Premium Essay

Adaz

In: Business and Management

Submitted By ADAZ
Words 351
Pages 2
Threat of substitutes

The threat of substitutes is definitely high in this industry sector. In the last year it can be seen a lot of alternative drinks which enter the market such as bottled water, juice, sports drinks . Consumers are getting more aware of the soft drinks and they can change consumption tastes easily. This is combined also with the low switching cost . In this regard Coca Cola started to bring innovation in their products so that they can battle the substitutes.

Bargaining power of buyers

The most valuable buyers in the soft drink industry are the restaurants, fast food chains, vending, college canteens, and food stores . In this regard Coca Cola buyers are both direct and indirect buyers. For instance the bottlers (direct buyers) are bound into agreements that give the power of the producers to put prices . The indirect buyers such as food stores, restaurants and vending are highly fragmented. In this regard these indirect buyers are not in position to negotiate lower prices.

Bargaining power of suppliers

The bargaining power of suppliers is considered low. Ingredients and materials in these industries are mostly commodities for instance – sweetener, cans and plastic bottles, etc. In this regard Coca Cola does have the choice to opt suppliers for its products. Coca Cola has low switching costs and that gives them the opportunity to choose suppliers easily and without any price difference.

Degree of rivalry between existing competitors

The main competitor to Coca Cola is Pepsi which in the last years has put a lot of work into alternative products. Both companies are inclined to invest in outdoor activities and sports where they the opportunity to present their brand to the wide public. The companies (Coca Cola and Pepsi) are known on the market from consumers and the companies do know each other. These companies compete for…...

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