Coke Vs Pepsi Case

Coca-Cola is a cola (a type of carbonated soft drink) sold in stores, restaurants and vending machines in more than 200 countries. It is produced by The Coca-Cola Company (NYSE:KO) and is often referred to simply as Coke.

Coca- Cola was invented in Atlanta, Georgia, on May 8, 1886, by John Pemberton, originally intended as a patent medicine. Some years later, Coke’s formula was bought by businessman Asa Griggs Candler, and started to be promoted as a new brand. In a few years, Coke started facing a huge growth that made it the main reference in the Carbonated Soft Drinks market and an American icon, throughout the 20th century. Although faced with criticisms of its health effects and various allegations of wrongdoing by the company, Coca-Cola has remained a popular soft drink till the present day.

The company actually produces concentrate for Coca-Cola, which is then sold to several Coca-Cola throughout the world. The bottlers, who hold territorially exclusive contracts with the company, produce finished colas in cans and bottle them from the combination of concentrate with added carbonated water and high fructose corn syrup. Then the bottlers sell, distribute and merchandise Coca-Cola in cans and bottlers to retail stores and vending machines.

Pepsi Cola is also a cola that is produced and manufactured by PepsiCo. The production and distribution method of Pepsi is similar to Coca-Cola´s one that was described above. Pepsi is also sold in stores, restaurants and in vending machines.

The drink was first made in the 1890s by pharmacist Caleb Bradham in New Bern North Carolina. The brand was trademarked on June 16, 1903. In 1931 conditions at the Pepsi-Cola Company were desperate; the company had entered bankruptcy for the second time in 12 years. To resolve this situation, PepsiCo lowered the price of their products, charging the same as Coca-Cola for twice the quantity. This allowed PepsiCo to survive and start an intensity competition and a “war” with her principal competitor (Coca-Cola); a” war” that exists until today and will continue existing.

The “war” between these two companies is the central theme and development of this work. We will discuss the nature of strategic interaction between these two firms, how their profits are affected based on their price’s and quantity’s decisions, and how firms will sustain their position while facing future challenges.

As a brief introduction to this question, one should state the general fundamentals of an industry. Those are the key factors to achieve equilibrium: number of firms, cost structure, demand and nature of strategic interaction. Each of these fundamentals will be deeply understood all over the resolution of the case.

Firstly, in order to support more precisely the answer to this question, one should define the Soft drink industry (SDI). The name “Soft drink” specifies