Customize Consent Preferences

We use cookies to help you navigate efficiently and perform certain functions. You will find detailed information about all cookies under each consent category below.

The cookies that are categorized as "Necessary" are stored on your browser as they are essential for enabling the basic functionalities of the site. ... 

Always Active

Necessary cookies are required to enable the basic features of this site, such as providing secure log-in or adjusting your consent preferences. These cookies do not store any personally identifiable data.

No cookies to display.

Functional cookies help perform certain functionalities like sharing the content of the website on social media platforms, collecting feedback, and other third-party features.

No cookies to display.

Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics such as the number of visitors, bounce rate, traffic source, etc.

No cookies to display.

Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.

No cookies to display.

Advertisement cookies are used to provide visitors with customized advertisements based on the pages you visited previously and to analyze the effectiveness of the ad campaigns.

No cookies to display.


Coca Cola Porter’s Five Forces Analysis

By John Dudovskiy
August 8, 2015

Porter’s Five Forces analytical framework developed by Michael Porter (1979)[1] represents five individual forces that shape the overall extent of competition in the industry. These forces are represented in figure below:

Coca Cola Porter’s Five Forces Analysis

Threat of new entrants in the industry is insignificant. This is because the global market of carbonated drinks is highly saturated and new entrants cannot benefits from the economies of scale extensively exploited by existing market players. Moreover, there is a substantial knowledge barrier in terms of being able to develop soft drinks that could successfully compete with industry leaders such as Coca Cola and Pepsi and the relevance of technological barrier can be assessed as substantial as well.

Bargaining power of buyers is great and this power is fuelled by the availability of great choice of cola beverages. Moreover, there is no switching costs for customers and the price elasticity of products further increases buyer purchasing power. At the same time, the issue of Coca Cola addiction has surfaced in the media a number of times, addiction of Peter Lawrie, a professional golfer being a noteworthy exampe[2]. Accordingly, it can be argued that bargaining power of small segment of buyers who can be classified as ‘Coke addicts’ is not significant.

Bargaining power of suppliers varies according to the type of supplier. There are few suppliers with great bargaining power such as Ajinomoto Co., Inc. and SinoSweet Co., Ltd suppliers of spartame, a non-nutritive sweetener and Nutrinova Nutrition Specialties & Food Ingredients GmbH, supplier of acesulfame potassium. Coca Cola operates Supplier Diversity Program that promotes diversity among suppliers for reportedly noble reasons, at the same time decreasing the bargaining power of each individual supplier. As it is illustrated in figure below, the volume of investment on supplier diversity has been consistently increasing for the last four years….

Coca Cola Porter's Five Forces

Coca Cola spending on supplier diversity program (figures in millions)[3]

Coca Cola Company Report contains more comprehensive application of the framework of Porter’s Five Forces. Moreover, the report illustrates the application of SWOT, PESTEL and Value-Chain analytical frameworks and discusses Coca Cola’s marketing strategy and company’s approach towards Corporate Social Responsibility (CSR).

 

Do you want more about this?

 

References
[1] Porter, M. (1979) “How Competitive Forces Shape Strategy” Harvard Business Review

[2] Wallop, H. (2015) The Telegraph, Available at: http://www.telegraph.co.uk/foodanddrink/11420170/Are-you-addicted-to-Coca-Cola.html

[3] Supplier Diversity (2015) Coca Cola Company, Available at: http://www.coca-colacompany.com/our-company/suppliers/supplier-diversity

 



[]