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Coca Cola's Market Structure Based on Annual Report to Stockholders

Based on Coca-Cola's annual report to stockholders on its web site:

• Does the company have characteristics of a perfect competition, monopoly, or oligopoly?
• How does competition in this industry help or hurt consumers?
• What does the annual report say about the corporation's view of future business challenges and the market in which it operates?
• Does this corporation see long-run adjustments?
• Consider both the microeconomic and macroeconomic views. Do you agree with the corporation's view? Why or why not?

Solution Preview

I found the annual report here:

The company falls somewhere between perfect competition and oligopoly. On the one hand, their beverages have multiple substitutes. For example, their bottle water products are hardly different than the bottle water products of other producers and their brand-name flagship product, the Coca-Cola beverage has substitutes in Pepsi-Cola and other generic brand products. Yet, some of its brands, the Coca-Cola beverage and their sports drink, Powerade, enjoy such distinction in their brand that they only compete with a few other products, namely Pepsi and Gatorade. That is, they exist on a market of their own and thus enjoy a premium in pricing. A corporation, for example, is highly unlike to purchase generic brands for cola or sports drinks, which makes these products, differentiated from generic products in at least some markets (1).

The competition that exists helps consumers by decreasing price and forcing the company to better target the needs of the countries in which it operates. For example, when Coca-Cola had to fight Kola Real in various ...

Solution Summary

The expert examines Coca Cola's market structures based on annual report to stockholders.