Diversification drive benefits Coca-Cola Enterpises

Impact on the frontiers of strategy research, Strategic Management Journal, 12 1. And the main limitation is that SWOT doesn't take into account to the core competencies of other company e. Global scale allows SAB to share brand innovation. This places extra pressure on Total Quality Management, and if no adequate organizational structures exist to absorb these stresses, it could make this Giant Company unstable, and possibly vulnerably be their Achilles Heel. After establishing substantial presence in developed economies, their strategy shifted back to developing economies due to their proven competitive advantage. The generic strategies are: The value of Porters model is more that it enables managers to think about the current situation of their industry in a structured, easy-to-understand way — as a starting point for further analysis.

ANALYSIS OF SABMiller’s DIVERSIFICATION AND COMPETITIVE STRATEGIES INTRODUCTION SABMiller PLC is a global giant in the brewery industry and has a track record of innovation and growth. Being one of the world’s biggest brands, SABMiller has adopted a unique style to ensure competitive advantage and remain at the forefront of the brewing world.

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More Essay Examples on Marketing Rubric. This allowed them to establish common techniques and disciplines for releasing premium brands in new markets and it is now being applied globally. After establishing substantial presence in developed economies, their strategy shifted back to developing economies due to their proven competitive advantage.

African markets such as Tanzania and Mozambique, gave more opportunity and Africa as a whole was encouraging. Stakeholders such as investors expect business growth and profits of their investment, so they could continue to re-invest and build the global portfolio. Management expects to have good performance and build on their competences and capabilities in order to have a secure job and earn good paying salaries.

The Ansoff matrix is a model used to give an organisation alternative direction for strategic development. SABMiller has four strategic options to choose from: This can be achieved by attracting new customers to their product through options such as aggressive promotions, intensive distribution and pricing their product competitively.

SABMiller exists in the Russian market where vodka is widely consumed. They may develop a vodka spirit that will attract their already existing Russian market. SABMiller could decide to launch its already existing products into a new market such as the Australian beer market. SABMiller may develop a totally new product from what they normally offer.

For instance, they could begin to produce snacks such as potato chips or crisps which they could sell to a market such as Mexico. Let us create the best one for you! Globalization was the logical choice for SABMiller since they were under pressure from the South African economic and political environment to find healthier profits and new markets elsewhere.

Leveraging scale, therefore, is not simply a case of putting two or more businesses together and saving costs. While some such synergies are possible, the real benefits arise in driving sales using our scale to grow the business. It is possible for individual businesses to select particular beers from our global portfolio and apply them in their own markets as Miller.

Our global scale allows us to share brand innovation. We use our scale to help us grow by transferring skills, methods and technologies around the group. This clearly applies when we buy a new business. In South America, for instance, the rigorous application of SABMiller tools and techniques, and the infusion of talent from around the group, is generating tremendous growth and transforming the beer market in the region.

SAB therefore use their giant size and global reach to do both. This maximizes their profit margins through differentiation and concentration of the market simultaneously.

They have improved their manufacturing efficiency by consuming less water and energy for each hectolitre of beer brewed, producing more beer from given quantities of raw material while also improving the shelf-life and quality of SAB products. They also customized their point-of-sale activity to vary from market to market because local conditions are so different.

SAB created an international spread of businesses, that is weighted advantageously towards fast growing, developing markets. They are actively involved in buying and building production capacity, forming partnerships to take advantage of new markets and acquiring new brands. This clearly proves that they are a trans-national company according to Bartlett and Ghoshall. The SAB structure is dispersed over all continents, acting as independent units, specializing for their own markets.

This will provide a platform for exchange of knowledge which will result in rapid and ongoing improvement of performance. The discussion above proves extensively that SAB is a trans-national Company but has strong elements of a Global influence driven exclusively though product offerings. Global brands are treated through Global distribution channels, while most manufacturing gets done locally, and local premium or low-cost value brands are tailor made. Reid points out that if demand starts to stagnate, this tendency can be self-reinforcing, with firms who are not industry leaders going to the wall, and a tendency to monopolisation asserting itself.

SAB needs to be careful that their guidance mechanisms should neither be used to blunt the market mentality, nor to reverse the trend of liberalisation. However, they need to be put in place to guard against instability and stagnation.

This can be very difficult for SAB to negotiate, if their control over input factors for supply chain management is not decentralized. Overall SAB has done excellently at negotiating the tricky road avoiding the potholes that globalization brings, and putting the proper mix of both Global competition strategies and Trans-national elements to satisfy market demand.

