The market for soft drinks cola has been engaged in almost a century old real war, particularly between the two leaders in this sector: Coca-Cola and Pepsi-Cola. These two companies are of American origin, and represent the epitome of the evolution of the firm.
How does one analyze the competition between these two companies and interpret their respective developments, particularly in the field of distribution. The recent years have seen the arrival of many competitors in the market for soft drinks.
Coca-Cola was started in Atlanta at the end of the Civil War. In May 1886, Dr. John Pemberton introduced the drink as a new product. The drink sold at a loss in the first year. The following year, he sold his patent to Mr. Candler, another pharmacist who founded "The Coca Cola Company of Georgia." The latter succeeded with the emphasis on advertising, and bottled the drink since 1891.
The success of the drink also led to the lowering of the prices and the establishment of a broad based distribution network of franchises. The company's marketing strategy was based on the desire to transform the preferred cola beverage on the planet.
The real expansion of Coca Cola will start in 1923 when the presidency passed into the control of Robert Woodruff with the creation of the first subsidiary owned 100% eligible for tax benefits.So with creating franchise operations Coca Cola will be able to create his empire.
The company allows its bottlers to buy concentrate syrup to carbonation in the bottling and selling the product to local retailers.
In 1928, Coca Cola already has 164 bottling units in 28 countries.
The initial strategy of The Coca Cola company is therefore to produce and distribute the syrup or concentrate to bottlers franchised.
The franchise system is a strategy of decentralization that allows the company to reap the benefits of local management in local markets and is linked by a network of collaboration. However, the company keeps control over the basic product,decides on the promotion, provides direct assistance to franchisees ons imitation of the mark and makes direct investments (branches /subsidiaries) to penetrate foreign markets.
As the list of franchises in Europe grows, more legal expertise, managerial and financial need is needed. The solution will then be to establish domestic subsidiaries that manage the distribution of concentrate,bottling, franchise bottlers and local promotional activity. These national subsidiaries will in turn be controlled by two holding companies in Germany and Luxembourg.
Coca Cola continues to aggressively defend its mark on the local market and abroad, but his defensive policy increases even more when Pepsi Cola began a diversification strategy by the price with twice the volume of Coca Cola for the same price.
Pepsi Cola is also a native of the United States and was invented around the same time It was created by pharmacist Caleb D.Bradham. It will introduce the brand in 1902 as a refreshing drinkthat is healthy. Today the two soda giants continue to wage a relentless battle to nibble growing market share and meet new arrivals who intend to come into the market.
Tags:Coco Cola, Pepsi, strategy of distribution of both brands
[...] The unit of analysis is the transaction. This is still under a contract between the principal and the subordinate, which may be a natural person (an employee) or entity company through its legal representative), and whose nature characterizes the specific form of organization. In an exchange such as outsourcing, there are three types of costs to bear for the contracting company: - The cost of determining the relevant costs: This primarily involves determining if the cost price of the agent does not impinge on that of the originator. [...]
[...] resulting in cost control and therefore transaction costs associated with system 'independent bottlers. In the new competitive environment and face the size of some bottlers and their importance in the organization of the system, the risk of opportunistic behavior or uncooperative multiplied.Similarly, conflicts between producers and bottlers were not excluded during the negotiation of contracts with large customers, including with several distributors. By integrating this activity, Coke and Pepsi limited potential conflicts especially with regard to pricing policy. Indeed, the competition law prohibits Pepsi and Coke to fix resale prices or to impose on distributors a single price strategy. [...]
[...] Indeed, the externality of the activity of bottling and distribution, as adopted by Pepsi Cola, is somewhat unique.In the 70s, the trend is internalization. Both manufacturers must reconsider their distribution strategy to respond to this new market. They begin to integrate the largest bottling companies through numerous acquisitions of their previous subcontractors.This is comparable strategy of transaction costs.The company saw the benefit s to contract directly with suppliers to take advantage of transaction costs through vertical integration. The firms are therefore saved time by creating networks of bottlers thus avoiding wasting time trying to contract with new suppliers.This strategy allows significant reductions in co uts transaction. [...]
[...] So there is a greater mastery of the economic chain in its entirety at Pepsi than Coke. Today the two soda giants continue to wage a relentless battle to snack more and more market share and meet new arrivals who intend to come and take a piece of the pie. Advertising and the media is their favorite playground to be ever more and highlight their advantages.W hen you think one might wonder why these two giants have not yet integrated into their firm an industry, communication.Indeed given the budgets they spend ever- changing, this strategy would allow large economies of scale and complement their vertical integration strategy. [...]
[...] Behind this idea of patriotism, was a strategy which would enable the firm to be present in Europe, Asia, Africa and Latin America. Five billion bottles were distributed as well. At the time, the drink was conditioned for soldiers in 33cl tin cans, with packaging that may develop for the consumer in the 60s. The war has allowed Coca Cola to increase its presence overseas and expand in markets where the taste of cola was still unknown. At the end of the war subsidiaries, including 64 new ones, worked around the world. [...]
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