Analysis Of Coca Cola And Pepsi

1. VRIO Analysis

This section of the report analyzes the internal resources and capabilities of Coca-Cola and Pepsi, and compares their competitive advantages and disadvantages relative to each other.

Distribution

*Coca-Cola

*Pepsi

Resources & Capabilities Value Rarity Imitability Organization Distribution Yes

Yes Yes

Yes No

No Yes

Yes

Value: Coca-Cola focuses its distribution more on the fountain market with restaurants. While retail distribution is important, there is bigger margin for fountain sales. Distribution through global markets has proved to be valuable in strengthening their distribution network. Pepsi’s distribution network is vital to compete with Coca-Cola. Through acquisitions of non-soft drink entities such as

Imitability:

The push and pull distribution strategy of Coca-Cola may be imitated in its basic essence, but size of their channels is unique.

Pepsi spent billions in mergers to create its own distribution network, which would be hard for other firms to copy.

Organization:

Coca-Cola is able to exploit their distribution by entering foreign markets to dominate their market share. For example, in Mexico there is not much clean water to drink. Coca-Cola realizes this and heavily distributes and advertises in Mexico. Producing Coke in Mexico uses the clean water available, forcing Mexican citizens to buy Coca-Cola beverages to satisfy their thirst. Pepsi exploits their distribution network by working close with other reputable firms in separate industries. These relationships help Pepsi tie its products to other industries and distribute them efficiently. Pepsi’s acquisitions of fast food chains such as KFC and Taco Bell have increased its fountain market share.

Differentiation

*Coca-Cola *Pepsi

Resources & Capabilities Value Rarity Imitability

It is important for Pepsi to set it self apart from Coca-Cola and generic colas in a market where the end product is essentially the same type of beverage. Rarity: Coca-Cola differentiation strategy is rare considering that when people thinking of drinking cola, Coca-Cola is typically the first soda that comes to mind. Indirectly engraining an idea that your product is “the” product to choose into consumers’ minds has allowed Coca-Cola to sustain a competitive advantage.

Pepsi differentiates their product through brand value by pushing its products on the “new generation.” Although this strategy is not necessarily rare, it has defined the brand since the early 90’s and the time investment makes the strategy more rare. Imitability: Coca-Cola experiences imitability, considering in essence it is a standard cola beverage. There are hundreds of generic colas on the market. While the type of product is easily imitated, the specific product of Coke is not imitable. Pepsi faces slightly more imitability because it does not have the same brand value as Coca-Cola, but its heavy capital spending in advertising make it difficult to