October 29, 2012
Coco-Cola and Pepsi are two major competitors in the beverage industry but each company is working on being different even though each company has similar products. Both companies are very popular and each company needs to develop and maintain a competitive edge that will help one or the other stay above the other. To gain a competitive edge, measurement guidelines need to be implemented to make sure that strategic planning is effective and to confirm that the plan is effective. This paper will examine both companies and what competitive advantages each company has and the strategies each company is using to keep the advantage. The competitive advantages will be shown by examining strategies, such as creation of value and sustain, measurement guidelines, and the effectiveness of the measurement guidelines used by each company Internal and external environment scan
Environmental scanning according to Wheelen and Hunger (2010) will involve monitoring, evaluating, and disseminating of information from the external and internal environments to the key people within the corporations (p. 98). Each company will need to establish what level of environmental scanning is best for the company such as continuous or periodic. Each company will need to evaluate the performance of the products, review the SWOT factors to develop the best strategy to implement. Both Coca-Cola and Pepsi should “scan the environment to identify changing trends and patterns, monitor specific trends and patterns, forecast the future direction of these changes and patterns, and assess their organizational impact. Merged with internal analysis of the organization's vision, mission, strengths, and weaknesses, external analysis assists decision makers in formulating strategic directions and strategic plans” (Morrison, 2006). Competitive Advantages
By looking at the competitive advantages, a comparison can be made between the two rivaling cola companies. Cost advantage and differentiation advantages encompass the two basic types of competitive advantages. A cost advantage involves companies that make the same or similar products; however charge lower prices to gain a competitive edge. Differentiation advantage is when a company offers better products or services in the same market. When resources and capabilities manifest into distinct competencies, the cost, and differentiation advantages become value creation (Porter, 2010). Coca-Cola
The creation of a cola giant was built by John Stih Pemberton in 1886, as a health and stamina elixir infused with copious amounts of sugar laden syrup and cocaine. The beverage quickly became in demand and competitive advantage strategies were employed. Although the ingredient of cocaine was eliminated, the company flourished throughout the prohibition area and expanded internationally by late “roaring twenties.” In the early stages of Coca-Cola differentiation advantage techniques were employed, such as strict standards of mixture at soda fountains that formulated a uniform quality product that would distinguish them from other soft drinks (RetroPlanet, 2008). The strategy of Coca-Cola is to maximize growth and profitability to create value for shareholders by focusing on customer’s value potential, implement multi-segmentation strategies, create high quality, drive innovation, and maintain effective operational efficiencies. Coca-Cola’s value and sustain competitive advantage is comprised of : market leadership, business partners, strong brand portfolio, customer relations, channel marketing, multi-segmentation, client value management, sales and distribution models. Operating potential, managerial expertise, and sustainable development encompass measurement guidelines ("Coca-Cola FEMSA Investor Relations ", 2011.) With market leadership, Coca-Cola will decide how to match strategies and capabilities to the environments in which...