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0. Introduction With retail revenues of $52 billion in 2003 , which is about 1.75x over 1993 ( $30 billion) the software industry in Romania is one of the most profitable industries. Major companies and brands are showed in appendix 1. According to U.S. Industry Profiles which cites the Ward’s Business Directory of Public and Private Companies, 292 soft drink manufacturers and bottling companies operate in the U.S. ( personally I found 194 entries under SIC 2086 in the same source ), but two companies, Coca-Cola Co. and PepsiCo. Inc., control nearly three-quarters of the U.S. market with each company producing four of the top ten best-selling brands. To get a better image over soft drink industry, the next exhibit2 depicts the industry structure, and estimates where available the size of different parts of the system in 1986. 1. Porter’s Five Forces Model Analysis 1.1 Threat of entry a) Economies of Scale - The majority of companies in the soda pop industry definitely operate at a large scale, deterring the entry. The scale economies are present at every level, concentrate manufacturing, bottling, and distribution. For instance, the major competitors Coca-Cola Co. and Pepsi Co. are vertical integrated and take advantage from scale economies at each level having a total production in 1996 of 3,574 mil. cases and 2,713 mil. cases respectively1. They also own glass, cans, and plastic containers operations, and part of retail channels, i.e. PepsiCo. owns fast-food restaurant chains (29,000 Pizza Hut, Taco Bell, Kentucky Fried Chicken; this also could be seen as horizontal integration), and Coca-Cola dominates McDonald’s account. Both giants, Coke and Pepsi, discovered their great fallacies that being successful in producing and selling soda, they should be able to transfer that ability to other consumer products. Coke started first to abandon its web horizontal businesses (film studio, plastic bags, wine) and PepsiCo. followed. In the TIME magazine (2/3/1997) PepsiCo. announced it was spinning off into an independent company its fast-food restaurant group, Pizza Hut, Taco Bell, Kentucky Fried Chicken, and remain focused on cola wars.
Approximate Word count = 1270
Approximate Pages = 5.1
(250 words per page double spaced)
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