Coca-Cola Low Cost Differentiation Preemptive Research Paper

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This provides tremendous opportunity to build market share without significant increases in infrastructure. The downside of these markets is that they tend to be less efficient, because fixed costs are higher in relation to revenues. The company can win in such markets, however, if it uses its globally powerful brand to gain a stronger presence in underserved markets, thereby pre-empting rival firms from entering these markets. With Coca-Cola establishing market share, it will be all the more difficult for other companies to match the distribution clout and brand loyalty that Coca-Cola can build up.

In every market, competition remains a serious threat. Economies of scale can help the company in two ways. The first is that it improves margins, leaving more money left over for marketing efforts. The second is that there is often price competition in competitive markets. With better economies of scale, Coca-Cola can withstand price wars long enough to outlast competitors. Being such a strong company, Coca-Cola can also gain preferential access to distribution and retail channels, enabling it to outlast the competition. Competition can be pre-empted by using the company's power to block competitors out of key channels.

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There are sometimes laws against this, but often there are not. Even when there are, the company can gain preferential relationships that limit market access for competitors. In addition, Coca-Cola can find the open space in markets where there is less competition, and in those markets the profit opportunities will be greater for Coca-Cola.

Overall, the company can take advantage of its external and internal environmental conditions in a lot of different ways. A company with the skills and resources of Coca-Cola can be a formidable competitor, because it has the ability to address areas of weakness very quickly, and it can also leverage a lot of different strengths in order to derive superior long-run performance. Globally, only Pepsi can match what Coca-Cola has to offer from a business perspective. For other companies, the best strategy is usually to find a way to avoid competing directly against a company that has as many strengths and as few weaknesses as Coca-Cola has.

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