 The five forces model of Porter is and outside-in business unit

strategy tool that is used to make an analysis of the

attractiveness (value…) of an industry structure
 Allows the development of a competitive strategy

 Suggests 5 main forces may be decisive in helping shape the

outcome:

Suppliers

New entrants

Substitutes

Buyers

Rivalry (Industrial competitors)

 Rivalry ( Condition  Substitutes (Wilde and Thick
concentrated on 2 main causing a significant decline in
 Coca-Cola Coca-Cola profits . To reduce the
threats it embraced bottling and
 Pepsi concentrated on diversification
 Teas
 Milk
 Coffee
 Juice
 Alcoholic drinks
 Bottled water
 Energetic drinks
 Other refreshments

 Barriers to Entry (Penetrating the soft
drink industry is hard because of the
established name of Coca-Cola,
 Exclusive Territories
 Direct-store-delivery (DSD)
 Substantial Investment
 Current Market Presence of Coca-
Cola
 Coca-Cola has long-term relationships
with their retailers and distributors
making possible the defense of the
position by means of discounts and
other tactics, and regulation make it
impossible for new bottlers to enter
areas where an existing bottler operates.
 Power of Suppliers
 Sugar
 Packaging
 Bargaining power of suppliers is low
due to two reasons.
 First, the main inputs are sugar and
packaging. Sources of sugar are on the
open market which subsequently makes
the creation power of suppliers at low
levels. There are several suppliers for
packaging as well as the abundance in
supply of inexpensive aluminum.
 Second, direct negotiations from
concentrate producers to suppliers are
present; an initiative to encourage
reliable supply, faster delivery and lower
prices.
 Bargaining Power of Buyers depends on the marketing channel used.
For Coca-Cola, there are six core channels such as:
 Super Markets
 Convenience Stores
 Mass Merchandisers
 Fountain
 vending machine
 Restaurants and Food stores

Bargaining power of buyer is high for fountain supermarkets and

mass merchandising because of the low profitability and strong
negotiation power of retail channels but for vending bargaining
power is non-existing caused by high profitability.