Issues with Cola War

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Summary:

"Cola Wars Continue: Coke and Pepsi in the 21st Century” explains the economics of the soft drink industry and its relation with profits, taking into account all stages of the value chain of the soft drink industry. By focusing on the war between Coca-Cola and PepsiCo as market leaders in this industry – with a 90% market share in carbonated beverages – the study analyses the different stages of the value chain (concentrate producers, bottlers, retail channels, suppliers) and the impact of the modern times and globalization on competition and interaction in the industry.

Analysis:

It is quite clear that there was a “war" between Coca-Cola and PepsiCo: not only have they been rivals for ages but they have always followed each other’s moves. In the late 1950s, the beginning of World War II, both companies started to make it clear in their advertising that competition existed between them, creating campaigns that recognized the existence of competitors. However, according to Roger Enrico, former CEO of PepsiCo, the brand would have a tough time being an original and lively competitor if it wasn't for Coke. In fact, this statement proves the existence of a war, but it also proves that both companies actually benefitted from this war.

The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi would have a tough time being an original and lively competitor. The more successful they are, the sharper we have to be. If the Coca-Cola company didn't exist, we would pray for someone to invent them. And on the other side of the fence, I'm sure the folks at Coke would say that nothing contributes as much to the present-day success of the Coca-Cola Company than...Pepsi.

To understand the profitability of the industry, I used the Porter Framework, where I identified the forces close to the firms affecting their ability to serve customers and make a profit: threat of substitute products, threat of new entrants,...
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