Analysis Of Porter 's Five Forces Essay

1271 WordsOct 31, 20166 Pages
Porter’s Five Forces can be used to analyze the carbonated soft drink industry in the United States. The first force is the threat of new entrants. Essentially, this is an analysis of the level of difficulty and number of challenges for new businesses to enter the market. The second force is the threat of substitutes. This is a detailed description of potential substitutes for the products in the industry. The third force is the bargaining power of suppliers. This analysis shows the amount of power that suppliers have over the businesses in the industry. The fourth force is the bargaining power of buyers. This is a summary of the negotiating power of the buyers, and the power they have over the business. The final force is the level of rivalry among the competitors. This is a measure of the intensity of the rivalry between all competitors in the industry. Each of these factors influence the industry. Assessing each force will help a business develop a successful business strategy. Threat of New Entrants The market for carbonated soft drinks is saturated with many brands. The top five are, Coca-Cola, Diet Coke, Pepsi-Cola, Mountain Dew, and Dr. Pepper (Hartlaub, n.d.). Over 90% of the market is dominated by three companies, Coca-Cola, Pepsi, and Dr. Pepper/Snapple (Statista, 2015) Because the soft drink industry manufactures its products in mass amounts, they can produce economies of scale and create a competitive advantage over smaller or new companies trying to
Open Document