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Coca-Cola Historical Summary

Essay by review  •  July 8, 2010  •  Case Study  •  7,976 Words (32 Pages)  •  8,465 Views

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Historical Summary

Coca-Cola started as a fountain beverage used for medicinal purposes in 1886 selling for five cents a glass. It grew quickly, but only after a bottling system was developed did Coca-Cola have a chance to became the world-famous brand it is today.

In 1894 in a candy store in Vicksburg, Mississippi, sales of Coca-Cola impressed the stores owner, Joseph A. Biedenharn. He began bottling Coca-Cola to sell, using a common glass bottle. Two attorneys from Chattanooga, Tennessee believed they could build a business around bottling Coca-Cola. Benjamin F. Thomas and Joseph B. Whitehead obtained exclusive rights to bottle Coca-Cola across most of the United States for the sum of one dollar! The two divided the country into territories and sold bottling rights. By 1909, nearly 400 Coca-Cola bottling plants were operating. Bottlers worried that Coca-Cola's straight-sided bottle was easily confused with imitators so they got together with bottle manufacturers and designed a bottle that definitely couldn't be mistaken. The Contour Bottle became one of the only packages ever granted trademark status by the U.S. Patent Office. Today, it's one of the most recognized icons in the world. By the end of the 1920s, bottle sales of Coca-Cola exceeded fountain sales. In the 1920's and 30's the company began a major push to establish bottling operations outside the U.S. Plants were opened in France, Guatemala, Honduras, Mexico, Belgium, Italy and South Africa. By the time World War II began, Coca-Cola was being bottled in 44 countries. Sprite, Fanta, Fresca and TAB joined the Coca-Cola brand in the 1960's. Mr. Pibb and Mello Yello were added in the 1970's. The 1980's brought diet Coke and Cherry Coke, followed by POWERaDE and Fruitopia in the 1990's. Today there are many different brands offered to meet consumer preferences in local markets around the world. Now in the 21st century Coca-Cola consumers seek brands that honor local identity and the distinctiveness of local markets. Strong locally based relationships between Coca-Cola bottlers and communities are part of why Coca-Cola is the most recognized brand name in the world.

THE COCA-COLA PROMISE- Mission Statement

The basic proposition of our business is simple, solid and timeless. The Coca-Cola Company exists to benefit and refresh everyone it touches. Our ultimate obligation is to provide consistently attractive returns to the owners of our business. We do this by bringing refreshment, value, joy, and fun to our stakeholders, then we successfully nurture and protect our brands, particularly Coca-Cola.

Porter's Model

According to porter's five forces theory there are certain conditions that must be met by a firm to maximize profits. Porter states that an attractive industry contains no rivals, many suppliers and buyers, no substitute products, and difficult entry into the industry. The bottled and canned soft drink industry contains some of the elements that indicate an attractive industry.

Rivalry

The first factor in determining whether or not this industry is attractive is the rivalries. Rivalry among competing sellers intensifies the more frequent and more aggressive industry members are to undertake fresh actions to boost their market standing and performance. In the soft drink industry there are many fresh actions taken to boost the standing and performance of the company. The main actions taken are between the two major sellers in the industry, Coca-Cola and Pepsi Co. Both are quick to create wider product selections, such as cherry colas, lemon colas, and diet colas. The soft drink industry has become stagnant in recent years making rivalry also become more intense. Rivalry also tends to increase as the products become more standardized, and in the soft drink industry the products are generally standardized. Some may make the argument that one taste better than the other or that Coca-Cola has a "secret recipe" but as a whole the product of cola has become standardized. Rivalry also increases when it becomes less costly for buyers to switch brands. In the soft drink industry the price of a Coke is not any less than the price of a Pepsi or an RC (Royal Crown) soft drink. The rivalry in an industry can also increase when one or more competitors become dissatisfied with their market position and launch moves to bolster their standing at the expense of rivals. This industry tends to have many firms introducing new products and boosting new and improved advertisement campaigns. The rivalry of industries often fluctuate in proportion to the size of the payoff from a successful strategic move, and in the soft drink industry strategic moves such as globalization and the internet open many windows for competitors in the industry. The rivalry in industries become more volatile and unpredictable as the diversity of competitors increase. As a firms visions, strategic intents, objectives, strategies, resources, and countries of origins change so does the rivalry in the industry. With Pepsi Co. and Coca-Cola globalizing the rivalry in the soft drink industry is becoming more intense. The last thing that will increase rivalry in the soft drink industry are powerful, successful competitive strategies. When one company implements a strong strategy it puts pressure on other firms in the industry to develop effective strategic responses or be relegated to also-ran status. Firms in the soft drink industry often implement these successful strategies to boost their market standings.

Though there are many determinants that increase the competitive rivalry in the soft drink industry there are also factors that can decrease the competitive rivalry. There are not many competitors entering into the soft drink industry. There are two main firms in the industry, though they are both relatively equal in size, and the rest of the competitors are mainly independent bottlers. Therefore, the rivalry decreases because there is not a lot of competitors entering the industry and the firms are not equal in size, except for the two main firms. Also, because there are only two major firms in the soft drink industry this makes the competitive rivalry weaken. In a market with few rivals, each competitor soon learns that aggressive moves to grow its sales and market share can have immediate adverse impact on rivals' businesses. The rivalry weakens also because the soft drink industry does not force any competitors to use price cuts or other competitive weapons to boost unit volume. Soft drinks are not seasonal, are not costly to hold in inventory, and buyer demand for the product does not slack off. Rivalry may also weaken when companies outside

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