The amount of labor can be represented by the human capital that the firm needs to function properly. The company should monitor other alternative sweeteners that give consumers sugary satisfaction without the negative health effectives.
On the other side of the equation, if the sweetener is shown to have negative heath effects it will quickly drive down demand. A slight decrease in productivity may occur to train employees about the new product, but otherwise, productivity should remain virtually unchanged.
A major threat facing Coca-Cola is a growing number of niche soft drink brands that are becoming more popular with consumers.
The two largest firms in the market are Coca-Cola and PepsiCo, which collectively dominate the vast majority of the market.
The company many want to consider vertically integrating stevia plant farms in South America to mitigate the risk of price spikes in raw materials.
As mentioned previously, if demand suddenly surges for stevia sweeteners, the price of raw materials could skyrocket. Stevia is a natural zero-calorie sweetener that has become popular among heath food consumers.
Many Americans are looking to improve their diets to combat the persistent obesity problem plaguing the country. Factors That Affect Demand, Supply, And Equilibrium Prices Supply and demand are forces that are always working to reach an equilibrium point in a competitive market.
Price Elasticity Of Demand Price elasticity of demand can be summed up with the following formula: ECO Microeconomics — Online Understanding the competitive forces within a market is essential for the successful rollout of a new product.
The direction of this market is unlikely to change due the fact that many government initiatives have been aimed at fixing the dietary choices of Americans. If the company can gain confidence with consumers about a healthy soft drink product it could lead the massive growth in revenue in this emerging sector.
The main force effecting demand for this product will be consumer sentiment about stevia-sweetened products. Currently, the plant is primarily grown in South America and is not considered a staple crop. Factors Affecting Variable Costs, Including Productivity The single most important variable cost is the raw stevia sweetener used to manufacture this new product.
Consumers have many alternatives to choose from and can easily find substitute goods when necessary. In other words, if a good is perfectly inelastic, the demand will NOT change when the price changes. In the soft drink market, goods are considered very elastic. Productivity among the labor force is a minimal concern for this project.
The occurs because a higher amount of working capital is needed to fund the salaries and benefits of workers. At this point in time, the sweetener has not had a long history of use in the Western world and potential health drawbacks are not well understood.
As the amount of labor increases, the capital employed will decrease. The company will need to monitor supply closely and have a mitigation plan if raw materials become unavailable.
If research shows that the sweetener is a healthier alternative to cane sugar is will cause demand to rise significantly. The company will need to monitor these startups and take steps to acquire them if they start experiencing rapid growth.
In order for Coca-Cola to launch a new product it will need to increase the amount of labor to manufacture this new product. These two firms have built exceptional brand loyalty and have contracted with fast food chains to serve their products exclusively.
The soft drink industry is highly competitive and there are numerous firms seeking to gain market share. Technological Innovation Ultimately, Coke is attempting to create an innovative soft drink that will solve the obesity crisis in America.
If a good is perfectly elastic, the demand will change equally to the percent change in price. Coca-Cola already has a well-established manufacturing base that can produce soft drink products across the globe.
If shareholders approve of this direction for the company, the capital employed may be reinvested into expenditures to meet this goal. This longstanding brand has a massive amount of capital that can be invested into these groundbreaking markets.
Supply for stevia sweetened Coke is largely determined by the harvesting of the Stevia plant. If global demand suddenly surges, it could create a supply shortage for the raw ingredients needed to produce the product. This same concept is true for the stevia-sweetened products and Coca-Cola will need to maintain prices that are fall near the middle of the market.
Current Market Conditions Competitive Analysis for Stevia-Sweetened Coke. ECO Week 3 Team Paper: Imagine you are part of a strategic planning group at a large corporation that is considering developing a new proposed product.
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