Launching a
new product in the soft drink industry is possible but it is difficult. Florida
was receptive but who’s to say other places will be receptive. It is a big
competition with all the other types of drinks that are already out. Within the
report, a microeconomic analysis of the current state of the soft drink market
in the U.S. was explored and what is currently going on that is affecting
demand. The macroeconomic analysis of the state of the U.S. economy and the
impact this may have on the demand for this new product was presented. Finally,
a list of key management accounting practices was listed with explanations for
each. Though it is a great idea to expand, at the moment the way the economy is
going, it may not be the right choice. Consumers are now in demand of healthier
products compared to before when people drank any and everything. The figure below
shows the decline of soda consumption in the U.S.


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4.     Trust: Decisions should be more
objective because of accountability and scrutiny. There should be a balance
between the short-term and long-term interests to value for stakeholders. The
accountants are to be professional, ethical, mindful of the values the
organization holds, etc. Trust and credibility is enhanced through feedback from
the organizations performance (Bramwell, 2014).

3.     Value: A thorough understanding of
the macroeconomic environment on a wider scale must be understood. Information
along with value-generation path, evaluating opportunities, and focusing on the
risks, costs, and value-generation potential of opportunities must be explored.
Other scenarios should be looked at to determine the end result to help
determine whether or not engaging in the expansion is worth the risks that may
come along (Bramwell, 2014).

2.     Relevance: Information that is
passed must be relevant to the what the company is working on. The best and
available resources are scanned to help those who make the big decisions. Once
the information is understood, it is identified, collected, and will be
analyzed. There must be a balance between past, present, and future-related
information, internal and external information financial and nonfinancial
information, including environmental and social issues (Bramwell, 2014).  

1.     Influence: Communication is key to
everything. It can either make the transition smooth if everything is going the
right way or it can make things difficult if the wrong information is passed
around. Accounting begins and ends with conversations. No communication means
no decision making taking place. The lines of communication must be open
between all departments, so everyone is aware of what will/will not happen. Transparency
and teamwork are the key to making sure projects are going as planned, new
ideas forming, and bringing everything together before it goes to top
management (Bramwell, 2014).

planning on expanding, there are procedures that must be followed and practices
that must be put in place to support the expansion plan. The key management
accounting practices are:

Management and Accounting Practices

            Due to the rise and fall of the
economy, the value of the U.S. dollar is increasing, which is a positive thing
for the economy. As the economy does well, jobs become available, the
unemployment rate down and brings increased spending putting money back into
the economy (Pokharna, 2011).
Then when the economy is in a bad state, unemployment rates increase, while the
dollar value begins to decrease. When there is an increase, spending increases
as well so the flow of cash in and out of consumer pockets go into the economy.
The decline can lead to recession depending on how bad the economy takes a hit
2011). Federal Funds rate were increased
by the FOMC (Federal Open Market Committee), which deals with financial loans increasing
the federal funds rate currently at 1.5% (Amadeo, 2017). Federal fund rates are the most
influential n the U.S. economy. Targets are set for the funds rate, and banks
can’t be forced to use these rates. Inflation is controlled through the feds
and how it deals with rates. The impact it may have on the new product is that
as the U.S. improves, the soft drink industry will be positively affected
through sales and revenue, and consumer purchases increasing (Amadeo, 2017).

Macroeconomic Analysis of The State of
The U.S. Economy


(Kell, 2016)

Nevertheless, sales are decreasing
because consumer interests are shifting towards water, coffee, and juices (Fry,
Spector, Williams, & Mujeeb, 2012). For the tenth year in a row the
carbonated soft drink market decline. 1.4 billion cases were lost in the
beverage industry since 2004. Diet soda brands are also losing, reporting a
decline of over 5% with Diet Coke, 4.8% with Diet Mountain Dew (Kell, 2016). The
soda industry is struggling as consumers are turning to juices, flavored water,
and other options that are healthy due to an increase in health consciousness,
so the soda industry is struggling (Fry, Spector, Williams, & Mujeeb,
2012). The health alternatives don’t have as much calories, do not contain
ingredients like sweetener aspartame, a sugar substitute that has a mixed
reputation among consumer that those purchasing would worry about (Kell, 2015).
In the figure below, it shows the demand drop for soft drinks in 2015.

