How Competitors Affect Competitive Advantage of Pepsi
How competitors affect competitive advantage of Pepsi
Pepsi is one of the world’s top carbonated drink company established in 1893. Today it has grown into a multibillion company which produces some of the most popular soft drinks, cereals and franchise eateries (Our History 2011). But Pepsi, like most of the other companies is unable to escape competitors in their general task environment who directly affect their competitive advantage. Competitive advantage is the advantage a company or product has over other companies in terms better attributes such as cost advantage, differentiation advantage, network distribution, and customer support that will help the company gain better sales compared to other companies (Hao, Ma 1999). For decades, Pepsi’s main competitor has been The Cola-cola Company, which is the world largest beverage company, followed by companies such as Cadbury Scheweppes Plc, Kraft, Dr, Pepper Snapple Group, Cott Corporation and Nestle (Joys M, Wolburg 2003). All these competitors are coming up with more innovative ideas to gain sales. Pepsi’s competitor affects Pepsi’s competitive advantage in terms of cost structure and cost advantage. A general sales key is to avoid price war between competing companies in the same industry because the companies must reduce their prices below the production price. This would affect the cost structure of a company and put the company in competitive disadvantage because sales below price margin means the company is selling at a loss. An example of price war between Pepsi and the Coca-Cola Company would be in the 1970’s. Coca-Cola bought most of the packaging bottles in the market to ensure lower production price beating its other competitors. In response, Pepsi had to cut its advertising and drop its selling price, decreasing its cost advantage (Coke and Pepsi’s uncivil). The price war between Pepsi and its competitors has been continual for decades. This tremendously affected and cost advantage of Pepsi, thus
Pepsi is one of the world’s top carbonated drink company established in 1893. Today it has grown into a multibillion company which produces some of the most popular soft drinks, cereals and franchise eateries (Our History 2011). But Pepsi, like most of the other companies is unable to escape competitors in their general task environment who directly affect their competitive advantage. Competitive advantage is the advantage a company or product has over other companies in terms better attributes such as cost advantage, differentiation advantage, network distribution, and customer support that will help the company gain better sales compared to other companies (Hao, Ma 1999). For decades, Pepsi’s main competitor has been The Cola-cola Company, which is the world largest beverage company, followed by companies such as Cadbury Scheweppes Plc, Kraft, Dr, Pepper Snapple Group, Cott Corporation and Nestle (Joys M, Wolburg 2003). All these competitors are coming up with more innovative ideas to gain sales. Pepsi’s competitor affects Pepsi’s competitive advantage in terms of cost structure and cost advantage. A general sales key is to avoid price war between competing companies in the same industry because the companies must reduce their prices below the production price. This would affect the cost structure of a company and put the company in competitive disadvantage because sales below price margin means the company is selling at a loss. An example of price war between Pepsi and the Coca-Cola Company would be in the 1970’s. Coca-Cola bought most of the packaging bottles in the market to ensure lower production price beating its other competitors. In response, Pepsi had to cut its advertising and drop its selling price, decreasing its cost advantage (Coke and Pepsi’s uncivil). The price war between Pepsi and its competitors has been continual for decades. This tremendously affected and cost advantage of Pepsi, thus