Coca-Cola External
Coca-Cola's industry conditions, according to the Five Forces analysis, are generally favorable. The environmental conditions, according to the PEST analysis, are also generally favorable. This means that with few obstacles, Coca-Cola should be able to achieve its business objectives.
NCAIS Code
The industry code for Coca-Cola is 312111: Soft Drink and Ice Manufacturing (U.S. Census Bureau, 2007).
Porter's Five Forces
Porter's Five Forces explain the ability of firms to earn profits in their industry. The bargaining power of suppliers is relatively low. Coca-Cola is a high volume buyer -- the highest in the industry -- and for most suppliers this volume is critical to the business. The inputs are not well-differentiated, so the switching costs for Coke are not especially high. The bargaining power of buyers is moderate. Most wholesale and retail buyers are all but obligated to carry Coca-Cola, given the popularity of the firm's products. Some of the largest buyers, like Wal-Mart or Target, do have buying power because of the volume of business that they do. Other than brand loyalty, however, consumers can switch very easily between Coke products and competing products. Many consumers are price sensitive, however, and there are many low-priced generic beverages on the market.
The intensity of rivalry in this industry is very high. Coca-Cola and Pepsi are the market leaders, and there are a host of generic products on the market as well. The two main firms have an intensely personal rivalry and very high exit costs, raising the stakes. In addition, the largest markets (such as the U.S.) are mature, meaning that the companies are battling intensely for a relatively fixed market. Both firms, however, are differentiated players and maintain relatively high prices, so the oligopoly situation does not cause these firms to sell at a loss in order to gain market share.
The soft drink industry...
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now