Sse Cola Wars Group 10


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  • Horizontal forces and vertical forces Picture from Grant 2008
  • Sse Cola Wars Group 10

    1. 1. Cola Wars Continue Media Management Camilla Minnhagen G östa Carlberg Xuan Zhao Hengchong Zhang January 19, 2010
    2. 2. Is the concentrate industry profitable ?
    3. 3. Porter’s five forces of competition SUPPLIERS POTENTIAL ENTRANTS SUBSTITUTES BUYERS INDUSTRY COMPETITORS Rivalry among existing firms Bargaining power of suppliers Bargaining power of buyers Threat of new entrants Threat of substitutes
    4. 4. <ul><li>It’s difficult for stores to not sell important brands like Coca Cola, but in distributors are also quite few on the Swedish market so they have a lot of power against small unknown brands </li></ul><ul><li>The buyers are big food chains and restaurants as well as small entrepreneurs. In Sweden ICA is a very dominant player together with Coop and Axfood </li></ul>Bargaining power of suppliers
    5. 5. <ul><li>The economies of scale is good, but it costs to defend your market share </li></ul><ul><li>Strong customer loyalties if your brand is strong </li></ul><ul><li>There is limited access to distribution channels since companies like Coca Cola have agreements with all important players </li></ul>Threat of new entrants
    6. 6. <ul><li>Low legal barriers- it’s coke </li></ul><ul><li>The capital requirements for a concentrate producer such Coca Cola is low. One plant costs about 25-50 million to build and can provide the whole US with concentrate. </li></ul><ul><li>There is low switching costs since it’s easy for consumers to choose another product </li></ul>Threat of new entrants
    7. 7. <ul><li>A substitute is always a threat within the beverage industry since it’s easy to take an other product. After al, it has the same function. It should taste could, and make you less thirsty. Competitors are fighting with better prices and products. Red Bull is an example of a new innovation that “came out of nowhere”. </li></ul>Threat of substitutes
    8. 8. <ul><li>The product portfolio could be seen as highly differentiated for big brand like Coca Cola </li></ul><ul><li>The competition between local breweries is quite high for well known brands </li></ul>Bargaining power of buyers
    9. 9. <ul><li>You have a few quite balanced competitors on the concentrate business </li></ul><ul><li>The growth of the industry is low and are just above average GDP </li></ul><ul><li>The differentiation is sometimes high, but the switching costs is low </li></ul>Rivalry among existing firms
    10. 10. <ul><li>All this leads to  high rivalry between the firms  which affects the companies strategies negative  for example more marketing costs  less profit  low profit potential for other competitors. </li></ul><ul><li>A big problem for huge companies is that there is few line to hide behind, which you can defend you market share from. A new company’s brand can become cool and interesting just because the brand is new and unknown. </li></ul><ul><li>Example: Red Bull </li></ul>
    11. 11. Why is profitability so different between the concentrate business and the bottling business?
    12. 12. Bottling <ul><li>Industry Competitors </li></ul><ul><li>Potential Entrants </li></ul><ul><li>Suppliers </li></ul><ul><li>Substitutes </li></ul><ul><li>Buyers </li></ul>
    13. 13. Cocentrate producers vs Bottling Plants <ul><li>Operating profits </li></ul><ul><li>Pricing </li></ul><ul><li>Negotiation power </li></ul>
    14. 14. What challenges face these companies today? <ul><li>financial crisis in the world </li></ul><ul><li>slow growth in sales volume </li></ul><ul><li>some other none-cola beverage into the market </li></ul>
    15. 15. The effect of the competition <ul><li>The profit of the industry grows very slowly and the two companies take most of the market share. </li></ul><ul><li>CSD consumption of the total beverage consumption slowly decreases. </li></ul>
    16. 16. The factor effects the profitability <ul><li>In the international market, the local culture </li></ul><ul><li>The economy situation </li></ul><ul><li>The new need of the consumers </li></ul><ul><li>The raise of non-cola </li></ul><ul><li>The sales tactic of the competitors </li></ul>
    17. 17. Thank you!