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Strategy, Structure, and Antitrust in the Carbonated Soft-Drink Industry
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By Timothy J. Muris, David T. Scheffman, and Pablo T. Spiller
ISBN: 0-89930-788-4
ISBN-13: 978-0-89930-788-6
272 pages, figures, tables
Quorum Books
Publication: 5/30/1993
List Price: $85.00 (UK Sterling Price: £47.95)
Availability:
Media Type: Hardcover
Trim Size: 6 1/8 x 9 1/4
Subjects: Reviews:
  • By examining the larger market strategies associated with structural changes in this industry, Muris, Scheffman, and Spiller shed light on antitrust issues. All highly respected senior business faculty members at major universities, they ultimately argue that the move to captive distribution networks has been procompetitive rather than monopolistic. The system has grown in efficiency and this, in turn, has benefited consumers through lower prices.
    —Legal Information Alert
  • This is a novel and original book. Muris, Scheffman, and Spiller make important contributions to our understanding of how competition in the industry works.
    —Business History Review
Description: Pepsi-Cola and Coca-Cola are widely recognized as being two of the premier marketing companies in the world. They have introduced a great variety of new products and package types. They have raised celebrity advertising to a new level. Coca-Cola even changed the formula for Coke. These and other developments in the carbonated soft drink industry came about from major strategy changes by Pepsi-Cola and Coca-Cola. Rather than simply reacting to a changing competitive environment, PepsiCo and The Coca-Cola Company have created and implemented strategies that turned the new environment to their advantage. Although Pepsi-Cola attacked Coca-Cola's dominance and achieved near-parity with Coke in bottled soft drinks, both Coke and Pepsi have benefitted from fighting the Cola Wars. The battle between them has stimulated continuing growth in an industry regularly pronounced by the experts for many years to be on the verge of maturity. One widely ignored aspect of the Cola Wars is the ongoing transformation of the soft drink distribution systems of Coca-Cola and Pepsi-Cola from systems of independent bottlers to captive bottling subsidiaries. Chandler advanced the hypothesis that successful firms develop strategies to take advantage of new opportunities, and that those strategies then determine the organizational structure required for effective implementation. We find that changes in the organization of the two leading carbonated soft drink firms' distribution systems provide support for Chandler's hypothesis. The independent bottling systems were a unique and effective organization for many decades. Changes in the external environment, however, raised the costs of transacting between the parent concentrate manufacturers and their independent bottlers. In particular, the new competitive environment required rapidly changing product and marketing strategies, and the implementation of these strategies required the close cooperation of the distribution systems. In effect, Coke and Pepsi needed to change the organization of their distribution systems to implement effectively the strategies that stimulated the new competitive environment, because the relative transaction costs of the independent bottling systems in the new environment were too high. The book presents a strategic analysis of the history of the industry.
Table of Contents:
  • Introduction
  • A Strategic Analysis of the CSD Industry
  • The Origins and Development of Soft Drink Distribution
  • The Modern Soft Drink Industry
  • Strategy and Structure in Soft Drink Distribution
  • The Organization of Distribution of Other Major Grocery Manufacturers
  • Antitrust Theories of Bottler Acquisitions
  • Antitrust Challenges in the CSD Industry
  • Increased Operating Efficiencies Arising From Captive Distribution: The St. Louis and Denver Pepsi-Cola Franchises
  • The Output Effects of Captive Distribution: A Case Study of Sales in MEI Markets
  • The Price Effects of Bottler Acquisitions
  • The Competitive Effects of Bottler Acquisitions: The Stock Market Evidence
  • Conclusion
LC Card Number: 92-34944
LCC Class: HD9349
Dewey Class: 338.4
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