How Competitors Affect Competitive Advantage of Pepsi Essay

Pepsi is one of the worlds top change drink guild established in 1893. Today it has grown into a multibillion company which produces some of the approximately popular soft drinks, cereals and franchise eateries (Our History 2011). But Pepsi, like most of the other companies is unable to dodging competitors in their general task environment who directly affect their rivalrous utility. Competitive advantage is the advantage a company or harvest-home has over other companies in terms better attributes much(prenominal) as exist advantage, differentiation advantage, network distribution, and customer support that will befriend the company get through better sales comp ared to other companies (Hao, Ma 1999).For decades, Pepsis main competitor has been The Cola-cola Company, which is the world largest beverage company, followed by companies such as Cadbury Scheweppes Plc, Kraft, Dr, Pepper Snapple Group, Cott Corporation and Nestle (Joys M, Wolburg 2003). All these competitors are coming up with more(prenominal) innovative ideas to gain sales.Pepsis competitor affects Pepsis competitive advantage in terms of exist anatomical structure and cost advantage. A general sales key is to avoid wrong war amid competing companies in the same industry because the companies must reduce their prices below the work price. This would affect the cost structure of a company and put the company in competitive disadvantage because sales below price margin means the company is selling at a loss.An example of price war surrounded by Pepsi and the Coca-Cola Company would be in the 1970s. Coca-Cola bought most of the packaging bottles in the foodstuff to ensure lower production price beating its other competitors. In response, Pepsi had to cut its advertising and drop its selling price, decreasing its cost advantage ( hundred and Pepsis uncivil). The price war between Pepsi and its competitors has been continual for decades. This tremendously affected and cost advantage of Pepsi, thus reducing the companys competitive advantage.The distribution network of its competitors also disrupts Pepsis competitive advantage. Pepsi must compete with its competitors to expand their distribution network in more countries to expand their sales because all one company can dominate the industry. Companies unable to dominate would lose competitive advantage and sales. For example, Coke controls 75 percent of the soft drink foodstuff in Israel and Pepsi is unable to penetrate the market payable to Cokes strong distribution (Hellman, Ziv 1991). Coca-Cola and Pepsi is also always competing to expand their vending activities in every district to increase sales (Pierce, Gala 2005).A research also shows that Pepsi, Coca-Cola and Dr Pepper Snapple are continually fighting for calendar marketing contracts with supermarkets in United States, which pass ons an exclusive promotional ledge space of the product for a geological period of time. During months when other sof t drinks brands are promoted in this promotional shelf space, at that place is a drop in sales of Pepsi. This shows that the presence of competitors trying to expand their distribution network, vending activity and shelf space activity will cause decreases Pepsis competitive advantage (Klein 2008).Main competitors also result negative impacts on the differentiation advantage and product offerings of Pepsi, decreasing its competitive advantage. For example, Pepsis competitors are always imitating Pepsis new products. The competitors impeccable speed in producing similar products in the market affects the sales that Pepsi should get for their investment in research and development. For example, when Pepsi launched its Pepsi Light, Coke came up with Diet Coke concisely after. Soft drinks companies that are always imitating their competitors or are being imitated is causing competitive disadvantage whereby there is little product differentiation in the market (MacArthur 2006).However if the company does not imitate or come up with new innovative products they will also lose competitive advantage to their competitors who are always developing new products. When Cadbury Schweppes caught Pepsi off-guard by producing new beverages such as Hawaiian Punch, and Nantucket Nectar, Pepsis market share was heavily defeated (OConnor, Brian 2002). Pepsis competitor also affects Pepsis competitive advantage through advertisement and promotions.Every time Pepsi advertises, Coca-Cola will immediately respond by doubling its advertisements, making Pepsis advertisement and sales target redundant (Rivalry on various fronts 2001). Coca-Cola is always competing with Pepsi to be the main patronize in every Olympic game as this sponsorship significantly affects the consumers brand choice during the event period (Cho 2011). Competition by other competitors and their advantages directly affects Pepsi. Competitive advantages by other companies will affectcompanys sales, revenue, reputa tion and even customer support and loyalty.Mangers must also have a big understanding their companys environmental opportunities and threats as well as internal strengths and weakness (Barney, Jay B 1995). This can be found by a planning technique called the S.W.O.T analysis. S.W.O.T analysis will allow managers at different corporate level will select business, corporate and functional level strategies to help gain competitive advantage (Waddell, Jones and George 2012, 148).Another model that managers should consider carrying out is the Michael Porters five-forces model. This model helps managers isolate crabbed forces in the external environment that are potential threats to the company (Waddell, Jones and George 2012, 148).In conclusion, managers must be advised of what their competition companies are doing and what their competitive advantages are and try to come up with a strategy to dominate their competitors competitive advantage.ReferenceBarney, Jay B. 1995. Looking Insi de for Competitive Advantage.The Academy of caution Executive 9 (4) 49-49. http//search.proquest.com/docview/210515505?accountid=10382.Cho, Sungho, Minyong Lee, Taeyeon Yoon, and Charles Rhodes. 2011. 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