"Coke† brand name. Much of CocaCola management referred to its brand as â€Å"Mother Coke,† and considered it too sacred to be extended to other products. Despite internal opposition from company lawyers over copyright issues, Diet Coke was a phenomenal success. Praised as the â€Å"most successful consumer product launch of the Eighties,† it became within a few years not only the nation’s most popular diet soft drink, but also the third-largest selling soft drink in the United States. 14 Maxwell. 15 Pendergrast, p. 323. 8 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. 702-442 op y Cola Wars Continue: Coke and Pepsi in the Twenty-First Century In April 1985, Coke announced the change of its 99-year-old Coca-Cola formula. Explaining this radical break with tradition, Goizueta saw a sharp depreciation in the value of the Coca-Cola trademark as â€Å"the product had a declining share in a shrinking segment of the market. †16 On the day of Coke’s announcement, Pepsi declared a holiday for its employees, claiming that the new Coke tasted more like Pepsi. The reformulation prompted an outcry from Coke’s most loyal customers. Bottlers joined the clamor. Three months later, the company brought back the original formula under the name Coca-Cola Classic, while retaining the new formula as the flagship brand under the name New Coke. Six months later, Coke announced that Coca-Cola Classic (the original formula) would henceforth be considered its flagship brand. tC New CSD brands proliferated in the 1980s. Coke introduced 11 new products, including Cherry Coke, Caffeine-Free Coke, and Minute-Maid Orange. Pepsi introduced 13 products, including Caffeine-Free Pepsi-Cola, Lemon-Lime Slice, and Cherry Pepsi. The number of packaging types and sizes also increased dramatically, and the battle for shelf space in supermarkets and other food stores grew fierce. By the late 1980s, both Coke and Pepsi offered more than ten major brands, using at least seventeen containers and numerous packaging options. 17 The struggle for market share intensified and the level of retail price discounting increased sharply. Consumers were constantly exposed to cents-off promotions and a host of other supermarket discounts. No Throughout the 1980s, the smaller concentrate producers were increasingly squeezed by Coke and Pepsi. As their shelf-space declined, small brands were shuffled from one owner to another. Over five years, Dr Pepper was sold (all and in part) several times, Canada Dry twice, Sunkist once, Shasta once, and AW Brands once. Some of the deals were made by food companies, but several were leveraged buyouts by investment firms. Philip Morris acquired Seven-Up in 1978 for a big premium, but despite superior brand rankings and established distribution channels, racked up huge losses in the early 1980s and exited in 1985. (Exhibit 8a shows the brand performance of top companies, as ranked by retailers. ) In the 1990s, through a series of strategic acquisitions, Cadbury Schweppes emerged as the clear (albeit distant) third-largest concentrate producer, snapping up the Dr Pepper/Seven-Up Companies (1995) and Snapple Beverage Group (2000). (Appendix A describes Cadbury Schweppes’ operations and financial performance. ) Bottler Consolidation and Spin-Off Do Relations between Coke and its franchised bottlers had been strained since the contract renegotiation of 1978. Coke struggled to persuade bottlers to cooperate in marketing and promotion programs, upgrade plant and equipment, and support new product launches. 8 The cola wars had particularly weakened small independent franchised bottlers. High advertising spending, product and packaging proliferation, and widespread retail price discounting raised capital requirements for bottlers, while lowering their margins. Many bottlers that had been owned by one family for several generations no longer had the resources or the commitment to be competitive. At a July 1980 dinner with Coke’s fifteen largest domestic bottlers, Goizueta announced a plan to refranchise bottling operations. Coke began buying up poorly managed bottlers, infusing capital, 6 The Wall Street Journal, April 24, 1986. 17 Timothy Muris, David Scheffman, and Pablo Spiller, Strategy, Structure, and Antitrust in the Carbonated Soft Drink Industry. (Quorum Books, 1993), p. 73. 18 Greising, p. 88. 9 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 and quickly reselling them to better-performing bottlers. Refranchising allowed Coke’s larger bottlers to expand outside their traditionally exclusive geographic territories. When two of its largest bottling companies came up for sale in 1985, Coke moved swiftly to buy them for $2. 4 billion, preempting outside financial bidders. Together with other bottlers that Coke had recently bought, these acquisitions placed one-third of Coca-Cola’s volume in company-owned bottlers. In 1986, Coke began to replace its 1978 franchise agreement with the Master Bottler Contract that afforded Coke much greater freedom to change concentrate price. tC Coke’s bottler acquisitions had increased its long-term debt to approximately $1 billion. In 1986, on the initiative of Doug Ivester, who later became CEO, the company created an independent bottling subsidiary, Coca-Cola Enterprises (CCE), and sold 51% of its shares to the public, while retaining the rest. The minority equity position enabled Coke to separate its financial statements from CCE. As Coke’s first so-called â€Å"anchor bottler,† CCE consolidated small territories into larger regions, renegotiated with suppliers and retailers, merged redundant distribution and material purchasing, and cut its work force by 20%. CCE moved towards mega-facilities, investing in 50 million-case production lines with high levels of automation. Coke continued to acquire independent franchised bottlers and sell them to CCE. 19 â€Å"We became an investment banking firm specializing in bottler deals,† reflected Don Keough. In 1997 alone, Coke put together more than $7 billion in deals involving bottlers. 20 By 2000, CCE was Coke’s largest bottler with annual sales of more than $14. 7 billion, handling 70% of Coke’s North American volume. Some industry observers questioned Coke’s accounting practice, as Coke retained substantial managerial influence in its arguably independent anchor bottler. 21 No In the late 1980s, Pepsi also acquired MEI Bottling for $591 million, Grand Metropolitan’s bottling operations for $705 million, and General Cinema’s bottling operations for $1. 8 billion. The number of Pepsi bottlers decreased from more than 400 in the mid-1980s to less than 200 in the mid-1990s. Pepsi owned about half of these bottling operations outright and held equity positions in most of the rest. Experience in the snack food and restaurant businesses boosted Pepsi’s confidence in its ability to manage the bottling business. In the late 1990s, Pepsi changed course and also adopted the anchor bottler model. In April 1999, the Pepsi Bottling Group (PBG) went public, with Pepsi retaining a 35% equity stake. By 2000, PBG produced 55% of PepsiCo beverages in North America and 32% worldwide. As Craig Weatherup, PBG’s chairman/CEO, explained, â€Å"Our success is interdependent, with PepsiCo the keeper of the brands and PBG the keeper of the marketplace. In that regard, we’re joined at the hip. †22 Do The bottler consolidation of the 1990s made smaller concentrate producers increasingly dependent on the Pepsi and Coke bottling network to distribute their products. In response, Cadbury Schweppes in 1998 bought and merged two large U. S. bottlers to form its own bottler. In 2000, Coke’s bottling system was the most consolidated, with its top 10 bottlers producing 94% of domestic volume. Pepsi’s and Cadbury Schweppes’ top 10 bottlers produced 85% and 71% of the domestic volume of their respective franchisors. 