Concentrate business vs bottling business. Suppose Cola- Sol and Miniranda are the only two companies producing a particular type of cola drink in the soft drink industry. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different?The reason why their profitability is so different can be known by the fact that the costs they have to meet differ greatly. John Stith Pemberton, a pharmacist living in Atlanta, created the flagship soda, Coca-Cola, in 1886. Compare the economics of the concentrate business to the bottling business. đź”— Orig Comparing Profitability: Concentrate Business vs. Be sure to separate the concentrate producers and the bottlers in your analysis. 10 Prepare a detailed five competitive force (Porter Model) analysis of the Soft Drink industry. Key differences lie in the extraction, concentration, and preservation methods used. provides insights into the business factors linked to competitive rivalry or competition, the bargaining power of customers or buyers, the bargaining power of suppliers, the threat of substitutes or substitution, and the threat of new entrants or new entry in the consumer goods industry. The Coca-Cola Company doesn’t own or manage most of the bottling companies. Starting and ECM002 Business Economics Instructions: Please answer four out of the following six following questions: Question 1. Why is the profitability so different? Based on these analyses, provide two strategic recommendations for Coke or This Five Forces analysis of PepsiCo, Inc. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? The main The Coca‑Cola Company markets, manufactures and sells: Beverage concentrates and syrups; and, Finished beverages (including sparkling soft drinks; water, sports, coffee & tea; juice, value-added dairy & plant-based CM09 Strategy I - Cola Wars - Sarabjeet Walia 1. The barrier to entry is the key to deal with this problem. Which firm is in the best position to capitalize on current trends in the industry? Why is the concentrate business more profitable than the bottling business? Why do you think Coke & Pepsi are in the bottling business? Compare the economics (costs and profits) of soft drinks (concentrate) versus bottlers. Once a fragmented business that featured hundreds of local manufacturers, the U. Concentrate View Cola case study . B. As shown in the comparative analysis done by Yoffie and Kim, annual net profit both in Pepsi and Coca-Cola bottler companies did not exceed 5% over the period from 2000 to 2009 ±16². Why is Capital investment. Costs & Profits (Concentrate Business vs. 5 billion and a jump in operating margin Bottlers Purchased Concentrate Added carbonated water and high fructose corn syrup Bottled CSD product Delivered to customers accounts Diet CSDs Added sugar or high Question: Compare the economics of the concentrate business to the economics of the bottling business. And other troops’ position is at base or logistic line, like the concentrate business or bottling business in cola-biz. Concentrate makers negotiated “Customer Development Agreements (CDA)” while bottlers handled with business with smaller regional accounts. 2. Concentrate producers: Capital investment. com (A) (#9-798-063) A Note on Microeconomics for Strategies (9-799-128) Be prepared to address the following questions: i. Why has the soft drink concentrate business historically been so profitable? 2. The two most significant processes involved in the production of a SD encompass the Cola Wars Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different?The returns received by concentrate producers differ from those received by bottlers for several reasons Concentrate producers: Capital investment. They both use cans packaging, plastic bottles, and glass bottles. Via an anticipated income statement, it can be inferred that the net sales Compare the economics of the concentrate business to the bottling business: why is the profitability so different? (50%) Pepsi-Cola and Coca-Cola were both established at the very end of 19th century. And respectively, water has a 45% brand gross margin, energy drinks have 70% and ready to drink tea has 60%. 14 Under this contract, The Coca-Cola distribution system (source: Coca-Cola Company). Produce, package, and deliver your goods to stores and vending machines. Why is the concentrate business more profitable than the bottling business? 2. Both of them work in the consumer goods industry Study with Quizlet and memorize flashcards containing terms like Bigger margins - it takes little money to make the drink and it can be sold at a higher price. Reading The Cola Wars Bottling Vs Concentrate Harvard Case Study: To have a complete understanding of the case The economics of concentrate business and the bottling business are linked. High Margins: The concentrate business is particularly profitable due to the high margin on concentrate compared to its production costs. Leadership Online: Barnes and Noble vs. , Capital intensive and involves high speed production lines that were Economics of Bottling vs Concentrate Business Factor Bottling Business Concentrate Business (Data from Exhibit 5) As the above table indicates concentrate business is highly profitable compared to the bottling business. Bottling requires lots of logistics such as high productions costs, high overhead costs, plant allocation and distribution and cost about 10 million dollars to produce each Coca Cola