Question

what is Coca-Cola positioned in the market vis-à-vis the five forces in the industry?

Answer 1

Five forces analysis for Coca Cola:

1. Threat of New Entrants- Coca Cola does not have the threat of new entrants because though it is easy to set up a new firm in the beverages industry, it is hard to reach the level of Coca Cola. It is globally recognized and enjoys high consumer loyalty so does not have to worry about new entrants.

2. Bargaining power of Suppliers- Suppliers do not have bargaining power because there are many suppliers. So switching cost for Coca Cola is not high and they can easily find other suppliers. This means that suppliers cannot influence the prices.

3. Threat of Substitutes- Coca Cola has many substitutes. There are many drinks available for the consumers to choose from. Switching costs are low for consumers, so the firm has to ensure to keep it's prices competitive and satisfy consumers.

4. Competition in the Industry- The industry faces cut throat competition. There is intense rivalry among main players and the biggest rival for Coca Cola is Pepsi. There is a long term rivalry among the two firms and their pricing techniques are competitive to ensure they do not lose the market share.

5. Bargaining power of Buyers- Buyers get to choose from a wide range of products in the industry. They have many options available and it is seen that consumer loyalty pays a huge role in the industry. But buying power is moderate because each individual consumer will not be in a position to make a huge change of profits so the firms do not worry about individual buyers.