19 Greising, p. 292. 20 Beverage Industry, January 1999, p. 17. 21 Albert Meyer and Dwight Owsen, â€Å"Coca-Cola’s Accounting,† Accounting Today, September 28, 1998 22 Kent Steinriede, â€Å"PBG Charts Its Own Course,† Beverage Industry, May 1, 1999. 10 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Adapting to the Times 702-442 op y Cola Wars Continue: Coke and Pepsi in the Twenty-First Century In the late 1990s, a variety of problems began to emerge for the soft drink industry as a whole. Although Americans still drank more CSDs than any other beverage, U. S. sales volume registered only a 0. 2% increase in 2000, to just under 10 billion cases (a case was equivalent to 24 eight-ounce containers, or 192 ounces). This slow growth was in contrast to the 5%-7% annual growth in the United States during the 1980s. Concurrently, financial crisis in various parts of the world left Coke and Pepsi bottlers over-invested and under-utilized. tC Coca-Cola was also impacted by difficulties in leadership transition. After the death of the popular CEO Roberto Goizueta in 1997, his successor Douglas Ivestor had two rocky years at the helm, during which Coke faced a high-profile race discrimination suit and a European public relations scandal after hundreds of people became ill from contaminated soft drinks. Douglas Daft assumed leadership in April 2000; one of his first moves was to lay off 5,200 employees, or 20% of worldwide staff. While expressing â€Å"enthusiastic support for the current strategic course of the Company under Doug Daft’s leadership,† Coke’s Board voted against Daft’s eleventh-hour negotiations to acquire Quaker Oats in November 2000. As they had numerous times over the last century, analysts predicted the end of Coke and Pepsi’s stellar growth and profitability. Meanwhile, Coke and Pepsi turned their attention to bolstering domestic markets, diversifying into non-carbonated beverages (non-carbs), and cultivating international markets. Balancing Market Growth, Market Share, and Profitability in the United States No During the early 1990s, Coca-Cola and PepsiCo bottlers employed a low-price strategy in the supermarket channel in order to compete more effectively with high-quality, low-price store brands. As the threat of the low-priced brands lessened, CCE responded in March 1999 with its first major price increase at the retail level after 20 years of flat take-home pricing. Its strategy was to reposition Coke Classic as a premium brand. PBG followed that price increase shortly after. Price wars had driven soda prices down to the point where bottlers couldn’t get a decent return on supermarket sales,† explained a Pepsi executive. 23 Observed one industry analyst, â€Å"Coke’s growth is coming internationally, and Pepsi’s is coming from Frito-Lay. It is in the companies’ mutual best interest not to destroy the domestic market and eat up each other’s share. † 24 Consume rs’ initial reaction to price increases was a reduction in supermarket purchases. When CCE raised prices in supermarkets by 6. 0%-8. 0% in both 1999 and 2000, comparable volumes in North America declined each year (1. % in 1999 and 0. 8% in 2000). In 2001, however, the bottling companies effected more moderate price increases and consumer demand appeared to be on the upswing. Do Both Coke and Pepsi also set about to boost the flagging cola market in other ways, including exclusive marketing agreements with Britney Spears (Pepsi) and Harry Potter (Coke). Pepsi reintroduced the highly effective â€Å"Pepsi Challenge,† which was designed to boost overall cola sales and draw consumers away from private labels as much as it was to plug Pepsi over Coke. In contrast to the supermarket channel, Coke and Pepsi’s rivalry in the fountain channel intensified in the late 1990s. To penetrate Coke’s stronghold, Pepsi aggressively pursued national 23 Lauren R. Rublin, â€Å"Chipping Away: Coca-Cola Could Learn a Thing or Two from the Renaissance at PepsiCo,† Barron’s, June 12, 2000. 24 Rublin. 11 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 accounts, forcing Coke to make costly concessions to retain its biggest customers. Pepsi broke Coke’s stronghold at Disney with a 1998 contract to supply soft drinks at the new DisneyQuest, Club Disney and ESPN Zone chains. After a heated bidding war in 1999 over the 10,000-store chain of Burger King Corporation, Coke again won the fountain contract involving $220 million per year for 40 million gallons of syrup soda, but only after agreeing to double its $25 million in rebates to the food chain. Pepsi also sued Coke over access to the fountain market, charging Coke with â€Å"attempting to monopolize the market for fountain-dispensed soft drinks through independent foodservice distributors throughout the United States. Coke persuaded a Federal court to dismiss the suit in 2000. Despite Pepsi’s efforts, at the end of 2000, Coke still dominated the fountain market with 65% share of national â€Å"pouring rights† to Pepsi’s 21% and Dr Pepper/Seven Up’s 14%. tC The Rise of Non-Cola Beverages As consumer trends shifted from diet soda , to lemon-lime, to tea-based drinks, to other popular non-carbs, Coke and Pepsi vigorously expanded their brand portfolios. Each new product was accompanied by debate on how much each company should stray from its core product: regular cola. On one hand, cola sales consistently dwarfed alternative beverages sales, and cola-defenders expressed concern that over-enthusiastic expansion would distract the company from its flagship product. Also, history had shown that explosions in demand for alternative drinks were regularly followed by slow or negative growth. On the other hand, as domestic cola demand appeared to plateau, alternative beverages could provide a growth engine for the firms. No By the late 1990s, the soft drink industry had seen various alternative beverage categories come and go. From double-digit expansion in the late 1980s, diet CSDs peaked in 1991 at 29. 8% of the CSD segment and then declined to their 1988-level share of 24. 4% in 1999. PepsiCo’s introduction of Pepsi One in late 1998 was partially responsible for the minor recovery of the diet drink segment. Flavored soft drinks such as citrus, lemon-lime, pepper, and root beer were also popular. In 1999, Mountain Dew grew faster than any other CSD brand for the third year in a row, posting 6. 0% volume growth, but in 2000, its growth slowed to 1. 5% due to competing â€Å"new-age† non-carbs. Do At the turn of this century, CSDs accounted for 41. 3% of total non-alcoholic beverage consumption, bottled water accounted for 10. 3%, and other non-carbs accounted for the remainder. 25 When measured in gallons, sales of non-carbs rose by 18% in 1995 and 5% in 2000, compared to 3% and 0. 2% respectively for CSDs. The drinks with high growth and high hype were non-carbs such as juices/juice drinks, sports drinks, tea-based drinks, dairy-based drinks—and especially bottled water. In the 1990s, the bottled water industry grew on average 8. 3% per year, and volume reached more than 5 billion gallons in 2000. Revenue growth outpaced volume growth, with a 9. 3% increase to approximately $5. 6 billion, and per capita consumption gained 5. 1 gallons to 13. 2 gallons per person. Pepsi’s Aquafina went national in 1998. Coke followed in 1999 with Dasani. Though Pepsi and Coke sold reverse-osmosis purified water instead of spring water, they had a distribution advantage over competing water brands. 26 Coke and Pepsi launched other new drinks throughout the 1990s. They also aggressively acquired brands that rounded out their portfolios, including Tropicana (Pepsi, 1998), Gatorade (Pepsi, 5 Maxwell. Does not include â€Å"tap water / hybrids / all others† category. 