the customer’s perceptions of the place a product or brand occupies in a market
segment. In some markets, a position is achieved by associating the benefits of
a brand with the needs or lifestyle of the segments (Carbonated Soft Drinks…2020, 2017).”

process of focusing on a particular segment of a total population, whereby the
marketer utilizes its expertise to satisfy that submarket and accomplish its
profit objectives (Carbonated Soft Drinks…2020, 2017).”

Segmentation: process of subdividing a market into distinct subsets of
customers that behave in the same way or have similar needs. each subset may
conceivably be chosen as a market target to be reached with a distinct
marketing strategy (Carbonated Soft Drinks…2020, 2017).”

·       The soft drink market used marketing
strategies with a model called STP: a three-stage process examining
segmentation, targeting, and positioning which can be used by specific
companies or the industry.

·       U.S. when it comes to carbonated
soft drink still holds as the largest market both in growth and value (Report Explores… Industry, 2017).

·       Compound annual growth rate (CAGR)
of 0.1% was the market consumption increase between 2011 to 2015 and reached
183,791.5 million liters in 2015 (Report Explores… Industry, 2017).

·       The soft drink market in the U.S.
had a total revenue of $286,295.7m during the year 2015 with a compound annual
growth (CAGR) of 6.0% between 2011 and 2015 (Report
Explores… Industry, 2017).

Based on types of drinks whether it be Coke, flavored water,
or more the data listed below analyzes the market.

Spector, Williams, & Mujeeb, 2012).

Soft Drinks have been around for a long period of time and
in the beverage market it represents almost half of the revenue in the U.S. (Fry,
Spector, Williams, & Mujeeb, 2012). The industry accounts for about 25% of
the beverage market. Stats show that soft drinks are the largest sugar source
consumed in America. About 40% of children and 33% of adults drink these
beverages (Fry, Spector, Williams, & Mujeeb, 2012). Back in 2014, the
revenues of the soft drink market in the U.S. exceeded $158 billion. These
numbers represent a growth rate in the soft drink industry regardless of a
decline in sale at one point. The soft drink market is evolving with different
choices of drinks, but the three major companies are Coca-Cola Company (28·6%),
PepsiCo, Inc. (26·8%), and the Dr Pepper Snapple Group (8·6%) while the other
36% belongs to small soft drink manufacturers (Figure 1) (Fry, Spector, Williams,
& Mujeeb, 2012).

Microeconomic Analysis of The
Current State of The Soft Drink Market



            Industries no matter what type must
deal with the ebbs and flows of the economy in the nation they are located and
sometimes the world. The soft drink industry as a multi-billion-dollar global
industry with product lines in carbonated soft drinks, bottled water, juices,
teas, coffee, and fruit beverages (Fry, Spector, Williams, & Mujeeb, 2012).
For this paper, I will be assuming the role of a financial consultant for a
start up company that plans to introduce a new beverage categorized as a soft
drink, which will be a healthier alternative to soda. The product was first
introduced in Florida, where there was a growth in sales and the company wants
to explore the option of expanding to other markets in the U.S. Being that the
company has no financial experience and has become highly profitable I will
provide a general analysis of this project. I will start of by providing and
discussing a microeconomic analysis of the current state of the soft drink
market in the U.S. and how any recent developing trends may affect the demand
for this product. Then, a macroeconomic analysis of the state of the U.S.
economy and the impact this may have on the demand for this new product will be
presented. Finally, a list of key management accounting practices that the
company must put in place to support their planned expansion will be provided.
Each practice will have a full explanation describing how and why the practice
is necessary to manage the growth that will come with expansion of the product
to different states. With each explanation, I must consider the fact that the
company will need outside financing and may even consider the possibility of
going public in order to sell its stock on an exchange.


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