Porter Five Forces of Coca Cola

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Porter’s Five Forces In Action: Sample Analysis of Coca-Cola
Since its introduction in 1979, Michael Porter’s Five Forces has become the de facto framework for industry analysis. The five forces measure the competitiveness of the market deriving its attractiveness. The analyst uses conclusions derived from the analysis to determine the company’s risk from in its industry (current or potential). The five forces are (1) Threat of New Entrants, (2) Threat of Substitute Products or Services, (3) Bargaining Power of Buyers, (4) Bargaining Power of Suppliers, (5) Competitive Rivalry Among Existing Firms. The following is a Five Forces analysis of The Coca-Cola Company in relationship to its Coca-Cola brand.
Threat of New Entrants/Potential Competitors: Median Pressure • Entry barriers are relatively low for beverage industry: there is almost 0 consumer switching cost and very low capital requirement. There are more and more new brands appearing in the market with usually lower price than Coke products • However Coca-Cola is seen not only as a beverage but also as a brand. It has a very significant market share for a long time and loyal customers are not very likely to try a new brand beverage.
Threat of Substitute Products: Median to high pressure\ • There are many kinds of energy drink and soda products in the market. Coca-cola doesn’t really have a special flavor. In a blind taste test, people couldn’t tell the difference between Coca-Cola coke and Pepsi coke.
The Bargaining Power of Buyers: Low pressure • The individual buyer has little to no pressure on Coca-Cola • The main competitor, Pepsi is priced almost the same as Coca-Cola. • Consumer could buy those new and less popular beverages with lower price but the flavor is different and the quality is not guaranteed. • Large retailers, like Wal-Mart, have bargaining power because…...

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