mpanys control. Favorable exchange rates or inflation rates that raise the selling price for products create a temporary profit, but are not within the companys control. These actions triggered a decline in 1998. When that decline is added to weak economic situations in the rest of the world and a costly recall because of quality control problems in Europe, even the experienced, strong company like Coca-Cola shows the impact. In 1996, PepsiCo's goal was to build a stronger company. During that year they refranchised a large number of their restaurants and closed several underperforming ones. During 1997, PepsiCo announced a plan to spin off its restaurant businesses to its shareholders as an independent publicly traded company. This new company will be comprised, among other restaurants, of the world's most powerful and well-known restaurants, including Pizza Hut, Taco Bell and KFC. Pepsi's stock was languishing and Wall Street was on their back (Sellers 26). Ironically, after the announcement of the spin off, the stock shot up 11%. Motivation to meet Wall Street earnings expectations could have played a major part in the announcement, but in reality with the spin off of the restaurants; PepsiCo will be eliminating it low-return business. In 1997, with the spin off of its restaurant businesses to shareholders (sales of approximately $9.4 billion) provided the huge percentage increase of cash and cash equivalents. This is only a temporary growth and not repeatable. In 1998, the percentage was back to a reasonable increase of 1% while the company is on the first rung of the ladder of restructuring. Another restructuring effort consisted of separating their bottling and concentrate parts of the beverage business so both could operate more effectively. PepsiCo created a separate unit for the company owned bottling operations called The Pepsi Bottling Group. They plan to sell a majority interest to the public this year. The...