products. Concentrate production business is less capital intensive than bottling. Orange harvesting begins with crews picking ripe fruit from groves. This business arrangement between Coca-Cola and the bottling partners is known as the Coca-Cola System, which consists of: 225 bottling partners worldwide Question: Why has the soft drink industry historically been so profitable (Hint: consider critical structural factors the Five-forces framework)?Why are the levels of profitability so different between the concentrate business and the bottling business (Hint: consider critical structural factors the Five-forces framework)?How has the competition between Coke and Pepsi Cola Wars Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? The returns received by concentrate producers differ from those received by bottlers for several reasons Concentrate producers: Capital investment. S. Why do you think the profitability is so different? Answer: The concentrate Bottling is both used by Coca Cola and Pepsi for their various products. The production of frozen concentrate orange juice differs significantly from fresh juice processing. The bottling industry has become highly competitive over the đź“ť There is a large difference in profitability between bottling and concentrate enterprises. Lorenzo Guglielmotti (Section O) Short Analysis Assignment #2: Five-Forces Analysis for the Concentrate Industry (Cola Wars Case) (1) 1. 5 billion cases, energy has about 218 million, and ready to drink tea has about 706 million. , Little capital investment (costs to advertising, promotion, market research), and the industry was able to raise its price over the past two decades. Based on your own experience of traditional bookselling and your exploration of online bookselling, compare willingness-to-pay for books supplied by these two business Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? The process of producing carbonated soft drinks, or Cads, Is a multi-staged procedure that Involves varying levels of capital and labor. Not the question you’re looking for? Post any question and get expert help quickly. There is a number of reasons why the situation occurred. Bottling companies always rely on how many stores they can reach and how many demand they can satisfy. carbonated soft drink (CSD) industry, there is high Its unique business model has served the company well since bottling first began in 1894. Q) Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? In my view concentrated products are more profitable then the bottle products or bottle business is because of the reason that high quality material is used in it. A concentrate producer’s most significant costs were for advertising, promotion, market research, and bottler support. Coke and Pepsi, can sustain their profits in the wake of flattening demand the growing profitability of non-CSD. Concentrate Producers. Concentrate production business is Pepsi and Coke focused on producing concentrate, or flavor base, for the beverages while leaving the bottling to franchisees that are present nationwide. Concentrate companies send serious amounts of cash on advertisement and finding bottler cooperators. Why is the profitability so different? 3. AMAZON®. Concentrate businesses like Coca-Cola and PepsiCo have higher profit margins than bottling businesses because of the high costs of the capital-intensive bottling. Concentrate Producer Little Capital Investment Cost of $25 million - $50 million One plant to serve US Significant In the army, some troops’ position is at front-line, like sales in cola business. Concentrate is simpler and less expensive to transport than bottled soda due to its smaller volume and weight. The reasons for this are: Higher number of bottler’s when compared to the concentrate producer’s which fosters competition 4. As shown in the comparative analysis done by Yoffie and Kim, annual net profit both in Pepsi and Coca-Cola bottler companies did not Not only do bottlers help finance concentrate producers on advertising and brand promotion, they spend from $4 million to $10 million each year for bottling and canning lines The concentrate producers ship syrup or concentrate to the bottlers where they mix it with sugar or high fructose corn syrup, treat with local water and carbonate it. 33Using the data from the case, compare the economics of the concentrate business to that of the bottling business. Compare the economics of the concentrate business to that of the bottling business. 3. Botting Business) Concentrate Business Examine the economics of the soft drink industry and compare the concentrate business and the bottling business: why is the profitability so different? 2. Why is the profitability so different? Although the relation between concentrator producers and bottlers is so dependent and sharing the same end customers, the profitability for both of them is so different for the following reasons: 1. From Grove to Glass. Their only added value is their relationship with the concentrate producers and Cola Wars Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different?The returns received by concentrate producers differ from those received by bottlers for several reasons Concentrate producers: Capital investment. Cost of advertising: The main difference between concentrate business and bottling business is the cost of advertising. 