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Transcript

  • 1. Cola Wars
    Media Management - 2304
    Group 5a
    Ludvig (40089@student.hhs.se)
    Eva (40196@student.hhs.se)
    Vinay (vinayd@kth.se)
    Fredrik (fredjons@kth.se)
  • 2. Porter’s Five ForcesTheory
  • 3. Rivalry Among Existing FirmsConcentrate Industry
    Main competitors
    Coca Cola: Market share US of 44,1% (2000)
    Pepsi Cola: Market share US of 31,4% (2000)
    Little product differences
    Low capital investment (machinery, overhead or labor costs)
    High operating costs (advertising, promotion, market research, bottler relations)
    Competition encourages and holds back profitability, innovation and growth
  • 4. Power of SuppliersConcentrate Industry
    Input for Concentrates
    Low power as ingredients are majorly commodities
    Can Producers
    Low power due to high competition and a high number of available suppliers
    The main players on the market can “easily” backward integrate
  • 5. Power of BuyersConcentrate Industry
    Bottlers often operate as franchises
    Low power due to dependency on brand name and input (concentrate formula)
    Companies can forward integrate
  • 6. Threat of New EntrantsConcentrate Industry
    High entry barriers
    Economies of scale - strong brand names
    Large product portfolio available
    High brand identity and thus customers loyalty
    High initial capital investment for start-ups
    Suppliers are dedicated to existing players
  • 7. Threat of SubstitutesConcentrate Industry
    Rather low
    Change in consumer needs (health trends)
    Bad press
    Mergers & acquisitions are possible due to high financial power
    High control of distribution channels by existing firms in the industry
  • 8. Porter’s Five ForcesBottling Industry
    • Retail contacts
    • 9. High Capital
    • 10. Exclusive contracts
    • 11. Forward integration
    • 12. High dependencythroughformula, etc.
    • 13. CCE & PBG
    • 14. Retail network
    • 15. Develop untapped areas/markets
    • 16. Packaging innovations
    • 17. Recycling trends
    • 18. Do-it-yourself trends
  • Profitability AnalysisConcentrate Business vs Bottling Business
    Concentrate Business
    High Profitability for Coke and Pepsi
    Pretax profit as % of sales: 35%
    Low capital costs
    Duopoly, both are the major players in the market
    High growth potential through vertical integration possibilities and product innovations
    Bottling Business
    Rather low profitability
    Pretax profit as % of sales: 9%
    High capital costs
    High power of suppliers and thread of forward integration
     Higher Profitability for CB
  • 19. Today’s Challenges
    Environmental debates (recycling)
    Health trends (low calories, caffeine)
    Internationalization  Increasing Competition
    Globalization: Increasing Communication
    Expanding product portfolios (new flavors, etc.)
    International water quality
    Differing international formulas according to local taste
  • 20. Q & A
    ?
  • 21. Bibliography
    Cola Wars Continue: Coke and Pepsi in the Twenty-first Century
    http://www.slideshare.net/SSEGroup9/cola-wars-2946604
    http://www.slideshare.net/vameyer/sse-cola-wars-group-12
    http://www.slideshare.net/chimprox/sse-colawars-group5-presentation
    Porter, M.E., “The Five Competitive Forces that Shape Competitive Strategy”, HBR, 2008.