COLA WARS COURSE 2304 Erik Ingemansson (KTH), Karl Nielsen 40201, Henrik Engervall 20846 Contact:  [email_address] hhs .se...
 
BARRIERS OF ENTRY  <ul><li>1. Supply side economies of scale = HIGH </li></ul><ul><li>2. Customer switching cost = LOW </l...
POWER OF SUPPLIERS <ul><li>1. Many suppliers = LOW SWITCHING COSTS </li></ul><ul><li>2. Similar products = LOW  </li></ul>
POWER OF BUYERS <ul><li>Homogeneous products = LOW </li></ul><ul><li>Many bottlers are already owned by the concentrate co...
THREAT OF SUBSTITUTES <ul><li>The threat that people will choose another product = LOW </li></ul><ul><li>This could become...
RIVALRY AMONG EXISTING COMPETITORS <ul><li>Two big competitors and a lot of really small ones. </li></ul><ul><li>Industry ...
QUESTION ONE: HOW ATTRACTIVE IS THE INDUSTRY? <ul><li>Very attractive, if you are in it, otherwise not attractive at all. ...
QUESTION 2, THE BOTTLERS
THREATS OF ENTRY <ul><li>1. Customer switching cost = LOW </li></ul><ul><li>2. Capital requirements =VERY HIGH </li></ul><...
POWER OF SUPPLIERS <ul><li>1. Sweetener suppliers & Packaging suppliers = LOW (easy switch) </li></ul><ul><li>2. Concentra...
POWER OF BUYERS <ul><li>The retailers have a lot of power = HIGH </li></ul><ul><li>But retailers are also depended on the ...
THREAT OF SUBSTITUTES <ul><li>More companies will start using fountains and won’t need bottles = MEDIUM </li></ul><ul><li>...
RIVALRY AMONG EXISTING COMPETITORS <ul><li>Lots of competitors that is still left </li></ul><ul><li>Simple product </li></...
QUESTION TWO: WHY IS PROFITABILITY FOR BOTTLING LOWER? <ul><li>Because their margins are squeezed between suppliers and bu...
QUESTION THREE: What challenges face these companies today? <ul><li>Health trends </li></ul><ul><li>Substitutes </li></ul>...
Reference list <ul><ul><ul><li>http://hbr.org/hb/article_assets/hbr/0801/R0801E_A.gif </li></ul></ul></ul><ul><ul><ul><li>...
 
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Ssecolawarsgroup5b2011 110121071443-phpapp01

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Group assignement at Media Management course at Stockholm school of economics

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  • Include title page with SSE logo, name of course, names of group members, contact information, eg emails
  • Supply side economies of scale = (benefit of ordering big = HARD to get into market if you have to start ordering small) 2. Customer switching cost = Doesn’t cost the customer anything to change! 3. Capital requirements = (you need a plant (high cost) and a lot of unrecoverable costs such as ads) + coca and pepsi probably owns all the bottle makers 4. Unequal access to distribution (Coca cola and pepsi have binding contracts with several suppliers as mcdonalds, and in the supermarket they take up the most space) 1. Incumbents have previously responded vigorously to new entrants = (cola and pepsi buy up everything that threatens them.) 2. Incumbents possess substantial resources to fight back = (YES)
  • Homogeny product = many bottlers that can do the same thing Many bottlers are already own by the concentrate companies = making the ones left less important. Low margins thanks to high costs = gives them less wobble room.
  • Low risk because of the strong brands, as long as people drink cola they should be fine. US is to addicted
  • 1. Customer switching cost = Doesn’t cost the customer anything to change! 2. Capital requirements = (you need a plant (high cost) and a lot of unrecoverable costs such as ads) + coca and pepsi probably owns all the bottle makers 3. Unequal access to distribution (Coca cola and pepsi have binding contracts with several suppliers as mcdonalds, and in the supermarket they take up the most space) 1. Incumbents have previously responded vigorously to new entrants = (lots of small bottlers.) 2. Incumbents possess substantial resources to fight back = (not really to many enemies)
  • 2. Coca cola and pepsi is very powerfull and set thier prices!
  • People don’t go to the store if they don’t have coca cola
  • US is too addicted
  • Ssecolawarsgroup5b2011 110121071443-phpapp01

