project initiation document

Project Endeavour: A Re-engagement Strategic Approach.

Project Endeavour is a research based project aimed at assessing the viability of making an active effort (both strategically and operationally) in the re-entry/re-engagement in the Informal Commercial Carbonated Soft- drink Beverage Sector.

Project Endeavour will focus on specific sales and distribution channel being the wholesaler medium (i.e. Wholesalers who supply informal retail outlets with beverage products) in the Zinniaville Complex Commercial district in the city of Rustenburg, North West Province, South Africa.

The introduction makes mention of assessing the “viability” of re-entrance to a market. Breaking this term down, the project requirement then emerges defining what is expected of the project.

The Project expectation can be said to be obtaining financial data primarily regarding costing, pricing and investment data on both the procurement and external sales of PepsiCo Pepsi CSD Product Range 330ml variant within the informal sector beverage wholesale environment. Such data will ultimately be used to shed light on the viability of a commitment to re-entry in the mentioned markets.

Major Activities include: 3.1 Creation of Questionnaire to capture Financial Data Only. 3.2 Interviewing of up to a maximum of 10 and a minimum of 5 informal wholesalers in the Zinniaville Complex area only. 3.3 Collating data obtained from questionnaires in meaningful ways to provide opportunity for Statistical Analysis.

Project Endeavour’s tangible element is the final report commenting on the viability of a PepsiCo re-entry possibility into the informal CSD Beverage commercial market.

Costs are negligible as the project is being undertaken in the author’s/project champion’s personal capacity.

Preparations of questionnaires => 1 Day.

The interview sessions could take up to 10 days maximum with a minimum of 2 days.

Collation of the Data and the final report should take up to 7 days.

Total Estimated maximum days required => 18 days.

Total Estimated minimum days required => 10 days.

Statement of Mission: 6.1 To obtain financial data on the viability of re-entering the informal commercial beverage sector with regard to the supply of PepsiCo Pepsi Brand Product Range 330ml variant by PepsiCo SA Beverage Division.

Critical Success Factors: 6.2 The Key CSF is the “Buy-In” or acceptance to complete the Questionnaires or interviews by wholesaler participants with serious intent. Without their committed participation, the report cannot be generated or it cannot offer valuable viability findings.

Milestones of the Project: 6.3 These include obtaining committed questionnaires from the dominant wholesalers in the Zinniaville Complex namely: 6.3.1 Guul Cash and Carry 6.3.2 Salahaddin 1 Wholesaler 6.3.3 Salahaddin 2 Wholesaler

Stakeholder Party Interest In Project

Mr F Gani

Interviewed Wholesalers

Author/Project Champion.

Business Names and Responses Disclosed in Final Report.

What is a good cost price/purchase price of a case of 24 x Pepsi 330ml tins to YOU?

Options: Please Tick Your Answer:

R75.00 to R85.00

R85.00 to R95.00

R95.00 to R105.00

R105.00 to R115.00

What is a good resale/purchase price of a case of 24 x Pepsi Range 330ml tins?


R85.00

R95.00

R105.00

R115.00

R125.00

What is a good selling price/resale price of a case of 24 x Pepsi 330ml tins to YOU? (Remember what Cost Price you selected in Question 1)


R75.00 to R85.00

R85.00 to R95.00

R95.00 to R105.00

R105.00 to R115.00

R115.00 to R125.00



R85.00

R95.00

R105.00

R115.00

R125.00

What is the likelihood of you Stocking Pepsi 330ml Product Ranges on a monthly basis?


Very Likely

Likely

Neutral

Unlikely

Very Unlikely



R85.00

R95.00

R105.00

R115.00

R125.00

How much Money would you spend on Stocking Pepsi 330ml Product Range in your Shop?


R10000 upwards

R7500 to R10000

R5000 to R7500

R2500 to R5000

R0 to R2500



R85.00

R95.00

R105.00

R115.00

R125.00

Do you prefer to earn profits on Pepsi 330ml Product Ranges on a “Standard Mark-up % on cost” or “Rebates as a % of cost price”


Profit from Mark-up on cost %

Profit from Rebate % of Cost

*Rebate means that you agree to sell Pepsi 330ml Ranges for a set price range and ALSO sell an agreed minimum volume of Pepsi per month. You then get a % of the cost price paid back to you.

