Five Force Analysis of Coca Cola Organization
Porter’s five forces is a framework used to analyze an organization’s development (Grundy, 2006). Three of the forces are internal factors while the other two are external. These forces allow determination an organization’s competitive ability hence its attractiveness.
- Threat of Potential Competitors
According to Brand Keys, Inc. (2010), the beverage industry has low barriers to entry by new brands. This limitation poses threat of increased competition to the company. Coca-Cola has a brand image and hence enjoys high customer loyalty. It has also invested big in advertisement making it hard for new brands to compete for the market.
- Threat of Substitute Products
The beverage industry has a large variety of drinks. Coca-Cola Company has however provided various promotional activities attracting customers. There is no significant difference in flavors between Coca-cola and other brands.
- Customers’ Bargaining Power
The Large customer base of Coca-Cola Company comprise individual buyers. This characteristic of buyers reduces the pressure of bargaining power in the organization. Even large retailers, like Wal-Mart who may capitalize on their large ordering, may not benefit much from bargaining power due to the brand loyalty by consumers.
- Suppliers’ Bargaining Power
Coca-Cola uses common ingredients like flavor, color, carbonated water, phosphoric acid, and sweeteners. These are easily and cheaply available reducing the supplier bargaining base. Coca-Cola also acts as a large market to these suppliers encouraging the suppliers to remain loyal to the organization.
- Rivalry Among Existing Firms
Coca-Cola only experiences significant competition from Pepsi that also enjoys brand recognition. They both have highly invested in advertising and sponsor events like football. Other brands do not have a significant impact in the market but one Dr. Pepper assisted by its unique flavors has gained some popularity in the market. Coca-Cola has maintained significant market recognition (Coca-Cola Company).
Brand Keys, Inc. (2010). Brand Keys Customer Loyalty Leaders 2010. Retrieved on June 1, 2015 from http://www.brandkeys.com/awards/learders.cfm
Coca-Cola Company (2009 – 2011). Annual and Other Reports 2008 – 2010. Retrieved on June 1, 2015 from http://www.thecoca-colacompany.com
Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic Change, 15(5), 213-229.