Your Strategy Needs a Strategy The internet software industry would be a nightmare for an oil industry strategist. Innovations and new companies pop up frequently, seemingly out of nowhere, and the pace at which companies can build—or lose—volume and market share is head spinning. Still, the survey found, in practice many rely instead on approaches that are better suited to predictable, stable environments, even when their own environments are known to be highly volatile or mutable. Here we present
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1) Why, historically, has the soft drink industry been so profitable? Coca-Cola and Pepsi are 2 common soft drink companies that have been in existence for many years. Coca-Cola was founded in 1886 by a pharmacist, and the company grew from there. During World War II, soldiers were given reduced price Coca-Cola. Similarly, Pepsi (called Pepsi-Cola) was invented by a pharmacist in 1893. During the Great Depression, a 12 ounce bottle of Pepsi cost the same as a 6.5 ounce bottle of Coke, thus keeping
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Harvard Case: Cola Wars BUS 460 1 April 2014 Cola Wars 1. Why, historically, has the soft drink industry been so profitable? The soft drink industry has historically always been an extremely profitable industry since the beginning of it in the early 1900’s. There are many factors that have lead to the industry being so profitable but it is mostly contributed to the “war” going on with Coca Cola and Pepsi. Coca Cola and Pepsi have been around a very long time and have strong brand loyalty to each
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Question #1 Why, historically, has the soft drink industry been so profitable? The soft drink industry has historically been one of the most profitable industries. Coke and Pepsi, the two most dominant players in the soft drink industry, were both originally created in the late 1800’s as “medicines” and were sold exclusively from drug store soda fountains. Over the years both companies have continued to expand and have more recently shifted focus to non-carbonated soft drinks as well. The reason
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1. Historically, why has the soft drink industry been so profitable? We will use the Porter’s Five Forces framework to demonstrate why the soft drink industry – where Coke and Pepsi were, and still are, the two largest players – has been so profitable. Historically, several factors indicated high barriers to entry. Firstly, the successful consolidation and vertical integration of Coke and Pepsi’s bottling networks created an extensive, and almost exclusive, distribution prowess. In addition
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12th, 2015 1. Why, historically, has the soft drink industry been so profitable? Customer High consumption need in the market. Since 1970 consumption of CSDs grew by an average of 3% per year for 30 years. Compare to other beverage, Americans drank more soda. Market Environment The soft drink industry just likes an oligopoly market, and Coke and Pepsi have too big market share to affect the industry. Therefore, other companies are very difficult to entry this industry Little capital
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COKE AND PEPSI 1. Why, historically, has the soft drink industry been so profitable? 2. Why is the profitability of the concentrate business so different to that of the bottling business? 3. How has the competition between Coke and Pepsi affected industry profits? 4. Can Coke and Pepsi sustain their profits? Answers: 1. Market forces are promising for profits through the Porter’s five forces analysis. The soft drink industry has been profitable over the last couple of years for the following
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Introduction The soft drink industry has been a profitable one in spite of the “cola wars” between the two largest players. Several factors contribute to this profitability, and these factors also help to show why the profitability of the concentrate production side of the industry has been so much greater than the bottling side. Over the years the concentrate producers have experimented with different levels of vertical integration, and although it has not necessarily been clear which have been more successful
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Discussion Questions 1. Judith, an accounting major, states, “Strategy analysis seems to be an unnecessary detour in doing financial statement analysis. Why can’t we just get straight to the accounting issues?” Explain to Judith why she might be wrong. Strategy analysis enables the analyst to understand the underlying economics of the firm and the industry in which the firm competes. There are a number of benefits to developing this knowledge before performing any financial statement analysis. 1. Strategy
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analysis 3 Industry Analysis 3.1 Industry Structure - U.S. soft drink market share of concentrate producers - Suppliers within the carbonated soft drink industry 3.2 Market Structure - U.S. Liquid Consumption Trend (gallons/capita) - U.S. non-alcoholic refreshment beverage volume 2009 - U.S. soft drink market share – soft drink brands 3.3 Marketing Channels 3.4 Porter’s five forces 4 5 4 2 2 2 2 4 Competitive / corporate strategies of Coke and Pepsi 5 SWOT Analysis 6 Questions 6.1 How has the competition
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