Business Strategy

The Coca Cola defeat
Case Study On A Near - Merger

Estrategía Empresial | Aleix Calveras Maristany
Chris Apitius | Shakhromi Bakhtiyor | Julius Halm | Markus Vornholt Presentation held on November 5th, 2013

The Outline
1986 Coca-Cola tried to acquire and exploit Dr. Pepper Objective: Increase sales through high marketing skills and research abilities Federal Trade Commission went before judge to block the merger

The Players
Coca-Cola ‣ Largest seller of carbonated drinks in the U.S. Dr. Pepper ‣ 4th largest seller Federal Trade Commission ‣ Independent agency of the U.S. ‣ Prevention of anti-competitive business practices Section 7 of the Clayton Act ‣ “...prohibits any acquisition (...) of a company that might substantially lessen competition.“

Porter‘s Five Forces

Porter‘s Five Forces

Developed by Michael E. Porter Used to evaluate competitiveness, attractiveness & profitability Five competitive forces that shape every industry and every market

Supplier Power
Definition: The degree of control that the provider of a good or service exerts over a buyer Typically wielded through ‣ increased costs ‣ reduced quality or ‣ restricted availability

Buyer Power
Definition: An advantage to consumers that comes from gathering together to put collective pressure on producers to lower prices or improve quality Buyer dominance: Buyers have high share of total market for suppliers Buyer’s search costs are low, etc.

New Entry
Definition: Initiation of efforts to sell a new or existing product to a group of consumers not previously targeted by that marketer Possible barriers: ‣ Strong competitors ‣ Patented technology or ‣ Necessity for large initial capital outlays Examples: ‣ Coca Cola entered Khujand market by establishing a retail outlet ‣ Radio Shack entered the personal computer market by introducing its own brand

Entry Barriers
Other barriers: • High advertising expenditures through clear product differentiation

• Economies of scale: necessary...