1. Unlock. When you compare the CSD concentrate business with that of the bottling business, there is a. Compare the economics of the concentrate business to that of the bottling business: why is the profitability so Compare the economics of the concentrate business to the bottling business: why is the profitability so different? 3. The bottling companies however in the late 90's decided to abandon the price war, which was not doing industry any good by raising the prices. How has the competition between Coke and Pepsi affected the industry's profits? 4. In 2004, the net profit sales for Coca- Answer: The concentrate business and the bottling business represent two key segments of the soft dr View the full answer. For any business leader looking to go global, there is much to unpack from Coke's 130+ year journey. The concentrate business was much Concentrate is more profitable than bottling since it is produced and transported at a lower cost. Bottlers unlike their concentrate producer’s counterpart do not have trademarks, branded products or unique formula. Bottlers buy the concentrate and then add Bottlers Purchased Concentrate Added carbonated water and high fructose corn syrup Bottled CSD product Delivered to customers accounts Diet CSDs Added sugar or high-fructose corn syrup Concentrate Business vs. Threat of new entry: low It can be reasonably seen that the threat of new entrants is low due to the high entry barriers. Question: Cola war continue-Coke and Pepsi in 2010" have uploaded in Unit 8 PDF of Harvard. Why do concentrate producers want to vertically integrate into bottling? There are 2 steps to solve this one. Who has been winning the Cola wars and why? 4. Compare the economics of the concentrate business to the bottling business: why is the profitability so different? Why do concentrate producers want to integrate into bottling? a. In our concentrate operations, The Coca‑Cola Company typically generates net operating revenues by selling concentrates and syrups to authorized bottling partners. Their history is more than a hundred years old and the size of these two companies is huge. Concentrate production business is less capital intensive than bottling. The concentrate producers need lower cost for building a manufacturing plant about $25 million to $50 million‚ and just one plant is needed. Concentrate is simpler and less expensive to transport than bottled soda due to its smaller 1) The soft drink industry has historically been profitable due to relatively low costs of production, widespread distribution channels that increase accessibility, and high consumer demand Arial Tahoma Wingdings Times New Roman Bradley Hand ITC Blends Microsoft Graph Chart Cola Wars Continue: Coke and Pepsi in 2006 Overview History of Pepsi History of Coca-Cola Coca-Cola anticipates a significant financial impact from the changes, including a decrease in revenue from $44. Step 2. Concentrate is more profitable than bottling since it is produced and transported at a lower cost. It requires less funds to be invested in machinery, labor and modernization. In fact, huge capital requirements are necessary to enter the U. This case study takes a deep dive into Coca-Cola business strategy across dimensions like functional and corporate strategy, marketing, innovation, revenue growth management, and more. Both companies are considering launching a new drink with a light lemon twist. In conclusion, because concentrate has lower production and distribution expenses than cola in bottles, generating concentrate is more profitable. soft drink 92% of Coke’s U. Bottlers vs. Bottling Business Bottlers Purchased Concentrate Added carbonated water and high fructose corn syrup Bottled CSD product Delivered to customers accounts Diet CSDs Added sugar or high-fructose corn syrup. Why is the profitability so different? Refer to specific financial data in explaining your answer. For instance, Coke and Pepsi's extensive bottling and distribution networks enhance efficiency. Our bottling partners combine the concentrates with still and/or sparkling water, and/or sweeteners, depending on the product, to prepare, package, sell and distribute finished 2) Compare the economics of the concentrate business to the bottling business: Why is the profitability so different? To answer the question, apply Porter’s Five Force Model analyzing the industry, using the following guides: a. In relation to Coca-Cola, is the corporation a F&B (Food and Beverage) business? Yes, it is the answer. After reading this case study answer the following questions: 1. Step 1. Business; Finance; Finance questions and answers; Compare the economics (costs and profits) of soft drinks (concentrate) versus bottlers. (Remember that the Bottlers are “buyers” from the Concentrate producer’s perspective; and the concentrate producers are “suppliers” from the bottler’s perspective. Why is the concentrate business so profitable for Coke and Pepsi? Explain using the Five (or Six, if there are more) Forces Framework. Concentrate manufacturing i. Bottling Business Key Expenses for Concentrate Producers: Marketing, Promotion, and Support. 3 billion in 2015 to $28. Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-carbonated soft drinks? Within the carbonated soft drink industry (CSD), producers in the concentrate business and bottling business have played a pivotal part in the sustained growth and profitability of the $66 billion industry. "A typical The returns received by concentrate producers differ from those received by bottlers for several reasons . This completes step six. pdf from MGMT 390 at Howard University. Concentrate producers – Coke/Pepsi P/L: Comparing Profitability: Concentrate Business vs. Start learning . The bottling business was capital-intensive and involved high-speed production lines. - Coke was more successful internationally compared to Pepsi due to its early lead as Pepsi had failed to concentrate on its international business after the world war and prior to the 70's. Why are the differences in profitability so stark? What is causing concentrate producers to integrate vertically into bottling? The concentrate business does not require much initial capital investment so a plant can be built with only $50 to $100 million. Then they are bottling or Study with Quizlet and memorize flashcards containing terms like Why, historically, has the soft drink industry been so profitable?, Compare the economics of the concentrate business to that Some of the main factors impacting competitive rivalry in the Bottling Industry forces analysis of the bottlers or bottling business are as follows; I-Tough Competition. Pricing Power: Coke and Pepsi can maintain higher prices due to strong brand equity and market dominance. Both of them work in the consumer goods industry Cola Wars Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? The returns received by concentrate producers differ from those received by bottlers for several reasons Concentrate producers: Capital investment. Bottling partners either combine the concentrates with sweeteners (depending on the product), still water and/or sparkling water, or combine the syrups with sparkling water to produce 3. While in the directly owned bottling facilities, Coca-Cola sells directly, independent bottling partners manage distribution in the concentrate Cola Wars Bottling Vs Concentrate Harvard Case Study Solution and Analysis of Harvard Business Case Studies Solutions – Assignment HelpIn most courses studied at Harvard Business schools, students are provided with a case study. Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing popularity of non-CSDs? Question: 1. large degree of difference with the profitability of each. The most significant costs are advertising, 9 Concentrate Business vs. Functional Strategy Powering Global Growth Why, historically, has the concentrate producers industry been so profitable?Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different?How has the competition between Coke and Pepsi affected the industrys profits?Can Coke and Pepsi sustain their profits in the wake of flattening demand and the growing Cola Wars Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? The returns received by concentrate producers differ from those received by bottlers for several reasons Concentrate producers: Capital investment. Why, historically, has the soft drink company been so profitable? 2. Risk of Entry by Potential Competitors The bottling process is capital Compare the economics of the concentrate business to the bottling business: why is the profitability so different? (50%) Pepsi-Cola and Coca-Cola were both established at the very end of 19th century. Answer. Water makes about 4. Using the “Five Forces” model as a framework, compare the concentrate business to the bottling business. The barrier to entry means quantity advantages and business secret in a way. However, each business when taken individually is not the same as the other. Barriers to entry – Bottlers Purchased Concentrate Added carbonated water and high fructose corn syrup Bottled CSD product Delivered to customers accounts Diet CSDs Added sugar or high-fructose corn syrup Concentrate Business vs. concentrate sales for bottled and canned beverages was covered by its 1987 Master Bottler Contract, which granted Coke the right to determine concentrate price and other terms of sale. The concentrate and bottling businesses diverge in terms of their individual profitability The bottling companies mix the syrups and concentrates to package and sell to the distributors. What is (are) the key factor(s) for. Bottling Business. The largest beverage . Comparing concentrate producers’ profitability to bottlers’, there is a difference. Previous question Next question. The big difference between the two industries is also their added value. The franchise structure used by Coca There is a large difference in profitability between bottling and concentrate enterprises. In the concentrate business, the company generates revenues by selling concentrates and syrups (including fountain syrups) to authorized bottling partners. Concentrate and Bottling Business: The Difference in Profitability Essay (Critical Writing) There is a large difference in profitability between bottling and concentrate enterprises. Compare the economics of the concentrate business to that of the bottling business: Why is the profitability so different? In order to answer this question, we can do a 5 forces analysis for bottlers, and compare it to the 5 forces analysis of the concentrate business performed in question 1. Compare the industry attractiveness of the concentrate business to that of the bottling business. Concentrate business: Concentrate producers were dependent on the Pepsi and Coke bottling network to distribute their products.
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