26 Reverse osmosis is a method of producing pure water by forcing saline or impure water through a semi-permeable membrane across which salts or impurities cannot pass. 12 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. 702-442 op y Cola Wars Continue: Coke and Pepsi in t he Twenty-First Century 2000), and SoBe (Pepsi, 2000). Both companies predicted that future increases in market share would come from beverages other than CSDs. Pepsi pronounced itself a â€Å"total beverage company,† and Coca-Cola appeared to be moving in the same direction, recasting its performance metric from share of the soda market to â€Å"share of stomach. † â€Å"If Americans want to drink tap water, we want it to be Pepsi tap water,† said Pepsi’s vice-president for new business, describing the philosophy behind the new strategy. 27 Coke’s Goizueta had echoed the same view: â€Å"Sometimes I think we even compete with soup. †28 Though cola remained the clear leader in terms of both companies’ volume sales, both Coke and Pepsi relied heavily on non-carbs to stimulate their overall growth in the late 1990s. In 1999, non-carbs accounted for 80% of Pepsi’s and more than 100% of Coke’s growth. 29 tC At the turn of the century, Pepsi had the lion’s share of non-CSD sales. Pepsi led Coke by a wide margin in 2000 volume sales in three key segments: Gatorade (76%) led PowerAde (15%) in the $2. 6billion sports drinks segment, Lipton (38%) led Nestea (27%) in the $3. 5-billion tea-based drinks segment, and Aquafina (13%) led Dasani (8%) in the $6. 0-billion bottled water segment. 30 Including multi-serve juices, Tropicana held an approximate 44% share of the $3-billion chilled orange juice market, more than twice that of Minute Maid. 1 With the acquisition of Quaker and South Beach Beverages, Pepsi raised its non-carb market share to 31%, to Coke’s 19% (see Exhibit 8b). No Non-CSD beverages complicated Coke’s and Pepsi’s traditional production and distribution processes. While bottlers could easily manage some types of alternative beverages (e. g. , cold -filled Lipton Brisk), other types required costly new equipment and changes in production, warehousing, and distribution practices (e. g. , hot-filled Lipton Iced Tea). In many cases, Coke and Pepsi paid more than half the cost of these investments. The few bottlers that invested in these capabilities either purchased concentrate or other additives from Coke and Pepsi (e. g. , Dasani’s mineral packet) or compensated the franchiser through per-unit royalty fees (e. g. , Aquafina). Most bottlers, however, did not invest in hot-fill (for some iced tea), reverse-osmosis (for some bottled water), or other specialized equipment, and instead bought their finished product from a central regional plant or one owned directly by Coca-Cola or PepsiCo. They would then distribute these alongside their own bottled products at a percentage mark-up. More split pallets32 led to slightly higher labor costs, but otherwise did not significantly affect distribution practices. Despite these complicated and evolving arrangements, higher retail prices for alternative beverages meant that margins for the franchiser, bottler, and distributor were consistently higher than on CSDs. Internationalizing the Cola Wars Do As domestic demand appeared to plateau, Coke and Pepsi increasingly looked overseas for new growth. Throughout the 1990s, new access to markets in China, India, and Eastern Europe stimulated some of the most intense battles of the cola wars. In many international markets, per capita consumption levels remained a fraction of those in the United States. For example, while the 27 Marcy Magiera, â€Å"Pepsi Moving Fast To Get Beyond Colas,† Advertising Age, July 5, 1993. 28 Greising, p. 233. 29 Bonnie Herzog, â€Å"PepsiCo, Inc. : The Joy of Growth,† Credit Suisse First Boston Corporation, September 8, 2000. 30 Maxwell, p. 152-3. 31 Betsy McKay, â€Å"Juiced Up: Pepsi Edges Past Coke, and It has Nothing to Do With Cola,† The Wall Street Journal, November 6, 2000. 32 Pallets are hard beds, usually of wood, used to organize, store, and transport products. A split pallet carries more than one product type. 13 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Cola Wars Continue: Coke and Pepsi in the Twenty-First Century op y 702-442 average American drank 874 eight-ounce cans of CSDs in 1999, the average Chinese drank 22. In 1999, Coke held a world market share of 53%, compared to Pepsi’s 21% and Cadbury Schweppes’ 6%. Among major overseas markets, Coke dominated in Western Europe and much of Latin America, while Pepsi had marked presence in the Middle East and Southeast Asia (see Exhibit 9). C By the end of World War II, Coca-Cola was the largest international producer of soft drinks. Coke steadily expanded its overseas operations in the 1950s, and the name Coca-Cola soon became a synonym for American culture. Coke built brand presence in developing markets where soft drink consumption was low but potential was large, such as Indonesia: With 200 million inhabitants, a med ian age of 18, and per capita consumption of 9 eight-ounce cans of soda a year, one Coke executive noted that â€Å"they sit squarely on the equator and everybody’s young. It’s soft drink heaven. 33 By the early 1990s, Coke’s CEO Roberto Goizueta said, â€Å"Coca-Cola used to be an American company with a large international business. Now we are a large international company with a sizable American business. †34 No Following Coke, Pepsi entered Europe soon after World War II, and—benefiting from Arab and Soviet exclusion of Coke—into the Middle East and Soviet bloc in the early 1970s. However, Pepsi put less emphasis on its international operations during the subsequent decade. In 1980, international sales accounted for 62% of Coke’s soft drink volume, versus 20% for Pepsi. Pepsi rejoined the international battles in the late 1980s, realizing that many of its foreign bottling operations were inefficiently run and â€Å"woefully uncompetitive. †35 In the early 1990s, Pepsi utilized a niche strategy which targeted geographic areas where per capitas were relatively established and the markets presented high volume and profit opportunities. These were often â€Å"Coke fortresses,† and Pepsi put its guerilla tactics to work, noting that â€Å"as big as Coca-Cola is, you certainly don’t want a shootout at high noon,† said Wayne Calloway, then CEO of PepsiCo. 6 Coke struck back; in one high-profile coup in 1996, Pepsi’s longtime bottler in Venezuela defected to Coke, temporarily reducing Pepsi’s 80% share of the cola market to nearly nothing overnight. In the late 1990s, Pepsi moved even further away from head-to-head competition and instead concentrated on emerging markets that were still up for grabs. â€Å"We kept beating our heads in markets that Coke won 20 years ago,† explained Calloway’s successor, Roger Enrico. â€Å"That is a very difficult proposition. 37 In 1999, PepsiCo’s bottler sales were up 5% internationally and its operating profit from overseas was up 37%. Market share gains were reported in most of Pepsi-Cola International’s top 25 markets, including increases of 10% in India, 16% in China, and more than 100% in Russia. By 2000, international sales accounted for 62% of Coke’s and 9% of Pepsi’s revenues. Do Concentrate producers encountered various obstacles in international operations, including cultural differences, political instability, regulations, price controls, advertising restrictions, foreign exchange controls, and lack of infrastructure. When Coke attempted to acquire Cadbury Schweppes’ international practice, for example, it ran into regulatory roadblocks in Europe and in Mexico and Australia, where Coke’s market shares exceed 50%. On the other hand, Japanese domestic-protection price controls in the 1950s greased the skids for Coke’s high concentrate prices and high profitability, and in India, mandatory certification for bottled drinking water caused several local brands to fold. 33 John Huey, â€Å"The World’s Best Brand,† Fortune, May 31, 1993. 