Porter’s Five Forces In Action: Sample Analysis of Coca-Cola
Since its introduction in 1979, Michael Porter’s Five Forces has become the de facto framework
for industry analysis. The five forces measure the competitiveness of the market deriving its
attractiveness. The analyst uses conclusions derived from the analysis to determine the
company’s risk from in its industry (current or potential). The five forces are (1) Threat of New
Entrants, (2) Threat of Substitute Products or Services, (3) Bargaining Power of Buyers, (4)
Bargaining Power of Suppliers, (5) Competitive Rivalry Among Existing Firms. The following is
a Five Forces analysis of The Coca-Cola Company in relationship to its Coca-Cola brand.
Threat of New Entrants/Potential Competitors: Medium Pressure
Entry barriers are relatively low for the beverage industry: there is no consumer switching cost
and zero capital requirements. There is an increasing amount of new brands appearing in the
market with similar prices than Coke products. Coca-Cola is seen not only as a beverage but also
as a brand. It has held a very significant market share for a long time and loyal customers are not
very likely to try a new brand.
Threat of Substitute Products: Medium to High pressure
There are many kinds of energy drink s/soda/juice products in the market. Coca-cola doesn’t
really have an entirely unique flavor. In a blind taste test, people can’t tell the difference between
Coca-Cola and Pepsi.
The Bargaining Power of Buyers: Low pressure
The individual buyer has no pressure on Coca-Cola. Large retailers, like Big-Bazaar, have
bargaining power because of the large order quantity, but the bargaining power is lessened
These other brands have failed to reach the success that Pepsi or Coke has enjoyed.