Coca-Cola Amatil (CCA) is the Australia's market leader in the manufacture and distribution of soft drinks, including Coca-Cola, Fanta, Sprite and Mount Franklin (CCA,2010). It operates its company in different countries in Asia-Pacific regions: Australia, Indonesia, New Zealand and Fiji. Coca-Cola was introduced to Australia in 1937 and the first manufacturing plant was also begun operating in Sydney in 1938. In this essay, I will use the 5 competitive forces model to discuss in context of CCA providing a general view of the company, its competitors and company's environment.
According to Porter's competitive forces model, there are five competitive forces, traditional competitors, new market entrants, substitute products, customer bargaining power, supplier bargaining power and services (QuickMBA.com n.d.). These can help managers to know about the industry in which the company operates. The model can also locate situation of the company in order to make relevant decision towards to the problem and create competitive advantage (Porter 2008).
The force of traditional competitors is high in beverage industry because there have many companies selling same products in the market. In order to have higher market share, competitors trend to set lower price and introduce new products attracting more customers to buy. This will lead high level of price competition in the market. Competitors always introduce new products and services to customers because the competitors want to get their attentions, like Diet Coke with Vanilla, Coke Zero.
The force of new market entrants is low as the barrier entry is high. Huge financial support requires starting a beverage industry like Coca-Cola Amatil. It needs to have significant expertises to design packaging and solve problems. Besides, they are hard to obtain, so the employees need to have a higher pay. Therefore, the expenses to start beverage industry are high.
The force of substitute product and service are low in beverage industry. The reason is because the market volume of CCA is significant high. If people do not choose Coca Cola's products, they are not easily to find other substitutes to replace them. Additionally, price of CCA's product is not high compare to its substitutes as Pespi.
The force of customer bargaining power is low because the product differentiation is little. Customers hardly switch to a competitor's products and services. As there are not many choices in the market, they will not have chances to bargain; also the price is not so high in comparison with its substitutes.
The force of supplier bargain power is low. There are a number of suppliers of Coca-Cola. Manufacturers can look for the supplier which can offer lowest price. The bargaining power is low for the suppliers to control the price of their product.
After analyzing the competitive forces of Coca-Cola Amatil, the competitive strategies can approach to the management of CCA should consider reducing power of forces to it. There have four competitive strategies can apply against the competitive forces; only low cost leadership can apply in CCA which can use lower operational cost and price of resources by using information system.
Using lower cost leadership can bring advantages to CCA; it can produce their products in relatively lower cost and gain a large customer base. Also, it can reduce storage expenses for products when the products are made. When they use lower cost to produce, they can get higher profit.
Source: ChinaStones - http://china-stones.info/free-essays/business/coca-cola.php