Analysis_Soft_Drink

Analysis Soft Drink 1 Analysis of the U.S. soft drink industry, based on the competitive forces model of Michael Porter. Entry of new competitors: In the soft drink industry the entry of new competitors depends on the barriers to entry that are present, and also the reaction from existing competitors that the entrant can expect. I will now analyze the six major sources of barriers to entry the soft drink industry. Economies of scale: Economies of scale deter entry by forcing the entrant to come in at large scale and risk strong reaction from existing firms or come in at a small scale and accept a cost disadvantage. If a company wants to decline its unit costs of their product, they will have to produce more to lower the cost. The more you produce, the lower the costs. Product differentiation: In the soft drink industry establishing firms have brand identification and customer loyalties. The brand name can have differences. This is a high barrier to enter. Entrants are forced to spend a lot to overcome existing customer loyalties. Capital requirements: The capital requirements within this industry are very high. Production, distribution and advertising are a must to compete with the industry leaders like coca cola and Pepsi. So if a new entrant soft, drink, industry, new, high, companies, power, market, entry, costs, competitors, suppliers, compete, very, substitutes, entrants, conclusion, against, switching, distribution, come, because, barrier, threat, supplier, sugar, scale, say, product, existing, entrant, drinks, concentration, company, channels