Coca Cola And The Carbonated Soft Drink

1395 WordsOct 13, 20156 Pages
Question 1: Both Coca Cola and Pepsi originally operated primarily in the carbonated soft drink (CSD) industry, but have started to expand into other relatively similar markets, such as beverages that are non-carbonated. The soft drink industry during the time of this case is changing rapidly and forcing powerhouse carbonated soft drink companies like Coca-Cola and Pepsi to find new ways to adapt and compete with the rise of non-carbonated drinks and healthy drink alternatives. Below we will break down the industry using Porter’s five forces and discuss why we believe it is an attractive industry in which to do business. Bargaining Power of Suppliers In terms of the supplies used to create CSDs, the raw materials required for concentrate producers are not necessarily difficult to acquire and are more so considered basic commodity ingredients so the manufacturing process involved relatively little capital investment (pg. 2). Switching costs would be low as they are easily available on the market, thus allowing more of a choice to be made based on needs and costs of materials rendering the bargaining power of suppliers low. The supply of packaging (bottlers) works a bit differently. There are many suppliers available in the market of packaging (bottlers, metal cans, etc.) and often two or three can manufacturers compete for a single contract (pg. 5). However, in 2009, both Coca Cola and Pepsi consolidated their main bottler suppliers, thus allowing them to reduce purchasing
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