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Business Strategy Essay

574 words - 3 pages

The Coca Cola defeat
Case Study On A Near - Merger

Estrategía Empresial | Aleix Calveras Maristany
Chris Apitius | Shakhromi Bakhtiyor | Julius Halm | Markus Vornholt Presentation held on November 5th, 2013

The Outline
1986 Coca-Cola tried to acquire and exploit Dr. Pepper Objective: Increase sales through high marketing skills and research abilities Federal Trade Commission went before judge to block the merger

The Players
Coca-Cola ‣ Largest seller of carbonated drinks in the U.S. Dr. Pepper ‣ 4th largest seller Federal Trade Commission ‣ Independent agency of the U.S. ‣ Prevention of anti-competitive business practices Section 7 of the Clayton Act ‣ “...prohibits any acquisition (...) of a company that might substantially lessen competition.“

Porter‘s Five Forces

Porter‘s Five Forces

Introduction
Developed by Michael E. Porter Used to evaluate competitiveness, attractiveness & profitability Five competitive forces that shape every industry and every market ...view middle of the document...

Almost the same products with a bit different taste Experience goods

Internal Rivalry
Very strong branding generates consumer loyalty Intense competition in advertising

No competition in pricing

Coca-Cola‘s Argumentation
To defend merger, Coca Cola defined the relevant market as: “All (...) beverages including tap water.“ No impact for the relevant market Same competition and competitors

The Judge‘s Conclusion
Corresponding market can be determined through:

‣ nature of principal products of acquirer & acquired company ‣ distribution channels ‣ distribution outlets ‣ geographic target market
Cross-elasticity of demand between carbonated soft drinks Distinct substitutes, consumers & prices Pricing & market decisions:

‣ Comparisons with rival carbonated soft drinks ‣ Not on competition from other beverages
Carbonated soft drinks constitute a well-defined market

QUESTION OF MARKET DEFINITION

Why ?
Depending on market definition either ‣ no effect on competition at all or ‣ significant effect establishing monopolistic structures Market of carbonated drinks: ‣ Nationwide +4.6% ‣ Submarkets +10 - 20%

Bibliography
Coca-Cola Company, viewed 03 November 2013, Sibur, viewed 03 November 2013, Slideshare, viewed 02 November 2013, The Manager, viewed 01 November 2013, Torchrelay, viewed 03 November 2013, Tretail, viewed 03 November 2013,

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