34John Huey, â€Å"The World’s Best Brand,† Fortune, May 31, 1993. 5 Larry Jabbonsky, â€Å"Room to Run,† Beverage World, August 1993. 36The Wall Street Journal, June 13, 1991. 37 John Byrne, â€Å"PepsiCo’s New Formula: How Roger Enrico is Remaking the Company†¦ and Himself,† BusinessWeek, April 10, 2000. 14 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617- 783-7860. 702-442 op y Cola Wars Continue: Coke and Pepsi in the Twenty-First Century To cope with immature distribution networks, Coke and Pepsi created their own ground-up, and often novel, systems. Coke introduced vending machines to Japan, a channel that eventually accounted for more than half of Coke’s Japanese sales. 38 In India, Pepsi found the most prominent businessman in town and gave him exclusive distribution rights, tapping his connections to drive growth. Significantly, both Coke and Pepsi recognized local-market demands for non-cola products. In 2000, Coke carried more than 200 brands in Japan alone, most of which were teas, coffees, juices, and flavored water. In Brazil, Coke offered two brands of guarana, a popular caffeinated carbonated berry drink accounting for one-quarter of that country’s CSD sales, despite rivals’ TV ads ridiculing â€Å"gringo guarana. † tC When the economy foundered in certain parts of the world during the late 1990s, annual consumption declined in many regions. Major financial quakes in East Asia in 1997, Russia in 1998 and Brazil in 1999 shook the cola giants, who had invested heavily in bottler infrastructure. From 1995 to 2000, Coke’s top line slowed to an average annual growth of less than 3%. Profits actually fell from $3. 0 billion in 1995 to $2. 2 billion in 2000. In Russia, where Coke invested more than $700 million from 1991 to 1999, the collapse of the economy caused sales to drop by as much as 60% and left Coke’s seven bottling plants operating at 50% capacity. In Brazil, its third-largest market, Coke lost more than 10% of its 54% market share to low-cost local drinks produced by family-owned bottlers exempt from that country’s punitive soft-drink taxes. In 1998, Coke estimated that a strong dollar cut into net sales by 9%. Pepsi, with its relatively lower overseas presence, was less affected by the crises. Nonetheless, Pepsi also subsidized its bottlers while experiencing a drop in sales. No Despite these financial setbacks, both Coke and Pepsi expressed confidence in the future growth of international consumption and used the downturn as an opportunity to snatch up bottlers, distribution, and even rival brands. To increase sales, they tried to make their products more affordable through measures such as refundable glass packaging (instead of plastic) and cheaper 6. ounce bottles. The End of an Era? At the turn of the century, growth of cola sales in the United States appeared to have plateaued. Coke and Pepsi were investing hundreds of millions of dollars to shore up international bottlers operating at low capacity. The companies’ overall growth in soft drink sales were falling short of precedent and of investors’ expectations. Was the fundamental nature of the cola wars changing? Would the parameters of this new rivalry include reduced profitability and stagnant growth— inconceivable under the old form of rivalry? Do Or, were the troubles of the late 1990s just another step in the evolution of two of America’s most successful companies? In 2001, non-cola, non-carbs, and even convenience foods offered diversification and growth potential. Low international per capita soft drink consumption figures hinted at tremendous opportunity in the competition for worldwide â€Å"throat share. † Noted a Coke executive in 2000, â€Å"the cola wars are going to be played now across a lot of different battlefields. †39 38 June Preston, â€Å"Things May Go Better for Coke amid Asia Crisis, Singapore Bottler Says,† Journal of Commerce, June 29, 1998, . A3. 39 Betsy McKay, â€Å"Juiced Up: Pepsi Edges Past Coke, and It has Nothing to Do With Cola,† The Wall Street Journal, November 6, 2000. 15 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. Do Exhibit 1 702-442 Copying or posting is an infringement of copyright. Permissions@hbsp. harvard. edu or 617-783-7860. No U. S. Industry Consumption Statistics 1970 1975 1981 1985 1990 1992 1994 1995 1996 1998 1999 2000 Historical Carbonated Soft Drink Consumption Cases (millions) Gallons/capita As a % of total beverage consumption 3,090 22. 7 2. 4 3,780 26. 3 14. 4 5,180 34. 2 18. 7 6,500 40. 3 22. 4 7,914 46. 9 26. 1 8,160 47. 2 26. 3 8,608 50. 0 27. 2 8,952 50. 9 28. 1 9,489 52. 0 28. 8 9,880 54. 0 30. 0 9,930 53. 6 29. 4 9,950 53. 0 29. 0 22. 7 22. 8 18. 5 35. 7 6. 5 5. 2 1. 3 1. 8 26. 3 21. 8 21. 6 33 1. 2 6. 8 7. 3 4. 8 1. 7 2 34. 2 20. 6 24. 3 27. 2 2. 7 6. 9 7. 3 6 2. 1 2 40. 3 24. 0 25. 0 26. 9 4. 5 7. 8 7. 3 6. 2 2. 4 1. 8 46. 9 24. 3 24. 2 26. 2 8. 1 8. 8 7. 0 5. 4 2. 0 1. 5 47. 2 23. 3 23. 8 26. 5 8. 2 9. 1 6. 8 5. 4 2. 0 0. 6 1. 4 50. 0 22. 8 23. 2 23. 3 9. 6 9. 4 7. 1 4. 8 1. 7 0. 9 1. 3 50. 9 22. 3 22. 8 1. 3 10. 1 9. 5 6. 8 4. 9 1. 8 1. 1 1. 2 52. 0 22. 3 22. 7 20. 2 11. 0 9. 7 6. 9 4. 8 1. 8 1. 1 1. 2 54. 0 22. 1 22. 0 18. 0 11. 8 10. 0 6. 9 4. 7 2. 0 1. 3 1. 3 53. 6 22. 2 21. 9 17. 2 12. 6 10. 2 7. 0 4. 6 2. 0 1. 4 1. 3 53. 0 22. 2 21. 7 16. 8 13. 2 10. 4 7. 0 4. 6 2. 0 1. 5 1. 2 114. 5 126. 5 133. 3 146. 2 154. 4 154. 3 154. 0 152. 6 153. 6 154. 1 153. 8 153. 6 68 56 49. 2 36. 3 28. 1 28. 2 28. 5 29. 9 28. 9 28. 4 28. 7 28. 9 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 182. 5 U. S. Liquid Consumption Trends (gallons/capita) Carbonated soft drinks Beer Milk Coffeea Bottled Waterb Juices Teaa Powdered drinks Wine Sports Drinksc Distilled spirits Subtotal Tap water/hybrids/all others Totald tC opy Source: John C. Maxwell, Beverage Digest Fact Book 2001, and The Maxwell Consumer Report, Feb. 3, 1994; Adams Liquor Handbook, casewriter estimates. aFrom 1985, coffee and tea data are based on a three-year moving average to counter-balance inventory swings, thereby portraying consumption more realistically. bBottled water includes all packages, single-serve, and bulk. cSports drinks included in â€Å"Tap water/hybids/all others† pre-1992. This analysis assumes that each person consumes on average one-half gallon of liquid per day. -16- Cola Wars Continue: Coke and Pepsi in the Twenty-First Century Advertisement Spending for the Top 10 CSD Brands ($ millions) op y Exhibit 2 Share of market 2000 Total market 20. 4 13. 6 8. 7 7. 2 6. 6 6. 3 5. 3 2. 0 1. 7 1. 1 1999 20. 3 13. 8 8. 5 7. 1 6. 8 3. 6 5. 1 2. 1 1. 8 1. 1 Advertisement Spendinga per 2000 2000 1999 share point 207. 3 130. 0 1. 2 50. 5 84. 0 83. 6 0. 5 44. 5 NA 2. 7 148. 9 91. 1 25. 5 37. 1 68. 4 71. 3 0. 8 39. 2 NA 2. 9 tC Coke Classic Pepsi-Cola Diet Coke Mountain Dew Sprite Dr Pepper Diet Pepsi 7UP Caffeine Free Diet Coke Barq’s root beer Total top 10 702-442 72. 9 72. 9 10. 2 9. 6 0. 1 7. 0 12. 7 13. 3 0. 1 22. 3 NA 2. 4 604. 2 485. 2 8. 3 707. 6 650. 0 NA Source: â€Å"Top 10 Soft-Drink Brands,† Advertising Age, September 24, 2001; casewriter estimates. aAdvertisement spending measured in 11 media channels from CMR. Brands and total market in 192-oz cases from Do No Beverage Digest/Maxwell. Case volume from all channels. 17 Copying or posting is an infringement of copyright. Permissions@hbsp. arvard. edu or 617-783-7860. 702-442 Cola Wars Continue: Coke and Pepsi in the Twenty-First Century U. S. Soft Drink Market Share by Case Volume (percent) 1966 op y Exhibit 3 1970 1975 1980 1985 1990 1995 1998 2000E 27. 7 1. 5 1. 4 2. 8 33. 4 28. 4 1. 8 1. 3 3. 2 34. 7 26. 2 2. 6 2. 6 3. 9 35. 3 2

