In the market of soft drinks there are many companies all competing for the same business, some are small local companies and some are large multinational companies but the primary competitor of PepsiCo, Inc is Coca-Cola, and vice versa. The operations of both companies extend well beyond the borders of the United States. Coca-Cola and PepsiCo, Inc both market to consumers around the globe, and of virtually all income segments. Each company produces similar products and services (Coca Cola Company, 2010). It is common knowledge that when a company makes the decision to venture beyond its domestic territory many challenges await, primarily the production and distribution of the merchandise becomes a concern.
They develop promotions and advertisement that will target their customers. A major part of Coca-Cola being successful is the ownership and the ability to partner up with bottling and canning factories throughout the globe. They contribute assets that are up to 28%. Coca-Cola has relationships with three separate types of bottlers. Anchor Bottlers, Independently owned bottlers, and Coca-Cola invested bottlers.
Coca-Cola Company vs. PepsiCo, Inc Tina Davis Dr. David Humphries ACC 305 Intermediate Accounting III 9/11/13 Pensions Plans of Coca-Cola and PepsiCo Pension plan is an important feature in the modern day society and should therefore be embraced by companies. The Coca-Cola and PepsiCo have done very well in ensuring that their employees get full benefits from this arrangement (The Coca-Cola Company, 2008). Though they may differ in the way they offer this service, the benefits are strongly felt by those who subscribe. The two companies work under the 401k pension plan with insurance advantage on the medical requirements for the employees. This is a special type of a plan with friendly taxation measures that favors the employees and the company itself.
Hence, there is no real threat to see a new comer eroding the whole market profits by heating up internal rivalry. • Performance in the soft drink industry is highly related to brand reputation and consumers highly value it and are mostly brand loyal. Entrants should heavily invest in advertising and merchandising to establish a strong brand awareness. • Network externalities: Pepsi and Coke have a large installed base: they handle both concentrate production and bottling through their own
Strategic Issues Strategic issues are fundamental policy questions or critical challenges that affect, an organization's mandates, mission and values, product or service level and mix, clients, users, or cost, financing, organization or management. Pepsi and Coke both faced with several challenges from, could there be a boost in carbonated soft drink sales, to could the newly introduced products provide them with a steady increase in revenue for both companies. Staying In Line With Coke Everyone knows that Pepsi number competitor is Coke, and a lot of the things that Pepsi partake in were designed to compete with Coke. One of Pepsi’s main focuses is to “stay in line with Coke.” What I mean by this is that being on top of things when it comes to Pepsi’s advertising, new products and etc. Many of the brands that the two companies have are intended to be direct competition of each other.
HBS Case 9-702-442 MSB30 June 2008 COLA WARS CONTINUE: COKE & PEPSI IN THE TWENTY-FIRST CENTURY. Houssem Ghorbel Page 1 of 4 HBS Case 9-702-442 MSB30 June 2008 1- Why is the soft drink industry so profitable? Both concentrate producers (CP) and bottlers are profitable. These two parts of the industry are extremely interdependent, sharing costs in procurement, production, marketing and distribution. Many of their functions overlap; for instance, CPs do some bottling, and bottlers conduct many promotional activities.
Coke versus Pepsi (Cola Wars) The “Cola Wars” between Coca- Cola and Pepsi is not the new case, this rivalry is the buzzword not only in the industry but also for the whole globe because both companies are reaping the lions share because of their unique products but by keep facing the intense rivalry from their own industry peer but Coke has some key advantages that are the outcome of implementing the Porter’s five forces model and that implementation give the edge to coke over Pepsi. To analyze that rivalry, Michael Porter five forces model that describe the strategies for businesses to further expand their business and clientele by keep keenly observing their rivalry’s pros and cons. According to the porter this keen observation is highly inevitable to develop and devise the strategy that has the features not only to solve the current puzzle but also to further strengthen the business. Porter five force model is multifaceted that does not only evaluate the industry status in perspective of open market but also has the characteristics to analyze the rivalry, threats as well as to explore the opportunities to reap the benefit of competitive advantage. To be precise, Porte’s five force model will be discusses in the perspective of business rivalry, bargaining power and close substitute respectively.
Q1- Why, historically, has the soft drink industry been so profitable? First of all, we need to define the players in the soft drink industry which are: the suppliers of raw material such as (sugar, artificial sweeteners and packaging), the concentrate producers, the bottlers, and the retail channels. Looking at the five forces frame work, we can see why this industry has been so profitable. The threat of new entry is low for many reasons; the need of economies of scale and the existence of brand loyalty to either Coke or Pepsi. Also the absolute cost advantage for early entrants as new entrants will have to incur high cost in a plant, advertising, or R&D.
For example, Customer Development agreements help build and sustain long-term relationships with retailers. New entrants without these relationships could find it difficult to distribute their products or have to distribute them at a discount. Besides this, soft drink market has become a lot more concentrated. Comparing to the once fragmented business that featured hundreds of local manufactures, the industry right now has more national concentrate producers like Coke and Pepsi. These two companies occupied more than 74% market share in 2004.
Pepsi Co. and Coca Cola companies have developed the strategies which are hard for the local sellers to compete with them. However, there were still many producers including new entrants that try to access the market and compete seriously with low price and differentiation strategies among