Order custom Harvard Business Case Study Analysis & Solution. Starting just $19
Coca-Cola FEMSA, S.A.B. de C.V. Porter Five Forces Analysis
Strategic Management Essays, Term Papers & Presentations
Porter Five Forces Analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry. Coca-Cola FEMSA, S.A.B. de C.V. managers can use Porter Five Forces to understand how the five competitive forces influence profitability and develop a strategy for enhancing Coca-Cola FEMSA, S.A.B. de C.V. competitive advantage and long term profitability in Beverages - Soft Drinks industry.
Brief overview of Coca-Cola FEMSA, S.A.B. de C.V.
Coca-Cola FEMSA, S.A.B. de C.V. is one of the leading firms in the Beverages - Soft Drinks. Over the years Coca-Cola FEMSA, S.A.B. de C.V. has redefined the ways of doing business in Consumer Goods. Coca-Cola FEMSA, S.A.B. de C.V. is listed at New York Stock Exchange (NYSE) and have a market cap 5.56B USD.
What are Porter Five (5) Forces
In his revolutionary article - "Five Forces that Shape Strategy", Michael Porter observed five forces that have significant impact on a firm's profitability in its industry. These five forces analysis today in business world is also known as -Porter Five Forces Analysis. The Porter Five (5) Forces are -
- Threat of New Entrants
- Bargaining Power of Suppliers
- Bargaining Power of Buyers
- Threat from Substitute Products
- Rivalry among the existing players.
Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. Porter Five Forces focuses on - how Coca-Cola FEMSA, S.A.B. de C.V. can build a sustainable competitive advantage in Beverages - Soft Drinks industry. Managers at Coca-Cola FEMSA, S.A.B. de C.V. can not only use Porter Five Forces to develop a strategic position with in Beverages - Soft Drinks industry but also can explore profitable opportunities in whole Consumer Goods sector.
Coca-Cola FEMSA, S.A.B. de C.V. Porter Five (5) Forces Analysis for Consumer Goods Industry
Threats of New Entrants
New entrants in Beverages - Soft Drinks brings innovation, new ways of doing things and put pressure on Coca-Cola FEMSA, S.A.B. de C.V. through lower pricing strategy, reducing costs, and providing new value propositions to the customers. Coca-Cola FEMSA, S.A.B. de C.V. has to manage all these challenges and build effective barriers to safeguard its competitive edge.
How Coca-Cola FEMSA, S.A.B. de C.V. can tackle the Threats of New Entrants
- By innovating new products and services. New products not only brings new customers to the fold but also give old customer a reason to buy Coca-Cola FEMSA, S.A.B. de C.V. ‘s products.
- By building economies of scale so that it can lower the fixed cost per unit.
- Building capacities and spending money on research and development. New entrants are less likely to enter a dynamic industry where the established players such as Coca-Cola FEMSA, S.A.B. de C.V. keep defining the standards regularly. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry.
Bargaining Power of Suppliers
All most all the companies in the Beverages - Soft Drinks industry buy their raw material from numerous suppliers. Suppliers in dominant position can decrease the margins Coca-Cola FEMSA, S.A.B. de C.V. can earn in the market. Powerful suppliers in Consumer Goods sector use their negotiating power to extract higher prices from the firms in Beverages - Soft Drinks field. The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Beverages - Soft Drinks.
How Coca-Cola FEMSA, S.A.B. de C.V. can tackle Bargaining Power of the Suppliers
- By building efficient supply chain with multiple suppliers.
- By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another.
- Developing dedicated suppliers whose business depends upon the firm. One of the lessons Coca-Cola FEMSA, S.A.B. de C.V. can learn from Wal-Mart and Nike is how these companies developed third party manufacturers whose business solely depends on them thus creating a scenario where these third party manufacturers have significantly less bargaining power compare to Wal-Mart and Nike.
Bargaining Power of Buyers
Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible. This put pressure on Coca-Cola FEMSA, S.A.B. de C.V. profitability in the long run. The smaller and more powerful the customer base is of Coca-Cola FEMSA, S.A.B. de C.V. the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.
How Coca-Cola FEMSA, S.A.B. de C.V. can tackle the Bargaining Power of Buyers
- By building a large base of customers. This will be helpful in two ways. It will reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production process.
- By rapidly innovating new products. Customers often seek discounts and offerings on established products so if Coca-Cola FEMSA, S.A.B. de C.V. keep on coming up with new products then it can limit the bargaining power of buyers.
- New products will also reduce the defection of existing customers of Coca-Cola FEMSA, S.A.B. de C.V. to its competitors.
Threats of Substitute Products or Services
When a new product or service meets a similar customer needs in different ways, industry profitability suffers. For example services like Dropbox and Google Drive are substitute to storage hardware drives. The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry.
How Coca-Cola FEMSA, S.A.B. de C.V. can tackle the Treat of Substitute Products / Services
- By being service oriented rather than just product oriented.
- By understanding the core need of the customer rather than what the customer is buying.
- By increasing the switching cost for the customers.
Rivalry among the Existing Competitors
If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. Coca-Cola FEMSA, S.A.B. de C.V. operates in a very competitive Beverages - Soft Drinks industry. This competition does take toll on the overall long term profitability of the organization.
How Coca-Cola FEMSA, S.A.B. de C.V. can tackle Intense Rivalry among the Existing Competitors in Beverages - Soft Drinks industry
- By building a sustainable differentiation
- By building scale so that it can compete better
- Collaborating with competitors to increase the market size rather than just competing for small market.
Implications of Porter Five Forces on Coca-Cola FEMSA, S.A.B. de C.V.
By analyzing all the five competitive forces Coca-Cola FEMSA, S.A.B. de C.V. strategists can gain a complete picture of what impacts the profitability of the organization in Beverages - Soft Drinks industry. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity. By understanding the Porter Five Forces in great detail Coca-Cola FEMSA, S.A.B. de C.V. 's managers can shape those forces in their favor.
You can order Coca-Cola FEMSA, S.A.B. de C.V. Porter Five Forces & Industry Analysis with us at Fern Fort University.
HBR Case Studies Solutions
- Pricing Games: Sony PlayStation and Microsoft Xbox case study solution
- Shifting the Diversity Climate: The Sodexo Solution case study solution
- Anne Mulcahy: Leading Xerox Through the Perfect Storm (B) case study solution
- Deaconess-Glover Hospital (D) case study solution
- Abercrombie & Fitch: Is It Unethical To Be Exclusive? case study solution
Previous 5 Porter Five Forces Analysis
- Eastman Kodak Company Porter Five Forces Analysis
- The Coca-Cola Company Porter Five Forces Analysis
- Knoll, Inc. Porter Five Forces Analysis
- Kandi Technologies Group, Inc. Porter Five Forces Analysis
- Kimberly-Clark Corporation Porter Five Forces Analysis