Coca-Cola Porters Five Forces-SWOT Analysis.

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Porters Five Forces Sample Analysis Coca-Cola Porters Five Forces Model is

a framework for the analysis of an industry and how a business can implement strategies to gain market value. The model includes threats

of new entrants,threats of substitute products, bargaining power of the buyer, bargaining power of the

supplier,and competitor rivalry. In this case, the model is being utilized to analyze the global

beverageindustry from CocaColas perspective.

Threats of New Entrants The level of new entrants is

measured by multiple factors including: brand loyalty, advertisingabilit y, access of distribution channels, and supplier

availability. These factors create a low tomoderate threat of new entrants.

Customer and brand loyalty make it very problematic for new competitors to enter intothe beverage industry. CocaCola is the most

known beverage brand throughout theworld, which has been made possible through advertising and marketing.

Advertising and marketing are a key component for a new company to gain recognitionfrom consumers.

However, both these components require large amounts of funding to produce broad scale marketing campaigns that

will gain the recognition needed tocompete with industry leaders, such as CocaCola.

Access to distributing channels is an important factor when entering into a new market. Itcan be tiresome for new entrants to find

retailers that will carry their product before theyare established. Shelf space will rarely be made for products that cannot prove

they haveconsumers to regularly buy their product. Coca-Cola and other industry leaders have

strict bottling contracts in all of their salesareas. These contracts block the bottling company from doing business with

companies produ cing a similar product. One of the only alternatives for the new company is to dothe bottling themselves,

which requires high amounts of capital.8 Threats of Substitute Products In the beverage industry there are many

substitutes for each category of beverage. This allowsthe consumer to help shape what the retailers put on the shelves.

Examples of these substitute products compared to Coca-Cola are: Pepsi products, beer, wine, tea, coffee, energy

drinks, etc.The substitute products create a moderate threat in the industry. Marketing and advertising,

again, have a major impact on the substitute products. If theconsumers do not know about a particular product, then retailers do not

want to stock that product. The switching cost for retailers is fairly low, so retailers can easily switch to

more popular products. This can create an advantage for the retailer from a cost standpoint andfor the producers of the

substitute product. Throughout the beverage industry, product lines are very similar in price

betweencompeti ng companies. Differentiation techniques are taken so consumers will choosetheir product. This can give

substitute products the opportunity to use promotional influences to gain consumers favor.

Bargaining Power of Buyers Buyers make up an important aspect of the beverage industry. Some of these buyers include:

fastfood fountain, vending, convenience stores, and super markets. The bargaining power of

the buyer is low to moderate. Fast food chains have the highest bargaining power out of the other buyers,

simply because they buy in bulk. This method of purchasing provides the least profit for Coca-Cola due to small margins. It is

more for the customer to sample the product and grow aloyalty toward the brand name.

Vending machines provide a straight line approach from getting the product directly intothe hands of the consumer.

There is literally no bargaining power for the buyer. Convenience stores, like vending

machines, have no bargaining power. The reason for this low bargaining power is because convenience stor es pay inflated prices for

the products since they are buying smaller quantities. Super markets have low bargaining

power. The power they possess is best shelf space, but consumers usually make the final decision of the most popular products.8

Bargaining Power of Suppliers The bargaining power of the suppliers, in the beverage industry, is very low

because theingre dients used to create these beverages are readily available.

The basic materials used to make CocaCola products are easily found with manysuppliers. This ease of access gives a

huge advantage to Coca-Cola because the companycan set their own prices with the suppliers.

Switching costs are also very low, so the ability for manufacturer s to change suppliers iseasily done.

There is great emphasis put on the buyer industry to suppliers. The industry utilizes largequantities

of raw materials the suppliers must remain in good standing with the buyers. Competitor Rivalry The intensity of rivalry among

competitors differs by the industry. In the beverage industry thelevel of rivalry is relatively moderate. The main reason for

this is the number of major playerscontrollin g the market share. These players are Coca-Cola and PepsiCo.

Brand loyalty is a determinant of the rivalry between competi tors. In the end theconsumers chooses the

product, so the rivalry comes in the form of advertising andmarketing strategies to gain market value.

Products in the industry are easily differentiated. This differentiation lowers the level of rivalry because each

company is trying to create the next product that will have highconsumer reviews.

The ability for consumers to control the market greatly boosts competitor rivalry.Because stores stock their shelves with the

most popular products, competitors are alwaysfighting for their product to be the most popular and easiest to recognize.

Expansion opportunities are one of the major factors affecting rivalry. The best way togain market share is

to enter into a market that is not already occupied by strongcompetitor s. SWOT Sample AnalysisCoca-

ColaSWOT AnalysisThe following table outlines an analysis of the strengths, weaknesses, opportunities, andthreats of

The CocaCola Company. This SWOT analysis identifies the positive and negativeaspects of Coca-Cola as well as

opportunities and threats in the external environment. A moredetailed description of each of these items is

discussed in the following text. EvaluationEnvir onment Positive NegativeInternal Strengths

Strong Brand Identity Various Product Lines Globalization

Large Distribution Network Highest Market Share in CSD Weaknesses

Brand failures (New Coke) Product recalls damaging brand image

Destocking of CocaColaProductsExt ernal Opportunities

Increasing bottled water consumpti on globally Acquisition of CCE

New product penetration Potential growth outside U.S. NARTD market growth

Threats

Biggest competitor: Pepsi

Increasing cost of raw material Reduced demand worldwidedue to health concerns

& purchasing power Changes in consumer prefer ences Strengths

Coca-Cola has been accepted as a part of American culture for over a century. One of the biggest strengths of Coca-

Cola is the companys brand recognition. The Coca -Cola brand image is displayed on items

ranging from clothing to souvenirs, and thisrecognizable branding helps distinguish Coca-Cola from competitors. Their brand is a

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