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Choosing Business-Segment Disclosures

Choosing Business-Segment Disclosures
What factors are considered when a firm chooses segmental information disclosures? Consider the article "Cola Wars: Going Global" (Cespedes, 2009). Next, using outside sources that you may seek and your professional experience, concisely answering the following questions:
(A7.1) If you were an accountant for Pepsi, what specifically would be the relevant accounting research question with respect to choosing business-segment disclosures in view of its global competition with Coca-Cola?
(A7.2) What accounting standards must Pepsi consider when answering the question?
(A7.3) What must be known, estimated, and assumed to answer the research question?
(A7.4) What level of business-segment disclosure would you recommend to Pepsi given your research? Outline the basis of your recommendation.


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For companies to be able to increasing solidify their positions in the market, they need to expand their global operations on order to remain profitable. For Pepsi and Coca Cola, this entailed deep ingrained competition in various markets for market share that saw the companies develop various strategies in order to increase their global competitiveness and global market share. This paper analyses the implications of choosing business-segments disclosures for Pepsi in view of the global competition with Coca-Cola.

Relevant Research Question:

The relevant accounting research question with respect to Pepsi choosing business-segment disclosures in view of its global competition with Coca-Cola would be "Does disclosing segmental information as required by under SFAS 131 place Pepsi at a competitive disadvantage against Coca Cola taking into account that Coca Cola would be able to understand the managements insights in the overall global expansion strategy of the company?". This research question is very important in this manner as Pepsi was faced by stiff competition from Coca Cola and could not seem to be able to shake off the competition in the various markets it explored.

With Coca Cola's global market share being exceedingly higher even in Pepsi's strongholds such as China (Cespedes, 2008), disclosing partly the information that is used in evaluating the business segments or determining how to allocated resources among its segments could give Pepsi a competitive advantage supposing that Coca Cola had been monitoring their strategies and decision making criteria through the disclosure information thereby using it to develop even ...

Solution Summary

The expert examines choosing business-segment disclosures.