Upload
fahme
View
6.910
Download
3
Embed Size (px)
DESCRIPTION
Stella Artois Class Presentation - Harvard Case Review
Citation preview
Group 2 Consulting Anton Fahme Kirill Kareem Sharon
Traces origins to 1366 brewery in Brussels Bought out by master brewer in 1717 Expansion in 1954 brought Leffe and Dommelsch in 1968 1987 Merger with another Belgian brewery to form Interbrew
Momentum in local market propelled Interbrew for international acquisitions Hungary, Croatia, Romania, Bulgaria and Canada in early 1990’s Late 1990’s Ukraine, Dominican republic, China, Montenegro, Russia and Korea
• Momentum in local market propelled Interbrew for international acquisitions
• Hungary, Croatia, Romania, Bulgaria and Canada in early 1990’s
• Late 1990’s Ukraine, Dominican republic, China, Montenegro, Russia and Korea
80 Countries Top 10 markets account for 86% of sales 61% of Volume production came from Americas
35%
33%
27%
5% 0%
World’s beer market in 1998 Americas Europe Asia Pacific Africa Middle East
Interbrew’s vision is to be within top 3 beer producers in each of the key markets Deliver high quality beers.
Domestic markets are experiencing contraction and declining sales Health consciousness trend Marketing functions of Interbrew are not attuned for global beer brand Uncertainty with developing markets in China and Russia
• 4th Company globally • Lessen dependence on Belgian and
Canadian markets • Strengthen controlled brand’s
positions • Local for local, decentralized
administration
Traditional and sophisticated beer Flexibility of decentralization Fierce customer loyalty Intended strategy Global brand unified campaign Emergent strategy Global brand through adaptable regional initial branding
External environment
How do politics affect us Alcohol tax, consumption restrictions Opening of Eastern European markets in early 2000’s Potential trade sanctions and tariffs
Economic trends
Eastern European and Asian financial crisis of early 2000’s Rise of emerging economies
External environment
Social factors Emergence of wine culture, especially in Australia and NZ Trend towards healthy life style: lite line of products Trend towards specialty products, microbrew
Innovations
Emergence of internet
External considerations
Opportunities that the environment presents
Opening of Asian and eastern European markets Reduction of trade barriers Converging markets
Threats faced by the firms in the industry
Growth of substitutes Declining sales in mature markets Strong competition
Where do we excel?
Company’s performance is partially attributed to its:
Strategic operations- cross fertilization Strategic sourcing Motivated employees Successful capacity utilization Diverse product line from premium to light beers
Are there other pressures? Suppliers power – medium
Interbrew works with a limited number of high quality suppliers, increased power Offer raw materials that could be easily substituted, reduces power
Buyers power- moderate to high
Costs nothing to switch A lot of close substitutes
Threat of substitutes – medium
Wine, cocktails, pilsner, lager
Threat of new entrants – high ratio of fixed vs. variable costs Rivalry- intense, Anheuser-Busch, Heineken, Carlsberg, little differentiation, high exit cost
Overall industry attractiveness
Fragmented, top four players account for 22% of global volume
Attractive in growth markets as well as mature markets
83 lpc in N. America, 79 in W.E., 29 in E.E. Growth of speciality and light beer segments
Value Chain Analysis Primary
Inbound Logistics Partnerships with suppliers
Outbound Logistics Economies of scale in distribution
Handled differently according to region, little standardization
Value Chain Analysis Primary
Operations, Interbrew strong point Shifting production to more efficient facilities Cross fertilization of best practices Capacity utilization
Marketing and Sales Product quality and positioning Specialty Belgian cafes
Value Chain Analysis Secondary
General Administration Benefits from economies of scale
Human Resource management Employee suggestions Motivated owner-operators
Procurement Great relationships with limited suppliers across the board
Firms Resources & Sustainable advantage
Tangible Resources Wide range of locations Lean operations from efficient sites
Key strengths come from intangible resources and organizational capabilities
Intangible Resources Wide Portfolio
Very different from its competitors Key acquisitions Presence in both developing and emerging markets Best practices from different sites can be applied across the board
Decentralized approach Allows flexibility despite portfolio size Handles different tastes Can shift and adjust product mix
