1. Developing Strategic Intent
Managing smarter, applying strategic tools…
… being recognized as a leader!

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7. Industry Analysis Porter’s Five Forces Model
Potential competitors vs. Threat of substitutes
Suppliers vs. Purchasers in bargaining power
Stronger forces inhibits profit growth
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10. Competitors Brand Loyalty/Switching Costs Efficiencies
Performance (product, support, etc.)
Costs
Regulatory Environment
Barriers to Entry
Direct
Indirect
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11. Buyers End users Retailers (buying power)
Most powerful in fragmented markets
Low switching costs decrease loyalty
Can buyers produce the product on their own?
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12. Suppliers Unique products command premiums
Can suppliers directly compete?
Are suppliers the driving force of future innovation?
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14. Coca Cola Porters 5 Threats of new entrants
Entry barriers are relatively low for beverage industry: there is almost 0 consumer switching cost and very low capital requirement.
There are more and more new brands appearing in the market with usually lower price than Coke products
However Coca-Cola is seen not only as a beverage but also as a brand. It has a very significant market share for a long time and loyal customers are not very likely to try a new brand beverage.
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15. Coca Cola Porters 5 Threats of Substitutes
There are many kinds of energy drink and soda products in the market. Coca-cola doesn’t really have a special flavor. In a blind taste test, people couldn’t tell the difference between Coca-Cola coke and Pepsi coke.
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16. Coca Cola Porters 5 Bargaining power of buyers
The individual buyer has little to no pressure on Coca-Cola
Consumer could buy those new and less popular beverages with lower price but the flavor is different and the quality is not guaranteed.
Large retailers, like Wal-Mart, have bargaining power because of the large order quantity, but the bargaining power is lessened because of the end consumer brand loyalty.
Increasing number of consumers begin to drink fruit juice, lemonade and tea instead of soda products.
© 2013, Jens Mueller

17. Coca Cola Porters 5 Bargaining power of suppliers
The main ingredients for soft drink include carbonated water, phosphoric acid, sweetener, and caffeine.
The suppliers are not concentrated or differentiated.
Any supplier would not want to lose a huge customer like Coca-Cola.
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18. Coca Cola Porters 5 Summary: Rivalry is HIGH
Currently, the main competitor is Pepsi which also has a wide range of beverage products under its brand.
Both Coca-Cola and Pepsi are the predominant carbonated beverages and commit heavily to sponsoring outdoor festivals and activities. As Coca-Cola has a longer history, it is advertised in a more classical approach while Pepsi tried to attract younger generation by using pop stars as brand ambassadors.
There are other soda brands in the market that become popular, like Dr. Pepper, because of their unique flavors.
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19. Core Competencies
Where does the company add value; and is it more value than a competitor could add?
Extension of core competencies to new ventures
Internal
External
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21. 4
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22. Markets and Firms Going wide or going deep?

23. Concentration/ Diversification
Create value through focus?
Do diverse business units stimulate management?
Can a company rely on core competencies alone?
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24. Vertical Integration
A requirement for growth in a single, dedicated market
Control over inputs (upward)
Control over outputs (downward)
To what extent does integration compete with business partners?
Barriers to new competition
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25. Against Vertical Integration
Is there competence in the new business activities?
Cost
Technological advancement
Increased commitment to/dependency on one market
Administrative overhead
Is outsourcing an alternative?
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27. Most firms integrate Making tools for the workshop
Growing herbs as ingredients
Designing forms rather than buying them
Only firms with one single production step do not integrate
Transaction cost theory price vertical integration through market forces
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28. Outsourcing Nike: No longer produces shoes
AT&T Wireless delegate customer service duties to a competitor
No longer control over competencies - no learning curve
Dependencies
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31. Diversification
How far removed from the core business is the proposed diversification?
Are there some overlaps?
It takes money and resources to diversify
What does it take to generate profits from diversification?
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33. Diversification Separate business units Acquisition of external units
Leave as is
Integrate
Change, through the transfer of efficiencies
Subsidiary formation
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35. Diversification Limits
How many pots can a cook manage?
Communication inefficiencies in large diversified organizations
Friction and administrative costs
If additional units provide buffer against failure, why not keep just the winners?
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36. Brandeis University: Selling Art or the Art of Selling Change
Page 69
Brandeis University: Selling Art or the Art of Selling Change
Group analysis
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