Africa and the Coca-Cola Company
Coca-Cola was founded in 1892 in the US, but entered Africa in 1929. The main reason behind this entrance is seeking new sources of growth. Its home markets are unlikely to help; health advocates accused Coca-Cola of contributing to an epidemic of obesity. As a result, United States proposed to tax soft drinks to pay for health care.
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Get Help Now!In Africa, Coca-‘Cola has a market share of 29% larger than Pepsi. With 65,000 employees and 160 plants, it is the largest private sector employer in Africa.
According to Porter, there are five forces that affect the market industry. First of all, the market being analyzed here is the African market. “Coca’ Cola is already in all African countries, but the challenge now will be to deep dive into every town, every village and every township” (CEO Kent). The African market is not too rivalry among competitors for Coca Cola.
The main competitor there is Pepsi, however; their market share is just 15% comparing to Coca-Cola. There is a few number of fizzy drinks’ suppliers, and exiting cost is not expensive comparing to other markets and industries and the price of the product.
This small number of suppliers gives Coca Cola a bargaining power against its buyers. Also, there is a small number of substitutes as well; which make hard for local drink companies to compete with Coca’-Cola.
Low number of suppliers with few substitutes decreased the bargaining power of buyers in Africa. Although soft drinks industry does not cost too much, there are lots of barriers against new entrants. Coca-Cola created a huge base of customer loyalty in Africa.
In addition, it has directly created 65,000 jobs and 1 million indirectly local jobs because of Coca-Cola vast system of distribution. These activities and other charitable activities higher the barriers and make it difficult for new entrants to compete with Coca-Cola in Africa.
Seeking new resources and new sources of growth are the main reasons behind Coca-Cola’s entrance to …
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