Cola Wars Case: Porter's Five-Forces Analysis

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Cola Wars Case: Porter's Five-Forces Analysis
1 Competitive Rivalry
The competition amongst the existing rivals is low or medium. Coke and Pepsi have the largest market share in the soft drink industry. By 2009, the companies claimed a combined 72 percent of the United States (US) carbonated soft drink (CSD) market's sales volumes (duopoly), followed by Dr. Pepper Snapple Group (DPS), which was expected to command 16.4 percent of the market share, and Cott Corporation (4.9 percent). Additionally, private manufacturers and several other regional and national producers constitute key industry players (Yoffie and Wang 2).
2 New Entrant Threat
It is reasonably clear that new entrant's threat is low because of heightened entry barriers. A huge initial capital outlay is required to enter the United States' CSD industry. There is also high competition in the bottling process, which incorporates substantial capital requirements and entails high-speed production and substantial costs necessary for advertising, market, research, promotion, and bottler support (Yoffie and Wang 2).
3 Suppliers' Power
The most crucial input in CSDs (concentrate) marking process is offered by the soft drink firms, whereas other inputs (caffeine, packaging, sweetener, flavor, and carbonated water) needed are non-differentiated (commodities) and easy to source for many producers (Yoffie and Wang 5). Therefore, suppliers have low bargaining power.
4 Buyers' Power
Many players are represented in the buyers' category within the CSD market, which weakens buyers' bargaining power (low). The bottlers' network is highly fragmented and incorporates the limited power of concentrate producers. Pepsi's Master Bottler Agreement and Coke's Master Bottler Contract granted the two cor...