BUS 478 memo week 2 cola wars
Memorandum
To: Anthony Chan
From: Kenny Shan Widjaja
Date: May 21, 2015
Subject: Case Analysis of Cola Wars Continue Coke and Pepsi in 2010
Essentially the case discusses about the rivalry of Coca-Cola and Pepsi throughout the years from the beginning, and how they manage to come up with a more lucrative way to establish more market share. The case mentioned the reasons profitability of the soft drinks industry. The reasons for this profitability are:
Both Coca-Cola and Pepsi have an agreement with their own bottler who specializes in this field. Moreover, the agreement restrains the bottlers to carry other brand. For instance, Coke bottler could not carry Royal Crown Cola.
Both brands have an enormous cash pool, therefore in terms of distributing their products, for instance, PepsiCo are able to acquire several fast-food restaurants to exclusively offer Pepsi.
Both brands have a strong bargaining power towards their suppliers because of their strong brand name, and the amount of sales that they can bring to their suppliers. The key ingredients of the drinks are regular commodities, as well as the cans. Therefore, their suppliers have a relatively low bargaining power. Also, as mentioned in the case, usually two or more can manufacturers have to fight for a single contract.
Therefore, based on these reasons, the soft drink industry is very profitable in respect of those two companies.
Moreover, the case also mentioned about the unequal responsibility in terms of expenses for the bottlers and the concentrate producers. Concentrate producers, like Coca-Cola and Pepsi, requires relatively small investment to build a plant compared to the bottlers, and concentrate producers’ major costs were only for advertising, promotion, and market research. In contrast, bottlers’ factories require a more substantial amount of investment, as it needed more modern and high-tech machinery. In addition, bottlers also have a total responsibility for the selling and delivery,
To: Anthony Chan
From: Kenny Shan Widjaja
Date: May 21, 2015
Subject: Case Analysis of Cola Wars Continue Coke and Pepsi in 2010
Essentially the case discusses about the rivalry of Coca-Cola and Pepsi throughout the years from the beginning, and how they manage to come up with a more lucrative way to establish more market share. The case mentioned the reasons profitability of the soft drinks industry. The reasons for this profitability are:
Both Coca-Cola and Pepsi have an agreement with their own bottler who specializes in this field. Moreover, the agreement restrains the bottlers to carry other brand. For instance, Coke bottler could not carry Royal Crown Cola.
Both brands have an enormous cash pool, therefore in terms of distributing their products, for instance, PepsiCo are able to acquire several fast-food restaurants to exclusively offer Pepsi.
Both brands have a strong bargaining power towards their suppliers because of their strong brand name, and the amount of sales that they can bring to their suppliers. The key ingredients of the drinks are regular commodities, as well as the cans. Therefore, their suppliers have a relatively low bargaining power. Also, as mentioned in the case, usually two or more can manufacturers have to fight for a single contract.
Therefore, based on these reasons, the soft drink industry is very profitable in respect of those two companies.
Moreover, the case also mentioned about the unequal responsibility in terms of expenses for the bottlers and the concentrate producers. Concentrate producers, like Coca-Cola and Pepsi, requires relatively small investment to build a plant compared to the bottlers, and concentrate producers’ major costs were only for advertising, promotion, and market research. In contrast, bottlers’ factories require a more substantial amount of investment, as it needed more modern and high-tech machinery. In addition, bottlers also have a total responsibility for the selling and delivery,