Case Notes/Answers
Case Solutions for COLA WARS CONTINUE COKE AND
PEPSI IN 2010 by David Yoffie Renee Kim
Discussion Questions:
1. Why, historically, has the soft drink industry been so profitable?
2. Compare the economics of the concentrate business to that of the bottling business: Why is the
profitability so different?
3. How has the competition between Coke and Pepsi affected the industry’s profits?
4. How can Coke and Pepsi sustain their profits in the wake of flattening demand and the
growing popularity of non-CSDs?
, 5-711-531
JUNE 14, 2011
T E AC
CHING NOTE
Cola Wars Contiinue: Coke
C an
nd Pepssi in 20110
Th
his case is a reewrite, updatee, and expanssion of the vaarious Coke v
vs. Pepsi casess and “Note o on the
U.S. Soft
S Drink Ind dustry in 1986,” (HBS No.. 387-107), wh hich have beeen taught in tthe strategy ccourse
for more
m than two decades. “Co ola Wars Con ntinue: Coke aand Pepsi in 2010” will bee taught in vaarious
execuutive program ms and the reqquired MBA strategy
s coursse at HBS. Th me of this case is to
he central them
underrstand how and a why diffferent indusstry structurees offer vary ying opportun nities for firm
ms to
achievve competitiv ve advantage.
Thhe case is set at
a the beginniing of 2010, and
a the introdduction raisess the question
n of what Cok
ke and
Pepsi must do to sustain their spectacular historical succcesses. Dem mand for carbonated soft d drinks
(CSDss) is on a decclining trajecttory in the United
U States, and non-CSD D beverages are emerging g as a
seriou
us substitute for CSDs. The T obvious question is——what can b be done to en nsure growth
h and
profittability in the 21st century?
Att the end of the case, theere is a brieff discussion o of Coke and Pepsi’s deciisions to verttically
integrrate again by buying theirr largest bottllers in the U.SS. A new case titled “Cocca-Cola in 20011: In
Search h of a New Model”
M (HBS No.
N 711-504) explores in d detail the new
w strategy of v
vertical integrration.
It hass been design
ned to compleement the Co ola Wars 20100 case, and can be taughtt on second d day or
later in
i the same coourse.
Major Themess of the Ca
ase
Understand
ding the und
derlying econ
nomics of an industry and
d their relatiionship to av
verage
profits
Understandding the relattionship betw
ween differennt stages of tthe value chaain in an ind
dustry,
including an
a introductio
on to the incen
ntives for verttical integratiion
The relation
nship between competitivee interaction aand industry profits
Stru
ucture of th
he Case
Prior versions of
o the case have been useed to teach vaarious subjeccts, including industry anaalysis,
competitive dynammics, vertical integration, and
a globalizaation. The Co
ola Wars 20100 case incorpo
orates
Case Solutions for COLA WARS CONTINUE COKE AND
PEPSI IN 2010 by David Yoffie Renee Kim
Discussion Questions:
1. Why, historically, has the soft drink industry been so profitable?
2. Compare the economics of the concentrate business to that of the bottling business: Why is the
profitability so different?
3. How has the competition between Coke and Pepsi affected the industry’s profits?
4. How can Coke and Pepsi sustain their profits in the wake of flattening demand and the
growing popularity of non-CSDs?
, 5-711-531
JUNE 14, 2011
T E AC
CHING NOTE
Cola Wars Contiinue: Coke
C an
nd Pepssi in 20110
Th
his case is a reewrite, updatee, and expanssion of the vaarious Coke v
vs. Pepsi casess and “Note o on the
U.S. Soft
S Drink Ind dustry in 1986,” (HBS No.. 387-107), wh hich have beeen taught in tthe strategy ccourse
for more
m than two decades. “Co ola Wars Con ntinue: Coke aand Pepsi in 2010” will bee taught in vaarious
execuutive program ms and the reqquired MBA strategy
s coursse at HBS. Th me of this case is to
he central them
underrstand how and a why diffferent indusstry structurees offer vary ying opportun nities for firm
ms to
achievve competitiv ve advantage.
Thhe case is set at
a the beginniing of 2010, and
a the introdduction raisess the question
n of what Cok
ke and
Pepsi must do to sustain their spectacular historical succcesses. Dem mand for carbonated soft d drinks
(CSDss) is on a decclining trajecttory in the United
U States, and non-CSD D beverages are emerging g as a
seriou
us substitute for CSDs. The T obvious question is——what can b be done to en nsure growth
h and
profittability in the 21st century?
Att the end of the case, theere is a brieff discussion o of Coke and Pepsi’s deciisions to verttically
integrrate again by buying theirr largest bottllers in the U.SS. A new case titled “Cocca-Cola in 20011: In
Search h of a New Model”
M (HBS No.
N 711-504) explores in d detail the new
w strategy of v
vertical integrration.
It hass been design
ned to compleement the Co ola Wars 20100 case, and can be taughtt on second d day or
later in
i the same coourse.
Major Themess of the Ca
ase
Understand
ding the und
derlying econ
nomics of an industry and
d their relatiionship to av
verage
profits
Understandding the relattionship betw
ween differennt stages of tthe value chaain in an ind
dustry,
including an
a introductio
on to the incen
ntives for verttical integratiion
The relation
nship between competitivee interaction aand industry profits
Stru
ucture of th
he Case
Prior versions of
o the case have been useed to teach vaarious subjeccts, including industry anaalysis,
competitive dynammics, vertical integration, and
a globalizaation. The Co
ola Wars 20100 case incorpo
orates
