Name: Abiera , Luzviminda A.

Course: BSBA FM3A

Lesson 3

Porter’s Five Forces of Cola-Cola Company

The five forces that this model evaluates are part of every industry and market manages
can form strategies based on an analysis of this forces to increase the probability of
their business. Coca Co la is the leading brand in beverages sector and has a global
presence its only major industries. The five forces that this model evaluates are a part of
every industry and every market. Manages can form strategies based on analysis of
these force. Coca-Cola is a leading brand in beverages sector and has a global
presence. It only major competitor is Pepsi.

1. Bargaining power of suppliers

The bargaining power of suppliers of Coca cola is weak. It is so because the

number of suppliers is high and the switching cost for Coca cola low. While Coca
cola can easily switch from one supplier to another it is not possible for any
suppliers to switch away from Coca cola as easily there are several suppliers the
size of individual suppliers is small or moderately larges. So the main factors that
have come to light regarding the bargaining power of suppliers are.

 Larges number of suppliers

 Small to moderately large size of individual suppliers
 Forward integration difficult for the suppliers
 Scotching cost for coca cola not so high

2. Bargaining power of buyers/customer

The bargaining power of individual customer in case of coca cola is low.
Individual customers generally buy small volume and they are not concentrated
in specific markets either. However the level of differentiation between Pepsi and
coca cola is low. Mostly they sell similar flavors. Scotching cost is not high for
costumer and still the two brands enjoy high brand loyalty. The customers of
coca cola are not price sensitive. Backward integration is not a possibility for the
 customer or a large retailer if a retailer acquires some bargaining power then it is
only because it buy in large volumes still overall the customer bargaining power
is weak.

3. Threat of new entrants

In the beverages industry there are several factors that discourage new brands
from entering. Growing a brand overnight is impossible. There are significant
investments to be made. From operations to marketing every part requires larges
investments. Some local brands may start it at smaller scale and still marketing
and hiring qualified staff requires generous investment. The level of customer’s
loyalty in the industry is moderate and for any brand to build customer loyalty it
will take some time.so while new entrants can complete with brands like coca
cola at a smaller or local level to build a brand as a big is a mammoth task
requiring both capital and skilled human resources.

4. Threat of substitutes
Main substitutes of coca cola products are the beverages made by Pepsi, fruit
juices and other hot and cold beverages. The number of substitute of coca cola
product is high. There are several juices and other kinds of hot and cold
beverages in the market. The switching cost is low for the customers. Apart from
it the quality of the substitute product is also generally good. So based on these
factors the threat from substitute is strong

5. Competitive rivalry between the existing

There are two major players in the soda industry and they are coca cola and
Pepsi. There is intense rivalry between the two major players. There are few
smaller player. There are a few smaller players too but they do not pose a major
competitive threat, the two main players are nearly of the same size and they
have similar product and strategies. The level of differentiation between the two
brands is also low and therefore the price competition is intense. People have
already heard of the coca cola wars so the level of competitive rivalry between
the existing firms is a strong force.
SWOT Analysis

Strengths
 Varity of across different categories.
 A 43% market share in the soft
drink industry.
 Powerful brand recognition on a
global scale.
 Secret recipes for their soft drink
products.
Opportunities
 The company can increase their
market share if they listen and
adapt to health trends.
 Relatively few actual competitors on
market.
Weaknesses
 Difficulty to keep up with the health
industry.
 Unable to find a better substitute for
sugar.
 Difficulty to change current
positioning and customers attitude
toward the company.
Threats
 Companies that are offering healthy
alternatives to coca cola and other
soft drinks
 Negative press and media coverage
can harm the brand in the long run.

Strengths

 Variety of product – one of the biggest strengths that the coca cola Company has
is their incredible variety of products across different categories. In fact there are
over 500 brands across 200 companies connect by coca cola. This not only gives
them a higher control on the market but also more diversified expertise and less
overall completion.
 Market share – with a marketable share of 43% in the soft drinks industry. They
have a very solid positioning compared to many other competitors , which also
means that it would be extremely difficult to compete with Coca Cola and its
almost unlimited resources.
 Brand recognition – Coca-Cola is one of the most recognized brands in the world
, which gives them a huge advantage in front of their competitors.
 Secret recipes – And last but not the least , the company prides itself in having a
secret recipe for its flagship product the Coca –Cola this means that this
product will be difficult to replicate by competitors.

