About the Paper Authors: David B. Yoffie and Reene Kim Title: Cola Wars Continue: Coke and Pepsi in 2010 Journal name: Harvard Business Review Volume & Issue: 9-711-462 Year: May 2011 Introduction This case study observes the industry structure and competitive strategy of Coca-cola and Pepsi over 100 years of rivalry. It gives insight about how these two company was literally into an extreme fights in the so-called “cola war”. Firsthand challenges of the 21st century included improving weakening internal cola sales and finding new income streams. Coke as well as Pepsi started to change their bottling, pricing, and brand strategies. They viewed the developing global markets to enhance growth and expand their brand sets to include noncarbonated …show more content…
In the late 1950s, the beginning of World War II, both companies started to make it clear in their advertising that competition existed between them, creating campaigns that accepted the presence of competitors. In this case let, the authors explained the status of industry background, economic background, Porter’ five force analysis and few issues on forces altering the company’s strategy of operation during the period. The economic standing of U.S CSD industry started deteriorating from 1975 through the mid-1990’s. The consumer started becoming health conscious especially started dodging carbonated drinks, so market for CSD started falling drastically. Both the companies average annual profit growth decreased year after year as there were many alternative beverages other than CSD. Production and Distribution The companies started hanging their production and distribution strategy by introducing four distinct participants as mentioned …show more content…
It is not so clear whether the cola wars really took place and that both businesses profited from that. The outfits used in this war were reaching from marketing drives to the improvement of the delivery services and the upgrading of plants, introducing new flavors and packing. The effects of this war were on the industry's profitability. The rivalry for supermarket shelf space led to a decrease in retail prices and as a result of intense competition, bottlers saw an increase in capital requirements followed by a decrease in margins. Sustaining profits in a market which is giving more and more importance to the non-carbonated drinks can be difficult task to achieve, but there are some measures that could help both companies in reaching it: diversification, marketing, focus on core products, emerging markets, innovation, market research
Porter’s Five Forces Porter’s Five Forces framework is to identify the level of competition within the industry and to determine the strengths or weaknesses which can utilise to strengthen the position. The framework consist of five elements: threat of entry, bargaining power of supplier, bargaining power of buyer, threat of substitutes and industry rivalry. Forces Analysis Implication Threat of new entrant Low Threat Diversified of product There are high demand of furniture and electrical appliance.
According to the Porter’s five forces analysis (2004), the threats of new entrants had been low, with the growth of Komatsu sales volume. Kotmatsu had gained market share by offering low cost, high quality choices in multiple range of product lines. At the same time Caterpillar lacked innovation and kept increasing the price of their product by an average of 10% every year. In order to recover from the cost war and to attain real growth, Caterpillar had to consider new products lines and new market to expand in, due to the maturation of the market. Also, Caterpillar considered restructuring due to the direct threat of Komatsu invading Caterpillar’s markets.
Another aspect of Porter’s Five Forces model is the threat of substitution, or how easy it would be for another company to take over the present business by innovating in some way. The threat of substitution is low but still present in the trucking industry. Due to the fact that a large majority of freight moved in the United States is moved by truck, it would be difficult to shift to a different mode of transportation. However, there are still other methods of travel that can be used, for example freight can be moved by airplane or by train within the United States. These alternative modes of transportation tend to be more expensive though, meaning it makes more sense for a company to simply purchase the services of a trucking company.
This analysis assumes that the varying profit margins between industries can only be explained by the structures of such industries. While the Five Forces are used to determine how attractive an industry is, they can also be used to formulate a strategy and understand the competitive environment in which a company operates. 2.1. Porter’s Five Forces
Each of the forces is determined how competitive in that industry as well as the structure of the industry. Porter’s five forces factors are consists of competitive rivalry, the threat of new entrants, the threat of substitutes, bargaining power from
This paper presents an overview of Kmart retail supply chain in New Zealand. Various IT systems and software used by Kmart are presented in this paper. The new IT systems and business applications are also proposed. In retail sector, IT is involved at every point right from supply chain management to POS terminals for transaction processing. Efficient use of technology and IT systems can bring innovation.
