provided that firms can sustain different levels of returns which are dependent on the industry structure but which can also be enhanced by the use and basic understanding of the model. This is thus applicable to the Coke and Pepsi industries who are major rivals in the production of carbonated soft drinks.
The structure of the concentrated producers is such that a blend of raw materials ingredients are produced, packaged in plastic canisters and taken to the bottlers. Concentrate producers add artificial sweeteners to carbonated drinks while the bottlers add sugar or high fructose thus making the process of the former to be less capital intensive than the latter. Production cost is low under the concentrate producers with little capital being used on machinery, labor and overheads and still ensuring that production can serve the whole of the United States (Greenwald & Kahn 91). Innovation and sophistication is a key goal in the firm with high investments awarded to marketing, advertising, research, promotion and bottler support. However, key emphasis is given to the development of customer development agreements with other advanced companies to promote marketing strategies and employment of many people to meet the production demand
Bottlers on the other hand add sugar, carbonated water, high fructose corn syrup to the concentrates and packed it ready for delivery to customers. The sales include maximization of space, positioning of brand, setting displays and points of sale and coming up with promotional activities. The process of the bottlers is capital intensive, involves high speed and high cost to produce packages that are of similar type and size. Much of the system is capital intensive with major investments being accounted for trucks and distribution process.
The industry structure of the concentrate producers is more attractive based on the model provided by Porter on industrial framework. The supplier power of the concentrate producers is higher than