Poter’s 5 Forces Model
1.Suppliers Power: How easy it is for suppliers to drive up prices? Bottlers (Direct Store Doors) & Concentrate Producers (Soda Fountains) -Coke & Pepsi each required closer to 100 plants to provide enough capacity to US. -Franchise agreements with both Coke and Pepsi allowed bottlers to handle the non-cola brands of other concentrate producers. -Bottlers could not carry directly competing brands.
-the concentrate producers’ strategy toward can manufactures was typical of their suppliers relationships. -metal cans were essentially a commodity, and often two or three can manufacturers competed for a single contract Coke and Cadbury Schweppes had long retained control of national fountain accounts, negotiating pouring-rights contrasts that in some cases (as restaurants chains) covered the entire United States or even the world. Local bottlers or the franchisors’ fountain divisions serviced these accounts. In such cases bottlers received a fee for delivering syrup and maintaining machines.) CSDs products prices since 1978 are regulated by the
2. Industry Rivalry: What is the number and capability of your competitors? Pepsi vs Coke
Coca- Cola was formulated in 1886 at Atlanta, Georgia. Syrup known as Merchandise 7X. Future of the drink rested with soda fountains. Products: Coke, Diet Coke, Sprite, Fanta, Minute Maid, and others. Total 11. Pepsi-Cola was invented in 1893 in New Bern, North Carolina. Products: Pepsi, Mountain Dew, Diet Pepsi, Pizza Hut, KFC, Frito-Lay. Total 13. And by late 1990s Cadbury Scheweppes had emerged as the clear third-largest player in the US soft drink industry. Both companies try to be better than the other one. So if one of them does something the other one do the same. Mostly Coke is the first to make the movement. Coca-cola & Pepsi-Cola claimed a combined 74.8% if the US CSD market in sales volume in 2004. 3 Threat of entry (Potential Entrants)= How easy is...