Marketing individual assinment Essay Example | Topics and Well Written Essays - 1500 words

Marketing individual assinment - Essay Example From a scan of various internet and other sources, the worldwide toothpaste industry is comprised by thousands of formulations and hundreds of brands. According to Oligopoly Watch, in the year 2000, the toothpaste industry in the U.S. alone was worth USD 1.3 billion with two leading brands owning sixty percent of the market. As in most industries, the toothpaste industry necessarily conducts market segmentation activities in order to provide focus for production, sales and marketing programs that will target specific market segments. Market segmentation helps ensure high returns for production, marketing and sales expenditures. The process of market segmentation identifies parts or portions of the market that can be differentiated from one another. Within a segment, members are supposed to have the same characteristics, which are different from the characteristics of members in other segments. With the identification of these characteristics, marketers are able to better satisfy the needs of prospective customers. Since different customers may have different needs, it is not always possible to satisfy all customers by treating them in the same way (NetMBA 2007). As part of the bigger oral care business, the toothpaste industry segments the market both in terms of mass marketing and target marketing. Simplified formulations are marketed as regular, as against special, toothpaste to serve the mass market, treating the market as a homogenous group which appreciates anyway, a teeth cleaning paste. This is the reason why almost all brands have a 'regular' formulation. Through mass marketing, economies of scale are realized because products which appeal to a mass market results in savings from mass production, mass distribution and mass communication (NetMBA 2007). Toothpaste manufacturers also employ target marketing, which is the reason for the wide variety of formulations for the products they carry. They recognize the diversity of customers and do not need to please everybody with the same offering. Consumer markets are segmented according to geographic, demographic, psychographic, and behavioral characteristics of consumers. Some geographic variables are region, continent, country, state, neighborhood, size of metropolitan area, population density, climate and other variables (NetMBA 2007). Toothpaste manufacturers with international operations use geographic segmentation in developing formulations with local appeal as well as marketing and sales programs that will be appreciated by the target segment. In 2000, although Colgate was the market leader in India, it faced stiff competition from Hindustan Unilever and low-priced regional competitors like Anchor Healthcare and Ajanta India. To combat their low-priced competitors, Colgate revita lized its Colgate-Cibaca brand and Hindustan Unilever, its Aim brand. Colgate-Cibaca, which is not a brand that is marketed internationally, effectively garnered the top position in the low-price segment in India (Comstrat 2006). Demographic segmentation variables include age, gender, family size, family lifecycle, generation, income, occupation, education, ethnicity, nationality, religion, social class (NetMBA 2007). In terms of

