Competition in Energy Drinks, Sports Drink, and Vitamin-Enhanced

3103 Words Sep 18th, 2011 13 Pages
1. What are the strategically relevant components of the global and U.S. beverage industry macro-environment? How do the economic characteristics of the alternative beverage segment of the industry differ from that of other beverage categories? Explain.

The strategically relevant components of the global and U.S. beverage industry macro-environment:
• Global beverage companies such as Coca Cola and PepsiCo had relied on such beverages to sustain in volume growth in mature markets where consumers were reducing their consumption of carbonated soft drinks.
• Coca-Cola, PepsiCo, and other beverage companies were intent on expanding the market for alternative beverages by introducing energy drinks, sports drinks, and vitamin drinks in
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The alternative beverage companies compete for the same customers and resources, and they fight for market share.

Among the five competitive forces, the Rivalry among Competing sellers and the Buyers are the strongest. The rivalry among competing sellers is often the market maneuvering for buyer patronage. The market is a competitive battlefield where the contest among competitors is ongoing and dynamic. Each competing company endeavors to deploy whatever means in its business arsenal it believes will attract and retain buyers, strengthen its market position, and yield good profits. The buyers are the people who create demand in an industry. Buyers with strong bargaining power can limit industry profitability by demanding price concessions, better payment terms, or additional features and services that increase industry members’ costs. Buyer price sensitivity limits the profit potential of industry members by restricting the ability of sellers to raise prices without losing revenue.

New Entrants, Substitutes, and the Suppliers are the weakest of the five competitive forces. The threat of new entrants to an industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries whereas other industries are very easy to enter. The threat of substitute’s products can lower industry attractiveness

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