Coke Wars Case Study Essay

1. Why, historically, has the soft drink in industry been so lucrative? The soft drink industry has been profitable due to numerous reasons. Overall, it was the successful combination of decoct upgraders, bottlers, retail channels, and suppliers sum the wide spread availability of CSDs and their availability in nutrition and numerous early(a) flavors.2. Compare the economics of the concentrate business sector to that of the bottling business Why is the gainfulness so different? Concentrate producers, produced cheap concentrate product that was promoted and advertised successfully. The cost to build and run a manufacturing facility was relatively elfin , concentrate companies invested heavily in research and maturation and food marketing of the product, and successful customer development agreements(where the company would offer retailers gold for marketing and other uses) were made that helped stimulate sales.Bottling companies had it harder, since the industry was muc h more capital intensive and had significant expenses in concentrate, syrup, packaging, labor, and overhead.3. How has the competition between bump and Pepsi affected the industrys profits? Their competition for greater market share led to the evolution of both companies into dominant companies that left little room for other competitors for the vast majority of their history. This increased growth in profit, however, meant a lot more advertising and capital investment, which its profitability began to reach its peak in the late 1970s as nearly other small bottlers were forced out of the market. Thus, as Coke and Pepsi pulled away, other CSD concentrate companys and bottlers were forced to leave the industry, since they couldnt compete.4. Can Coke and Pepsi observe their profits in the wake of flattening demand and the growing popularity of non-CSDs?-I believe they can, as they have been known to branch out and buy or produce other types of products other than just CSDs. An exam ple would be coke nowowning swank Water. However, they must invest heavily in these non CSD products and make them a big part of their operations.5. Which of the 5 forces is the most important threat for concentrate producers v. bottlers? Barriers to entry. two companies have franchise agreements with their bottlers, who have rights in certain geographic areas. These agreements proscribe bottlers from taking on new contracts for competing brands for similar products.View as multi-pages