Cory Wells Coke And Pepsi
Cory Wells
Coke and Pepsi Case
Coke and Pepsi have been long time rivals with competition being the name of the game in their industry. Historically, the soft drink industry has been so profitable because Americans tend to love soft drinks, more than any other beverages out there. Americans soda consumption grew by an average of 3% a year since 1970. Coke and Pepsi had an average annual growth of 10% from 1975 to 1995. Not to mention, the internal rivalry between Coke and Pepsi has only increased both of their profits. They also both had a very high market share. Coke and Pepsi had an average of 10% net profit in sales. The profitability of the concentrate business is so different to that of the bottling business because the concentrate producers are not responsible for distribution. Coke and Pepsi are to distribute their products. It also takes little capital investment for the concentrate producers. They need only one factory to serve all of the U.S. Bottlers deal with merchandising and have high fixed operation costs. They also pay for all redistribution costs. It is the power over suppliers and power over buyers that the concentrate producers employ. What keeps Coke and Pepsi in the game is because their internal rivalry seems to benefit the companies. The competition between Coke and Pepsi has affected industry profits in a positive way. Their internal rivalry has accounted for a combined 73% of the market share. Globalization of the two firms has also changed the industry. Though Coke leads Pepsi in international sales, this is because of Coke took advantage of Pepsi’s late entry into the different market. Threat of substitutes can always be a challenge; although there not many now, and since Coke and Pepsi remain separate this gives them more power with buyers and suppliers. Also, because of Coke and Pepsi’s internal rivalry it forces them to constantly assess their firms’ macro-environment to stay
Coke and Pepsi Case
Coke and Pepsi have been long time rivals with competition being the name of the game in their industry. Historically, the soft drink industry has been so profitable because Americans tend to love soft drinks, more than any other beverages out there. Americans soda consumption grew by an average of 3% a year since 1970. Coke and Pepsi had an average annual growth of 10% from 1975 to 1995. Not to mention, the internal rivalry between Coke and Pepsi has only increased both of their profits. They also both had a very high market share. Coke and Pepsi had an average of 10% net profit in sales. The profitability of the concentrate business is so different to that of the bottling business because the concentrate producers are not responsible for distribution. Coke and Pepsi are to distribute their products. It also takes little capital investment for the concentrate producers. They need only one factory to serve all of the U.S. Bottlers deal with merchandising and have high fixed operation costs. They also pay for all redistribution costs. It is the power over suppliers and power over buyers that the concentrate producers employ. What keeps Coke and Pepsi in the game is because their internal rivalry seems to benefit the companies. The competition between Coke and Pepsi has affected industry profits in a positive way. Their internal rivalry has accounted for a combined 73% of the market share. Globalization of the two firms has also changed the industry. Though Coke leads Pepsi in international sales, this is because of Coke took advantage of Pepsi’s late entry into the different market. Threat of substitutes can always be a challenge; although there not many now, and since Coke and Pepsi remain separate this gives them more power with buyers and suppliers. Also, because of Coke and Pepsi’s internal rivalry it forces them to constantly assess their firms’ macro-environment to stay