Coca-Cola Value Chain, Competition, Challenges, Threats, Supplier, and Strategy

First and Last Name:
Major:CFA
Section: 3
1 Industry Value Chain (20 points)
The producers of carbonated beverages are those which produce the concentrate, particularly the syrup, which is the base of the carbonated drink.
The Bottlers are those which turn the resulting concentrate into carbonated drinks by adding carbonated water and fructose corn syrup.
The distributors are the intermediate entities that are in charge of establishing and maintaining logistical support to deliver produced carbonated drinks to retailers. At times, they are also in charge of entering into contracts with local merchants for bulk sales.
The Marketing and the merchant are two entities. On the one hand, the marketing works with the whole company as well as the merchants to increase the sales of the carbonated drink. On the other hand, the merchant is those retailers who sell the carbonated drinks in retail, rather than in bulk.
2 Competitive Forces Model (30 points)
The following are the competitive forces that surround Coca-Cola:
1 Threats of New Entrants: Coca-cola is one of the largest companies that produce various beverages around the world. Because of its sheer size, product variation, and the nature of the competition, some barriers exist, including
1 Technical barriers
1 Coca-cola's recipe is still undisclosed right now. Thus, any R&D to develop a new product might take a few resources to conduct. Nonetheless, producing another product would not be as high a threat for new entrants.
2 Financial and Logistical Barriers
2 One of the main difficulties for any new entrants is Coca-Cola's broad popularity and accessibility. On the one hand, Coca-Cola spends a lot of its resources on marketing. In fact, in 2009 alone, the company is said: "to have contributed $540 million in marketing support payments to its top bottler" alone CITATION Dav11 \l 1033 (David & Kim, 2011). These high marketing expenditures would be one of the barriers to entry.
On the other hand, Coke's logistical support is also established.
2 Buyer's Power
3 One of the difficulties for Coke is the high buyer's power. There are a variety of drinks and beverages available in the consumer market. This includes carbonated drinks and even those that belong to different categories like juices, teas, and coffees, among others. This affects the buyer’s power.
First, with regards to bottlers, this diversity of products and competitors give them the chance to demand for higher price especially if there are other offers from competitors.
Second, with regards to retailers, the number of competitors who are paying for shelf-space also increases the competitiveness of the market.
Finally, with regards to end consumers, the diversity of the product makes it difficult for Coke to increase its prices significantly.
Nonetheless, Coke's marketing strategy, together with its history, helps in maintaining a steady set of consumers.
3 Threat of Substitute
4 Coke's carbonated drinks have a lot of substitutes like tea, coffee, juices, and even other soda beverages all over the world. Nevertheless, Coke’s acquisition of various businesses, still gives it an edge which when combined with its sheer size and logistical pow...