Five Forces Model

Introduction Coca-Cola Company is the world’s largest nonalcoholic beverage company. It offers a portfolio of world class quality sparkling and still beverages, starting with Coca-Cola® and extending through over 400soft drinks, juices, teas, coffees, waters, sports and energy drinks that refresh, hydrate, nourish, relax and energize. Coca-Cola has more than 400 brands are nearly 2,400 beverage products. Four of the world’s top-five soft-drink brands are: Coca-Cola, Diet Coke®, Sprite, Fanta, Thums Up and Limca, which are formulated to appeal to local cultures and lifestyles.With operations in more than 200 countries, we have a diverse workforce of approximately 55,000 Company employees.

Coca Cola family of beverages accounts for approximately 1. 3 billion servings worldwide of the 50 billion beverage servings consumed every day-a figure that indicates both strength and growth opportunity of the company. Company profile: Coca-Cola is a carbonated soft drink sold in stores, restaurants, and vending machines in every country except Cuba and North Korea.

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1] It is produced by The Coca-Cola Company of Atlanta, Georgia, and is often referred to simply as Coke (a registered trademark of The Coca-Cola Company in the United States since March 27, 1944). Originally intended as a patent medicine when it was invented in the late 19th century by John Pemberton, Coca-Cola was bought out by businessman Asa Griggs Candler, whose marketing tactics led Coke to its dominance of the world soft-drink market throughout the 20th century.The Coca-Cola Company (NYSE: KO) is an American multinational beverage corporation and manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups, which is headquartered in Atlanta, Georgia. [3] The company is best known for its flagship product Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton in Columbus, Georgia. [4] The Coca-Cola formula and brand was bought in 1889 by Asa Candler who incorporated The Coca-Cola Company in 1892.

Besides its namesake Coca-Cola beverage, Coca-Cola currently offers more than 500 brands in over 200 countries or territories and serves over 1. 7 billion servings each day. [5] The company operates a franchised distribution system dating from 1889 where The Coca-Cola Company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive territory. The Coca-Cola Company owns its anchor bottler in North America, Coca-Cola The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the world.The bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and vending machines.

Such bottlers include Coca-Cola Enterprises, which is the largest single Coca-Cola bottler in North America and western Europe. The Coca-Cola Company also sells concentrate for soda fountains to major restaurants and food service distributors.The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke brand name. The most common of these is Diet Coke, with others including Caffeine-Free Coca-Cola, Diet Coke Caffeine-Free, Coca-Cola Cherry, Coca-Cola Zero, Coca-Cola Vanilla, and special versions with lemon, lime or coffee.

Based on Interbrand’s best global brand 2011, Coca-Cola was the world’s most valuable brandThe Company manufactures, markets and sells Leao / Matte Leao teas in Brazil through a joint venture with its bottling partners.During 2011, the Company introduced a variety of brands, brand extensions and beverage products: the Latin America group launched Frugos Sabores Caseros; in the Pacific group, Fanta, a fruit-flavored sparkling beverage, was relaunched in Singapore and Malaysia; Real Leaf, a green tea-based beverage, launched two varieties in Vietnam; and in South Korea it introduced three flavor variants of the Georgia Emerald Mountain Blend ready-to-drink coffee beverage and Burn Intense, an energy drink; the Europe group launched Powerade ION4 in Denmark, Norway, Sweden and France, France launched Powerade Zero; in the Eurasia and Africa group, Turkey launched Cappy Pulpy, and India launched Fanta Powder, an orange-flavored powder formulation; Schweppes Novida, a sparkling malt drink, was launched in Kenya and Uganda; and in Uganda Coca-Cola Zero was launched; in Egypt, it launched Cappy Fruitbite; and Schweppes Gold, a sparkling flavored malt drink, and in Ghana, it launched Schweppes Malt, a dark malt drink. During 2011, the Company sold approximately 26. 7 billion unit cases of its products. The Company’s core sparkling beverages include Coca-Cola, Sprite, Fanta, Diet Coke / Coca-Cola Light, Coca-Cola Zero, Schweppes, Thums Up, Fresca, Inca Kola, Lift and Barq’s. Its energy drinks include Burn, Nos and Real Gold. Its juices and juice drinks include Minute Maid, Minute Maid Pulpy, Del Valle, Simply, Hi-C, Dobriy and Cappy.The Company’s other still beverages include glaceau vitaminwater and Fuze.

The Company’s coffees and teas include Nestea teas, Georgia coffees, Leao / Matte Leao teas, Sokenbicha teas, Dogadan teas and Ayataka teas. Its sports drinks include Powerade and Aquarius. The Company’s waters include Ciel, Dasani, Ice Dew, Bonaqua / Bonaqa and Kinley. The Company competes with PepsiCo, Inc.

