How to Write a Strategic Analysis of the CSD Industry

Understanding where a company stands against its competition in a particular industry is not an easy task. There are a myriad of factors to consider such as market share, competition, suppliers, and barriers to entry. The carbonated soft drink (CSD) industry is no different. One of the most popular frameworks used to measure and compare competitive position is Porter's 5 Forces, a model developed by Micheal E. Porter in the book "Competitive Strategy:Techniques for Analyzing Industries and Competitors." The model uses 5 forces to assess the competitive positioning of a company. The following will use this model as a framework for doing a strategic analysis on the CSD industry.

Difficulty: Moderate

Instructions

1. Identify the major competitors. Go to a reputable financial research database such as Yahoo! Finance or MSN Money. Do a search for companies in the CSD industry like Coca-Cola. Rank based on revenues or market share and choose the top 5 to 10 companies. See Resources "Beverage Resource Center" for help with this task.

2. Assess brand loyalty. Create a metric to compare brands with customer loyalty. As the CSD industry sells similar products, brand loyalty should be a big consideration for strategic planners.

3. Measure the threat of new entrants into the industry. New entrants are not a strong pressure for the CSD industry due to brand loyalty and developed distribution channel/relationships.

4. Identify the threat of viable substitutes in the CSD industry. These substitutes can eat away at market share. Substitutes are sports drinks, coffee, bottled water, juice, tea, and other more health conscious drinks. This is a high threat in the CSD industry as it is easy for consumers to switch to substitutes.

5. Assess the power of suppliers in the CSD industry. Suppliers for the CSD industry do not hold much competitive pressure as the number of equipment and bottling vendors is not in short supply.

References

• Investopedia: Porter's 5 Forces

Resources

• Porter's 5 Forces Diagram
• Beverages Research Center