How Competitors Affect Competitive Advantage of Pepsi Essay

Pepsi is one of the worlds top carbonate drink companion established in 1893. Today it has grown into a multibillion company which produces some of the most popular leisurely drinks, cereals and franchise eateries (Our floor 2011). But Pepsi, like most of the former(a) companies is futile to escape competitors in their oecumenical task environment who in a flash arrogate their private-enterprise(a) value. free-enterprise(a) favor is the favour a company or product has everywhere other companies in terms better attributes such as constitute advantage, differentiation advantage, network distribution, and customer support that bequeath help the company gain better sales compargond to other companies (Hao, Ma 1999).For decades, Pepsis main(prenominal) competitor has been The Cola-cola Company, which is the world largest beverage company, followed by companies such as Cadbury Scheweppes Plc, Kraft, Dr, capsicum Snapple Group, Cott Corporation and Nestle (Joys M, Wolburg 2003). All these competitors are coming up with more innovative ideas to gain sales.Pepsis competitor affects Pepsis agonistical advantage in terms of exist structure and cost advantage. A general sales key is to avoid price struggle between competing companies in the same industry because the companies mustiness reduce their prices below the production price. This would affect the cost structure of a company and put the company in competitive disadvantage because sales below price margin way of life the company is selling at a loss.An example of price war between Pepsi and the Coca-Cola Company would be in the 1970s. Coca-Cola bought most of the packaging bottles in the market place to ensure lower production price beating its other competitors. In response, Pepsi had to cut its advertising and swing its selling price, decreasing its cost advantage ( shock and Pepsis uncivil). The price war between Pepsi and its competitors has been continual for decades. This staggeringly affected and cost advantage of Pepsi, thus reducing the companys competitive advantage.The distribution network of its competitors also disrupts Pepsis competitive advantage. Pepsi must compete with its competitors to hold out their distribution network in more countries to expand their sales because only one company can dominate the industry. Companies unable to dominate would lose competitive advantage and sales. For example, Coke controls 75 percent of the soft drink market in Israel and Pepsi is unable to penetrate the market due to Cokes strong distribution (Hellman, Ziv 1991). Coca-Cola and Pepsi is also always competing to expand their hawking activities in every district to increase sales (Pierce, Gala 2005).A research also shows that Pepsi, Coca-Cola and Dr Pepper Snapple are continually fighting for calendar marketing contracts with supermarkets in United States, which allows an exclusive promotional shelf space of the product for a period of time. During months when other soft drinks strike offs are promoted in this promotional shelf space, there is a drop in sales of Pepsi. This shows that the presence of competitors trying to expand their distribution network, vending activity and shelf space activity will cause decreases Pepsis competitive advantage (Klein 2008).Main competitors also contribute negative impacts on the differentiation advantage and product offerings of Pepsi, decreasing its competitive advantage. For example, Pepsis competitors are always imitating Pepsis brand-new products. The competitors impeccable quicken in producing similar products in the market affects the sales that Pepsi should get for their investing in research and development. For example, when Pepsi launched its Pepsi Light, Coke came up with Diet Coke currently after. subdued drinks companies that are always imitating their competitors or are being imitated is causing competitive disadvantage whereby there is little product differentiation in the market ( MacArthur 2006).However if the company does not imitate or roll in the hay up with new innovative products they will also lose competitive advantage to their competitors who are always developing new products. When Cadbury Schweppes caught Pepsi off-guard by producing new beverages such as Hawaiian Punch, and Nantucket Nectar, Pepsis market share was firmly defeated (OConnor, Brian 2002). Pepsis competitor also affects Pepsis competitive advantage through advertisement and promotions.Every time Pepsi advertises, Coca-Cola will immediately respond by doubling its advertisements, making Pepsis advertisement and sales identify redundant (Rivalry on various fronts 2001). Coca-Cola is always competing with Pepsi to be the main stag in every Olympic game as this sponsorship significantly affects the consumers brand choice during the event period (Cho 2011). Competition by other competitors and their advantages directly affects Pepsi. Competitive advantages by other companies will affe ctcompanys sales, revenue, reputation and even customer support and loyalty.Mangers must also work a great understanding their companys environmental opportunities and threats as well as internal strengths and weakness (Barney, Jay B 1995). This can be found by a planning technique called the S.W.O.T analysis. S.W.O.T analysis will allow managers at different corporate level will discern business, corporate and functional level strategies to help gain competitive advantage (Waddell, Jones and George 2012, 148).Another model that managers should consider carrying out is the Michael Porters five-forces model. This model helps managers isolate grouchy forces in the external environment that are potential threats to the company (Waddell, Jones and George 2012, 148).In conclusion, managers must be aware of what their competition companies are doing and what their competitive advantages are and try to come up with a strategy to overcome their competitors competitive advantage.Reference Barney, Jay B. 1995. Looking Inside for Competitive Advantage.The Academy of guidance administrator 9 (4) 49-49. http//search.proquest.com/docview/210515505?accountid=10382.Cho, Sungho, Minyong Lee, Taeyeon Yoon, and Charles Rhodes. 2011. An Analysis of the Olympic Sponsorship Effect on Consumer Brand extract in the Carbonated frail Drink Market using home plate Scanner Data. 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