COMPETITIVE AND CORPORATE STRATEGY COLA WARS CONTINUE : COKE AND PEPSI IN 2010
TEAM:
Daniela Tello Rioja
041314353058
Wisnu Harimurti
041324353024
Ryzkiya Noor Annisa
041324353013
MAGISTER MANAGEMEN ECONOMICS AND BUSINESS FACULTY OF AIRLANGGA UNIVERSITY
COLA WARS CONTINUE : COKE AND PEPSI IN 2010 Could Pepsi and Cola boost flagging domestic CSD (Carbonate Soft Drink) Sales? Pepsi and Coca Cola could boost the Flagging Domestic CSD with consider with Porter’s five key competitive on exhibit 1. The Threat of new Entrants Particularly when new entrants are diversifying from other markets, they can leverage existing capabilities and cash flows to shake up competition, as Pepsi did when it entered the bottled water industry and gained cola (Porter,2008). The Power Of Supplier Pepsi and cola is Already consolidate with the bottler, it is mean that the can decrease their cost. It’s one of tehir competitive advantage to stay. The Power of Buyer can capture more value by forcing down prices, demanding better quality or more service (thereby driving up costs), and generally playing industry participants off against one another, all at the expenseof industry profitability. (Porter,2008) The threat of Subtitutes Subtitute can be non Carbonated product or carbonated product with different charactheristic. But Pepsi and Coke, both have strong brand images that difficult to immitated. Rivalvy Among Existing High intensity of rivalry due to slow industry growth and two equal sized, highly committed rivals Pepsi and Coca-Cola that strive for leadership, is questioning the existence of smaller players. As we know from the case that the consumption of CSD is grew up by 3%. To maintain this condition especially on sales Cola and Pepsi have to: Product innovation It is need because buyer always want something more, cola and pepsi have to make an innovation gradually to fullfill the need of buyer. Aggressive Marketing and Promotion The case noted that Gallon per capita for U.S market is 48.9 and gallons per capita is less than 10 for most of the potential international markets ( Exhibit 8). This forces the Coke and Pepsi to pursue a different kind of marketing strategy in domestic and these international markets. Initially the marketing strategy is to boost the soft drink consumption in these untapped markets. Advertisement create great relationship with their consumers to make them feel relax to use these brands.
Diversivication Diversivication is need to keep the brand uniq and variative. How could they compete in in the growing non-CSD category that demanded different bottling, pricing and Brand Strategies? Cola and Pepsi are already growing in the non-CSF category. Cola purchased Minutes Maid (Fruit Juice) and Duncan Foods (Coffee, tea, hot chocholate). Pepsi also diversivified with snack-food giant Frito-Lay. It is very possible to compate in non CSD category. Cola and pepsi are already have great resource, core competency and capabilities to run their bisnis. They also need to maintain their competitive advantage to catch the superior firm performace. (see exhibit 2) What had to profitability?
be
done
to
ensure
sustainable
growth
and
The challenge sustain their profit is to sustain their historical rate of growth. To do so, they need to seek out new markets and increase consumption. They also can Grow in the International Markets and Enter into growing non- soft drink but beverage industry, Improve their cost structure, Acquire growing brands in the soft drink industry. The VRIO Framework Valuable The consolidate bottlers > may lowering the cost. Both brand are known as great brand in US. Rare The strong and unique promotion will capture Coke and Pepsi as the greatest brand. But if they are not rare there would be little power of the supplier because there will be any subtitutes that excactly the same. Costly to Imitate The network and product availability in Supermarket as well as vending machine make this company was Costly To Imitate. Organized to Capture Value Both company are organize to capture value especially from the customer by maintaning the quality and performance of their brand.
Exhibit 1 Porter Five Force based on CSD industry:
Already consolidate with the bottler --> Decrease
The The Competitio Competitio n in CSD CSD n in for new new for Brand Brand
The new competitors from dr pepper group
High Rivalry Due Industry didn’t growth
The Bottler The Bottler Consolidati Consolidati on on
Strong Strong Brand Brand Hard to Hard to subsitute subsitute
Powerful Powerful Buyers Buyers
Pepsi and Coke, both have strong brand images that difficult to immitate
Exhibit 2
Resources Core Competenci es
Reinvest, Home, Upgrade
Firm Activities
Competitiv e Advantage
Capabilities Reinvest, Home, Upgrade
Both may leveraging their recognized brand
Superior Firm Performanc e
