FREE ESSAY ON COCA COLA BAD FOR YOU.

COCA COLA BAD FOR YOU.

Coca - Cola
Bad for you.
On the 14th of June Coca-Cola's soft drinks were banned from the markets in Belgium and
later also in Luxemburg and France. Two failures in the bottling system were the cause
for the nausea that the people suffered. According to the article it would have been
better if they would have acted fast and told the whole truth. Coca- Cola is in an
ologopolistic market and therefore branding plays a great role. It is possible that the
company ha lost market shares, due to this accident. In the ologopolistic market the
firms don't compete with price, but rather with advertising and other non-price
strategies. Therefore one can predict that this scandal has shifted the demand curve to
the left. This accident can be seen as a negative externality. The government should make
Coca Cola increase their health controls (internalise their externalities), if scandals
of this sort happen again. They can enforce this by either subsidies (reward) of in this
case taxation (punishment). People who would usually only buy Coca Cola due to the heavy
advertising might try a substitute during the time of the ban. This can be seen as a sort
of free promotion for the others in the market. According to the zero sum game, the lose
that Coca Cola is making right now is directly proportional to the profits the other
firms are making in the respected market. Coca Cola will need to take further actions to
restore their brand name that they have established throughout all these years. This will
significantly influences their total added costs. A strong brand has very few goods
substitutes and it is very difficult for competitors to challenge the supremacy of the
brand. This health scandal might have opened the doors fro new competitors. In the long
run this can lead to Coca Cola's costs for advertising to increase or furthermore they
could lose control of the market and fall into a disequilibrium. The accelerator theory
suggests that the level of planned investments varies with the rate of change of income
or output rather than with the rate of interest. It will be hard for the big American
company to fulfil their expectations of expansion in Europe with no investors being
pleased with their progress.