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Cola Wars

In: Business and Management

Submitted By kruti2126
Words 1610
Pages 7
Kruti Shah
Cola Wars Continue: Coke and Pepsi in 2010
MBA 680 – B
10/27/2015

Introduction:
This paper explains the economics of the soft drink industry and its relation with profits. Coke and Pepsi being the dominant player in the industry, Control of the market share is the key issue. The war between Coke and Pepsi has constituted an opportunity for many new challenges year after year. This paper explains competitiveness of both these companies and the effects of the cola wars on overall industry. It also provides some recommendations to sustain the profits in the future with changing requirements of customers.
Analysis for profitability of soft drink Industry:
CSD industry is dominated by coke and Pepsi with very less other competitors that can affect the industry structure. Understanding the competitive forces and their underlying causes, reveals the roots of an industry’s current profitability while providing a framework for anticipating and influencing competition and profitability over time (Porter, 2008). There were several factors that made difficult for competitors to enter the soft drink market. According to Porter (2008), the threat of entry puts a cap on the profit potential of the industry and it depends on the height of entry barriers that are present. Soft drinks industry’s dominant player’s coke and Pepsi deter new competitors by heavily investing in advertising and promotion and gaining brand recognition. A long history of heavy advertising and loyal customer’s all over the world virtually made impossible for a new entrant to match this scale in this market place. Both Coke and Pepsi have franchisee agreements with their existing bottler’s. They have a huge bottling network, it is very difficult for a firm entering to find bottler’s willing to distribute their product. The other approach to try and build their bottling plants would be very

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