Weaknesses

 Health trends – One of the biggest weaknesses that the company has is its
inability to adopt to current health trends. As people are becoming more and
more conscious about the unhealthy foods and the amount of sugar they are
consuming, soft and sugary drinks are slowly getting substituted by healthier
options .
  Sugar substitute – another health related weaknesses for the company involves
the difficulty of improving their quality of their product without affecting its famous
taste. Coca-Cola has been actively looking for healthy sugar substitute for years
with no success.
 Current positioning – The current positioning of Coca-Cola and its soft drinks is
both a blessing, because everyone knows the brand and the product it offers.
This kind of brand recognition is something that every company dreams of.

However, this weaknesses comes with fact that Coca-Cola already has certain
reputation established for itself that is difficult to change, and considering its sugary
drinks with mysterious and secret ingredients, it is certainly not the most positive one.

Opportunities

 Health trends – If the Coca-Cola company closely monitors and responds

adequately to current health trends , they have a huge opportunity to increase
their market share. And get an event bigger chunk of the soft drink industry.
Especially if they manage find a healthy substitute for sugar.
 Few major competitors – considering the dominance of the brand and only few
major competitors for these particular types of products , Coca-Cola can quickly
introduce new products with the right marketing strategy.

Threats

 Healthier alternatives – Although the company is quite dominant when it comes

to soft drinks . a lot of other healthier alternatives are arising on the market .
flavored waters , smoothies , organic drink , green juices , and so on, are just
some of the alternatives that people are starting to prefer as they get more
conscious with their heath.
 Negative press media coverage – Although the Coca-Cola company is known for
its brilliant marketing strategies and its incredible brand recognition , it also get a
lot of negative coverage for being unhealthy .
 EFE Matrix

The Cola-Cola company was founded in 1886 and it is based on the industry of
soft drinks . The company was first started or the origin of the company was United
States . The production of the concentrate is sold by the company which I further sold
by the company through the licensed bottles of the coca cola. The company has the
very strong diversified product portfolio which attracts the interest of the customer.

External Weighted comments

strategic factor weight Rating score

OPPORTUNITIES

Strong and Due to the strong and diversified

diversified product 0.13 4 0.52 product portfolio the company Is not
affected by the any new invention in
the market

The arrangements made by the

Packaging 0.08 4 0.32 company relating to the coca cola
packaging are most advantage for the
company for enhancement the whole
world.

The acceptance of The acceptance of the new projects in

the new projects in 0.03 4 0.12 the company has been stared in the
the company industrial level that increases the
demand for the company’s product.
New technology should be introduced
New technology 0.14 4 0.56 by the company in order to improve
the performance and efficiency of the
work.
The company can focus on the niche
Niche market 0.05 3 0.15 areas of the market that generates and
could be focused improves the sale of the products
within the company
Advertisement of There is an opportunity for the cola-c
unpopular product 0.03 2 0.06 cola company to advertise its product
that is not much popular among the
customers or the people .
 There is a great opportunity for the
Gap between 0.04 2 0.08 company to overcome the gap
competitors between them and their competitors.
Great number of The Cola-Cola company has lots of
successful brands 0.14 3 0.42 brands that continue and pursue it to
the great success.
THREATS
Heath conscious Although the Coca-Cola company is
people 0.04 4 0.16 attaining almost about 40% control
over the entire beverage market but
due to the factor of health conscious
people attitude the company can be
affected badly and affects the sale of
the company.
The factor of The factor of lawsuit is also the threat
lawsuits 0.06 4 0.24 for the company that cause decline the
wealth and popularity and also affects
the sales of the company.
The major threat for the company is its
Competitors 0.07 4 0.28 competitor especially Pepsi which is
(Pepsi) selling most similar product same as
the Coca-Cola and also the various
sorts of the brand juices , coffee , and
milk are threat for the company .
Economical change and impact are
Economical 0.08 3 0.24 also playing adverse role in the
changes success of the company and the
growth that is among the sales.
Increase in The increase in the demand of the
demand of 0.02 3 0.06 production of the noncarbonated
substitute products like juices and nectars etc.
can affects the growth of the company.
Total Weighted The large numbers of substitute
score 1 3.48 regarding the company’s product are
also available in the market that
reduces the demand.

