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It Started as a Proposal
In the year 1979, Michael Porter belonging to the Harvard Business School, proposed a business plan based on the five industry forces to do a SWOT analysis. The aim was to help business enterprises enlarge their market share and augment their profit. Michael Porter's plan was to make organizations understand their competition strengths and weaknesses and then devise suitable mechanisms to overcome competition. The plan studies the combined strength of five different market forces to achieve profitability goals. Coke, based on the above model, designed its own strategies for product differentiation. This is how Coke's Porter's Five Forces Model came into execution.
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Why is it Required?
The five forces plan is to assess the status of the industry in the open marketplace. It goes into the nature of competition, examines the external threats and identifies the opportunities to achieve competitive advantage.
Generally, business competition negates profits if the organization has no competitive advantage over its business rivals. When a competitor acts in a particular fashion and others respond to counter-balance it, the rivalry only gets keener.
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Coke's Porter's Five Force Model - Need of Standardized Strategies Coke recognized that designing products, manufacturing processes and marketing strategies are to be internationally standardized. These factors are dictated by the scales of economy of different countries and the imperative need for cheaper means of production. Thus, Coke studied the five industry forces to evolve its competitive advantage over Pepsi.
As per Porter’s formula, Coke’s Porter's Five Force Model...