Porter’s Five Forces can be related to products ranging from highly differentiated, or specialized products, to non-specialized commodity products. Carbonated beverages is a large business controlled mainly by Coke and Pepsi, for the sake of this assignment I will be focusing on Coke because I choose the drink over Pepsi. However, the beverage industry is not limited to these two companies they both just control a large amount of the overall market share. Coke being within the carbonated beverages industry faces substantial threats of substitution because is it relatively simple to produce beverages and there is a wide array of products to choose from. For example, water, fruit drinks, energy drinks, coffee, and tea. Further dissecting would
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Important to understand here is that none of these are differentiated products, meaning multiple suppliers exist in the marketplace offering these exact products. Because Coca-Cola has a large product mix, most of which has an expiration date and therefore they want to turnover their inventories quickly, they are high volume purchasers of raw materials. Thus, making them a company that any supplier would jump at the chance to have. Combining all of these factors it becomes evident that suppliers will not have much power over Coke in bargaining …show more content…
Coke and Pepsi have such a grip on the market share that new entrants will struggle to get their foot in the door, also if a new company emerges and does well for itself it is likely one of the two controlling market share companies will buy you out. Humans are creatures of habit, we know what we like and normally we do not enjoy straying far away from our comfort zone. Tie this in with Coke’s brand loyalty among consumers and you will begin to see the challengers new companies will face. Competitive rivalry is alive and well in the beverage industry with the two giants Coke vs. Pepsi battling it out. These products appear to have different tastes but they are very similar, the bulk of differentiation between the two comes in the form of what other products they offer besides beverages. There are also other soda companies that pose small threats to coke, but in terms of market share they do not even come
Important to understand here is that none of these are differentiated products, meaning multiple suppliers exist in the marketplace offering these exact products. Because Coca-Cola has a large product mix, most of which has an expiration date and therefore they want to turnover their inventories quickly, they are high volume purchasers of raw materials. Thus, making them a company that any supplier would jump at the chance to have. Combining all of these factors it becomes evident that suppliers will not have much power over Coke in bargaining …show more content…
Coke and Pepsi have such a grip on the market share that new entrants will struggle to get their foot in the door, also if a new company emerges and does well for itself it is likely one of the two controlling market share companies will buy you out. Humans are creatures of habit, we know what we like and normally we do not enjoy straying far away from our comfort zone. Tie this in with Coke’s brand loyalty among consumers and you will begin to see the challengers new companies will face. Competitive rivalry is alive and well in the beverage industry with the two giants Coke vs. Pepsi battling it out. These products appear to have different tastes but they are very similar, the bulk of differentiation between the two comes in the form of what other products they offer besides beverages. There are also other soda companies that pose small threats to coke, but in terms of market share they do not even come