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Case Study - Sabmiller, Strategy Analysis - 2006 - Vaishak V
Case Study - Sabmiller, Strategy Analysis - 2006 - Vaishak V
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Asof2006,SABMillerhadpresenceinbothdevelopingcountriesaswellasdeveloped
countries.AftertheliftingoftheinternationalsanctionagainstSouthAfricain1990s,SABwasableto
capturenewgrowthbyexpandingintodevelopingcountries,whilstatthesametimeconsolidatingits
existingregionalmarketofSouthAfricaandin2002entereddevelopedmarketofUSwiththe
acquisitionofMiller.
ExternalAnalysis
SABMiller'sbusinessstrategiesareinfluencedbytheforcesinitsexternalenvironment.
PESTELandPorter'sfiveforcesframeworkareusedtoanalyzethesefactorsinfluencingthe
firm'smacroenvironmentalandindustrysectorsrespectively(Johnsonetal,2008,p.55).From
SABMiller'sPESTELAnalysis(AppendixA)andPorter'sFiveForcesAnalysis(AppendixB),
thekeyexternaldriversofchangeaffectingSABMillerare
PoliticalThreat&EconomicThreat
SABMillerreliesonmarketsindevelopingcountriesforitsgrowthobjectives.Henceithastocomplywithdiverse
setoflocalregulations,taxlawsthatareuniquetothesecountries.Anditisdependentonpoliticalstabilityin
thesecountriesasanykindpoliticalturmoilcanhaveanegativeeffectonSABMiller'soperationsandprofitability.
InthedevelopedcountriesSABMillerhastofaceandadopttostricteralcohollawsalongwithgrowingantialcohol
lobby.
EconomicThreat
SABMillerissubjecttoglobaleconomiccycleslikeGDP,exchangerates,oilprices,levelsof
disposableincome.Whenincomelevelfallsinemergingmarkets,beerconsumptionfalls.
Fluctuationinlocalcurrencyexchangeratewillalsohavesignificanteffectonitsprofits.
Increaseinthepricesofrawmaterialsortransportationcostwilleffectitsprofits.
BuyerPower
Indevelopingcountries,beerconsumptionincreasesasdisposableincomeincrease.However
buyerscaneasilyswitchfrombeerconsumptiontowine&otherspiritsduetochanging
lifestyle.Antialcoholmovementinwesterncountrieslikecurbingofbar/pubhoursalongwith
smokingbanaffectsbeerconsumptions
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Competition
CASE STUDY: SABMiller, STRATEGY ANALYSIS 2006
Eventhough,SABMilleristhesecondlargestbrewingcompanybyvolumeanditenjoys
competitiveadvantagesineconomiesofscaleandlowprices,itstillfacesfiercecompetition
fromthefewlargeestablishedbrewingcompanieslikeAnnheuserBusch,InBev,Heineken,etc.
ThesecompetitorshaveentereddevelopingmarketsandcompetedirectlyagainstSABMiller..
ForExampleAnheuserBuschinChina.
InternalAnalysis
Inspiteofbeinginahighlycompetitiveindustry,wecanseefromSABMiller'sSWOT
practice - Part 1
analysis(AppendixC),thatemergingmarketsisfastgrowingwithhugepotentialandthereis
anincreaseindemandforPremiumbeersindevelopedmarkets.SABMillerhasbeenableto
successfullyexploittheseopportunitiesbyenteringbothdevelopinganddevelopedmarketsand
thencreatingasustainablemarketbyusinganoptimizedbrandportfolioapproach.
FromExternalandInternalanalysisSABMiller'ssuccessfactorscanbeattributedtoitsunique
Resourcesandcapabilitiesof
ScanningBusinessEnvironment
ManagementSkills
SABMiller'smanagementhaslotofexperienceconductingbusinessesindevelopingcountries
andwassuccessfulinleveragingthisskillindevelopedcountryalso.WhenSABacquired
Miller,thegrouphadtomovefromtheirtraditionalpracticesofconductingbusinessesin
emergingeconomytodevelopedcountrywhichshowsmanagement'sflexibilitytoadaptto
changes.SABMiller'sManagementarecapableofdevelopingsophisticatedlogisticsin
developedregionsofUSAandWesterneurope,whilstcapableofworkingwithprimitive
logisticsinruralareasofAsiaandAfrica.
ValueaddingandCorporateparenting
SABMillerhasuniquecompetenciesofworkingwellindifferentcountriesandpossessvalueadding
parentingcapabilitiestoincreasingoperationalefficienciesandtransformacquired
businesses.OnesuchexampleiswhenSABMilleruseditsmanagementskillsandcorporate
parentingtoturnaroundMillerbybringinginitsoperationalefficienciesandemployee
performancepractices.
Acquisition&Takeovers
SABMillerhasuniquecompetenceinacquisitionsandtakeovers.Itsgrowthhascomethrough
enteringdevelopingmarkets,acquiringbusinessesandgrowingthem.Theyareconfidentin
acquiringsmallcompaniesindevelopingcountriesandalsohighprofileacquisitionslikeMiller
&Fostersindevelopedcountries.
StakeholderExpectation
SABMillerhasmadestrategicchoicestofulfillstakeholderexpectations.Onesuch
moveisitsacquisitionofMiller.WhenSABlisteditselfinLSE,itfacedhugepressurefrom
investorsandanalyststohaveapresenceinwesternmarketandmoveawayfromoverreliance
onemergingmarkets.Inordertobeestablishitselfasaglobalplayer,SABacquiredMiller
whichgaveitimmediateaccesstoUSmarketandestablisheditselfastheworld'ssecondlargest
brewingcompanybyvolume.
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SABMillerhasutilizeditsuniqueresourcesandcorecompetencestoaddresscompetitive
challengesandstakeholderexpectations.FrombeingaregionalplayerinSouthAfricaduringthe
1990s,ithasachievedtremendousgrowthviaglobalizationandasof2006,ithasannualrevenuein
excessofUS$18billion,withmorethan200brandsandhasfirmlyestablisheditselfasaglobal
brewingcompany(AnnualReport2007).
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