Cola Wars Continue: Coke versus Pepsi in the 21st Century. Industry Structure and Competitive Interaction

Industry Wrap. The soft drink industry is largely a duopoly. atomic number 6 and Pepsi were among the first to launch carbonate soft drinks (CDS). For over a degree Celsius other companies tried to enter the trade exactly had to face fierce argument and lawsuits from Coke and Pepsi. The worldwide command for soft drinks in 1999 was 31 billion cases. Coke and Pepsi unneurotic held 74% of market parting followed by Cadbury Schweppes at 6%. In this duopoly, participating firms ar assured of high long economic rents, and there be high barriers of entry. Being the ceremonious sellers, Coke and Pepsi can persistently raise prices above agonistic levels without any significant curse of new entrants (e.g. 1978 Coke had a significant price hike, and Pepsi followed by 15% price increase). crimson though, in recent years, bespeak for CSDs seems to have levelled off in USA, other countries have the voltage to offer significant proceeds opportunities. New challenges of the 21st century taked boosting flagging internal cola sales and purpose new revenue streams. both(prenominal) firms also began to modify their bottling, pricing, and brand strategies. They looked to rising international markets to fuel growth and broaden their brand portfolios to include noncarbonated beverages akin tea, juice, sports drinks, and bottled water.

Additionally, the soft drink industry is knowledge intensive; close to of the significant costs are for advertising, promotion, and market research. Any innovation costs have been sunk in the past. 1. Compare the economic science of the compact business to the bottling business. why is the hitabil! ity so unalike? From Exhibit 5, a natural centralize producers gross gather is 83% compared to 35% for a typical bottler. Similarly, pre tax profit for a concentrate producer is 35% and it is 9% for a bottler. The cost of goods sold for a concentrate producer is... If you motivation to get a full essay, instal it on our website: BestEssayCheap.com

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