The Waldorf Property Essay Example | Topics and Well Written Essays - 1000 words

The Waldorf Property - Essay Example The strands are then hardened using cold air and then passed through the draw twister which reduces the diameter of the strands making them resistance to break. The strands are finally packed by hand in a special container. The problem faced by the firm include the breakdown of the draw twisting machine that can only be allocated 1,000 hours and this means that it can only produce only a third of its capacity, the other problem is that the competitor need to be informed about the hire of the spinning machine as soon as possible. The other problem is that there is need to allocate more spinning hours to denier 44/10sd due to its increasing demand. Finally the marketing department fore see an increase in the price for denier 84/21fd by 25% The industry seem to have idle capacity as indicated by the possibility of hiring a spinning machine, the price of the products they produce also seem to fluctuate by a large margin especially the denier 15/1g. The industry is a perfect competitive market in that prices are determined by demand and supply this is evident in the memorandum by the assistance manager to increase production of 44/10sd due to increasing demand for the product. The company makes decisions at the beginni... If we are to compare the two deniers the 15/1g denier is more profitable than the 84/21fd denier, this can be mathematically proven by the Aprils production as follows 15/1g 84/21fd Production in kgs 4,200 9,600 Variable cost 88 74 Total cost 369600 710400 Market price 178 124 Total revenue 747600 1,190400 Profit 378000 480000 Profit per kg 90 50 Possible Decision Alternatives: The company should hire the excess capacity for the spinning stage, this will ensure that the right quantities of its products are produced, and there should also be an increase in the production of 84/21fd denier whose price is expected to rise and also in the production of the denier 44/10sd. Evaluation of alternatives: If the company produces more of denier 84/21 which is less profitable, it may not maximize its profits, the reason being this denier spends more time in the draw twisting machine, this is seen where only 12kgs of the 84/21fd are produced per hour in the draw twisting machine as compared to 15 kgs of 15/1g produced per hour, therefore by producing more of the 84/21fd will minimize profits in that this denier is less

The Way to Wealth Benjamin Franklin Essay Example | Topics and Well Written Essays - 1250 words

The Way to Wealth Benjamin Franklin - Essay Example To gain diligence, a student requires undivided attention in class and participation in group works. It is possible to reinforce diligence through readings in articles, journals and other books. A knowledgeable student possesses a large scope of understanding in the electrical concepts. Diligence allows making inferences where concepts are not well understood. Participation in class discussions should be encouraged so that students get to share views and wealth of their understanding of concepts in electricity. To gain diligence is a factor of effort by an individual. With proper understanding of electricity, a student becomes empowered to avoid accidents. The student gets to learn what to do and what to rephrase from doing in an electrical accident. People become empowered to work with electrical cables conducting high voltage due to a good understanding of electricity. Experts in the field lack tension regardless of the danger they expose themselves (Adams 18). Another aphorism inf orms the reader to do today, what he plans to do tomorrow. This indicates the need for research. To keep in pace with the demands of the current world, an electrician cannot be left behind in designing user friendly interphones in the field. It is only through research that safe methods of handling electricity can be developed. Electricity forms the driving force of many economies and gains application in many homesteads all over the world. Through research, ways of application can be reviewed, or new ways developed. New ways of generating electricity can be discovered through extensive research. It is through research that electricity can now be generated from wave tides, wind and biogas. Efficient ways of application and perhaps generation can be developed through research. With the global warming challenge, many rivers used for hydro-power generation are receding. The amounts of Kilowatts diminish continually. Nuclear generation has its share or challenges in disposal of radioact ive matter and the impact on the environment. All fields are facing various challenges prompting aggressive research to be able to sustain the world while taking care of the environment. Through research, the foreseeable problems can be solved and avoided (Hill 592). ‘A little neglect may bring enormous mischief.’ In this aphorism, the writer sought to caution against lack of attention to details. Most electrical accidents happen due to neglect. Installers leave loose live wires hanging around or bare sockets. These become lethal in the homesteads. Fires and electrocution form examples of mischief caused by neglect. Good workmanship should be encouraged to the students. This can be instilled through practical sessions to establish how keen a student remains. Electrical work is sometimes tedious and uninteresting; this may cause a person to overlook basic faults which might later develop into disastrous mistakes. Students usually lack the necessary attention while perfor ming duties. When designing a factory, for instance, careful calculations are involved. If the calculations used are wrong, installations might fail or even blow. Huge losses would be incurred due to small mistakes in calculations. This also calls for discipline and decent work ethics. Imagine the damage that would occur in the ICU unit of a referral hospital due to the negligence of an electrician. Expensive equipment would be destroyed and lives lost. Taking of shortcuts must be

(the topic of your choice) Essay Example | Topics and Well Written Essays - 750 words

