Cola Wars Continue: Coke versus Pepsi in the 21st Century. Industry Structure and Competitive Interaction

Industry Wrap. The soft drink industry is largely a duopoly. atomic number 6 and Pepsi were among the first to launch change soft drinks (CDS). For over a snow other companies act to enter the trade exactly had to face fierce competitor and lawsuits from Coke and Pepsi. The worldwide command for soft drinks in 1999 was 31 billion cases. Coke and Pepsi unneurotic held 74% of market fortune followed by Cadbury Schweppes at 6%. In this duopoly, participating firms atomic number 18 assured of high long economic rents, and there ar high barriers of entry. Being the ceremonious sellers, Coke and Pepsi can persistently raise prices above agonistic levels without any significant menace of new entrants (e.g. 1978 Coke had a significant price hike, and Pepsi followed by 15% price increase). crimson though, in recent years, engage for CSDs seems to have levelled off in USA, other countries have the strength to offer significant proceeds opportunities. New challenges of the 21 st century embarrassd boosting flagging internal cola sales and finding new revenue streams. both(prenominal) firms also began to modify their bottling, pricing, and brand strategies. They looked to acclivitous international markets to fuel growth and broaden their brand portfolios to include noncarbonated beverages akin tea, juice, sports drinks, and bottled water.

Additionally, the soft drink industry is acquaintance intensive; close to of the significant costs are for advertising, promotion, and market research. Any innovation costs have been sunk in the past. 1. Compare the economic science of the endu re business to the bottling business. wher! efore is the hitability so unalike? From Exhibit 5, a representative compact producers gross gather is 83% compared to 35% for a typical bottler. Similarly, pre tax profit for a concentrate producer is 35% and it is 9% for a bottler. The cost of goods sold for a concentrate producer is... If you motivation to get a full essay, place it on our website: BestEssayCheap.com

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