The Coca-Cola company was created as an energizing drink. The company then produced various brands that become a massive product in the market currently. However, now, the Coca-Cola brand has expanded its market and value across the world, a factor that has made the company to be recognized effectively. Pepsi also was created as a herb in the year 1898, which later developed as a trademark (Chalikias & Skordoulis, 2017). The company then developed its brand in the market, a factor that led to the creation of a Pepsi brand. This research will analyze both Coca-Cola and Pepsi's external industry analysis using PESTEL and Five Forces Model.
Coca-Cola Company PESTEL Analysis
Coca-Cola Company is a brand that is highly dependent on governmental policies such as sugar and caffeine rates in the market. Coca-Cola company are forced to alter the level of sugar in countries where the government introduced strict measures in sugar level content. The increase in taxes also affects the operation of the company (Chalikias & Skordoulis, 2017). The economic factor that Coca-Cola faces include, high in cost of raw material in the markets. The social factor that affects the drink is the Customers shifting to energy drinks due to health concerns. Coca-Cola is believed to be causing obesity among consumers.
Technology advancements have boosted company publicity and marketability in various markets. Coca-Cola draws a huge follower from Facebook, Twitter, and Instagram (Li et al., 2018). Coca-Cola companies have been accused by most countries as the leading cause of environmental degradation since most water is used by the company during the manufacturing of the drink. Legal factors have also affected the business operation of the Coca-Cola structure in the market. Some countries have introduced laws that have changed the functioning of Coca-Cola in one way to the other. For instance, this legal factor has hindered the growth and stability of the company in the market structure.
Coca-Cola Five Forces Model Analysis
Coca-Cola company is facing the following challenges in the market system, bargaining power of suppliers, bargaining power of buyers, the threat of new entries, threat of substitutes, and competitive rivalry (Chalikias & Skordoulis, 2017). Coca-Cola has a weaker bargaining power of suppliers in the market, due to the number of suppliers increasing compared to the switching costs of the company. Suppliers cannot switch from one supplier to the other in the market (Chalikias & Skordoulis, 2017). The individual bargaining power in Coca-Cola is also lower; this is because most individuals in Coca-Cola buy small quantities of product from the product. There are several factors that discourage customers from entering new markets brands. The beverage market requires significant investments to be made before entering. Coca-Cola also faces a more significant threat from beverages that are made by Pepsi, fruit juice, and cold drinks (Li et al., 2018). In the Soda industry, there are two leading players that impose stiff competition at one another. They include Coca-Cola and Pepsi. There are other small players, but they do not impose stiff competition compared to Coca-Cola.
VRIO Analysis of Coca-Cola Company
Valuable-Coca-Cola has a vast global distribution network, a factor that has made the company to maintain a global presence in the market. Some of its valuable include, extensive products range, skilled human resource, brand image and practical marketing skills (Li et al., 2018).
Rare-Some of the rare advantage that Coca-Cola has in the market include global distribution network, extensive product range, marketing skills and expenses and skilled human resource.
Imitability-The imitability of Coca-Cola includes vast global distribution network, skilled human resource, qualified marketing expenses, secret formula and brand image (Chalikias & Skordoulis, 2017).
Organization-Coca-Cola has effective policies and procedures that are appropriately organized in helping its valuable resources. They include global distribution network, broad product range, skilled human resource, marketing skills expenses, secret formula, brand image and research development.
Pepsi Company PESTLE Analysis
Political factors that affect Pepsi company include political stability in the economy, improvement of governmental cooperation and government initiatives on carbonated drinks. Economic factors that affect the company include economic instability of significant markets, the rapid growth of the developing economies and slowdown of the Chinese economy. Social factors that Pepsi company has faced in the market include, increase in the health concerns among the customers, increasing busy lifestyle, discriminating attitude on the product quality (Chalikias & Skordoulis, 2017). Technological factors have significantly affected the company from one perspective to the other. Some technical factors include increasing the moderate in R&D investments in food and beverages in the market, improvement of the knowledge management system and strengthening of automation in business. Environmental factors that affect the organization include a high focus in business sustainability, senior complex in standards expectation on the waste disposals and climate change (Li et al., 2018). The external legal factors affecting the company include the following, regulation on GMO ingredients, health and product safety management and a moderate rate of the regulatory system.
Pepsi Company Five Forces Analysis
Pepsi company faces various external forces in the market environment that also reflects on the productivity of the company in one dimension to the other. The competitive rivalry of Pepsi company includes high aggressiveness rate of companies, a decrease in the rate of the switching cost and an increase in the number of firms. Some of the external factors that led to an increase in the bargaining power of Pepsi company include low switching costs, high access to product information and high availability of substitutes in the market (Li et al., 2018).The threats of substitute that Pepsi company faces in the market include, increase in performance from other substitute's, low switching costs and higher availability of the alternatives. The threat of new entries that have affected Pepsi company include low switching costs, moderate customer loyalty and an increase in the price of brand development.
VRIN Analysis of Pepsi Company
Valuable- Pepsi has a vast distribution network that competes with Coca-Cola company productivity in the market. Some of the factors include a broad product range, increase in human resource level and practical marketing skills (Li et al., 2018).
Rare- Pepsi shares the same rare advantages that Coca-Cola has in the market; this includes massive human resource management, practical marketing skills, vast product range and extensive global distribution network (Li et al., 2018).
Imitability- Pepsi company uses over billion of its own distribution networks in expanding its market structure. This describes that the Pepsi company has attained the same range as the Coca-Cola company.
Organization-Pepsi company work in hand with other recognized firms in the market. This strategy has improved the company to expand its structure in the market effectively.
Chalikias, M., & Skordoulis, M. (2017). Implementation of FW Lanchester's combat model in a supply chain in duopoly: the case of Coca-Cola and Pepsi in Greece. Operational Research, 17(3), 737-745.Retrieved from https://link.springer.com/article/10.1007/s12351-016-0226-0
Li, S., Jiang, C., Wang, H., Cong, S., & Tan, M. (2018). Fluorescent nanoparticles present in Coca-Cola and Pepsi-Cola: physiochemical properties, cytotoxicity, biodistribution and digestion studies. Nanotoxicology, 12(1), 49-62. Retrived from https://www.tandfonline.com/doi/abs/10.1080/17435390.2017.1418443
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