Tuesday, June 6, 2017

Duopoly Competition

While reading the Cola Wars case and the competition between Pepsi and Coke, it made me wonder about other large Duopolies in the marketplace and how they have competed with each other and how their industry will change over time.  The one that comes to mind is the duopoly of Airbus and Boeing. They are the currently the only major players within the aerospace industry that makes large airplanes for use.  Their competition starts back in the 1970s, and Boeing dismissed them as a potential player in the marketplace.  However, Boeing under estimated Airbus and Airbus was able to become a leading seller of planes to many historically Boeing operated airlines.
            Some can argue that Airbus wouldn’t have caught up to Boeing as quickly as it did without the subsidies that the European government offered, but looking at recent events can be compared with the competition between Coke and Pepsi where both companies are attempting to capture new markets and new inventions to stay ahead of the other.
            In the case of Boeing vs Airbus, Airbus made a bet with the A380 that consumers and airlines would stay with the historical hub-spoke model where airlines would maintain central hubs and require travelers to have at least one stop on their destination.   Boeing on the other hand thought consumers preferred to travel point-to-point and not have layovers, so Boeing developed the 787 and left Airbus to have the super jumbo jet market.  Currently it is becoming clear that the age of the super jump jets is over.  Boeing is slowing their production of their largest jet the 747 and Airbus continues to search for potential buyers of their double decker A380.

            Pepsi and Coke went through similar choices throughout their history and will continue to do so in future. The chess game being played with large duopolies will only change when new entrants to the market begin to take market share of these mature industries and outside forces can potentially cause changes in strategy for these companies to take. As consumers continue to look for healthier choices, the soft drink market will continue to decline and as research continues to show that diet soft drinks have health issues as well, that segment of the market could cause shifts as well.  Currently with the rise of concern for recycling and having things become compostable, I think the bottling process has the potential for additional improvement and Pepsi and Coke will need to continue to look for healthier and more organic products to supplement their current product offerings.  However only in time will these strategy decisions being made will truly determine to be a success or a failure.

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