International business 2020

Porter’s Five Forces Analysis of The Coca

Cola Company

The Coca Cola Company

Coca-Cola Company is the world's largest nonalcoholic beverage company. It offers a portfolio of world
class quality beverages, starting with Coca-Cola® and extending through over 400 soft drinks, juices,
teas, coffees, waters, sports and energy drinks. Coca-Cola has more than 400 brands are nearly
2,400 beverage products. Coca cola operates in more than 200 countries, with a diverse workforce of
approximately 55,000 Company employees.

Organizational Structure Of The Coca Cola Company

It has hybrid structure. To be more responsive to local demand of customers in different regions, coca
cola allows local managers, at lower level to make decisions about changing demands of local customers
to be more responsive, flexible and adaptive to change. The structure of company has centralized
decision making as well decentralized to some extent. Some decisions are made by top management
and lower level employees are engaged in decision making process by allowing them to decide about
promotional or marketing strategy for their respective regions. 

Rivalry
The company has faced the high pressure of rivalry from PepsiCo. The taste of both the beverage drinks
is hard to differentiate. Apart from this, other brands like Dr. Pepper also offer unique and different
flavors, which help in attracting the customer and may violate the established customer loyalty  of the
coca cola company.

New Entrants
Coca-Cola has earned an immense brand image and market share, which makes it uneasy for the
competitors to enter the market. Further, Coca Cola enjoys high customer loyalty, because of its high
brand equity. Thus, new competitors find it almost impossible to counterpart this loyalty.

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In terms of advertising and marketing, the company has invested a huge amount to establish itself,
which provides a barrier to other entrants as they need large capital to compete with the brand image.

Suppliers
 The manufacture of soft drinks depends on basic raw materials like sugar, caffeine, flavor and
packaging. The bargaining power of suppliers of Coca Cola is weak. It is so because the number of
suppliers is high (32,000 registered suppliers) and the switching costs for Coca Cola low. While Coca Cola
can easily switch from one supplier to another, it is not possible for any supplier to switch away from
Coca Cola as easily.

Buyers
The beverage industry includes corporate buyers as well as individual buyers.  Leading buyers of coca
cola soft drink products are food store, restaurants, college canteens, and fast food chain. The buying
power is higher when it comes for retail stores and fast food chain as the purchase in bulk quantity. On
the other hand individual consumers have limited bargaining power. Therefore it can be concluded that
the bargaining power of buyers on Coca Cola is moderate.

Substitutes
The company faces moderate to high pressure of threats from the substitutes. It is so because the
switching cost is very low and perceived value of beverages is also low and customers can easily move to
a different brand if an effective promotional strategy is adopted by other brands. Moreover, with
increasing consciousness towards health, other beverage industries are focusing on providing healthy
drinks to consumers, which also contributes towards a higher level of threat from substitute.  Common
substitutes include water, tea, coffee, juices and beer.