Porter's five forces Case Study Example | Topics and Well Written Essays - 500 words

Porter's five forces - Case Study Example Start up of soft drink industry requires high financial capital, labor, marketing, warehousing and advertising. The situation makes it difficult for a competitor to enter into the industry and expand. Additionally, Coca Cola Company has made huge investments in their advertisements which resulted to brand loyalty with its customers throughout the world. For example, Coca Cola Company’s advertising strategy made it attain a larger market share in 2011 than its rival Pepsi. The market of Coca Cola was at 41.9%, the market share for its rival Pepsi was at 29.9%. The advantage was driven by huge investment Coca Cola Company makes in advertising (Russell). The main substitutes of Coca Cola products are bottled water, tea, coffee and sport drinks. Consumers are currently more concern about their health. They have begun cutting down on the demand of sodas because of the view that they contribute highly to obesity due to its high caloric content. Additionally, tea and coffee are a threat to Coca Cola products because they have caffeine and customers can decide to buy it. This makes the substitute products stronger and a threat to the Coca Cola Company (Russell). Raw materials essential for manufacturing Coca Cola products are basic raw materials such as sugar, flavor, color and packaging materials. The suppliers of the above materials have low bargaining power because materials are easy to obtain and there are many suppliers in the market. However, with recent inflation of the price of goods, cost of materials such as sugar and packaging increased. This affects the profits of Coca Cola Company (Hill and Jones 44). The Coca Cola Company and any other company distribute their soft drinks to convenience stores, restaurants, supermarkets and large grocers for resale directly to customers. They are the buyers of Coca Cola products, and they buy the products in large quantities for