Body by Me

Body By Me's fixed costs includes rent, credit interest, maintenance costs, security and administrative expenses. Fixed costs normally remains constant regardless of Body By Me's activity in a given period, but can change when there's a change in Body By Me's organization, changes in technology applied, sale of manufacturing equipment, decisions to undertake advertising activities etc.

The ease of entry and exit does not cause competitive pressure on the major soft drink

companies. It would be very difficult for a new company to enter this industry because they

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would not be able to compete with the established brand names, distribution channels, and high

capital investment. Likewise, leaving this industry would be difficult with the significant loss of

money from the fixed costs, binding contracts with distribution channels, and advertisements

used to create the strong brand images. This industry is well established already, and it would be

difficult for any company to enter or exit successfully.

This makes it very

difficult for new, unknown entrants to start competing against the existing firms. Another barrier

to entry is the high fixed costs for warehouses, trucks, and labor, and economies of scale. New

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entrants cannot compete in price without economies of scale.

The S&P Industry Survey has shown the soft drink industry profit margin

to be on a steady incline over the past fifteen years. Levels in 1980 were near

14%, while as of year-end 1995 were over 20% and expected to flatten a bit.

This flattening effect may be an indication that fixed costs are on the rise due

to expansion