Preview
Preview

Soft Drink Industry Porter's Five Forces Analysis: Essay example

No Works Cited
Length: 1671 words (4.8 double-spaced pages)
Rating: Purple      
Open Document
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Soft Drink Industry Five Forces Analysis:

Soft drink industry is very profitable, more so for the concentrate producers than the bottler’s. This is surprising considering the fact that product sold is a commodity which can even be produced easily. There are several reasons for this, using the five forces analysis we can clearly demonstrate how each force contributes the profitability of the industry.

Barriers to Entry:

The several factors that make it very difficult for the competition to enter the soft drink market include:

Bottling Network: Both Coke and PepsiCo have franchisee agreements with their existing bottler’s who have rights in a certain geographic area in perpetuity. These agreements prohibit bottler’s from taking on new competing brands for similar products. Also with the recent consolidation among the bottler’s and the backward integration with both Coke and Pepsi buying significant percent of bottling companies, it is very difficult for a firm entering to find bottler’s willing to distribute their product.
The other approach to try and build their bottling plants would be very capital-intensive effort with new efficient plant capital requirements in 1998 being $75 million.

Advertising Spend: The advertising and marketing spend (Case Exhibit 5 & 6) in the industry is in 2000 was around $ 2.6 billion (0.40 per case * 6.6 billion cases) mainly by Coke, Pepsi and their bottler’s. The average advertisement spending per point of market share in 2000 was 8.3 million (Exhibit 2). This makes it extremely difficult for an entrant to compete with the incumbents and gain any visibility.

Brand Image / Loyalty: Coke and Pepsi have a long history of heavy advertising and this has earned them huge amount of...


... middle of paper ...


... already setup. The will lack the clout that have with the bottler’s in the US.
Suppliers: Since the raw material’s are commodities there should be no problems on this front this is not any different


Customers: Internationally retailers and fountain sales are going to be weaker as they are not consolidated, like in the US Market. This will provide Coke and Pepsi more clout and pricing power with the buyers
Substitutes: Since many of the markets are culturally very different and vast numbers of substitutes are available, added to the fact that carbonated products are not the first choices to quench thirst in these cultures present additional significant challenges.
The consumption is very low in the emerging markets is miniscule compared to the US market. A lot more money would have to be spent on advertising to get people used the carbonated drinks.


Click the button above to view the complete essay, speech, term paper, or research paper








This essay is 100% guaranteed.


