The assembly department has idle capacity so the manager will only accept any price lower or equal to prevailing market price of $75. This department have the idle capacity which they can use to cover the fixed cost of the department by operating at the full capacity.
Question 4 – Research a. Http://us. Coca-cola. Com/home/ ii. This organization provides beverages that include carbonated soft drinks such as coke, sprite, Fauna etc, juices such as simply, minute maid, dollar, Fruition etc, energy drinks such as NO’S, full throttle etc.
Nested and water. Target market includes all age groups from kids to elderly, but key target is teenagers and adults. Product is sold almost everywhere including large & small stores, hospitals, schools, airports, food service and other businesses. Business unit strategy : Coca- cola’s strategy is customer oriented. It aims to increase customer satisfaction with introduction of more low cost innovated products. Proof: HTTPS://strategically. Wordless. Com/2011103/02/busing -strategy-of-coca -cola/
Coca cola’s Porters five force analysis: The five forces that Porter mentions are; threat of entry, supplier power, buyer power, threat of substitutes and industry rivalry.
Threat of New Entrants/ Potential Competitors: The company has medium threat from the new entrants because of the no barrier to entry in the beverage market. Beverage industry is very wide spread and new brands are coming up every year. Beverage industry is ever expanding with little to no restrictions to enter the market. Consumers have a large variety to choose from and there is no cost to switch from one to another.
Similar products in the market are similar in price to those of coca cola. There is lot of loyalty attached with brands, and much so with brands like Coca Cola. A Coca Cola product means a lot more to consumers than just a beverage. Coca Cola has had a major market share for decades and customers are attached to this brand for decades, which prevents customers to switch their beverage brand.
Threat of Substitute Products: Huge variety of products exist in market that are a substitute to Coca Cola products for example Pepsi, No name, president’s choice etc.
The company faces high threat from the availability of substitutes at the less cost. These substitutes have similar taste profiles, packaging and cost. Market is competitive and Coca Cola products stand out primarily because of brand power, and not because of any unique flavors or products. By doing more research, the company can improve by introducing more innovative products
The Bargaining Power of Buyers: Bargaining power of retailers is very limited purely due to brand power that Coca Cola has built over decades. Consumer loyalty forces all retailers to keep this brand at all times.
The limited bargaining power of buyers is limited to large volume business that may have an impact on pricing but not on availability of coca cola products. The bargaining power of buyers doesn’t not pose any threat to the company or has very low threat.
The Bargaining Power of Suppliers Coca Cola and other competitors use common ingredients such as water, sugar, phosphoric acid, carbon dioxide, caffeine etc. A large number for suppliers exist for such ingredients. Coca Cola buys large quantities of these ingredients and therefore it has strong bargaining power.