Analyzing Porter's Five Forces: Coke and Pepsi Rivalry Insights
School
LUISS Guido Carli**We aren't endorsed by this school
Course
ECONOMIA 12345
Subject
Economics
Date
Dec 12, 2024
Pages
4
Uploaded by EarlGullMaster1109
Cola Wars Continue: Coke and Pepsi in 2010Case assignment For this assignment, we shall put to the test your understanding of Porter’s classic Five Forces model. Let’s start by numbering them:1.Threat of new entrants2.Threat of suppliers3.Threat of buyers 4.Rivalry conditions5.Threat of substitutesI would like your team to focus on only one of those forces. Please focus on the force identified with your team’s number. That is, if you belong to Team 4, focus only on Rivalry conditions. In this course we shall have only 4 teams; we shall cover the remaining force in class.Please, make a comprehensive analysis of the conditions on the force you’ve assigned to, as it applies to the Concentrate Producers’ industry. Please, apply the relevant ideas showcased in the assigned reading. For further guidance, please consider the questions listed in the next pages. You do not need to fill out those spaces one by one, as this is not a questionnaire, but only a guide for your own analysis. After reviewing each of the factors that explain the force at play under analysis, you should come to a conclusion. Does this force make the industry very attractive, moderately attractive, or unattractive? Remember you always evaluate industries from the perspective of incumbents, not new entrants. Once you are finished, please upload your document to Canvas and come to class prepared to defend your position. Good luck! Yes (+) No (-) N/A Do industry incumbents have any cost or performance advantage over new entrants?Are there products with differentiating attributes exclusively controlled by one or a few competitors (“proprietary differentiators”)?Are there well-defined brand identities in the industry?Do new entrants need substantial upfront capital investments to enter the industry?Do industry players require capital goods that particularly expensive?Would new entrants find it difficult to obtain access to distribution channels?Threat of new entrantsPage of 14
Is there any evidence that experience & learning enable incumbents to continually lower their costs?Would new entrants find it hard to access qualified human resources, or some critically important supplies or suppliers?Does your product or service have any distinctive characteristics that give you a cost advantage?Are there any licenses, administrative requirements, or insurance coverage that may be difficult to obtain?Should a newcomer to the industry fear retaliation by incumbents?Yes (+) No (-) N/A Threat of new entrantsThreat of suppliers Yes (+) No (-) N/A Are industry inputs (materials, HR, services, technology, etc.) standard commodities, undifferentiated? Or are they subject to proprietary technology or particularly scarce? How hard would it be for incumbents to change supplies?Can incumbents change suppliers quickly and inexpensively?How difficult would it be for an industry supplier to forward integrate and enter the industry? How difficult would it be for an industry incumbent to backward integrate and enter the suppliers’ industry? How important is the industry business to its suppliers’ base?Is the cost of supplies an important component in the incumbents’ cost structure?Yes (+) No (-) N/A Are there many buyers in relation to the number of companies in the industry?Do incumbents have many customers, with relatively small individual purchases?Should industry buyers incur significant switching costs when changing providers?Does the buyer need plenty of critical product-related information to make purchasing decisions?How feasible would it be for an industry’s customer to backwards-integrate and enter the industry?Threat of buyersPage of 24
Are industry customers price-sensitive?Does the industry products have differentiated attributes?Do industry incumbents have a brand identity clearly established in consumers’ minds?Are the industry clients' businesses profitable?Yes (+) No (-) N/A Threat of buyersRivarly conditions Yes (+) No (-) N/A Is the industry growing rapidly?Is the industry cyclical, with intermittent overcapacity crises?Are the industry’s fixed costs an important portion of total costs?Are there significant differences in product and brand identities among competitors?How hard would it be for an incumbent to divest and exit the industry? Are there barriers to exit, such as important sunk investments in highly specialized assets, or long-term contracts?Would industry buyers incur significant switching costs if they decided to change a supplier? Are industry products complex? Do customers need detailed understanding, specialized knowledge or advice to use industry’s products?How populated is the industry? Can incumbents be counted by the tends of thousands, the thousands, the hundreds, or by the dozen?Are all industry players roughly the same size?On what basis do incumbents compete? Is it price? Is it innovation? Other basis?Yes (+) No (-) N/A How many substitutes does the industry product/service have? How (psychically) accessible and (financially) affordable are those substitutes? In your opinion, how tempted are customers to defect towards substitutes?Threat of substitutesPage of 34
Do industry customers incur switching costs when choosing a substitute product?Do substitute products have any performance limitations, not fully compensated for by their lower price? Do they have alleged performance advantages, not fully justified by their higher prices?Yes (+) No (-) N/A Threat of substitutesPage of 44