For the purpose of this essay I am going to use Porter’s five forces framework to analyse the sources of competition in the soft drink industry with a specific focus from the aspect of Coca Cola, a company with a global share in the industry of around 50%. INSERT MORE ABOUT THE INDUSTRY/ COMPETITORS ETC
Barriers to Entry
• Barriers to entry are factors that need to be overcome by new entrants if they are to compete successfully.
• New entrants are not a strong competitive pressure for the soft drinks industry.
• Market fully saturated and growth is small – difficult for new/unknown entrants
• Coca Cola and Pepsi Co dominate the industry with;
o Strong Brand Name – advertising and marketing spend in industry is high. Difficult for an entrant to compete and gain any visibility. Established brand names and loyal customers impossible to match.
o Distribution Channels – Retailers enjoy high margins of 15-20% on these soft drinks for the space they offer. New entrants cannot convince retailers to substitute Coke/Pepsi for their new products.
o Bottling Network – Both firms have agreements with their existing bottlers that prohibit bottlers from... [continues]
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