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<p align="justify">Fomento Económico Mexicano, S.A.B. de C.V., doing business as FEMSA, is a Mexican multinational beverage and retail company headquartered in Monterrey, Mexico. It was formed in 1980. Its business divisions include the beverage industry and commerce division. The company&#8217;s primary business subsidiary is the beverage industry. It includes Coca-Cola Femsa it owns 47.2% of it, and HEINEKEN (Femsa, 2021). In addition, its commerce divisions operate retail pharmacies under the health section and OXXO gas stations. The company has more than 320,000 employees in 13 countries: Argentina, Brazil, Chile, Colombia, Costa Rica, Ecuador, Guatemala, Mexico, Nicaragua, Panama, Peru, U.S.A., and Uruguay (Femsa, 2021). Porter&#8217;s five forces model is a valuable tool to identify threats and opportunities faced by Femsa in the beverage industry in the world.</p>
<h2 align="justify">Competitive Rivalry in the Market</h2>
<p align="justify">The soft drink industry is concentrated all over the world, and it is very competitive. The industry is predominated by a conglomerate with its presence all over the world. The most significant competitors of Femsa are Pepsi Co and DANONE. All these multinational companies have a strong foothold all over the world. Femsa dominates the market in Mexico. According to Statista (2011), Femsa Coca-Cola has around 47.7% of market share compared to Pepsi&#8217;s 15.1% and DANONE&#8217;s 7.5%. Femsa posted annual revenue of $26.319 Billion in 2020 (Fortune, 2021). Femsa owned a bigger market share compared to its rival. Its retail branch provides it an opportunity to expand its clientele. It had made it difficult for their rivals to compete with them. However, the industry remains highly competitive.</p>
<h2 align="justify">Threat of Substitutes</h2>
<p align="justify">The threat of substitutes in the beverage is low. A substitute is a product or service that performs the same function as a firm&#8217;s product but by different means (Porter, 2008). There aren&#8217;t many options available in the industry. People tend to stay loyal to a brand name in the soft drink industry. Different brands are offering similar products. So to keep with them, they must not compromise on their products while maintaining the prices in control. The other available substitutes are tea, sports drinks, and juices. Soft drinks are linked with poor health conditions. The only better solution available is healthy juices. The switching cost is higher than any better solution. Those products cater to huge masses in society. The threat of substitutes is low against Femsa. It is mainly because of the scale of the economy and the limitation of the product&#8217;s availability.</p>
<h2 align="justify">The Threat of New Entrants</h2>
<p align="justify">The threat of new entrants is low. Many factors make it impossible for newcomers to compete in the market. The threat of new entrants into an industry is related to entry barriers within the industry and geographic boundaries (Dobbs, 2014). It needs enormous capital investment to start the production. The newcomer will have to come with better products available in the market to affect the market share of these companies. A brand like Coca-Cola has been associated with fizzy drinks, and it cemented its brand identity. The new entrants need a goods supply chain to distribute their products and develop a distribution channel. Femsa owns the majority of the market share in Mexico. Femsa is the largest Coca-Cola bottling company globally, and it operates its convenience store as well. It provides it access to the market, and it does not need to rely on other companies.<br />
Bargaining Power of Buyers</p>
<p align="justify">The buyer&#8217;s bargaining power depends on the number of characteristics of its market situation. Buyer can exert their power if the product available are standards; they are buying them in bulk quantities if the product produced is not up to the mark (H.B.R., 1979). The soft drink market is the largest group in the more significant beverage industry. Mexican is the world&#8217;s number 2 in soft drink consumption (Cohen, 2016). Products are unique in the soft drink industry, and people are very brand loyal to the drink of their choice. The average price of soft drinks is meager, which makes each individual purchase relatively insignificant. Buyers are price-sensitive, but companies keep to it low and comparable to their rivals. So people do not switch. The buying power in the beverage industry is intense.</p>
<h2 align="justify">Bargaining Power of Supplier</h2>
<p align="justify">Suppliers are organizations that provide resources to the industry, such as materials, services, and labor (i.e., individuals, organizations such as labor unions, or companies that supply contract labor). The bargaining power means the ability of the supplier to increase the price of raw material or the industry&#8217;s cost (Hill and Jones, 2012). Suppliers hold higher power if a few suppliers dominate the industry, it provides more products in the market &; it is future integrated. The primary material providers are bottling equipment manufacturers and secondary packaging suppliers. The products are pretty much identical, and the market is saturated with suppliers. Suppliers need the beverage industry due to its profitability. This supplier can have or little no impact on the company. So they hold a weak level of bargain power against the company.</p>
<h2 align="justify">References</h2>
<p align="left">Cohen, L. (2016). PepsiCo, Coca-Cola still sparkle in Mexico after fizzy drinks tax. Available at: https://www.reuters.com/article/us-pepsico-mexico-tax-idUSKCN0ZO0B5<br />
E. Dobbs, M. (2014). Guidelines for applying Porter&#8217;s five forces framework: a set of industry analysis templates. Available at: Competitiveness Review, 24(1), 32-45<br />
Femsa. (2021). About us. Available at: https://www.femsa.com/en/about-femsa/about-us/<br />
Fortune. (2021). Fomento Económico Mexicano. Available at: https://fortune.com/company/fomento-economico-mexicano/global500/<br />
Harvard Business Review. (1979) How Competitive Forces Shape Strategy. Available at: https://hbr.org/1979/03/how-competitive-forces-shape-strategy<br />
Hill, J., 2012, Essentials of Strategic Management, 3rd Edition. South-Western,<br />
Porter, M. E. (2008). On competition. Available at: Harvard Business Press.<br />
Statista. (2011). Market share of soft drink companies in Mexico in 2010, based on sales value. Available at: https://www.statista.com/statistics/216909/market-share-of-soft-drink-companies-in-mexico/</p>
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