Coca-Cola Case Study
According to an article, sugary drinks, such as soft drinks, increase the risk of obesity, diabetes, heart disease, and gout. This was based on a 20-year study that stated people who consume sugary drinks regularly have 26% possibility of developing these sicknesses, especially diabetes. (Harvard School of Public Health, 2012) With this, there are a lot of substitute products that are being introduced to the market. These substitutes are bottled water, sports drinks, coffee, and tea. As more and more people are becoming health-conscious, the demands for these products are increasing. Likewise, these people also prefer healthy drinks. Because of this and the low switching costs in the part of the consumers, the threat of substitute products for Coca-Cola Co. is high.
Supplier Power
Coca-Cola has been dependent to its suppliers in providing raw materials such as the ingredient needed to produce the product. The company does not do the bottling and the packaging itself and is done by other bottlers company. One of the bottlers of Coca-Cola Co. is the Coca-Cola Enterprises, which is the largest bottler. (Staff, 2012) It was once an independent company until Coca-Cola Co. took actions in acquiring the said bottling company in 2010 with a deal that will result in about $4 billion cash to the shareholders of the Coca-Cola Enterprises. (Gelsi, 2010) Because of the acquisition, it enabled Coca-Cola Co. to gain control over the packaging and distribution of its products. The outcome of this is a low bargaining power over its suppliers.
Buyer Power
Some of the main buyers of Coca-Cola Co. are supermarkets, grocery and convenience stores, and restaurants. Given the concept of economies of scale, the bargaining power of buyers is relatively high since they can buy large volumes of soft drinks that would allow them to bargain the price. As what was mentioned