Question 1
The concentration producing industry has one buyer and through its value chain. Instead, costs for advertising, promotion, market research, and bottler relations were significant. On the other hand, bottling industry is the mid-way player in the soft drink industry. There are two suppliers and one buyer involved in its value chain (Exhibit 1).
Whether two industries are profitable depends on soft drink consumption, which had increased for more than 20 years and plateaued in the 1990s.
The economics of the CP and bottling is very different from each other in terms of number and s…
