Porter’s Five Forces Coke Vs Pepsi 704 Words

Porter’s Five Forces Coke Vs Pepsi 704 Words

Porters Five Forces Analysis of Coca Cola

The presence of highly recognizable brands that are distributed globally is a serious factor that makes it challenging for other companies to compete. Moreover, almost the whole industry is divided into three major representatives, although other brands also exist or are regularly established. Coca-Cola, established in 1892 has been a leading player in the beverage industry since many years. The following section discusses the industry dynamics of the beverage industry and the forces that affect the firm’s strategic direction and financial performance. Horizontal integration is the acquisition, merger, or expansion of a business that increases the market share in its existing industry. Named after the Harvard professor who developed it, the Five Forces model is a qualitative analysis tool designed to help an investor identify and analyze the competitive forces that drive an industry. It can be just as helpful for analyzing the strengths and weaknesses of a single company within an industry.

  • Soft drink products are competing with other categories of beverages including energy drinks and herbal drinks, as well as coffees and teas, alcoholic beverages, and even bottled water products.
  • Still, for them to gain a foothold as significant as Coca Cola would be an extremely difficult task.
  • Coca-Cola can reexamine and rebuild its strategy by distinguishing external threats and weakness which is essential to cementing a business strategy to grow and move the organization forward.
  • These contracts make sure that bottler’s must have standard manufacturing plant; these plants need huge capital and exertion.

The threat of buyers is shown once prices increased, there was a decline in consumer sales and volume, which led to profits to drop. The consumer always show their demand to be heard in terms of what they buy and if they are not happy with a company’s product, that company will find out in their quarterly sales report. The fixed costs are high within the industry in which Coca-Cola Bottling operates.

Similar to Coca Cola – 5 Porter’s forces (

This is a deal is beneficial to both firms because it gives Monster access to Coca-Cola’s extensive distribution network, and gives Coca-Cola a stake in Monster’s world class energy soda brand. Partnering with Monster will prove to be a profitable venture and Coca-Cola will be able to cement their position in the rapidly developing energy beverage industry . The increasing awareness about health drinks, foods, and bottled waters have made many people discern energy drinks such as Coca-Cola Porters Five Forces Analysis of Coca Cola and Pepsi. Coca-Cola can take advantage of its brand identity and venture into health drinks and bottled water. Apart from increasing its revenues, the company will also counter the negative campaigns about soft drinks such as Coca-Cola, Fanta, and Sprite among others. Penetrating developing regions such as South America, Asia, and Africa will increase the company’s market share. Through the Kinley brand, the company could increase its presence in that segment (The Coca-Cola Company, 2015).

It draws ahead Industrial Organization economics to develop five forces that conclude the competitive intensity and consequently attractiveness of a market place or industry. Attractiveness in this framework refers to the generally overall industry profitability. An “unattractiveness” in industry is one in which the mixture of these five forces proceed to constrain behind overall profitability. An extremely unattractive industry would be one moving toward “pure competition”, in which existing profits for all companies are moving down to zero.

Bottled Water Industry

Although there are loyal customers to each company, many consumers of CSD products are willing more often not to buy the lower priced product whether it is Coke, Pepsi, Schweppes, or store brand. Other substitutes have mentioned in the threat of buyers and their demand for alternative beverages. Such https://online-accounting.net/ substitutes included diet and non-carbonated drinks, and bottled water. Because the raw materials used in the manufacturing of soft drinks are readily available, suppliers have low bargaining power. Coca-Cola does not experience threats from rival companies because Pepsi is its only major competitor.

  • A year’s bad harvest will cause the product’s cost to increase, which is not ideal for the company as it needs to maintain the product’s price constant.
  • Soft drink industry needs huge amount of money to spend on advertisement and marketing.
  • Coke and Pepsi mainly are competing on advertising and differentiation rather than on pricing.
  • The main raw materials used in the manufacturing of soft drinks are carbonated water, caffeine, sweetener, and phosphoric acid.

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