SABMiller Strategy Case Study

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SABMiller Strategy Introduction

SABMiller Plc was a multinational beverage and brewing company with its headquarters at London until October 2016, when it was taken over by Anheuser-Busch InBev. Until then, the company was the second largest brewing company as per the revenues gathered by them. The company had acquired certain brands like Miller, Fosters and Pilsner Urquell and has been operating in more than 80 countries within the world and has sold an overall of 21 billion litres of beverage as per 2009. Prior to acquisition of the company, the company has been operating as a business division for Anheuser-Busch InBev with its headquarters at Leuven.

Fill the table

Company Name

SABMIller

Type of Industry

Brewing and Beverage company

Headquarters

London

Sales/Revenue

$9.9 billion

Areas served

All over the world

Number of Stores

3500

Competition

Glenfiddich, Brown-Foman, Bacardi

USP

Diverse portfolio of brands

Target Groups

Upper Middle and Middle Class

Products

Beers

Website

www.sabmiller.com

SABMiller Strategy Swot Analysis

Strengths

  • Company size
  • Wide portfolio of products
  • Smart acquisitions
  • Sound strategies for expansion

Weakness

  • Heavily reliant on organic growth
  • Integration Issues
  • Sustaining growth

Opportunities

  • Increasing demand of surge beer
  • Business exposure

Threats

  • Highly competitive market
  • Ethical and legal barriers

Table 1: Swot Analysis of SABMiller

(Source: Influenced by Lynch and Jin, 2016)

SABMiller Strategy Analysis

Strengths

SABMiller has been one of the largest brewing companies in the world and carries their operations in nearly 60 countries with 139 manufacturing industries. As per the case study of SABMiller, the company has been manufacturing more than 200 different kinds of beer at various locations within the world. Along with various local brands for the company, a range of global brands are sold by SABMiller which includes Miller Genuine Draft, Grolsch, Pilsner amd Peroni. Since 2009, the company has achieved huge success in choosing effective partners and acquiring them (Fernandes and Pinho, 2016). As per the case studies of SABMiller, the company has always been planning their strategies for expansion in an effective manner and been acquiring adequate partners.

Weakness

SABMiller has been heavily reliant on acquiring other companies for expanding themselves within global markets. With the passage of time, the scopes for acquisitions have been significantly reduced and has been very difficult for the company to maintain their growth momentum (Nyugen et al. 2015). As per the case study of SABMiller, the company has always seeked for organic growth within every market and has followed a similar strategy for entering into every market. This has lead to failing of the company to effectively expand into every market. In 2016, SABMiller was acquired by Anheuser-Busch InBev and both the brands have been facing integration issues mainly due to work culture difference.

Opportunities

With sudden increase in demand for surge beer within the market, the brewing companies have been provided with range of opportunities. As opined by Hoffman et al. (2016), several beer companies are seeking for collaborative brewing in order to cut down their costs and gaining a competitive edge over their rival companies. With the emergence of the Internet, the barriers which are involved within the business have been removed. This is mainly because people across the world are getting more aware of global alcohol brands and clients have been seeking for Miller or Corona in developing countries like Malaysia and India.

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Threats

As per the case study of SABMiller, the company has been experiencing a huge amount of competition within the market with companies such as Heineken, Fosters and Molson Coors (Sanidas, 2016). Along with that, there are a range of ethical and legal barriers in selling alcohol to any part of the world. The company is hence needed to address these barriers by devising effective strategies for entering successfully into foreign markets.

SABMiller Strategy Pestel Analysis

Political

  • Political Stability
  • Laws and regulations existing within the country
  • Trade barriers

Economic

  • Economic system within the country
  • Rate of GDP
  • Effectiveness of financial markets

Technological

  • Recent developments in technology

Socio-Cultural

  • Population demographics
  • Differences in educational background between target market and marketers

Legal

  • Intellectual property laws
  • Health and Safety Laws

Environmental

  • Change in climate
  • Producing higher amounts of waste

SABMiller Strategy Analysis

The level of political stability within the country dictates the way SABMiller operates within the market. Some countries for instance, have certain conditions to be fulfilled by the company or bans alcohol, while other governments might not possess adequate amounts of red tape which might discourage business (sabmiller.com, 2016). As per the case study of SABMIiller, one of the incidents was reported by the Economist Magazine in 2014 when in Mozambique, due to unavailability of adequate amounts of water. As a result, the company had to pay large amounts to Fire Brigade for obtaining expensive water for continuing their process of production. The success of SABMiller depends mainly on their overall integrity within their operations like cutting of price for their production due to large scale facilities of production. As per the case study of SABMiller, in 2015, the company has been facing various problems in bringing profits through soft currencies leading into loss for the company. In 2015, the company achieved a net growth rate of nearly 2.7% and earned revenue of approximately $177 billion. With recent advancements in technology, SABMIller is being provided with a range of opportunities to be exploited within the market. As per the case study of SABMiller, modern technologies has enabled the company in making a sustainable business and has been able to carry out their promotions for beer through social media. In accordance to Sanidas (2017), production of beer can place considerable impact on environment as it production requires huge amounts of water for brewing a single barrel. SABMiller, being one of the largest brewing companies in the world, has made considerable changes within their process of production for making a more sustainable business. Their breweries combine heat turbines and power and these generators accounts for overall 11% of electricity consumption. As per the case study of SABMiller, the company has always been committed towards using less amounts of water and reduced their water consumption by almost 40% in 2015. Moreover, their recycling rate has also reduced by almost 99.6%. The legal environment has been one of the complicated factors for brewing businesses and certain countries have adopted regulations which have hindered sales of beer within the country (Nyugen et al. 2015). As per the case study of SABMiller, the government of Kentucky has stated that the sale of beer is prohibited beyond 1 pm on Sundays, which has lead to a decrease in sales by almost 15% in 2015.

Reference List

Fernandes, R. and Pinho, C., (2016). Support International Business Expansion with Sequential Reviews. Sustainable Supply Chain Management8(2), p.247.

Hoffman, R.C., Munemo, J. and Watson, S., (2016). International franchise expansion: the role of institutions and transaction costs. Journal of International Management22(2), pp.101-114.

Lynch, R. and Jin, Z., (2016). Exploring the institutional perspective on international business expansion: Towards a more detailed conceptual framework. Journal of Innovation & Knowledge1(2), pp.117-124.

Nguyen, T.H., Newby, M. and Macaulay, M.J., (2015). Information technology adoption in small business: Confirmation of a proposed framework. Journal of Small Business Management53(1), pp.207-227.

Sabmiller.com (2019). About the company. Available at: www.sabmiller.com, [Accessed on: 25th June 2019]

Sanidas, E., (2017). The Role of Knowledge in Determining Innovations, Technology, Business, Management and Economic Development: An Expansion Beyond Knowledge. Int J Econ Manag Sci7(501), p.2.

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