(the topic of your choice) - Essay Example This is a complex term which takes on a variety of implications, but can be most accurately understood as a story blending magical elements with an otherwise realistic narrative. Through an examination of Marquez’ ‘A Very Old Man with Enormous Wings,’ this essay contextualizes this understanding of magic realism. One recognizes that Marquez fuses magical and realistic elements into this text from the very opening sections. In this way, Marquez begins the narrative through a number of realistic descriptive patterns, before implementing a magical element in his description of the old man. In this way Marquez writes, â€Å"He had to go very close to see that it was an old man, a very old man, lying face down in the mud, who, in spite of his tremendous efforts, couldn't get up, impeded by his enormous wings† (Marquez). In this way, Marquez situates an element of magical realism at the story’s very core through the characterization of the titular characte r. A notable aspect of the old man is the way that the other characters interact with this man. Marquez indicates that at first they express astonishment at his condition, but then come to feel comfortable around him. Rather than simply recognizing the man as an individual with wings, they attempt to use their best worldly reasoning to make sense of the situation. As such, the man is determined to be an angel. It seems then that an aspect of magical realism is that the magical elements retain a slight dissonance from the realistic perspectives of the rest of the narrative. As the story progresses, Marquez seamlessly interweaves other magical realist elements into the plot. It is not long before a carnival emerges wherein on-lookers revel at the man. During this period, a man with bat wings flies overhead, but nobody pays attention to him because he does not have angel wings. Later in the story, a woman who has changed into a spider appears. Because of the tragic components of this w oman’s story, as well as her cheaper admission price, she quickly dwarfs the old man in terms of attention. In this instance, Marquez is making a further ironic statement on the nature of the magical elements; namely, it is the shock of the new that has intrigued the crowd, not so much the ‘magical’ component itself. Again, one witnesses that while the magic element is a major aspect of this literary technique, it is the realistic reaction to these magical elements which more fully encapsulates the use of magical realism as a literary technique. Another aspect of magical realism appears to be the gradual integration of the magical element into the real world. In terms of the old man, this is witnessed as he becomes accepted by Pelayo and Elisenda. This acceptance then is extended to the villagers, as they tire of his act. Finally, Marquez depicts the man as physiologically integrating into the fabric of human existence. Referring to the doctor’s perception of the man’s wings, Marquez writes, â€Å"They seemed so natural on that completely human organism that he couldn't understand why other men didn't have them too† (Marquez). In this section, Marquez additionally describes the old man in human terms, with the dragging of the wing’s potentially representing a metaphor of the old man’s life. While the angel flies away at the end, it seems that this can be a further metaphor on death. In conclusion, this essay has examined Gabriel Garcia Marquez ‘

Three Newspaper Eras Essay Example | Topics and Well Written Essays - 750 words

Three Newspaper Eras - Essay Example 27). Innovations in printing, combined with the interest that was generated by current events, created increased readership and a need for more consistent reporting. According to Dietrich (2010), the political events that surrounded the American Revolution changed the nature of the newspaper industry. Until this time, newspapers consisted primarily of notices of events and advertisements. However, with the interest that was generated in the politics of the colonies versus the British government, reporting began to arise in which the political events were related in story form. Stories of the war began to be printed for the public that was greatly interested in what was occurring. The period from the end of the American Revolutionary War until the 1850’s saw a rise in partisan writing as the partisan press era dominated the newspaper industry. They battles between the Federalists and the Anti-Federalists were fought within the press as positions were declared and sides were taken. However, during the 1850’s the newspaper industry found it could increase its circulation by creating pieces that were more unbiased than within partisan based writings. The objective of increased readership to promote profit provided for newspaper writing that no longer took a political stand, but reported Freedoms Journal was the first African American newspaper. It was first published in 1827 and was followed by as many as forty other African American publications. The North Star, a publication begun by Fredrick Douglas in 1847, was dedicated to the cause of abolition. It was titled The North Star because the slaves who escaped captivity used the north star as a guiding light(LaRose & Straubhaar, 2009, p. 95). The first Native American Press was begun in 1828 with the Cherokee Phoenix which was put out in 1828. However, it was only a year later when the American government, founded on the principles of the Declaration of Independence which

Number and Apllication Essay Example | Topics and Well Written Essays - 1000 words

Number and Apllication - Essay Example For class 02/03, the mean of 48.5 means that most of the scores falls somewhere near 48.5. Lastly, for Data Set 3, the median was measured. Both of the classes had a median of 3. This means that the rating of 3 is the middle score when the scores are arranged from lowest to highest or vice versa. Range was the measure of variability for Data Set 1. Since both classes had a highest mark of 5 and a lowest mark of 1, they had the same value for the range. This means that the jobs that the students in the classes being studied took jobs that range from those signified by 1 until 5. For Data Set 2, the standard deviation was measured. For class 01/02, this was calculated to be 20.85 while for class 02/03, it was 21.17. Since Class 01/02 has a smaller S.D. than Class 02/03, this means that there is more variation in scores for the latter. Although both classes had scores that were very distinct, the lesser S.D. signifies less variation. In Data Set 3, the semi-inter quartile was measured. The results of the measure mean that the values of Class 01/02 are from the X-axis than those of Class 02/03. The value of the SIQ refers to half the range, between Q1 and Q3. The pie graphs for data set 1 makes evident that in class 01/02, there is no individual who took up a pre-university or summer job as a skilled or semi-skilled worker. ... The value of the SIQ refers to half the range, between Q1 and Q3. III.A. Charts Data Set 1 Data Set 2 Data Set 3 III.B. Interpretation The pie graphs for data set 1 makes evident that in class 01/02, there is no individual who took up a pre-university or summer job as a skilled or semi-skilled worker. It also shows that majority of the class worked as manual workers. For class 02/03, the pie chart shows that there is no occupation that may be considered as the majority since each of the 5 occupations receive almost the same share. For data set two, the line graphs show how the modular ratings of the students in each class progress. Although there is not particular ranking, the histogram shows that in both classes, there are sharp increases or decreases in the ratings of the students. This maybe related to the high S.D. that was computed for both classes. Lastly, the bar graphs for data set 3 reveal which evaluation rating has the highest frequency. It is evident in both classes that the rating of 3 is the most common rating that students give to the learning they have acquired in the module. Also, the graph for class 02/03 almost demonstrates a bell-shape curve or what we know as a normal distribution. III.C. Standard Error S.E. for class 01/02 = 1.220655562 S.E. for class 02/03 = 0.9 Overall S.E =

Nursing Case Review of 15 Year Old Girl Essay Example | Topics and Well Written Essays - 2000 words

