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Coca Cola vs. Pepsi Case Study- Team 4

The soda industry has been profitable because of the constant growth with in the industry related to its individual sectors and it concentrates producers. An example of this would be the Cola Wars between Pepsi and Coca Cola. This is where from the years of 1975 to the 1990’s Coke and Pepsi fought over the carbonated soft drink industry in the United States. According to the study both made and average revenue growth of 10%.

Why has the soft drink industry historically been so profitable?

In order to properly analyze the probability of the industry, the use of external analysis is necessary. External analysis requires the assessment of the industries microenvironment, that includes the competitive structures of the industry the competitive position of the company and the competitiveness and position of the major rivals. Porter’s five forces model is used specifically for of the microenvironment analysis. The five forces include barriers to industry, industry rivalry, buyers, suppliers and threats of substitutes. Barriers to entry are a reason the soft drink industry is so profitable. For example the bottling network which makes it difficult for outside companies (not including Coke and Pepsi who buy larger percentages of the bottling companies they use in order to secure the position in the company and make it harder for other companies to use their bottlers to distribute their products. Branding is another reason why it’s hard to enter the soda industry. Both Coke and Pepsi have a long history of advertising and customer loyalty. It would be difficult for another industry to inter the market and compete with those two.

Suppliers are one of the weakest forms of the forces. part of the reason why the market is so profitable this is because the supplies need to produces the products are relatively basic, and the producers who make them don’t control the price. There are several areas of the market where the soft...