Coke vs. Pepsi: An Economic Analysis
Rebecca Simmons Managerial Economics
Dr Sol Drescher
December 4, 2012
In this case study we will do an economic analysis of two major competitors; Coke® and Pepsi®. We will look at the history of these to competitive giants and discuss how they have evolved over the years to become rivals in the 21st Century. In this case study we will also look at the supply and demand of each company’s products. Coke and Pepsi are not only in the beverage business they have branched out into other arenas to continue being the leaders in their market. Both companies do business all over the world; we will also look at how they size up internationally as well as nationally. We will look at production and cost in the short run and long run by analyzing each company economically. Each company has forecasted where they will be financially in the 21st Century and in this analysis we will calculate if they have forecasted close to where they are today. Management is a big part of the success of large firms such as Coke and Pepsi so we will look at the management styles of each one. By looking at management will analyze the strategic decision making of each firm and note any issues they have had in the past or present with upper management. Finally strategic decisions in oligopoly markets with regards to profit maximization is vital to the firm and the shareholders alike, we will analyze those strategies as well.
After reading both of these competitive giants’ histories it is clear to see they are both trend setters in their own rights. Coca-Cola® was being formulated in Atlanta in a pharmacy and selling about 9 drinks a day to now selling over 1 billion servings of Coke products a day. With Coke the product has always been an advertisement junkie from its beginnings when the founder put the Coca-Cola name on...