Sse cola_wars_6a_2011


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  • 1) both a challenge and an opportunity depending on how well the companies in the industry adapts.  
  • Sse cola_wars_6a_2011

    1. 1. By Tatjana Apanasevich, [email_address] Erik Bergschöld, Jeanette Finder, Caroline Perman, 2304 Media Management
    2. 2. <ul><li>Threat of new entrants (rather high): </li></ul><ul><li>Low switching costs </li></ul><ul><li>Low investments </li></ul><ul><li>Few dominating players </li></ul><ul><li>Great recipy is needed </li></ul>Rivalry among concentrate producers: Very high <ul><li>Power of the suppliers (low) </li></ul><ul><li>Generic products are easy to change. </li></ul><ul><li>Big players and suppliers dependence        </li></ul><ul><li>Low switching costs </li></ul><ul><li>Threat of substitutes (high/medium): </li></ul><ul><li>Similar price and taste </li></ul><ul><li>High threat (switching costs for users is low) </li></ul><ul><li>Well known brand and status </li></ul><ul><li>Other beverages </li></ul><ul><li>Bargaining power of buyers (both low and high): </li></ul><ul><li>Fountains - high since they can integrate high volume, good substitutes. </li></ul><ul><li>Strong brand </li></ul><ul><li>Bottlers bargaining power is low. </li></ul>
    3. 3. <ul><li>Overall the market has potential of profitability, because: </li></ul><ul><li>barrier of entry is rather low initial investments </li></ul><ul><li>there are many different suppliers to choose from hence low supplier power </li></ul><ul><li>low switching costs for end consumers </li></ul><ul><li>people’s preferences are changing together with changing trends, there are several ways to enter the market which might prove profitable for the new concentrate producer </li></ul><ul><li>there is high rivalry which means that it might be difficult to compete </li></ul>
    4. 4. <ul><li>Threat of new entrants (low): </li></ul><ul><li>Needs capital investments; </li></ul><ul><li>industry (high costs of entry) </li></ul><ul><li>Economies of scale </li></ul><ul><li>Contract with concentrate producer crucial </li></ul>Rivalry among bottlers: increasing <ul><li>Power of the suppliers (high to low) </li></ul><ul><li>Dependence on concentrate producers (brands, prices..) and bottle producers (generic product) </li></ul><ul><li>Threat of substitutes (rather low) </li></ul><ul><li>Increased interest for fountains </li></ul><ul><li>New ways of consuming soft drinks, e.g. people can make it at home through soda stream </li></ul><ul><li>Bargaining power of buyers </li></ul><ul><li>Retailers: depends on what the brands, can be both high and low </li></ul><ul><li>End consumer: low bargaining power (because of small volumes) </li></ul>
    5. 5. <ul><li>gross profit is much higher for concentrate (83% compared to 35%) (concentrate industry is a more attractive market in terms of return) </li></ul><ul><li>the initial investment is lower </li></ul><ul><li>concentrate market has a higher business opportunity </li></ul>
    6. 6. <ul><li>Development in society </li></ul><ul><li>Concentrate: Health awareness increasing (1)         </li></ul><ul><li>For bottlers: environmental factors and recycling is becoming more central        </li></ul><ul><li>New distribution channels  e.g. online </li></ul><ul><li>shifting power structures - increasing power of retailers </li></ul><ul><li>more international markets = a different way of competing         </li></ul><ul><li>Information spread, e.g. contamination of coke could have negative effects. </li></ul><ul><li>more substitutes are entering the market - increasing competition </li></ul>
    7. 7. <ul><li>decreasing margins </li></ul><ul><li>more marketing costs </li></ul><ul><li>keep up the competition, costly to differentiate </li></ul>
    8. 8. <ul><li>Threat of new entrants – h igh </li></ul><ul><li>many new substitutes to soft drinks are entering the market </li></ul><ul><li>new ways of using soft drinks are emerging which often decrease the margins (such as soda-streamer). </li></ul>Rivalry: high <ul><li>Power of the suppliers (high to low) </li></ul><ul><li>increasing for retailers, more choices and more info for end consumers - increasing </li></ul><ul><li>Threat of substitutes (high) </li></ul><ul><li>plenty in varying forms and prices </li></ul><ul><li>Bargaining power of buyers </li></ul><ul><li>rather low, decreasing due to globalization) </li></ul>
    9. 9. <ul><li>Porter, ME, &quot;What is Strategy&quot; </li></ul><ul><li>Porter, ME, “The Five Competitive Forces that Shape Competitive Strategy” </li></ul><ul><li>Case: Cola Wars Continue </li></ul>