Nursing Case Review of 15 Year Old Girl - Essay Example Based on this information sexual health is a very broad subject that include information relating to ones own body and how its works, knowledge of the physical, emotional and social changes that take place during puberty, pregnancy, youth and ageing. Further, it includes the precautionary measures that are aimed at protecting sexuality of yourself and others, and measures that can be put in place when the safety is broke in instances such as unplanned pregnancy, rape, or sexually transmitted diseases. In essence, it will also entail information relating to responding to children’s sexual exploitations and behaviours to the level of understanding and maintaining safe and happy adult relationships (HealthInsite, 2011). Adolescence and sexual changes Sexual health is a life long part of human beings that accompany them from conception, birth, childhood, adolescence to adolescence. Adolescence is a period of life that is marked with the greatest sexual changes within the body of a person. It is marked by rapid numerous hormonal changes that transform the body of a girl into that of a woman and a boy into man. Thus, it is a transition period between the childhood and adulthood. In this stage, the general calmness and peacefulness of childhood is replaced by a rush of biological sensations, emotions, feelings, social challenges, and interpersonal questions that were never there before (Newton 2010). These transformations make an individual to start relating with other individuals of the same and opposite sex in different new ways that may involve sexual contact and intercourse. Revelation of sexuality brings many joys and physical pleasures but may turnout to be a very risky and destructive human behaviour. Sexual health issues outcomes When an adolescent engage in sexual contact and intercourse many outcomes may arise, thus for our 15 years old girl the following outcomes were possible. First, there is possibility of conception, which leads to unplanned pregn ancy (Weiss, 2009). This was a very likely outcome since studies have shown that age of first sexual intercourse is an important determinant of pregnancy risk with 46% of teenage girls and 22% of teenage boys who engage in their first sexual experience before the age 15 years having been involved in a pregnancy (Ehiri, 2009, p378). This outcome can be even worse especially where two teenagers (like in this case of a 15-year-old girl having unprotected sex intercourse with her 19-year-old boyfriend) who just began their sexual activity experience. Considering that this girl and her teenage boy friend they had not used any contraceptive during the intercourse unplanned pregnancy could have resulted which would have made her not likely to complete school education, more likely to face limited career and economic opportunities, and less likely than older women to obtain timely prenatal and postnatal care (Ehiri, 2009, p378). Research further show that babies from teenage mothers are mor e likely to be preterm, have low birth weight, and also are at greater risk of serious and long-term illness, development delays and death in the first year of life (WHO 2006). This mainly because they may have many issues to contemplate before starting a family or may even lack any means of sustaining one (Cherry 2001). With the rapid hormonal

How are adults presented in Romeo and Juliet Essay Example for Free

How are adults presented in Romeo and Juliet Essay There is a large difference between youths and adults in Romeo and Juliet. The adults often make emotionally driven decisions, often ones that go back on what they have previously said. An example of this is Lord Capulet, who changes his mind on the marriage of his daughter. This drastically changes the plot of the story and could have been the reason for the death of Romeo and Juliet. They see the world in a different light to the youths. The younger men in the Montague and Capulet families love to fight, and would happily insult the other family in order to start a fight. However, Lord Capulet, and maybe Lord Montague, is less happy to begin the fight, although he would try to join in, like in act one scene 1. Lord Capulet says tis not hard. I think / for men as old as we to keep the peace and later on in the play he also compliments Romeo by calling him a virtuous and well-governed youth. Capulet and Montague could have ended a feud, which was started by their ancestors ancient grudge breaks to new mutiny. You do not find out what Lord Montague thinks about the feud, only that Capulet thinks that Montague has the same opinion as he. Later in act 1 scene 5 Capulet gets very angry with Tybalt for wanting to start a fight with Romeo. Capulet expects Tybalt to obey him, as he is the master of the house. When Tybalt still refuses to give in to Capulet, his multi faceted side comes out. Capulet changes from arguing to Tybalt Marry, tis time to complementing the guests Well said, my hearts! and then back to arguing with Tybalt. Lord Capulet loves his daughter very much. In act 1 scene 2, when Paris asks for Juliets hand in marriage, Lord Capulet tells him that Juliet is too young, but he can start to court Juliet and in 2 years, they may marry. You can tell that he cares about Juliet because he says that Paris may only marry if Juliet agrees, An she agreed within her scope of choice, / Lies my consent and fair according voice. This is surprising for a patriarchal society and where the daughter has to do what the father says. When Lord Capulet says that Juliet is too young to marry Paris he makes a indirect reference to his wife. And too soon marred are those so early made who we later find out married Lord Capulet when very young. Lord Capulet changes after Tybalt dies. Maybe because he loves Juliet so much he wants to help her, but instead he makes her life worse. He tries to cheer her up -believing that she cries over the death of Tybalt- by moving the date of the wedding forward to three days time Thursday. When Juliet refuses to marry Paris, lord Capulet becomes very violent, and shows another side of himself. He threatens to hit her and says unworthy as she is, that we have wrought / So worthy a gentleman to be her bride? He goes on to say that he was cursed when she was born, and then insults the nurse by calling her a mumbling fool! The nurse is used as comic relief in the play. She is bawdy and comes from a lower class than the majority of the rest of the cast. Simply the fact she is from a lower class makes her slightly funnier, and she often jumbles up her words I desire some confidence with you and speaks in prose. She gets on better with Juliet than Lord or Lady Capulet, and so Juliet confides in the nurse. The nurse is loyal and caring but very bawdy. However, when Juliet needs her most, the nurse turns away from Juliet, and changes her loyalty by saying I think you are happy in this second match, She goes on to say that Romeo is no longer there so she has to marry Paris. This is shocking because you believe that the nurse was always on Juliets side, In act 1 scene 3, the nurse talks about Juliet when she was a little girl, and of many slightly rude tales of Juliet. These stories horrify Lady  Capulet, but the audience find them funny. It shows the difference between the nurse and Lady Capulet, and their different upbringings. The nurse knows more about Juliet than her own mother The nurse brings a lot of tension into the balcony scene, because she keeps calling Juliet inside. You worry that she may come outside and ruin Romeo and Juliets romantic moment. But it also brings an element of comedy to it, because it annoys Romeo and Juliet, and you imagine in your head how she would act if she did come out and see Romeo and Juliet on the balcony, confessing their love. The nurse adds a bit of tension in act 2 scene 5 when Juliet is waiting to find out what Romeo has said about their marriage. She will not tell Juliet what Romeo has said, and even though the audience already know what has been said, they are still concerned in case something terrible has happened. When Lord Capulet is insulting Juliet about her marriage to Paris, the nurse stands up for Juliet, even when Capulet attacks the nurse verbally. This may be when the nurse has a change of thought, and decides the marriage between Juliet and Paris is a good thing.