Question 1: Definition of Close Competition and Its Distinguishing Features
Close competitions is a state in which competitors have thin margins between them and operate in the same industry. Furthermore, close competitions offer related goods and services, thereby, competing for the same market. On the same note, close competitors hold the same views and principles and, hence, the difference between them cannot be determined easily. In that case, several features enable people to distinguish close competitions from other competitions in the economy. Primarily, close competitions are marked by intense rivalry amongst them since they target the same market unlike other competitions that operate in different industries. For instance, the fact that close competitions have some factors in common leads to increased animosity in the industry as each of them seeks to dominate the market.
Secondly, close competitions are distinguished from other competitions due to the application of advertisement as a main marketing strategy. Close competitors normally identify themselves with the market through advertisements, which is not a necessary feature in other competitions. Lastly, close competitions have similar goals and objectives compared to other competitions in the economy that are unrelated and have different targets. As a result, close competitions can be easily distinguished from other competitions.
Question 2(1): Evolving Features
The Cola industry is the largest soft drink industry. As a result, it had four main players, namely: the Coca-Cola company, Cott, Dr. Pepper Snapple Group, and PepsiCo. Despite the difference in names, all four participants are related in several ways. First, the companies produce the same type of goods, although the products are marketed under different brand names. Additionally, the companies are related in the sense that they utilize similar raw materials in the production process. Furthermore, the four participants in the Cola industry target the same market; hence, they are deeply related.
On the other hand, both Coke and Pepsi, sometimes want to have full control of the bottling networks and sometimes not. Firstly, the companies desire to have full control of the networks in order to gain a big market share and maximize their sales. Secondly, controlling the bottling networks gives the concerned company a competitive advantage. However, acquisition of control of the bottling networks creates an unhealthy competition in the industry. Similarly, controlling the bottling networks limits a companys innovativeness and creativity, thereby easily losing its impact in the market. For these reasons, Pepsi and Coke do not want to have full control of the bottling networks.
Question 2(2): Competitive Dynamics
The cola war has been on for quite a long time. While analyzing the period between 1970s and 2000s, it is evident that Coke won the war in 1970s, 1980s and 2000s whereas Pepsi, at some point dominated in the 1990s. There were several strategies that were applied by both companies that significantly affected their competitive advantage. For instance, in the 1970s, Coke rebranded its products and changed its slogan. Likewise, in the 1980s, Coke adopted low-pricing and increased advertisement strategies. In the 2000s, Coke incorporated technology and Coke rewards in the business. As a result, the new look of Coca-Cola products was appealing in the market and, hence, more sales were made compared to Pepsi. On the other hand, Pepsi resurfaced in the 1990s through the Pepsi stuff and low-pricing strategies. However, Pepsi success has been short-lived since, by the mid-1990s, Coke took the lead.
It is observed that the strategies applied are courtesy of innovations and imitations. Indeed, imitations and innovations advance a companys competitive advantage by fostering strategy development. On the same note, cola wars forced smaller concentrate producers and bottlers to merge in order to withstand the competition in the industry.
Question 2(3): Potential Challenges
In the mid 1990s, both Coke and Pepsi were making huge profits due to the successful application of strategies. However, both companies encountered challenges during that period. For instance, Coke was faced with the most threatening challenge as its products were declared to be contributing to obesity problems in the country. Likewise, Pepsi was seriously shaken by the discovery of syringes in the soda cans and the lawsuit in relation to the Pepsi Stuff promotion.
In light of that, Coke responded by introducing diet coke and coke zero in the bid to tackle the obesity issue. In the end, Coke was successful in dealing with the obesity claim since the new products gained publicity rapidly. On the other hand, Pepsi sought help from the court concerning the issue of syringes. Regarding the Pepsi stuff, the firm opted to change the wording in the advert. On both challenges, Pepsi did not score since the final result was lack of trust and suspicion in the company. Since the market is rapidly expanding, both companies need to establish correct strategies that can enable them to perpetuate their advantages in new markets. Therefore, the firms do not need a second foundation since they are at the moment. However, Coca-Cola has a better chance of winning the cola wars.
Question 3: Examples of Close Competition and Summary
There are so many close competitions in the economy. For example, in the ever-growing internet industry, close competitors are Google and Yahoo. These are the companies that compete in the provision of internet services to their clients. For instance, each of them strives to offer the best services to the customers, thus, increasing business rivalry. For instance, several strategies are adopted by the firms with the aim of attracting more clients as well as maintaining and motivating their employees to keep serving the clients diligently. A critical analysis into their competition indicates that Google has overpowered Yahoo in terms of both service provision and employee maintenance. Although Yahoo was established several years before Google, Google has scaled heights in the internet industry.
Furthermore, the success of Google is attributed to its ability to respond timely and immediately to the demands of the market. For example, Google managed to incorporate social networking and messaging tools in its services to enable clients share photos and links. Equally, Google provides a variety of features to the customers, unlike Yahoo that took long to realize the changing trends in communication. Therefore, close competitions need to be flexible and innovative in order to withstand the stiff competition witnessed in the industry.
Question 4: Conclusion
Close competitions are often technical and are won by small margins. Businesses that operate in a close type of competition must always be on the outlook and need to understand the nature of their clientele. That way, the business will be in a good position to serve its customers in a unique manner unlike the other competitors. Similarly, those businesses that win in close competitions war have a high sense of flexibility, creativity and innovativeness. On the same note, close competitions are won by competitors that analyze each and every step they take. For instance, one should set proper goals and objectives to boost the chances of winning a close competition. Hence, it is important to be mindful of Lockes goal setting theory to set realistic goals. Due to the complicatedness of close competitions, and the fact that they have similar features, it requires managers who are also leaders to propel an enterprise to victory.
To stir a firm to victory in a close competition, it calls for transactional leadership so that workers can be motivated to show outstanding performance though the exchange of rewards. Equally, there should be consultations to ensure that the correct strategies are put in place to speed up objective achievement. On the same note, creativity and innovativeness within the company facilitates faster response to market needs and enable the business to provide what is exactly required to its clientele. Flexibility allows the company to move in the same direction with the customers, thereby, establishing permanent clients. To add on that thorough analysis and examination of activities to be taken is also important since it helps the company to avoid unintended results that compromise the competence of the firm. For example, the marketing strategies employed by Pepsi turned out to harm the company. In order to eliminate such issues, there is a need to be systematic and look at possible outcomes of the steps being taken.
Moreover, winning a close competition requires that a firm becomes mindful and concerned with the activities of the competitors. Through that, employees gets to copy and learn from what the other company is doing and, hence, does it better than them. As seen earlier, imitations the knowledge and skills of people by providing a chance to develop an already existing idea. In addition, proper networking enables the company to reach out to other firms as well as the market effectively. As a result, new ideas reach the firm faster and the products easily reach the consumers. Furthermore, honesty is one of the most important virtues in business. The competitors ought to be honest to each other and to the market so as to gain favor and, thus, a large market share. Through honesty, a healthy environment is established within the industry, leading to fair play. Therefore, as much as each firm desires to win in a close competition, ethics and code of conduct has to be upheld. Looking at the case study, Coca-Cola has so far managed to win the competition because of its mass market strategy.