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For over a century Coca Cola and Pepsi have been the leading companies in the soda
drink industry. They have gone head to head in this industry as the most successful companies
for over a century. Both of these companies have not only expanded from just making soda
products but making all sorts of drinks, as well as individually owning over hundreds of other
drink/bottling companies.
When looking at the external environment of Coke and Pepsi in economy using Porter's 5
forces model for analysis there are significant factors observed. The first aspect out of Porter's 5
forces analyzed was the threat of new entrants in the industry. The soft drink enterprises have
long imposed major restrictions on new competitors. Coke and Pepsi have created strong brand
identities, distribution networks, and economies of scale, making it difficult for new competitors
to enter. Furthermore, significant financial needs, access to distribution channels, and the
necessity for large advertising budgets all serve as deterrents. The "Cola Wars Continue" case
(Yoffie, 2011, p.7) demonstrates the significant investment and market expertise necessary to
succeed in this business.
Another aspect analyzed using Porter’s 5 forces was buyer power. While consumers have
a wide range of options, their negotiating power is often limited. The competition between Coke
and Pepsi provides customers choices, but brand loyalty, promotion, and product difference limit
bargaining power. Both corporations use pricing methods, such as advertising initiatives and
loyalty programs, to influence consumer decisions (Yoffie, 2011, p.8). With Coke and Pepsi
being big names in this industry and major competitors, this in turn drives the consumer to play
into the competition by choosing a side.
Correspondingly the next force analyzed in Porter's model was supplier power. Suppliers
of basic commodities used in the drinks, such as sugar and packaging materials, usually have
little bargaining leverage. Coke and Pepsi have long-standing connections with their suppliers,
and their size enables them to negotiate cost saving rates. However, any disruptions in the supply
chain may affect output and distribution. This refers back to the new entrants force discussed
earlier, as it is very hard to become a big name in this industry with Coke and Pepsi dominating,
if a company did succeed this Coke and Pepsi would suffer with supplier power. Coke and Pepsi
are able to have this negotiating power with suppliers because they make up a major of the
consumer base for the supplier industry.
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Related Questions
SS
Ismail Omar, a sole trader, owns a retail outlet in a shopping mall in Bahrain. He sells jewellery
that he imports from oversane In 2014 the business was struggling to survive owing to strong
competition from other retailers inside the mall. However, one of his main rivals closed down in
2015 and now his business is increasing its sales.
A02 a
A02
b
A01 C
A01
d
A01
State one non-financial aim of a business.
State one way of measuring the success of a business.
(1)
(1)
Explain one way in which a fall in the exchange rate might affect a business. (3)
Explain one disadvantage of operating as a sole trader.
Ismail read in a newspaper that interest rates in Bahrain were likely to rise
in 2017.
66
(3)
e Explain one possible effect on a business of an increase in interest rates. (3)
In 2017, Ismail was informed that his rent in the shopping mall would double.
As a result of the news, Ismail was considering two options:
Option 1: Move his shop to a Bahraini side street where rent is very…
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Firm
1
3
نا لیا
Nİ
4
5
b)
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35
25
15
15
10
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Related Questions
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