Cola Wars

ECN5210

Winter 2021

Thia is regarding the "Cola Wars" case.

https://www.slideshare.net/VinodhiniGuhesanMBAP/cola-wars-case-study-analysis

focus on the vertical chain choices that Coke & Pepsi have made over the years.

look at the remainder of Porter's 5 forces (horizontal & rivalry), especially in the context of game theory and repeated interactions.

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It might be helpful for you to start by drawing the vertical value chain for pepsi & coke.This may help you to answer the following questions and really identify WHO ARE THE "BUYERS" AND "SELLERS"

1)Analyze buyer power.WHO ARE THE BUYERS?Use Porter's framework & definitions.

2)Analyze seller power.WHO ARE THE SELLERS? Use Porter's framework & definitions.

Note: for 1 & 2 above, it is helpful to look at current buyer & seller power (well 2006) and historical buyer & seller power.Actions taken by the firms are based on the historical level of power, so it is the dynamic path of these that are important to look at.

The two firms have followed very similar historical paths.Think about Profit = Total Revenue - Total Cost.At different stages in their development the firms aimed at one or the other of the two components of profit.These stages can be (generally) differentiated.

For example: in the 1970s Coke & Pepsi tried to ___________________ (either increase revenue or decrease costs) by doing ______________________ (strategy) which is based on the economic theory of __________________.

While there was a lot of imitation by the rivals, there are also instances where the rivals chose not to imitate or tried a strategy different from their rival.

We are concerned with VERTICAL CHOICES for our first round of discussion.

3)Discuss choices in the rivalry where the two firms imitated each other in terms of VERTICAL CO-ORDINATION.Make sure to address

a)Is this imitation strategy a cost-cutting strategy or revenue increasing strategy?

b)Defend the firms' strategy with economic principles

c)Explain why the firms' chose (or were forced) to imitate their rival's strategy

4)Discuss VERTICAL choices in the Cola War where the two firms deviated in strategy (i.e. didn't imitate the other).Make sure to address

a)Is this imitation strategy a cost-cutting strategy or revenue increasing strategy?

b)Defend the firms' strategy with economic principles

c)Explain why the firms' chose (or were forced) to imitate their rival's strategy

5) The following is an idea we will explore further next week during our discussion of the Nucleon case.How do the vertical relationship choices merge with corporate vision?