Eco/561 Signature Assignment: Challenges Of Expansion To A Foreign Location

Signature Assignment Challenges of Expansion to a Foreign Location Name ECON/561 Tutors Name Date Market Structure PepsiCo operates in an oligopoly market structure. An oligopoly market structure is characterized by dominance of the market by a few interdependent firms. Interdependence means that if one firm changes their price or volume the other firms are likely to follow suit. The dominant firms in the soft drinks industry are the Coca Cola Company and PepsiCo with their leading brands Coca Cola and Pepsi Cola respectively. Therefore, if PepsiCo changes prices Coca Cola is likely to do the same. There are several reasons for concluding that the soft drink industry is an oligopoly (McConnell, Brue, Flynn, 2008). First the lions share of the market is controlled by two firms. Although there are a vast number of smaller firms in the industry, their market share is miniscule in comparison to the dominant firms. Second entry barriers to the industry are high because of the financial capital required to launch a serious competition. Second, a significant investment is required for branding and advertisement of competing products. Third and last, the two dominant firms engage in aggressive product differentiation (Leahy Neary, 2013). In 215, the Coca