Question 1: > Question 1 has the objective of finding out what cost price levels are considered to be reasonable by Wholesalers to enable purchase of the Pepsi range inventory. This allows us to work closely with the manufacturer and distributor of the Pepsi Range of products to re-evaluate current manufacturing and distributions costs to reflect the cost price that the commercial market wants. We will thus have a retrospective and prospective understanding of our pricing levels. > Therefore the data from this question allows us to use the management accounting principle of ‘Target Pricing/Costing’ which allows us to compete better in the market with regard to pricing, allows us to increase market share and market reach as we are able to get product to wholesalers at a price at which they will naturally be committed to push the product out to retailers and general consumers. > We can also assess if the documented reasonable cost prices are feasible to attain both, financially, operationally and strategically.

Question 2: > Question 2 has the objective of finding out what resale price levels wholesalers consider to be reasonable. Question 2 is complimentary and supplementary to Question 1 so they should be evaluated in conjunction with each other. From the data of this question one is able to see the acceptable prices of the informal sector which may differ from blanket corporate recommended resale prices. Again, one will be able to understand the resale pricing position that is currently endorsed to what resale prices the informal wholesale commercial sector wants. > In conjunction with Question 1, we are able to determine the acceptable isolated mark up% assuming that at this stage wholesalers do not follow a rebate profit making business model. This wholesaler acceptable mark-up % again, goes with the management accounting principle of ‘Target Pricing/Costing’ as we are able to engineer and re-evaluate the product cost (both Manufacturing and Distribution costs) working backwards from the acceptable resale price level.

Question 3: > Question 3 has the objective of assessing the sentiment from both the commercial attractiveness of selling Pepsi products i.e. from the wholesalers point of view and the retail and the end-user consumer demand for Pepsi products. > The approximate retail and end-user consumer demand for Pepsi products is thus a function of the wholesalers sentiment as logically a wholesaler would not stock the Pepsi products if he did not think he had an immediate market to sell it via his existing business channels i.e. through to retailers or direct to end users. Thus Question 3 is two-pronged indicated wholesale sentiment and thus indirect approximation of different end users along the channels, namely Retailers and End-user consumers. > As with the logic of all the Questions, Question 3 fits in terms of financial management framework by assessing the overall sentiment from the data to determine if enough demand from wholesaler and indirect consumer exist to warrant a comprehensive investment into a re-engagement strategic approach. > Apart from the quantitative side of the ‘Demand’, this question points out qualitative aspects such as branding, merchandising and advertising that may be required to activate greater sentiment or enable current sentiment longevity for Pepsi Products.

Question 4: > Question 4 has the objective of determining if the sentiment or demand established in Question 3 is actually sustainable both financially and economically in terms of sales volume and profit. To illustrate this point. If Sentiment is expressed to a high degree but wholesalers will only stock 10 cases of the Pepsi Range then a committed robust re-engagement strategic approach in the informal sector may not be feasible since the volumes and profits would be too small and not sustainable in terms of product pricing and associated costs in the long term. Although Pepsi products are high quality and well-branded, the CSD sector is largely volume related, thus the investments per month by wholesalers must be substantial to enable the efficacy of the proposed re-engagement strategic approach. > Thus Question 4 collates some aspects of the previous questions from an investment point of view in terms of total cash commitments. From the Data, one would be able to run models of cash flows, ROI’s to assess the final decision of implementing the strategy.

Question 5: > Question 5 has the objective of determining broadly what profiteering model the wholesalers prefer. This could be either based on a traditional mark-up% model or a rebate on cost model %. > Data from this Question allows one to determine more accurately the recommended resale pricing policies as well as product costing using this information as we now reducing variables since we are basing decisions on what wholesalers report to use in terms of price and costs and incorporating their profit making models of the sale of Pepsi products into the said resale and cost price. Ultimately the applied management accounting principle of ‘Target Pricing’ is thus improved when the variables are narrowed down as each element within the calculation is accurate to a better degree. > Apart from the above, one can determine if the wholesalers profit making model is feasible in terms of our manufacturer and distributor capabilities. This is the qualitative aspects highlighted by the data from this question.

project initiation document

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