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Activity 1: Porter'S Five Forces Analysis: Soft Drink Industry

The document analyzes Porter's Five Forces model for the soft drink industry in the Philippines, focusing on Coca-Cola and PepsiCo. It finds that the threat of new entrants is weak to medium. Existing companies have significant economies of scale, brand recognition, and control of distribution channels. Significant capital is required to enter the market and new companies would face retaliation from Coca-Cola and PepsiCo, who have strong relationships with suppliers and customers. Coca-Cola in particular has a very significant global market share and loyal customer base, making it difficult for new entrants to compete at the same scale.

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Hazel Mosot
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186 views3 pages

Activity 1: Porter'S Five Forces Analysis: Soft Drink Industry

The document analyzes Porter's Five Forces model for the soft drink industry in the Philippines, focusing on Coca-Cola and PepsiCo. It finds that the threat of new entrants is weak to medium. Existing companies have significant economies of scale, brand recognition, and control of distribution channels. Significant capital is required to enter the market and new companies would face retaliation from Coca-Cola and PepsiCo, who have strong relationships with suppliers and customers. Coca-Cola in particular has a very significant global market share and loyal customer base, making it difficult for new entrants to compete at the same scale.

Uploaded by

Hazel Mosot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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University of San Carlos – Technological Center

Bachelor of Science in Industrial Engineering

IE 514NX: INFORMATION SYSTEMS

MW 12:30 – 2:O0 PM

ACTIVITY 1: PORTER’S FIVE FORCES ANALYSIS

SOFT DRINK INDUSTRY

SUBMITTED BY:

Amores, Nicole Mae

Belciña, Giselle Angeli

Dinopol, Shairabel

Mosot, hazel Princess

Napoles, Ina

SUBMITTED TO:

Engr. Fritz Nichole Abad, MIE

September 10, 2018


Porter’s Five Forces Model of Competition: Analysis of Soft Drink Industry - Coca-Cola Company
and PepsiCo

The five forces model of competition by Michael Porter is an analytical tool used that helps to analyze
some critical forces affecting the level of competition in an industry. It also helps firms find the industry
that is the most attractive for them. The model encompasses several variables and tries to capture the
complexity of competition. These five forces are part of every industry and market and have an
important influence on profitability. Evaluating the strength of these five forces can provide the business
with valuable insights to formulate effective strategies.

Below shows the five forces analysis that analyzes the state of competition in the Soft Drink Industry.
Sample analysis on how much control Coca-Cola Company and PepsiCo, two of the leading brands in soft
drink industries in the Philippines, has over these five forces have also been pinpointed.

1. Threat of New Entrants/Potential Competitors (Weak – Medium Force)


In beverages particularly in soft drink industry, there are several factors that discourage new
brands from entering:
 Existing firms (such as Coca-Cola and PepsiCo) have cost and performance in this industry
because they have already purchased large capital expenditures and have economies of
scale.
 There are no significant costs in switching suppliers. The soft drink industry is very
competitive, so prices only fluctuate slightly depending on geographical location or short-
run sale discounts.
 A lot of capital is needed to enter this kind industry because there are large capital costs
needed for manufacturing, bottling, distribution, marketing and storage and a huge
investment for skilled human resources.
 New comer to this industry would face difficulty in assessing distribution channels. Major
brands such as Coca-Cola and PepsiCo have already controlled the main distribution
channels, such as big supermarkets, gas stations, and restaurants. They have competitive
pricing and strong business relationships.
 A new comer in this industry can expect retaliation from current companies. The soft
drink industry is an oligopoly with existing firms having strong distribution channels,
relationships with suppliers, retailers, and brand value to customers, the industry leaders
have to tools necessary to force out new competitors.

 Coca-Cola Company
Coca-Cola is seen not only as a beverage but also as a brand not only in the Philippines but
around the world. It has held a very significant market share for a long time and loyal
customers are not very likely to try a new brand. New entrants can probably compete with
brands such as Coca Cola at a smaller or local level, but to build a brand as big is a massive
task requiring both capital and skilled human resources.
 PepsiCo
PepsiCo has very few direct competitors in the Philippines and except Coca-Cola, no one has
the power to look it in the eye. The threat of new entrants for a brand like Pepsi with strong
brand image is minimal. Becoming a major player in the soda industry is not easy. PepsiCo
has already established its product quality and brand image here in the Philippines.

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