• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Cola War between Coca-Cola and PepsiCo

Extracts from this document...


Business Studies 1 Cola War between Coca-Cola and PepsiCo Meili Wang Bing Xu 27th Nov. 2008 Introduction When a new business starts, there are always hundreds of competitors fighting for the cake division. While only minority of them can stay up to be the leaders of the whole industry after intense competition and restructuring. Especially during the process of industry globalization, there would appear huge industry giant companies. Coca-Cola and PepsiCo in beverage industry are examples for birth of giants in their industries. They have competed for the worldwide beverage market "throat share" since the past more than 100 years. During the "carefully waged struggle" period (1975-1995), both of them kept a growth rate at average around 10% for the consistent increase in the US and world Carbonated Soft Drinks (CSD) consumption. However, their comfy situation has not last a long time since worldwide consumption for Coca-Cola and PepsiCo both slowed down in the late 1990s. Therefore, they began to take corresponding "bottling, pricing and brand strategies" (Yoffie, 2002, p1). With the continuing intense competition, the cola giants are facing new challenges; this essay aims at giving possible strategies that can be applied for their further development based on detail analysis on their competitive position in this industry. ...read more.


"Technological forces" Computerised technology would bring improvement to the efficiency of the bottling process and IT makes the industry easier to operate globally. > Porter's five forces analysis on "task-environment" Figure 1: Porter's Five Forces Framework (Source: Adapted from Wheelen T.L. & Hunger J.D., 2006) As it is shown above in Figure 1, Porter's Five Forces Model of competitive analysis is a widely used approach for developing strategies in many industries. It provides a framework for analysing the nature and extent of the competition as well as company's competitive position within an industry (Campbell & Stonehouse, 2002). "Threat of New Entrants" The pressure from new entrants to the CSD industry are not very strong because potential entrants can only be the companies with vast distribution systems that can compete with the current market players. In addition, consumers are always brand loyalty in this market and this causes barriers of entry high. "Rivalry among Existing Firms" According to "2007 Annual Review" released by The Coca-Cola Company, in the US non-alcoholic beverage market, by volume, Coca-Cola covers 43% and Pepsi 31% of the market share. The rivalry between the two leaders is extremely high, but other players in the market stand no possibility in competing against the well established brands: Coca-Cola and PepsiCo. ...read more.


The key recommendation for Coca-Cola is to gain more market shares in bottled water and other non-carbonated drinks. It must change with the times to adapt the needs for new generations of consumers and health conscious consumers. It should also communicate well with its buyers and suppliers. The most important is it must have continuing product innovation. For PepsiCo, it should stick to its product differentiation strategy and maintain its market position in the non-carbonated drink market. In addition, PepsiCo should focus on providing good pricing strategies. "From a channel perspective, Coca Cola is dominating Pepsi in fountain stations. For Pepsi, turning the tide in this channel is critical to long-term success" (Puravankara, 2007, p94) Conclusion Given the extreme competitive environment of the CSD industry and comparative analysis on competitive positions of Coca-Cola and PepsiCo, the slow growing market size, a company that is going to be successful must know well of the environment that they are engaged in. In order for PepsiCo and Coca-Cola to protect their positions, they must recognize the existing opportunities and treats. For their further development, Coca-Cola should pay more attention in product innovation to facing health trend and changeable market. While for PepsiCo, it should stick to its product differentiation strategy and focus on gaining a pricing advantage and turning the tide in channel perspective. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our University Degree Management Studies section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related University Degree Management Studies essays

  1. Innovation For Business Success. It is possible to be innovative in both large ...

    CEO Christopher Janssen has concentrated 95% of his time and effort on marketing. The differentiated customer value proposition is not standard in the industry and requires significant effort and finesse in explanation to potential clients. Phil Cavanaugh is supply chain general manager and runs the operations of the company, ensuring that customer orders are filled with high reliability and quality.

  2. The global business environment and its impact on Nestle.

    * When the availability and benefits of the products are been informed, consumers will get persuaded to purchase the products. > Direct marketing and personnel selling * Direct marketing is selling the products directly to the consumers where the respective agents can gain the consumer response effectively.


    In the developing world, 80 percent of water usage goes into agriculture, a proportion that is not sustainable; and in 2015 a number of developing countries will be unable to maintain their levels of irrigated agriculture. Over pumping of groundwater in many of the worlds important grain-growing regions will be

  2. Critically evaluate the arguments for Corporate Social Responsibility and isolate whether you think it ...

    as the Red Cross and has won prestigious Indian environmental awards for environmental practices. They have also responded to these allegations by "rainwater harvesting" projects at 26 plants, cutting water use by 25 per cent and shipping in drinking water to stricken villages.

  1. Insight Into The Pharmaceutical Giant: Johnson&Johnson. The overall aim is to critically evaluate the ...

    (Johnson and Scholes, 1997). J&J's decentralized structure is the result of complex environment, which brings the company flexibility and quick reaction to the environment. 1.2 LEST Analysis In the external environment, the factors of Legal, Economic, Social and Technological more influence the development of J&J.

  2. Pakistan State Oil (PSO) is the oil market leader in Pakistan enjoying over 79% ...

    Substitutes are also taken into account when new development is done to introduce the real substitutes and these substitutes provide customers with price reduction and performance improvement hence increasing the competition. The most common substitute being used these days is natural gas by the power sector firms and coal.

  1. Influences of the Chinese macro environment on the past, present and future employment these ...

    and majority shareholding joint ventures The theoretical basis of foreign market entry is not new; in facts it has been explored extensively in the past by various academics of both the marketing and international trade disciplines. In order to reconcile their views it is believed that a theoretical examination (literature review)

  2. car industry

    these major groups - DaimlerChrysler, Volkswagen, PSA/Peugeot-Citroen SA and Renault - are European 3.' 1.0 THE MICRO-ENVIRONMENT. 3.1- SUPPLIERS. * Recent trends show that outsourcing in the European automotive industry is becoming more varied and more prominent, which large suppliers have utilised to adopt additional functions and therefore more added-value per unit vehicle.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work