Based on above calculations it has been concluded that the company’s total
weighted Score is 3.34 which shows that the company is hugely successful in utilizing
its opportunities and minimizing the threats around it.
CPM

The Cola-Cola is the world’s largest beverage company, offering consumers

almost 500 still and sparkling brands. Coke has the world’s largest beverage distribution
network ; consuming is more than 200 countries enjoys the Coke’s beverages at the
average of nearly 1.6 billion serving a day.

In 2011, Coca-Cola was declared the world’s most valuable brand according to
Interbrain’s best global brand. Most diversified range of products such as Cola-cola
Cheery, cola-Cola Vanilla, Diet Coke, Diet Coke Caffeine-Free, Caffeine-free Coca-
Cola and range of lime or coffee and lemon. Coca-Cola has very effective advertising
also represent the US culture , By sponsoring different games and team also featured in
countless television programs and films.

Competitive profile matrix (CPM) is one of the strategic management tools to

differentiate among different players with an industry. CPM indicates the snapshot to the
companies about weak and strong points relative to their competitors. In CPM players
are measured on the basis of their critical success factors. The competitive profile
matrix identifies a firm’s major competitors and its particular strengths and weaknesses
in relation to a sample firm’s

Competiveness of the firm can be measured on the basis of industry key success
factors and firms strengths. If variation between the final score found among the rivals ;
than with the higher score getter has the greater net competitive advantage and vice
versa for the lower score getter. The final score showed that the Coca-Cola is a strong
company in respect of its competitors. The Pepsi and Cadbury Schweppes stayed on
the second and third position with scores 3.48 and 2.88 respectively. Coca-Cola has the
highest score in the industry in terms of industry key success factors.

 Discuss the strategic issues that the company faces.

The main strategic issues facing Coca-Cola company are :

Wellness and health trend, Because the products of Coca-Cola Company

are considered to be a high sugar product and harmful for health. This health
trend and consumer awareness of health and obesity problems are considered to
be a serious risk to the carbonated drinks company and a significant challenge to
the Coca-Cola industry. And
PepsiCo Competitions, Coke main competitors is Pepsi Co. Both brand
represent the most heated enemies in the beverage business. There is others
competitors but none of them have successfully penetrated in the market like
coke and Pepsi Co. The competition between the two brand consist on the
creation of new variants of carbonated drinks and non-carbonated drinks and
increasing revenue and market share. Both of them have similar strengths and
weaknesses.
But the problem is that coke focuses almost exclusively in beverage
product while Pepsi don’t concentrate all its resources on the specific product , it
operates also in non-Beverage category such as oats and chips which create
more opportunity for Pepsi Co to takes sales advantages for resulting synergy
among various products.
 Lesson 4

1. Nokia selected the mobile telephone for the development , because mobile
telephone market had great worldwide growth potential and was growing fast .
Nokia’s competitive its advantage in the mobile telephone business was a step
ahead of other manufacturers.
Nokia was highly successful in its expansion. And also Nokia was
particularly good in reading what costumer wanted and raise profit margins.

2. The problems that Nokia faces by 2004 are it failed to read the customer
demand correctly around the year .the new clam shell folding designs and mid-
price photo imagining screens from its competitors proved popular in the market
place.
Nokia realize that it needed to review its position , it has also face problem
that would come as 3G digital technology become accepted medium of
technology.

3. What
4. Management teams was important to strategic choice because management
team has a vital role in terms of formulating and executing a strategic choice .
The management teams at Nokia change too often and without clear guidelines
to steer the process ahead.
YES, it change the necessary . most importantly the slow organizational
change, its gradual and likely to meet with less resistance and has a higher
commitment from the people involve.

Lesson 5