Potter's 5 Forces on Coke

The purpose of this project is to give the management of Coca Cola a view of the current market situation in Uzbekistan. The project will give detailed information about how Starbucks can use its strong brand image, financial strength and product innovation to its advantage on the Uzbek market. The conclusion has a solid answer on the problems at hand. The target audience of this project is everybody who could be concerned. I carried out our research in different fields, mainly the study books, online newspapers and the internet. While working on this project, we gained insight into several business evaluating tools, for example the Potters 5 forces analysis........

As, Coca Cola and Pepsi Co are global brands analysis will include both external and internal factors. Due to the lack of information about Uzbek market and because Coca Cola as well as PepsiCo use Etic approach for expanding (relating to, or involving analysis of cultural phenomena from the perspective of one who does not participate in the culture being studied) the hypothesis is stated - Global performance of rivals and some of their data are applicable for the Uzbek market.

Company summary

Porter's Five Forces Framework

To my point the analysis of Coca Cola through the viewpoint of Five Forces model will by far lead to valuable outcomes. In the text below I would like to explain how each force acts to create competitive pressure--what are the factors that cause each force to be strong or weak? Decide whether overall competition (the combined effect of all five competitive forces) is brutal, fierce, strong, normal/moderate, or weak

1. Rivalry among competing sellers

The big factor determining the strength of rivalry is how actively and aggressively are rivals employing the various weapons of competition in jockeying for a stronger market position and seeking bigger sales.

The main and the only direct rival of Coca Cola is Pepsi co. - The company, that sets its mission as being the world's premier consumer Products Company focused on convenient foods and beverages. The analysis of the rivalry among competing sellers will be conducted within the frameworks of Active efforts to improve quality, Rival's ability of racing to offer better performance features , the number of promotions and advertisement, active efforts to build stronger dealer network, active product innovation and active use of other weapons of rivalry.

As Coca-Cola has a longer history, it is advertised in a more classical approach while Pepsi tried to attract younger generation by using pop stars as brand ambassadors. The advantages of the Coca Cola's positioning as the family beverage against Pepsi's as the beverage of Youth is that Family values are eternal and youth is temporary. In the Highly communalistic society Coca Cola, with its message hits more people, but on the other hand according to http://www.nationmaster.com/country/uz-uzbekistan/Age-_distribution the biggest age group in Uzbekistan is between 15-30 years old, with the modern views and emphasis on individualism.

Marketing and product differentiation are become more significant if not the most significant factor of rivalry. I feel sure that the price war would be not beneficial for both of companies and would create short-term benefits, rather than long term outtakes, more than that It would result in what is called Loose-Loose strategies in Game theory, where constant price cutting will lead to significant profit suffers.

Due to the fact that rivalry in Uzbekistan is dualistic without any other soda brands there are 2 ways of reducing the rivalry - gaining more market share and defeating it's positions and increasing entrance barriers for other brands like Dr. Pepper.

To sum up, nowadays Pepsi is more aggressive in terms of advertisement, but it can be explained by the fact, that Pepsi is a new brand in Uzbek market and needs to gain the trust of potential buyers, while Coca Cola is widely perceived brand with no need for big marketing campaigns. You can familiarize yourself with Pepsi's current marketing moves by clicking on the following link. http://pr.uz/tag/Pepsi%20в%20узбекистане

2. Potential new entrance

One of vital parts of Porter's model is the competitive force of potential entry. Seriousness of threat depends on Barriers to entry and Reaction of existing firms to entry. Barriers exist when Newcomers confront obstacles economic factors put potential entrant at a disadvantage relative to incumbent firms.

Among the huge number of main factors of beverage market entrance are brand image and loyalty, advertising expense, retail distribution fear of retaliation and global supply chain, bottling network.

Bottling Network: Coke and PepsiCo deal on the basis of franchisee agreements with different bottle factories that have rights to produce products for the specific area. According to these agreements bottlers are not allowed to cooperate with competing brands. In addition, Coke and Pepsi are trying to integrate vertically, by buying the significant shares of factories; it is even more difficult for new firms to find bottlers that will distribute their product.

The other approach to creating their own bottling plants seems to big too risky and requires huge investments in highly uncertain environment

Advertising spend and brand image: Coke and Pepsi have a long history with customer interaction. It includes billions of dollars spent annually for advertisement. But it's not only money spent; it's about the Loyalty, about the entire philosophy that demands for decades to be created. It is virtually impossible for a new entrant to achieve such a wide recognition and loyalty

Finally, PepsiCo and Coke benefit from the economy of scales and some of their cost are taken by other branches or allocated between all members of conglomerate

3. Bargaining power of suppliers

Most of the raw materials to produce a drink are usually basic good like color, sugar, caffeine etc. It is beyond a reasonable doubt, that there are a lot of companies that can provide these goods and will be happy to work with coke and therefore are ready for cooperation, there is an opportunity to adjust just in time distribution, highly automated payment system etc. Consequently, have neither price power, nor power to resist.

4. Bargaining power of customers (buyers)

Since the main buyers for soft drink industry are fast food fountain, vending, convenience stores, food stores, restaurants, college canteens and others in the categorize of market share. The margin