Soft Drink Industry Essay Sample

Business Research

Business Research: Critical Thinking Question
The focus of this write up is to compare the soft drink manufacturing and the automobile manufacturing industries in the US and analyze the competitive environment in both these industries.

As per the American Beverage Association estimate, there are around 140 companies which manufacture and sell various brands of soft drinks. Among them The Coca-Cola Company with 42.4% market share, PepsiCo with 27.7% and Dr. Pepper Snapple with 16.9% are the leading players. With 87% being cornered by the top three companies, the rest is shared by companies like Cott Corp., National Beverage, Monster Beverage Company, Red Bull, etc. The global sales revenue of the top 3 is $ 46B, $ 66.68 B and $ 6.12 B respectively.

Automobile Industry in the US

The automobile industry is on the road to recovery; as per the information released by Autodata, US witnessed sales of 16.5 million new automobiles during the fiscal 2014, the best ever since 2006. As of 2014, there are about 30 car makers in the US with GM leading the pack with 17.8% market share. The rest of the top 4 include Ford, Toyota and Chrysler with 15%, 14.4%, and 12.7% market shares respectively. The global sales revenue of the top 3 manufactures for 2014 are GM- $155.93 Billion (US- approximately 98 Billion), Ford- $ 144.08 Billion (US- approximately $ 88 Billion) and Toyota- $ 219.94 Billion (US-approximately $ 65 Billion).

Comparison and Analysis

One of the major factors to be considered is the nature of competition in these industries. The soft drinks industry has got at least 3 times the number of manufacturers when compared with the automobile industry. While comparing the market shares, it is evident that the industry is dominated by two large players and one medium sized one. These three companies account for almost 87% of the total soft drinks industry in the US. The situation in the automobile industry is different, where the competition involves multiple companies, with their market shares in close vicinity of the others. There is no clear monopoly or duopoly here with at least the top 4 holding a fair chance of achieving the topper tag.
The effect of this supremacy in the soft drinks industry is that the smaller manufacturers will find it difficult to survive in the market, unless they have some very unique and niche offering and runs the possibility of shutting shop or getting acquired by the bigger ones. Also, owing to their dominance, the larger players enjoy competitive advantages like better finances, increased marketing spend, ability to make huge investments in research and development etc. which helps them to further consolidate their position in the market.
The dominant players in the automobile market are not just home-grown ones like GM or Ford, but also involve companies from Japan, South Korea, Germany, rest of Europe etc. This is in stark contrast to the soft drinks industry, where the leaders are all home grown and there is an insignificant representation from rest of the world. The net effect is that the duopoly enables the soft drink majors to effectively control the market and dictate its terms. The effective competition is only between the top 2 or top 3 and others remain as mute spectators, trying to save their ground. It is a contrasting picture in the automobile industry, where it is more of a level playing field, where the companies have to remain alert and innovative to survive in the market.