    1. 1. COLA WARS COURSE 2304 Erik Ingemansson (KTH), Karl Nielsen 40201, Henrik Engervall 20846 Contact: [email_address] hhs .se , [email_address] hhs .se , egjin@kth.se
    2. 3. BARRIERS OF ENTRY <ul><li>1. Supply side economies of scale = HIGH </li></ul><ul><li>2. Customer switching cost = LOW </li></ul><ul><li>3. Capital requirements =VERY HIGH </li></ul><ul><li>4. Unequal access to distribution = VERY HIGH </li></ul>EXPECTED RETALIATION <ul><li>1. Incumbents have previously responded vigorously to new entrants = HIGH </li></ul><ul><li>2. Incumbents possess substantial resources to fight back = VERY HIGH </li></ul>THREATS OF ENTRY
    3. 4. POWER OF SUPPLIERS <ul><li>1. Many suppliers = LOW SWITCHING COSTS </li></ul><ul><li>2. Similar products = LOW </li></ul>
    4. 5. POWER OF BUYERS <ul><li>Homogeneous products = LOW </li></ul><ul><li>Many bottlers are already owned by the concentrate companies = LOW </li></ul><ul><li>Low margins thanks to high costs = LOW </li></ul>
    5. 6. THREAT OF SUBSTITUTES <ul><li>The threat that people will choose another product = LOW </li></ul><ul><li>This could become a bigger threat due to increased general health concerns by the public </li></ul>
    6. 7. RIVALRY AMONG EXISTING COMPETITORS <ul><li>Two big competitors and a lot of really small ones. </li></ul><ul><li>Industry growth are slow and most of the markets are capitalized. </li></ul>
    7. 8. QUESTION ONE: HOW ATTRACTIVE IS THE INDUSTRY? <ul><li>Very attractive, if you are in it, otherwise not attractive at all. </li></ul><ul><ul><li>Why? </li></ul></ul><ul><ul><ul><li>Hard to get into the market by outsiders </li></ul></ul></ul><ul><ul><ul><li>The ones that are already in earns the big money thanks to good margins </li></ul></ul></ul><ul><ul><ul><li>Strong brands reassure the status quo. </li></ul></ul></ul><ul><ul><ul><li>Big existing companies can use their economies of scale </li></ul></ul></ul>
    8. 9. QUESTION 2, THE BOTTLERS
    9. 10. THREATS OF ENTRY <ul><li>1. Customer switching cost = LOW </li></ul><ul><li>2. Capital requirements =VERY HIGH </li></ul><ul><li>3. Unequal access to distribution = VERY HIGH </li></ul>EXPECTED RETALIATION <ul><li>1. Incumbents have previously responded vigorously to new entrants = LOW </li></ul><ul><li>2. Incumbents possess substantial resources to fight back = MEDIUM </li></ul>BARRIERS OF ENTRY
    10. 11. POWER OF SUPPLIERS <ul><li>1. Sweetener suppliers & Packaging suppliers = LOW (easy switch) </li></ul><ul><li>2. Concentrate supplier = VERY HIGH (when big companies like Coke and Pepsi) </li></ul>
    11. 12. POWER OF BUYERS <ul><li>The retailers have a lot of power = HIGH </li></ul><ul><li>But retailers are also depended on the strong brands = LOW </li></ul><ul><li>If you have a fountain, you don’t need the bottle = MEDIUM </li></ul>
    12. 13. THREAT OF SUBSTITUTES <ul><li>More companies will start using fountains and won’t need bottles = MEDIUM </li></ul><ul><li>The emerge of soda streaming at home = MEDIUM </li></ul><ul><li>The risk that people in general will stop drinking from bottles = LOW </li></ul>
    13. 14. RIVALRY AMONG EXISTING COMPETITORS <ul><li>Lots of competitors that is still left </li></ul><ul><li>Simple product </li></ul><ul><li>The concentrate companies have lately bought a lot of bottling operations </li></ul>
    14. 15. QUESTION TWO: WHY IS PROFITABILITY FOR BOTTLING LOWER? <ul><li>Because their margins are squeezed between suppliers and buyers bargaining powers. </li></ul><ul><li>Material costs are higher </li></ul><ul><li>All our analysis point towards that it is more attractive to be a player on the concentrate scene then to work with bottling. </li></ul>
    15. 16. QUESTION THREE: What challenges face these companies today? <ul><li>Health trends </li></ul><ul><li>Substitutes </li></ul><ul><li>Increased power of retailers (e.g. Walmart) </li></ul><ul><li>Matured market </li></ul><ul><li>How has competition between Coke and Pepsi affected the industry? </li></ul><ul><li>Lower margins </li></ul><ul><li>Creation of own subcategory </li></ul><ul><li>Made Coke and Pepsi bigger and stronger </li></ul><ul><li>Increased barriers of entry </li></ul>
    16. 17. Reference list <ul><ul><ul><li>http://hbr.org/hb/article_assets/hbr/0801/R0801E_A.gif </li></ul></ul></ul><ul><ul><ul><li>Porter, M.E., &quot;What is Strategy?&quot;, HBR , 1996. </li></ul></ul></ul><ul><ul><ul><li>Porter, M.E., “ T h e Five Competitive Forces that Shape Competitive Strategy”, HBR , 2008. </li></ul></ul></ul><ul><ul><ul><li>Case: Cola Wars Continue </li></ul></ul></ul>

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