, Nestle, Dr Pepper Snapple Group, Inc. , Groupe Danone, Kraft Foods Inc. and Unilever. SOME BRANDS OF COCA COLA Coke’s Porter’s Five Force Model Coke recognized that designing products, manufacturing processes and marketing strategies are to be internationally standardized.These factors are dictated by the scales of economy of different countries and the imperative need for cheaper means of production. Thus, Coke studied the five industry forces to evolve its competitive advantage over Pepsi.

As per Porter’s formula, Coke’s Porter’s Five Force Model plan was to differentiate its frontline Cola product from its chief rival Pepsi by adopting certain operational methods. To heighten its competitive advantage, Coca Cola applied the Porter’s formula Coca Cola has an enviable track record and there are countless millions of costumers the world over and with its five forces strategy it has succeeded remarkably in differentiating its products. The five forces plan is to assess the status of the industry in the open marketplace.It goes into the nature of competition, examines the external threats and identifies the opportunities to achieve competitive advantage. 1. Intensity of Existing Rivalry The first aspect was the low business rivalry. The market was essentially shared by Pepsi and Coca Cola, with a combined market share of 80 percent.

The fact is Coca Cola owns two of the three soft beverages in the market, has few competitors and constantly striving for international presence. The second was to consider the bargaining power with suppliers that can be rated as low. The role of Coca Cola was to primarily supply either sucrose or fructose and undertake the bottling work. Sugar is commonly available and can be bought in the open market.If sugar became overly costly, the company could buy corn syrup instead.

They even bought this substitute earlier during the early 1980s. As a matter of fact, Coca Cola buys high fructose corn syrup as its ingredient inside U. S.

and sucrose only in countries other than US. * Large industry size Large industries allow multiple firms and produces to prosper without having to steal market share from each other. Large industry size is a positive for Coca-Cola. … “Large industry size (Coca-Cola)” has a significant impact, so an analyst should put more weight into it. “Large industry size (Coca-Cola)” is an easily defendable qualitative factor, so competing institutions will have a difficult time overcoming it. Large industry size (Coca-Cola)” will have a long-term negative impact on this entity, which subtracts from the entity’s value.

* Mature industry 2. High number of substitutes High number of substitutes (Coca-Cola) which has a significant impact, “High number of substitutes (Coca-Cola)” will have a long-term positive impact on the this entity, which adds to its value. “High number of substitutes (Coca-Cola)” is a difficult qualitative factor to defend, so competing institutions will have an easy time overcoming it. 3. Bargaining Power of Suppliers * Water is the main ingredient “Water is the main ingredient (Coca-Cola)” has a significant impact, so an analyst should put more weight into it. Water is the main ingredient (Coca-Cola)” will have a long-term negative impact on this entity, which subtracts from the entity’s value.

* Critical production inputs are similar When critical production inputs are similar, it is easier to mix and match inputs, which reduces supplier bargaining power; a positive for Coca-Cola. * Low cost of switching suppliers The easier it is to switch suppliers, the less bargaining power they have. Low supplier switching costs positively affect Coca-Cola.

4. Bargaining Power of Buyers * Product is important to customer When customers cherish particular products they end up paying more for that one product. This positively affects Coca-Cola. Product is important to customer (Coca-Cola) which has a significant impact, so an analyst should put more weight into it. * Large number of customers: When there are large numbers of customers, no one customer tends to have bargaining leverage.

Limited bargaining leverage helps Coca-Cola. “Large number of customers (Coca-Cola)” has a significant impact, so an analyst should put more weight into it. 5. Threat of new customers * Strong brand names are important If strong brands are critical to compete, then new competitors will have to improve their brand value in order to effectively compete. Strong brands positively affect Coca-Cola. * Customers are loyal to existing brands It takes time and money to build a brand.When companies need to spend resources building a brand, they have fewer resources to compete in the marketplace. These costs positively affect Coca-Cola.

Strategic Group Map A Strategic Group Map is used to compare companies within an industry that have similar business model. These companies are compared on the basis of two variables. In the comparison of the companies in the non-alcoholic industry the two variables chosen are the percentage volume change since the last year and the current market share. The diagram identifies the two direct competitors in the industry which are PepsiCo and Coca-Cola Company. The diagram also shows that they compete on the basis of the market share of the industry and volume of sales.The two groups that can be easily interpreted from the map are of Pepsi and Coke and the other group being Dr Pepper the other one. Pepsi and Coke should be on high alert as the volume a change of the other group is gaining. It is not likely for any of Conclusion: Finally, to consider the possible threats of substitutes that may again be rated as low.

There are quite a few reasons why the threat of substitute is low – particularly against Coca Cola. The foremost of them is brand loyalty. Coca Cola has an enviable track record and there are countless millions of costumers the world over, who would never abandon the brand and other Coca Cola products.

There is no denying that Coca Cola has succeeded remarkably in differentiating its products.