BUAD497 Strategic Management Fall 2011 Session 3: Cola Wars Continue: Coke and Pepsi in 2010 Sun Hyun Park‚ Ph.D. Assistant Professor Marshall School of Business University of Southern California “Cola Wars” Blind Test “Can you tell the difference?” Student A 1: Coca Cola Student B 1: Big K Cola (Kroger) 2: Pepsi 3: Coca Cola Student C 1: Pepsi 2: Pepsi 3: Big K Cola (Kroger) 2: Coca Cola 3: Big K Cola (Kroger) Agenda for Today • Recap - Value chain analysis - Five Forces
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years. Annual consumption of CSDs was 740 eight-ounce drinks ig per person in the U.S. versus 288 in the rest of the developed world and 77 in developing countries.1 As a result‚ the Coca-Cola Co. (Coke) and PepsiCo (Pepsi) increasingly looked abroad for growth. Coke and Pepsi approached international CSD markets from different positions and heritages. Coke was “global when global wasn’t cool‚” noted a CEO of Coca-Cola.2 Coke’s global expansion began in 1906 when it entered Cuba‚ Panama‚ and
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31% for Pepsi) and almost 72% in 2009 (almost 42% for Coca Cola and almost 30% for Pepsi). The barriers to enter the CSD market are very high mainly because of the economies of scale enjoyed by Pepsi and Coca Cola. These two firms produce a very large portion of the total output of the market and they reach their MES (minimum efficient scale) when they cover for over 70% of the market. Another important barrier to enter this industry is the well-known reputations that Coca Cola and Pepsi have. It
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business and was instrumental in cooperation with U.S. Armed Forces during WWII. Caleb Bradham‚ a North Carolina pharmacist‚ invented Pepsi in 1893. Like Coca-Cola‚ Pepsi developed a franchised bottling system in the year 1910. Pepsi had a much more difficult time surviving and becoming successful‚ as it declared bankruptcy in 1923 and 1932. However‚ today Pepsi is a strong company that is competing with Coca-Cola. I will discuss the Cola Wars using the eleven step strategic model‚ SWOT‚ and Porter
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stay in line with their PESTLE situations. Pepsi is a big brand‚ currently holds the 23rd place in the Interbrands report of the World’s Leading Brands. Their advertisements feature major celebrities and athletes like David Beckham‚ Robbie Williams‚ Britney Spears‚ and Michael Jackson etc. Their market reach is also very diverse‚ as they’re present in almost every country from the US to New Zealand. Their PESTLE analysis is given below: Political: Pepsi is a non-alcoholic beverage and is therefore
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competitors. Pepsi was stealing a portion of the younger generation with their advertising campaign‚ and they proved that consumers liked Pepsi better with the “Pepsi Challenge.” To combat their falling market share Coke decided to introduce a new formula. This formula was based on the fact that people preferred the sweeter taste of Pepsi. Once the new formula was finished‚ Coke conducted close to 200‚000 taste tests to find out what consumers thought. New Coke outperformed both Pepsi and the original
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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
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Executive Summary Competition In 2005‚ the global carbonated soft drink (CSD) market generated revenues of over $147 billion‚ all of which comes from three global powerhouse companies occupying 90% of the market. Coca-Cola‚ Pepsi‚ and Cadbury Schweppes‚ are one‚ two and three‚ respectively‚ in the very competitive CSD industry. Over past decades‚ the CSD market has been honored with record growth‚ showing consumption rates that have more than doubled over the last 25 years. Americans are consuming
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Value Chain and their relationships 5 Industry Analyses 6 CSD Industry Analysis 6 Porter’s Five Forces for Bottler & Distribution 9 Profitability Analysis 11 Financial Analyses 12 SWOT and Ansoff Matrix Analyses 12 Where Should Pepsi and Coca-Cola head? 14 Keep status quo price competition and marketing mix? 14 Initiate Price War to enhance profitability while holding the rest of marketing mix? 14 Bottling drinking water‚ should the strategy be the same as CSD? 15 Should
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territory...(Yoffie‚ 2007)" Concentrate price. Coca-Cola was able to determine its concentrate prices since 1987 when the Master Bottling Contract was established. Pepsi ’s Master Bottling contract was a bit different to Coke ’s as it obliged bottlers "to purchase raw materials from Pepsi at prices‚ and on terms and conditions‚ determined by Pepsi". They based the price of the concentrate on CPI and negotiated it with bottlers. "From the 1980s to the early 2000s‚ concentrate makers regularly raised concentrate
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