Question

Article: Case 8, Dr Pepper Snapple Group 2011: Fighting to prosper in a highly competitive market

Joseph S. Harrison

University of Richmond

Perform a Porter’s five forces analysis on the beverage industry.

Answer 1

answer-

The bargaining power of Suppliers-

The Bargaining power of suppliers is low for this industry because Company like DPS has many suppliers for its non alcoholic beverages from many part of the world like it can get sugar from China, water from India etc at low price because if supplier bargain then it can switch to other supplier.

The bargaining power of customers-

This power is high in this industry because if customers do not like the flavor or pricing of firms like DPS, Coke or Pepsi then customer can switch to other brands or substitute products in beverage market.

The threat of substitute-

This force is also high because there are many substitute for customers. customer can drink Tea , coffee, shakes or fruit juices instead of beverages of DPS or coke . so this threat is higher than expected.

The threat of entry-

This force is also high because the beverage industry have few respected firms like Coke, pepsi but any outside foriegn firm with good financial resources and supply network can enter into this industry and start selling beverages.

the rivalry intensity-

This force is also high because there few branded firm like Coke, Pepsi, DPS but all of them are reputed, global beverage companies with strong customer base, huge financial resources so they do everything in their capabilities to attract customers which raises the intensity of competition.