Product Description: A “Soft Drink” is a carbonated, flavored, non-alcoholic liquid meant for human consumption. Example products produced by this industry include cola (Coca-Cola, Pepsi Cola, Diet Dr. Pepper, store brands, etc.), flavored soft drinks (Orange Crush, Grape Nehi, etc.), root beer (A&W, Barq’s, IBC), ginger ale (Vernor’s, Canada Dry Ginger Ale, Schweppes Ginger Ale, etc.), etc.
Substitute Products: by definition, a substitute is a product produced OUTSIDE this industry but serves the same function as a product produced INSIDE this industry. Primary substitutes for soft drink products include milk, bottled (and tap) water, sparkling water, fruit juices, beer, wine, spirits, coffee, teas, soy and coconut milks, etc. (NOTE: A SUBSTITUTE IS NOT A PRODUCT MANUFACTURED BY A DIFFERENT COMPANY IN THE INDUSTRY).
Strategic Group: Coca-Cola (KO), PepsiCo (PEP), Monster Beverage (MNST), and Keurig/Dr Pepper (KDP).
Note: You MUST use these companies. Refer to them by their ticker symbol (i.e. “KO” for The Coca-Cola Company). Also, for the purposes of this project, just focus on the strategic grouping of companies listed above and pretend they all have a PRIMARY function of manufacturing Soft Drinks (not water, food stuffs, etc.). Ignore the company “Embotelladora Andina” and “American Beverage S.A.” These are international companies that are not in your strategic group.
Note: In this industry, note the following terms and DO NOT CONFUSE THEM:
- Raw material suppliers: These are the companies that supply raw materials that get turned into soft drinks.
- Manufacturers / Producers: These are the companies that purchase raw materials from suppliers and CREATE the soft drink products. These companies include the companies in the strategic group.
- Customers: These are the companies that purchase the soft drinks in bulk from the manufacturers. These would include wholesalers, retailers, etc. (This includes Walmart, gas stations, Publix, etc.).
- Consumers: These are the people who actually drink the soft drinks (i.e. you and me). The consumers buy from the customers. (The consumers are actually the retail or wholeseale organizations who buy from the companies that produce customers, not customers of the manufacturing industry).
- Perform basic INDUSTRY research for the ENTIRE industry you have been assigned (not just the strategic group) and look for issues by following the PESTEL model’s major categories. Read what the textbook has to say about the PESTEL model and what types of things go into each category. You can also find examples online by just Googling “PESTEL Example” and reading some of the pages that show up. There is a great page at https://www.business-to-you.com/scanning-the-environment-pestel-analysis/ that should give you some good ideas.).
Make sure you have at least 20 opportunities and 20 threats total. However, they need to be spread out so that you have at least one opportunity and one threat for each category in each of the two models, with no duplicates. Even though a phenomenon can technically be listed in more than one category, only put it in one. It is even possible that a phenomenon can be both an opportunity and a threat, depending on how one views it. Regardless, only list something once.
- Perform additional basic INDUSTRY analysis for the industry again, but this time use “Porter’s Five Forces” model. Identify at least 2 major issues for EACH of the forces in the model. (NOTE: Again, this is an INDUSTRY analysis, not a company analysis.) For #1 and #2 above, the following items should help you get started. I expect to see most of
these in your work because they are nearly always applicable to most industries: Unemployment rate, disposable income, wage rates, currency exchange rates, inflation rate, etc.
Political stability at home and abroad, military strife, effects of administration changes, etc.
Changing legislation (state / Federal), regulations (both FDA and EPA), court cases, etc.
Social and political issues regarding environmental concerns (raw materials, production, waste, etc.).
Technological developments, availability of raw materials, barriers to entry/exit, economies of
scale/scope, market growth/contraction, etc.
Social trends and issues involving the products themselves, generational issues (i.e. old consumers vs.
younger, demands consumers put on businesses, demand changes due to consumer preferences, etc.. - Using this information, create a list of Opportunities and Threats (numbered O1, O2, O3, etc. and T1, T2, T3, etc.) that would apply to the majority of the companies in your firm’s industry. (note: If you provide an opportunity that is worded to include a something a competitor or the industry can do, your answer is completely incorrect and you will just have to do it over. Just because a company says that something is an opportunity for them does not make it an opportunity. Many companies often get this incorrect. Also, don’t use the words “Opportunity” or “Threat” to describe an opportunity or threat!) Opportunities and Threats ALWAYS meet the following criteria:
a. They represent phenomena or trends that currently exist and are not past or hypothetical future problems unless there is strong and sufficient evidence that suggests that the phenomena will PROBABLY exist (and your evidence must be clear and strong, in the present tense, with solid sources to back it up).
b. They represent phenomena or trends, NOT ACTIONS that a competitor or the industry might do about them (again, this is an automatic show-stopper). Read each one aloud and ask yourself if you are saying that a company can do something. If yes, then I stop grading here. If no, then possibly okay.
c. They apply to the environment in which the industry operates, not just to one or a few companies in the industry. Remember, your focus is on the environment in which the industry operates, not the industry competitors.
d. They are not under the control or direct influence of only one or a few competitors.
e. They do NOT describe things that are ALWAYS true (i.e., “Companies must follow government regulations”, or “When unemployment goes up, people have less money to spend”).
f. They are written in complete and grammatically correct sentences.
g. They are all in the present tense (not past or future tense).
