Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Strategy & Execution
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry
Describes the competition between Coca-Cola and Pepsi-Cola. Provides a summary of the history of the soft drink industry prior to World War II, and over the period 1950-1990 in greater detail. Major strategic competitive moves and countermoves are described. Also profiles industry developments, including the Pepsi Challenge, the reformulation of Coca-Cola, and the consolidation of the bottler network. Provides a teaching vehicle for analysis of competitors and strategic rivalry. An updated and revised version of an earlier case.
Swot Analysis of "Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry" written by Michael E. Porter, Rebecca Wayland includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Cola Pepsi facing as an external strategic factors. Some of the topics covered in Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry case study are - Strategic Management Strategies, Competition, Growth strategy and Strategy & Execution.
Some of the macro environment factors that can be used to understand the Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry casestudy better are - – supply chains are disrupted by pandemic , competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, talent flight as more people leaving formal jobs, there is increasing trade war between United States & China, increasing government debt because of Covid-19 spendings, there is backlash against globalization,
digital marketing is dominated by two big players Facebook and Google, banking and financial system is disrupted by Bitcoin and other crypto currencies, etc
Introduction to SWOT Analysis of Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Cola Pepsi, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Cola 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry can be done for the following purposes –
1. Strategic planning using facts provided in Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry case study
2. Improving business portfolio management of Cola 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 Cola Pepsi
Strengths Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Cola Pepsi in Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry Harvard Business Review case study are -
High switching costs
– The high switching costs that Cola 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.
Cross disciplinary teams
– Horizontal connected teams at the Cola 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.
Analytics focus
– Cola 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 Michael E. Porter, Rebecca Wayland 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.
Strong track record of project management
– Cola Pepsi is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Operational resilience
– The operational resilience strategy in the Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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.
Low bargaining power of suppliers
– Suppliers of Cola Pepsi in the sector have low bargaining power. Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Cola Pepsi to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Cola Pepsi has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Cola Pepsi to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to recruit top talent
– Cola Pepsi is one of the leading recruiters in the industry. Managers in the Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Highly skilled collaborators
– Cola Pepsi has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Sustainable margins compare to other players in Strategy & Execution industry
– Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry firm has clearly differentiated products in the market place. This has enabled Cola Pepsi to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Cola Pepsi to invest into research and development (R&D) and innovation.
Innovation driven organization
– Cola Pepsi is one of the most innovative firm in sector. Manager in Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Cola Pepsi digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Cola 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.
Weaknesses Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry are -
Capital Spending Reduction
– Even during the low interest decade, Cola 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Cola Pepsi has relatively successful track record of launching new products.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Cola Pepsi is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Slow decision making process
– As mentioned earlier in the report, Cola 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. Cola 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.
Slow to strategic competitive environment developments
– As Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry HBR case study mentions - Cola 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.
Increasing silos among functional specialists
– The organizational structure of Cola Pepsi is dominated by functional specialists. It is not different from other players in the Strategy & Execution segment. Cola Pepsi needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Cola Pepsi to focus more on services rather than just following the product oriented approach.
Need for greater diversity
– Cola Pepsi has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Aligning sales with marketing
– It come across in the case study Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry can leverage the sales team experience to cultivate customer relationships as Cola Pepsi is planning to shift buying processes online.
High cash cycle compare to competitors
Cola 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry, in the dynamic environment Cola Pepsi has struggled to respond to the nimble upstart competition. Cola Pepsi has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Cola Pepsi supply chain. Even after few cautionary changes mentioned in the HBR case study - Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Cola Pepsi vulnerable to further global disruptions in South East Asia.
Opportunities Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry | 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Cola 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.
Leveraging digital technologies
– Cola 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.
Loyalty marketing
– Cola Pepsi has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Cola Pepsi can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Better consumer reach
– The expansion of the 5G network will help Cola Pepsi to increase its market reach. Cola Pepsi will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Cola Pepsi can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Cola Pepsi can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Cola Pepsi can use these opportunities to build new business models that can help the communities that Cola Pepsi operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Cola Pepsi can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Cola 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Cola Pepsi in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Strategy & Execution segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Cola Pepsi has opened avenues for new revenue streams for the organization in the industry. This can help Cola Pepsi to build a more holistic ecosystem as suggested in the Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry case study. Cola Pepsi can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Cola Pepsi can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Threats Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry are -
Stagnating economy with rate increase
– Cola Pepsi can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Cola 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 Cola Pepsi.
Technology acceleration in Forth Industrial Revolution
– Cola Pepsi has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Cola 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.
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. Cola 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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Cola Pepsi business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Cola Pepsi demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Shortening product life cycle
– it is one of the major threat that Cola Pepsi is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Cola 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Cola Pepsi.
Regulatory challenges
– Cola 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 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. Cola Pepsi needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry, Cola 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 .
Weighted SWOT Analysis of Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Coca-Cola vs. Pepsi-Cola and the Soft Drink Industry 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 Cola Pepsi needs to make to build a sustainable competitive advantage.