3 Porter’s Five-Forces Model Analysis Different factors can be combined together in a simple business model. This is known as Porter’s Five-Forces Model and competitive circumstances of an industry can be analyze through this model. These five forces are critical forces that they determine the attractiveness and competitiveness of an enterprise and have influence on a firm’s profitability in its industry. The five-forces analysis can not only show how Walt Disney company builds a sustainable competitive advantage in Entertainment-Diversified industry but also can seize business opportunities in future development.
This model is considered as the most potent and useful tool and is widely used by organisations. This model deals with external factors that influence the nature of completion and internal factors how firms compete effectively to be more profitable. Porter’s 5 forces is used. Industry Rivalry : Porter (1980) reiterated that intensity of rivalry is dependent on number and size of direct competitors as numerous and/or equally balanced competitors may lead to intense competition. The rivalry for market share becomes intense when product differentiation and switching costs are
The conditions that the economy environment included, that is, the inflation, employment, monetary and fiscal policy… in a specific sector or region. The macro environment is closely linked to the general business cycle, as opposed to the performance of an individual business sector. -Physical factors: municipalities growth, population go to the regions are more developed, so we have to considerer what are these areas to create there our business. Climatic diversity, Zara knows this diversity so the clothes that it produces will be linked with the climatic of the region, for example, the North is cold, so the winter´s season arrives before.
Coca-Cola strives to utilize every strategy available to become successful whenever it launches its business in overseas markets. Pepsi seemed to have discovered Coca-Cola’s disadvantages and it was using them to check Coke’s dominance. The new market structure brought about cut throat competition between the two cola giants. However, the competition ate into a large chunk of the two companies’
Over time, the business model had to change due to many competitions from foreign company. Another major change to the US auto industries was due to rise of gas price and falling price of car. With the rising gas price and car market competition, consumer
Kraft Heinz Case Study Executive Summary Problem Statement The focal problem that Kraft Heinz Company (KHC) faces is the decrease in demand of packaged-foods, while trying to increase revenue. Analysis This analysis studies Kraft Heinz Company’s strategy, competitive position in the market, problems being faced, and the company’s financials.
ZHANG Shiyuan_HRM Human Recourse Management fascinates for me for the dynamism and challenge that it provides. A vital cog in the machinery of any business to maximize employee productivity, it is an interdisciplinary field relevant to the knowledge in policies and industries, business environment, organizational culture, essential skills in negotiation and leadership. I am hugely interested in grasping HRM knowledge for further integration with strategy consulting and management, which will be essential for establishing my career path. My first degree in International Communication Studies, which places great emphasis on analytical and highly interdisciplinary approach, has cultivated me with the literacy of communication, a significant quality needed for a practitioner in media and culture.
Porter’s five forces model To analyse the microenvironment facing United Biscuits in China, Porter’s five forces model is selected to provide an understanding of the competitive forces, to determine the competitive position of the company and profitability within the biscuit industry whilst offering a framework for predicting and influencing competition over time (Porter, 2008, p.80). The findings are explained below: Threat of new entrants • The high capital cost required for investing in developing distribution, sales network and acquiring production equipment could deter new entrants. The barriers are high when capital is necessary for unrecoverable expenditures such as marketing and product development capability which is difficult for new entrants to succeed in the short-term (Euromonitor, 2014; Porter, 2008, p.81).
Secondly, Porter’s Five Forces Model is used to analyse the level of rivalry in the market, the attractiveness for potential new entrants, the power of suppliers, the power of buyers and the threat of substitution. This will allow us to see a holistic view of the industry in the market environment. Thirdly, the PESTLE framework is used to analyse the factors within the macro environment that are influencing