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.
The five forces that this model evaluates are a part of every industry and every market. Managers can form strategies based on an analysis of these forces to increase the profitability of their business.
Coca Cola is the leading brand in beverages sector and has a global presence. Its only major competitor is Pepsi. Bargaining power of suppliers: The bargaining power of suppliers of Coca Cola is weak.
While Coca Cola can easily switch from one supplier to another, it is not possible for any supplier to switch away from Coca Cola as easily.
That can lead to losses for any of the suppliers. While there are several suppliers, the size of individual suppliers is small or moderately large. Moreover, forward integration is a distant possibility for most of its suppliers.
Even if there are no substitutes for raw materials like sugar, the number of suppliers is still high. So, the main factors that have come to light regarding the bargaining power of suppliers are: Large number of suppliers Small to moderately large size of individual suppliers. Forward integration difficult for the suppliers.
The bargaining power of individual customers in case of Coca Cola is low. Individual customers generally buy small volumes and they are not concentrated in specific markets either.
However, the level of differentiation between Pepsi and Coca cola is low. Mostly they sell similar flavors. Switching costs are not high for customers and still the two brands enjoy high brand loyalty.
The customers of coca cola are not price sensitive. Backward integration is not a possibility for the customers whether it is an individual customer or a large retailer. Threat of new entrants: In the beverages industry there are several factors that discourage new brands from entering.
Growing a brand overnight is impossible. There are significant investments to be made.
From operations to marketing every part requires a large investment. Some local brands may start it at smaller scale and still marketing and hiring qualified staff requires generous investment.
The level of customer loyalty in the industry is moderate and for any brand to build customer loyalty it will take some time.
So, while new entrants can compete with brands like Coca Cola at a smaller or local level, to build a brand as big is a mammoth task requiring both capital and skilled human resources.
Main substitutes of Coca Cola products are the beverages made by Pepsi, fruit juices, and other hot and cold beverages. The number of substitutes of Coca Cola products is high. There are several juices and other kinds of hot and cold beverages in the market. The switching costs are low for the customers.
Apart from it, the quality of the substitute products is also generally good. So, based on these factors the threat from substitutes is strong. Competitive Rivalry between the existing players: There are two major players in the soda industry and they are Coca Cola and Pepsi.
There are a few smaller players too but they do not pose a major competitive threat.Cola Wars: Porters 5 Forces. The Cola War: Coke's Porter's Five Force Model. Coca Cola has an enviable track record and there are countless millions of costumers the world over and with its five forces strategy it has succeeded remarkably in differentiating its products.
Coca-cola Vs Pepsi-cola War: Use Porter's five forces to compare Add Remove Using Porter's five forces to compare Coca-Cola and Pepsi-Cola companies in their fight to become the market major players.
Cola Wars: Porters 5 Forces; Cola Wars: Porters 5 Forces. Three of Porter’s forces that are exemplified in this “coke war” are buyer power, barriers to entry, and rivalry which will be explained and elaborated on in the following essay.
Porters 5 forces on Tesco: Porter's five forces look's into the external factors impacting on a. Porter’s five forces model is a framework for the industry analysis and development of business strategy.
Three (3) of Porter’s five (5) forces refers to rivalry from external/outside sources such as micro environment, macro environment and rest are internal threats.
Coca Cola and Pepsi vied for "throat share" of the world's beverage market for over a century. The biggest battles of the cola wars were fought over the $60 billion industry in the U.S, where the average American consumed 53 gallons of carbonated soft drinks per years.
Porter’s five forces model is a framework for the industry analysis and development of business strategy. Three (3) of Porter’s five (5) forces refers to rivalry from external/outside sources such as micro environment, macro environment and rest are internal threats.