Sse cola wars_group5a_2011
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Sse cola wars_group5a_2011






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Sse cola wars_group5a_2011 Sse cola wars_group5a_2011 Presentation Transcript

  • Cola Wars
    Media Management - 2304
    Group 5a
    Ludvig (
    Eva (
    Vinay (
    Fredrik (
  • Porter’s Five ForcesTheory
  • 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
  • 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
  • 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
  • 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
  • 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
  • Porter’s Five ForcesBottling Industry
    • Retail contacts
    • High Capital
    • Exclusive contracts
    • Forward integration
    • High dependencythroughformula, etc.
    • CCE & PBG
    • Retail network
    • Develop untapped areas/markets
    • Packaging innovations
    • Recycling trends
    • 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
  • 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
  • Q & A
  • Bibliography
    Cola Wars Continue: Coke and Pepsi in the Twenty-first Century
    Porter, M.E., “The Five Competitive Forces that Shape Competitive Strategy”, HBR, 2008.