Coce Vs. Pepsi

HBS Case 9-702-442 MSB30 June 2008 COLA WARS CONTINUE: COKE & PEPSI IN THE 21st CENTURY. Houssem Ghorbel Page 1 of 4 HBS Case 9-702-442 MSB30 June 2008 1- Why is the lite fuddle exertion so profitable? Both brook producers (CP) and bottlers are profitable. These two parts of the industry are highly interdependent, share-out costs in procurement, production, tradeing and distribution. Many of their functions overlap; for instance, bike do some bottling, and bottlers conduct many promotional activities. They in addition deal with similar suppliers and buyers. Entry into the industry would imply growth operations in either or both(prenominal) disciplines. In 2000, CPs earned 35% pre-tax profits on their sales, mend bottlers earned 9% profits on their `sales, for a integrality industry profitability of 12% (Exhibit 5). This industry as a whole generates positive economic profits. In addition, the producers of the basic commodities for the gu st production (like Caramel Colouring, flavour, caffeine or additives, sugar, packaging) have no power over the pricing hence the suppliers in this industry are weak.

Revenues are extremely concentrated in this industry, with coke and Pepsi, together with their associated bottlers, controlling between 70% & 90% of the US retail outlets in 2000 (Exhibit 7). In fact, one could characterize the blue-blooded drink market place as an oligopoly, or even a duopoly between Coke and Pepsi, resulting in positive economic profits. To be sure, there was tough competition between Coke and Pepsi for market share, and this occas ionally hampered profitability. For example,! price wars resulted in weak brand court of justice and eroded margins for both companies in the 1980s. 2Compare the economics of the concentrate craft to the bottling business: Why is the profitability so different? togged up ore business is highly profitable compared to the bottling business. The reasons for this are: • follow up on: A typical Concentrate manufacturing...If you want to get a full essay, order it on our website: BestEssayCheap.com

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