Porter's Model Applied for Coca Cola

Topics: Coca-Cola, High-fructose corn syrup, Soft drink Pages: 2 (481 words) Published: March 12, 2006
1) Competitive Rivalry (Low)
* The market can be considered a duopoly between Pepsi and Coca Cola, which are the strongest and hold something like 80% of the market. * However Coca Cola holds two of the top-three soft drinks in the market. * Coke is targeting and achieving international growth.

* Few competitors.

2) Bargaining Power of suppliers (Low)
* The inputs for Coca Cola's products were primarily sucrose or fructose and bottling. Sugar could be purchased from many sources on the open market, and if sugar became too expensive, the firms could easily switch to corn syrup, as they did in the early 1980s. Actually, Coca Cola uses high fructose corn syrup within U.S. and sucrose for outside U.S.

* Raw materials can be available from many sources around the world.

3) Bargaining Power of buyers (Medium)
* Principal sale channels can be divided into supermarkets, national mass merchandising chains, fountain sales, vending machines and gas stations.
* Channels like vending machines, gas stations and super markets have low bargaining power, mostly because there are few substitutes.
* Other channels like national mass merchandising chains and fountain sales which are located in fast-food outlets, have a little more bargaining power because the first buy in large scale, so they need cheaper prices, but this doesn't really generates big profits for Coca Cola. And the fountain sales are also considered as "paid sampling" because profit is very low. The only purpose is to keep brand loyalty in costumers.

4) Threats of substitutes (Low)
* Many factors make threat of substitutes a low force against Coca Cola.
* One of them is brand loyalty. Coca Cola has long transcendence and has millions of costumers that would never leave the brand and more specific, its principal product.
* A reason for this is that Coca Cola has successfully differentiated his products.
* Another reason for a low threat of substitutes is that this company has evolved...
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