Cocacola Essay

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Let’s assume that you are a wealthy (and a bit lazy ) student, so you decided – instead of setting up your own company – to invest all your money in one of the two selected companies. Using Porter model analysis, please bring rational argument for selecting the only one company (comparative analysis of 5 dimensions of Porter model). Company A …Coca-Cola Company B …Volkswagen Threat of new entrants Threat of new entrants is very low in this industry and the following factors are responsible: Brand name: It has taken these company decades to build their brand and it’s not easy for a new company to emulate that. Plus Coca-Cola has tremendous brand loyalty Distribution channel: The two existing companies (Pepsi and coca-cola) have wide distribution channel across the world and it’s difficult to match up to that. Huge initial investment: The high cost of setting up manufacturing plants, transportation channel and distribution channel is a big barrier for new entrants. Coca-Cola has huge market share Economies of scale: Coca-cola enjoy large economies of scale that help in keeping the costs down. A new entrant would not be able to match the cost . The threat of new entrants is considered low in the automobile industry. The industry has been in operation for a relatively long period of time and in several companies, such as Volkswagen and Ford have successfully reached economies of scale. In order to compete in this industry a manufacture must be able to achieve economies of scale at a pace which does not lag behind competitors, but can keep up, and set the standard at times. For this to occur, manufacturers like Volkswagen mass-produce the automobiles so that they are affordable to the consumer. Another barrier to entry is that it takes an incredible amount of capital to manufacture the automobiles, and of course the more tailored the vehicle,

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