Title Length Color Rating  
Essay on Fresh Connections - I am going to conduct a 5-forces analysis of the industry "Fresh Connections" is involved in, that is to say the fresh food industry. These forces help us to analyse everything from the intensity of competition to the profitability and attractiveness of the industry. We are going to use this model to better understand the industry in which "Fresh Connections" operates. So, the five forces are rivalry, buyer power, supplier power, barriers to entry and threat of substitutes. 1) The rivalry among competing sellers First and foremost, competitive rivalry describes the intensity of competition between existing firms in an industry....   [tags: Five Forces Model Analysis Food Industry] 1770 words
(5.1 pages)
Powerful Essays [preview]
Essay on Strategic Business Analysis: Porters Five Forces - The forces driving the competition and the intensity of the competition in an industry, are due to its principal economic structure and the behavior of the competitors (Porter, 1998). Therefore, the state of competition as shown in Figure 1 depends on five competitive factors such as industry competitors - rivalry, potential entrants, buyers, suppliers, and substitutes. As Porter(1998) states “ the collective strength of these forces determines the ultimate profit potential in the industry, where profit potential is measured in terms of long terms of long run return on invested capital.” Therefore, this chapter will focus on the strengths of the competitive forces that driv...   [tags: competition, industry profitability, hayleys]
:: 10 Works Cited
1414 words
(4 pages)
Strong Essays [preview]
Five Forces Framework Essay - Michael Porter's five forces model is a strategic framework by which an attempt is made to predict how an industry, behaves, grows and responds within a competitive environment. In his own words the creator of the concept offers an insight; "The five forces determine the industries profitability because they influence the prices, costs, and required investments of firms in an industry – the elements of return on investments ." It is the aim of this essay to apply Porter's model to Europe's rapidly growing budget airline industry....   [tags: Business Industry Market Analysis] 793 words
(2.3 pages)
Strong Essays [preview]
Sears Holdings Corp. (SHLD) SWOT Analysis, Porter’s Five Forces Analysis and Recommendations - Our recommendation is to take Sears Holdings Corp. (SHLD) private through a private equity buyout. After doing so, we recommend implementing a centralized management structure and recruiting retail-savvy executives for the upper management team. We then recommend focusing on increasing value by capitalizing on SHLD’s real estate holdings through leasing agreements and increasing partnerships with complementary enterprises. Also, we recommend improving employee retention rates and retaining exclusive rights to private brands....   [tags: Porter’s Five Forces Analysis]
:: 14 Works Cited
3014 words
(8.6 pages)
Research Papers [preview]
Essay on Lowes’ Porter's Five Forces Competitive Analysis - Lowes’ Porter's Five Forces Competitive Analysis Michael Porter's Five Forces analyze the external and internal environment of a company to increase the awareness of threats and structure of the industry that company competes within. Thus, the Five Forces is an ideal tool which can help companies to maintain their competitiveness with a higher profitability. Porter’s Five Forces is defined as threats of new entrants, bargaining power of suppliers, power of buyers, the threat of substitutes and rivalry among existing competitors....   [tags: external, internal environment, competitive forces]
:: 5 Works Cited
1086 words
(3.1 pages)
Strong Essays [preview]
Essay Air Flights: Five Forces Analysis and Southwest Airlines - Introduction Air travel began in the early 1900s and scheduled flights started in the 1920s (Harris). In the early years, the airline industry competition was nonexistent. The competitive environment changed dramatically over the course of the last century specifically when the industry underwent regulation and then deregulation. The future success of the airline industry depends on the ability to adapt with rapidly changing industry environmental factors. Southwest Airlines business opened for operations in 1971, after Rollin King and Herb Kelleher raised enough capital to finance their plan....   [tags: Airfare, Travel, Business]
:: 9 Works Cited
1294 words
(3.7 pages)
Strong Essays [preview]
porters five forces Essay - 4. Barriers to Entry When a business is profitable, it attracts potential entrants that desire to gain market share. In addition, it can negatively affect the existing firms' profitability. The probability that new companies will enter an industry depends on the extent to which barriers to entry have been build. In other words, existing firms in the industry set up multiple constraints to limit the number of potential entrants. Within the auto industry, the threat of new entrants is low, because of the substantial barriers to entry....   [tags: ]
:: 4 Works Cited
941 words
(2.7 pages)
Good Essays [preview]
Essay on Five Forces Analysis - Five Forces Analysis The industry being analyzed is the tobacco industry. The tobacco industry manufacturer cigarettes, snuff, chewing tobacco, etc. Customers a. The customers are the wholesalers and retailers of tobacco products. There are a large amount of customers in this industry, which makes the customers not very powerful. b. I believe the customers do make high-volume purchases, which would make them powerful. c. The purchases customers make from the industry are the same relative to the amount expended for items from other industries....   [tags: GCSE Business Marketing Coursework Essays] 1178 words
(3.4 pages)
Strong Essays [preview]
Essay on Michael E. Porter's Five Forces In Pepsi -     Introduction The model of the Five Competitive Forces was developed by Michael E. Porter in his book "Competitive Strategy: Techniques for Analyzing Industries and Competitors" in 1980. Since that time it has become an important tool for analyzing an organizations industry structure in strategic processes.   Porters model is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on and understanding of industry structures and the way they change....   [tags: Business Strategy] 1756 words
(5 pages)
Strong Essays [preview]
The World Watch Industry Essay - The World Watch industry was at a crucial stage in the 1970’s when there was a possible phase of transition from one way of watch making technology to another i.e. from mechanical to electronic watches. The mechanical watches had been ruling the watch market for quite some time while the electronic watches were deemed to be the next big thing. Amidst this clash of technologies, the three most important watch producing nations i.e. Swiss, Japan and United States competed with each other to maintain their market share as well as their profitability....   [tags: Watch Market Industry] 897 words
(2.6 pages)
Strong Essays [preview]