Company Strategy Essay Example | Topics and Well Written Essays - 1250 words

Company Strategy - Essay Example 9) There are several opportunities. Beer, being a luxury product, depends on the economy to stimulate demand. With the economic development of the developing nations, the demand for higher quality beverages, and hence beer is set to grow (Asia Pacific Breweries, n.d., p. 1; Diageo, n.d., p. 13; Krones AG, n.d., online). Alcohol consumption in Eastern Europe, Asia, Indochina (Vietnam and Cambodia), and America is rising (Asia Pacific Breweries Limited, n.d., p. 1; Camerra-Rowe, 2005, p. 8). Even in mature market such as Europe, opportunities exist as they have the highest per capita alcohol consumption in the world (Camerra-Rowe, 2005, p. 12). Opportunities exist for localised products as the market is fragmented due to differences in taste around the world, as well as national barriers to trade that stipulate the allowable ingredients, alcoholic content level, and size of containers of beer (Camerra-Rowe, 2005, p. 5). For example, the Chinese prefers lighter tasting beer (Asia Pacific B reweries Limited, n.d., p. 4). Moreover, in certain countries, such as Germany and the Netherlands, legislation is not so strict. Marketing and advertising are still self-regulated by the industry (Camerra-Rowe, 2005, p. 15). In the beer industry, the critical success factors for brewing fine beer are the brewer's marketing image and the recipe (Moen, 1997, online). Lastly, moderate amount of drinking is beneficial for health (Camerra-Rowe, 2005, p. 22). It is even considered as food in most of Europe (Camerra-Rowe, 2005, p. 25). The threats facing Guinness are strict legislation and decreasing demand. Increased focus on public health by the World Health Organisation (WHO) and some national governments lead them to urge for... The critical success factor of marketing image implies that a differentiation strategy is appropriate. In spite of the growing markets in other regions such as Asia, Eastern Europe, and Indochina, as well as the mature Europe market, Guinness has a low market share in the former. Moreover, these growing markets typically have less stringent legislation in contrast to the increasingly stricter legislation in Europe. A managerial implication is that Guinness should consider expanding its market beyond Europe. Lastly, the managerial implication of fragmented markets is the adoption of localization strategy. The beer industry sees a consolidation in recent years that mitigates competition. The intensity of competition is low, with only a few key competitors in each market. This includes Heineken in Ireland, both Heineken and SABMiller in Africa, and Carlsberg in Malaysia. In the beer industry, the customers are retail shops and wholesalers. Hence, the bargaining power of buyers is low, because they are fragmented, compared to a few large beer breweries. Suppliers of ingredients of beer such as tequila, neutral spirits, molasses, rum, cereals, sugar, and a number of flavors are located around the globe. Hence, the bargaining power of suppliers is low. Moreover, sourcing for suppliers globally reduces their bargaining power. This is because the raw materials of beer are mostly agricultural products which price depends on the weather conditions and governmental control. Hence, buying from the global market diversifies risk.