Cola Wars Continue: Coke vs. Pepsi in the 1990s SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Cola Wars Continue: Coke vs. Pepsi in the 1990s
The competition between Coke and Pepsi is a classic corporate battle that began in America at the turn of the century and has expanded into worldwide competitive warfare in the 1990s. This case examines the economics of the soft drink and bottling industries, and describes the history and internationalization of the cola wars.
Swot Analysis of "Cola Wars Continue: Coke vs. Pepsi in the 1990s" written by David B. Yoffie, Sharon Foley includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Coke Pepsi facing as an external strategic factors. Some of the topics covered in Cola Wars Continue: Coke vs. Pepsi in the 1990s case study are - Strategic Management Strategies, Competitive strategy, Globalization, Organizational culture and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Cola Wars Continue: Coke vs. Pepsi in the 1990s casestudy better are - – wage bills are increasing, increasing transportation and logistics costs, there is increasing trade war between United States & China, competitive advantages are harder to sustain because of technology dispersion, challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, increasing household debt because of falling income levels,
increasing inequality as vast percentage of new income is going to the top 1%, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Cola Wars Continue: Coke vs. Pepsi in the 1990s
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Cola Wars Continue: Coke vs. Pepsi in the 1990s case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Coke Pepsi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Coke Pepsi operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Cola Wars Continue: Coke vs. Pepsi in the 1990s can be done for the following purposes –
1. Strategic planning using facts provided in Cola Wars Continue: Coke vs. Pepsi in the 1990s case study
2. Improving business portfolio management of Coke Pepsi
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Coke Pepsi
Strengths Cola Wars Continue: Coke vs. Pepsi in the 1990s | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Coke Pepsi in Cola Wars Continue: Coke vs. Pepsi in the 1990s Harvard Business Review case study are -
Cross disciplinary teams
– Horizontal connected teams at the Coke Pepsi are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Cola Wars Continue: Coke vs. Pepsi in the 1990s firm has clearly differentiated products in the market place. This has enabled Coke Pepsi to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Coke Pepsi to invest into research and development (R&D) and innovation.
Operational resilience
– The operational resilience strategy in the Cola Wars Continue: Coke vs. Pepsi in the 1990s Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Effective Research and Development (R&D)
– Coke Pepsi has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Cola Wars Continue: Coke vs. Pepsi in the 1990s - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High switching costs
– The high switching costs that Coke Pepsi has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Coke Pepsi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Coke Pepsi has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Coke Pepsi has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Coke Pepsi has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
High brand equity
– Coke Pepsi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Coke Pepsi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Strategy & Execution field
– Coke Pepsi is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Coke Pepsi in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Analytics focus
– Coke Pepsi is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David B. Yoffie, Sharon Foley can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Innovation driven organization
– Coke Pepsi is one of the most innovative firm in sector. Manager in Cola Wars Continue: Coke vs. Pepsi in the 1990s Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Coke Pepsi has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Cola Wars Continue: Coke vs. Pepsi in the 1990s Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Weaknesses Cola Wars Continue: Coke vs. Pepsi in the 1990s | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Cola Wars Continue: Coke vs. Pepsi in the 1990s are -
Increasing silos among functional specialists
– The organizational structure of Coke Pepsi is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Coke Pepsi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Coke Pepsi to focus more on services rather than just following the product oriented approach.
Lack of clear differentiation of Coke Pepsi products
– To increase the profitability and margins on the products, Coke Pepsi needs to provide more differentiated products than what it is currently offering in the marketplace.
Slow decision making process
– As mentioned earlier in the report, Coke Pepsi has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Coke Pepsi even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
High cash cycle compare to competitors
Coke Pepsi has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Aligning sales with marketing
– It come across in the case study Cola Wars Continue: Coke vs. Pepsi in the 1990s that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Cola Wars Continue: Coke vs. Pepsi in the 1990s can leverage the sales team experience to cultivate customer relationships as Coke Pepsi is planning to shift buying processes online.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Cola Wars Continue: Coke vs. Pepsi in the 1990s, it seems that the employees of Coke Pepsi don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Capital Spending Reduction
– Even during the low interest decade, Coke Pepsi has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Cola Wars Continue: Coke vs. Pepsi in the 1990s HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Coke Pepsi has relatively successful track record of launching new products.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Cola Wars Continue: Coke vs. Pepsi in the 1990s, in the dynamic environment Coke Pepsi has struggled to respond to the nimble upstart competition. Coke Pepsi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As Cola Wars Continue: Coke vs. Pepsi in the 1990s HBR case study mentions - Coke Pepsi takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Low market penetration in new markets
– Outside its home market of Coke Pepsi, firm in the HBR case study Cola Wars Continue: Coke vs. Pepsi in the 1990s needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Cola Wars Continue: Coke vs. Pepsi in the 1990s | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Cola Wars Continue: Coke vs. Pepsi in the 1990s are -
Buying journey improvements
– Coke Pepsi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Cola Wars Continue: Coke vs. Pepsi in the 1990s suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Creating value in data economy
– The success of analytics program of Coke Pepsi has opened avenues for new revenue streams for the organization in the industry. This can help Coke Pepsi to build a more holistic ecosystem as suggested in the Cola Wars Continue: Coke vs. Pepsi in the 1990s case study. Coke Pepsi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Coke Pepsi in the consumer business. Now Coke Pepsi can target international markets with far fewer capital restrictions requirements than the existing system.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Coke Pepsi is facing challenges because of the dominance of functional experts in the organization. Cola Wars Continue: Coke vs. Pepsi in the 1990s case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Coke Pepsi to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Coke Pepsi to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Coke Pepsi to hire the very best people irrespective of their geographical location.
Using analytics as competitive advantage
– Coke Pepsi has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Cola Wars Continue: Coke vs. Pepsi in the 1990s - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Coke Pepsi to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Coke Pepsi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Leveraging digital technologies
– Coke Pepsi can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Coke Pepsi can use these opportunities to build new business models that can help the communities that Coke Pepsi operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Learning at scale
– Online learning technologies has now opened space for Coke Pepsi to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Developing new processes and practices
– Coke Pepsi can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Low interest rates
– Even though inflation is raising its head in most developed economies, Coke Pepsi can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Threats Cola Wars Continue: Coke vs. Pepsi in the 1990s External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Cola Wars Continue: Coke vs. Pepsi in the 1990s are -
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Coke Pepsi can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Cola Wars Continue: Coke vs. Pepsi in the 1990s .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Coke Pepsi with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Regulatory challenges
– Coke Pepsi needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Strategy & Execution industry regulations.
High dependence on third party suppliers
– Coke Pepsi high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Coke Pepsi can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Cola Wars Continue: Coke vs. Pepsi in the 1990s, Coke Pepsi may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Coke Pepsi needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Coke Pepsi will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Coke Pepsi has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Coke Pepsi needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Coke Pepsi in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Coke Pepsi needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Coke Pepsi can take advantage of this fund but it will also bring new competitors in the Strategy & Execution industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Coke Pepsi in the Strategy & Execution sector and impact the bottomline of the organization.
Increasing wage structure of Coke Pepsi
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Coke Pepsi.
Weighted SWOT Analysis of Cola Wars Continue: Coke vs. Pepsi in the 1990s Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Cola Wars Continue: Coke vs. Pepsi in the 1990s needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Cola Wars Continue: Coke vs. Pepsi in the 1990s is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Cola Wars Continue: Coke vs. Pepsi in the 1990s is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Cola Wars Continue: Coke vs. Pepsi in the 1990s is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Coke Pepsi needs to make to build a sustainable competitive advantage.
