Cola Wars

976 WordsMar 31, 20144 Pages
MKTS 7303 - PRINCIPLE OF STRATEGIC MANAGEMENT Cola Wars (Coke and Pepsi 2010) Case Study - Week 4 (S42166755) 1. Compare the competitive dynamics of the concentrate business to that of the bottling business? Why is the profitability so different? By using Five Forces Model by Michael Porter, it will shows competitive dynamics in the industry. Therefore, to define everything further this model will be used to do the comparison between concentrate business (CB) and bottling business (BB). • Barriers to entry, based on the case study and further research, it shows that it is quite impossible for new “challenger” to enter the market of concentrate business. The challenger needs a strong distribution channel and also considerably…show more content…
Due the emerging new health consciousness about soda consumption and rise of the substitution for example bottled water. The decision to take over their bottlers industries arguably still considered as profitable action and will lead both industries to another Cola Wars in different location. As for why the profitability is so different, the main difference is the CB has their branded products as their own and also as their added value. Not just that but by delivering strategic and operational action they create another advantage. Meanwhile, for the bottling business they do not have any ownership towards the brand itself, which is why they could not add another value to it. Moreover, in the slowing industry, CB could charge even more for their product while it cannot happen to bottling business, due the price pressure and to secure the store’s shelf with their products, resulting they have to minimize their profitability margin. Furthermore, high cost of sale in bottling business than concentrate business could lead to lower profit. 2. How has the competition between Coke and Pepsi affected the industry’s profits? There are several reasons why has the competition between

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