Access to a vast supply network
Organizational Capabilities
Makes strategic acquisitions Ability to leverage knowledge Focus on growth markets with long term volume growth potential Cost savings gained by purchasing and then rationalizing operations
Industry life cycle by region
Industry by product category
• holder
Intellectual Capital
Human Capital Spread globally Cultural, local and economy knowledge and expertise
Structural Capital Breweries around the world Brand equity
Relational Capital Connected to customers around the world Beer Cafe
Corporate Strategy
BRANDS MARKETS
OPERATIONS
INTERBREW TRIANGLE
Strategy Objective
Underlying Objectives Consolidate the company position in mature markets Improve margins through higher volumes of premium and specialty brands
Rationalize Worlds major markets would each end with just 2 or 3 major players
Fundamental Objective Increase shareholder value
Operational Strategy Cross fertilization
Sharing of best practices between sites
Employee propositions Improvement linked to employee motivation not technical performance
Capacity Utilization Close overproducing facilities and open under-producing
Strategic Sourcing Selecting small number of suppliers
Brand Strategy
Acquisition of existing brewers, in growth mature markets Identify brands, typically specialty products and them a regional basis across a group of markets
Market Strategy Increase global volume of beer production and reduce their dependence on Belgium and Canada Establish and manage strong market platforms Decentralization corporate structure Mature markets – greater efficiencies in production, distribution and marketing Growth markets – build significant positions & concentrate on long-term volume growth potential
Economies of scope
Core Competencies MERGERS AND ACQUISITIONS Sharing Activities Decentralized Management Structure
Market Power 4TH Largest beer company in the world Houses beers from 80 countries
Vertical Integration Strategic sourcing
Portfolio Management on Regional Level
Portfolio Management on Regional Level
Brewery : Manchester, England
Founded: 1853
Portfolio Management on Regional Level
Portfolio Management on Regional Level
Brewery : Namur, Belgium
Founded: 1152
Portfolio Management on Regional Level
Portfolio Management on Regional Level
Brewery : Prague, Czech Republic
Founded: 1869
Portfolio Management on Regional Level
Portfolio Management on Regional Level
Brewery : Hoegaarden, Belgium
Founded: 1445
BCG MATRIX STAR QUESTION MARK
CASH COW
DOGS
Relative Market Share
Rel
ativ
e G
row
th R
ate
Asia South America Central & Eastern Europe
Motivation for Global Expansion
Increase size of potential markets Reduce costs of R&D and operation Extend life of a product Optimize physical location for every activities in firm’s value chain
Risks: Political & Economic Currency Fluctuation Management Issues
Motivations for Global Expansion
Motivations for Global Expansion
Entry Modes of Global Expansion
Means to Achieve Diversification Global Approach
Mergers & Acquisition -Speed -Valuable resources -Consolidation and Scale -Leverage
Potential Limitations: Expensive Manager’s ego and creditability Cultural issues
Joint Venture Enter new markets Reduce costs in the value chain Develop and diffuse new technologies
Potential Limitations: Partner issues Control issues
Factors Affecting a Nation's Competitiveness
Is the nation’s business governing favorable and what are the nature of domestic rivalry?
Is there Demand for beer?
Presence/Absence of Suppliers & related industry such as wineries, and Distilleries that are globally competitive?
Does the nation have favorable Factors of Production that supports the beer industry?
Alternatives
• Continue with Stella Artois – Inadequate marketing experience – Old fashioned image – Alcohol level inconsistence in different
markets • Shift emphasis on Labatt
– Little exposure outside North America – 25% Decline in sales after Labatt Ice
peaked
Alternatives
• No global brand, differentiation of local beers – Leverage core competencies and
structure – Consistent with acquisition strategy – Cross cultural sharing and regional brand
development – Embrace Belgian Beer cafes franchise
Alternatives
• Promote “Interbrew” as a global brand – Similar to no global brand, could be used
as a tool to achieve it
• Emphasize and develop light beer as a category
Now we open the floor for questions
Today
• Interbrew no longer exists after 2 major mergers with AmBev and later with Anheuser Busch forming the biggest beer company in the world Anheuser-Busch InBev