Coca-Cola Company vs. PepsiCo, Inc Essay Example | Topics and Well Written Essays - 1500 words

Coca-Cola Company vs. PepsiCo, Inc - Essay Example The two companies have set some pension plans that have had many effects on the companies’ level of investment and risk while also, it affects their levels of sale and production of products. These plans are aimed at benefiting their retired employees while each company uses a quite different approach from the other. The two companies have developed strong public relations across many nations that assist them in linking customers to their company. The International Financial Report Standard (IFRS) has been a significant unit within the management of funds on the pension plan. It helps the companies realize whether the scheme of pension plan brings a loss or a profit for the company. The companies can therefore classify the pension plans as either assets or liabilities according to the IFRS report. It also enables the companies determine whether they have overfunded or underfunded the pension plan. In 2009, the coca-cola company held a third position among the companies that ha ve adopted a cash balance report meant to cater for the pension plan schemes (Diebold, 2010).   The coca-cola executive managers rejected the use of a constitutional approach in funding pension plans. As a result, there were minimized risks to the coca-cola company. Additionally, the company secured more benefits to the employees in comparison to year 2008. Following this actions, the company reported $31.9 billion in revenue operation, which was a higher value compared to $28.9 billion in the preceding year. On the other hand, because of the plan, mobility of the workforce went up while the career benefits accumulated from the plan increased compared to the preceding approach that dealt with pension plan. During the same year, 2009, Pepsi Co Company, through the assistance of the International Financial Report Standard (IFRS), developed a method of offering a final salary pension to the new employees. These were meant to benefit its workers and their family members upon their ret irement. This plan included medical fees among other benefits for the retired employee and is differently calculated. This method required a high quality pension scheme capable of securing the retirement of both the present and the newly employed workers. Up to date, the method is still applied in the company (Warfield et al. 2012). However, the method posed a higher risk to the Pepsi Company and brought in a decline of the total sales of Pepsi as compared to the year 2008. At Pepsi Company, Pension plans cover full time employees while their benefits are determined on the bases of either years of service for the worker, or a combination of service or the years of service. Retirees are eligible for life and medical insurance benefits upon meeting a specific age and service requirements. Their share of the pension costs is capped at certain dollar amounts on bases of years of service. The expected return on the pension plan assets is based on the company’s investment strategy on the pension plan as well as on their expectations for their long-term rates of return. In calculating their funding levels and capital gains in the pension plans, a market-related valuation method that realizes investment loses or gains for the securities included in their equity allocations. With complete reliance to the Financial Report Standard (IFRS), the company ensures that the amount of funds allocated for the pension plan does not exceed the expected gains. This is