Their strategy to acquire further breweries in more places, allows the product to travel far less — which is good for both costs and quality, since it is perishable. Discuss the importance of key success factors in businesses and organizations with specific reference to SAB.

The South African lager and sparkling beverage businesses are now integrated after Key Success Factors Identified Davenport mentions several critical key success factors for organizations. This refers specifically to the knowledge obtained to run these organizations. These are related to several general factors: Management and leadership Support 2.

Roles and Responsibilities 7. Rewards and Recognition Key strategic success factors Davenport mentions are: Senior Management Support 2. Knowledge Friendly Culture 3. Clear Purpose and language 5. Link to economic performance or industry value 6. Multiple channels for knowledge transfer 8.

Change in motivational practices Importance of Certain Key Factors Discussed There are several key success factors identified in the article that has allowed SAB to rise to its current position as Market leader. SAB decentralizes to the maximum and develops the separate, independent and individual entities of the subsidiaries and their managements.

SAB conducts performance matching risk and return, and strives to maintain high levels of productivity globally through standardized operational procedures. Diversification activities, lowering ownership bases, mass marketing through acquisition of diversified brands, SAB also negotiates punitive taxation laws by government, conduct Research and Development, improving quality of life for the local labor force, meaningful reporting and disclosure of financial results.

A corporate code of Conduct allows a corporate culture to build a common value base from which all Management decisions are evaluated. As Davenport suggests the board of directors for SAB, with advice from the audit committee, complete its annual review of the effectiveness of the system of internal control in accordance with the updated Turnbull Guidance Framework. This proves they are actively using senior management support as a key success factor. This knowledge is not static but is constantly refreshed through the knowledge and experience of the entire group, ensuring that they remain a learning, self-refreshing organization.

This also refers to the standardization of the knowledge and the flexibility to change unproductive business processes. A proper technical infrastructure allowed manufacturing efficiency to improve, continuing to produce more beer from given quantities of raw material while also improving the shelf-life and quality of our products. This also relates to using less water and electricity in the processes involved. Davenport reports that it is a critical success factor clear purpose and language is used throughout the company.

The venture will first concentrate on serving southern Vietnam and will then expand nationally. Formed in August , our joint venture imports, markets and distributes our three international premium brands — Peroni Nastro Azzurro, Pilsner Urquell and Miller Genuine Draft.

These statements show that new distribution channels are actively exploited continually. SAB also ensures that expansion is linked to economic performance or industry value.

Changes in motivational practices have all been playing an active role in the success that SAB has achieved especially in Australia. From these we can see that from Porters Five forces model, the global success SAB has achieved is mainly from exploiting factor conditions, and less market demand conditions.

Demand conditions tend to be more sensitive to domestic localized economic fluctuations, while factor conditions tend to be more global. For this reason I agree that the globalization success SAB has achieved can be ascribed to the proper allocation of resources to the proper business processes. This is very much in line with true organizational effectiveness, because there is maximum productivity for each step in the value chain.

SAB localized their strong differentiated markets and customize their product offerings there; they also use local natural resources. This allows the right factors to stimulate domestic market development also. They do however also use global brands in their capacity to have economies of scale through exports, as in the example of Australia above.

Therefore, it is possible to say that these key success factors played a very important role in allowing SAB to develop into an organizationally complex giant, while still operating as an effective unit growing inter-nationally and globally. Without the efficiency in business processes created by each of the key success factors, such a large organization would not survive.

Critically discuss how SAB utilizes its strengths and overcomes its weaknesses to compete in foreign markets. This provides the areas in which strengths and weaknesses can be examined. Firm strategy, structure and rivalry 2. Related supporting industries 4. Factor conditions David uses the S. He identifies the following key external factors: Competitive As well as the following internal factors: Research and Dev elopement 6. T analysis for SABMiller contains country specific environmental factors that are most effective when performed for all countries of interest.

Political Analysis The beer industry in which SABMiller competes is one of the highest regulated industries in the world. Nationalism and Government interference needs to be negotiated. The South African Government is trying to create three distinct tiers in the liquor industry e.

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Keywords: sabmiller case study, samiller strategy analysis Strategic position SABMillers one strategy is continuing to acquire other companies around the world and continuing to expand, especially in developing countries. The strategy in Africa has been to diversify the range and mix of beverages. It is also worth highlighting that the global brewer has developed at least one local premium brand in . The Ansoff Matrix, created by the American planning expert Igor Ansoff, is a strategic planning tool that links an organization’s marketing strategy with its general strategic di- rection.