INTERNATIONAL BUSINESS

CASE STUDY 5
BEER for all: Sabmiller in Mozambique

Satyapal yadav
21157 section-c

Submitted to:
1.Describe the Mozambican context from a social and economic perspective.
With a GDP of $583 per person between 1997 and 2007, SABMiller, one of the world's
leading brewers, had one of the fastest rising economies. In 2002, their country was ranked
101st in domestic market size and 41st in foreign direct investment. Despite the country's
impressive growth in 2008, more than half of the population was still poor. More than half of
the country's annual budget is spent on foreign aid. SABMiller has a variety of long-term
plans in place that will benefit both the company and the economy. As a result, SABMiller's
major production was centred on barley; nevertheless, the company chose to move to brewing
beer with cassava (the root of a plant plentiful in Mozambique) as the primary component in
order to stay on track with its long-term goals. As a result, the company will be able to
benefit from lower production costs and, as a result, a higher profit margin. As a result, in
order for this to be a success, the corporation will need to understand how to implement the
strategy in collaboration with Mozambique authorities.

2-How has Sabmiller shifted its traditional model to suit the Mozambican market?
• SABMiller has a number of long-term strategies in place to benefit both the company and
the economy.
• As a result, SABMiller's main production was focused on barley; however, in order to stay
on track with its long-term goals, the company decided to switch to the production of beer
with cassava (the root of a plant found in abundance in Mozambique) as the primary
ingredient.
• As a result, the company will be able to benefit from lower production costs, resulting in a
higher profit margin.
• As a result, in order for this to be a success, the corporation must understand how to engage
with Mozambique authorities in order to put the plan into action.
3-In what ways has SABMiller innovated in response to context?
• For farmers, a new sector has opened up in which the supply network is secure and
logistical issues are addressed.
• In order for the organisation to be successful, they were able to come to an agreement to pay
a low tax on beer while also agreeing to work with non-governmental organisations (NGOs)
in order to gain technology expertise and learn how to interact with various situations
involving the government and its employees.
4-Good business models create virtuous cycles where strategic choices reinforce each
other in contributing to the overarching goal. Map out the key strategic choices made
and indicate whether they reinforce each other in contributing to the overarching goal.
SABMiller’s strategy was to create high quality beers using locally sources materials for
people who wouldn’t be able to afford their beers.
The company also determined to have farmers as a crucial role in Africa’s future. Producing
Impala has created jobs for one than 1,500 smallholders, and with SABMiller providing
programs helped farmers learn the skills they need to increase their incomes.
Brand established since 1995 – Produce locally
Chosen to make beer at a more reasonable price so that to reach out to new markets. Using
the plants which are produce locally- will help to have a lower cost of production.
Completing the tasks alongside specialists allow the accomplishment of further development
and hence, provide a new cassava-based platform. The production of beer from cassava
benefit the economy through taxes and work for the farmers. Mozambique as host country
bring value to the economy through subsidiary CDM which also provide the help of the
government in completing the plans.

5-List the key stakeholders involved in Impala beer. Describe what success to each of
these stakeholders in terms of impala beer business.
Farmers of cassava – The use of higher-quality composts and seeds can result in higher
yields. Furthermore, with a stable network for product supply, timely payment to suppliers is
possible.
SABMiller – A lower tax rate, a larger platform with a lower value point, and the
achievement of sustainability goals. Raw materials are less expensive. A bigger market is
accessible at a lesser cost, and sustainability goals are met. As a result, the cost of production
falls.
DADTCO & IFDC - Experience working with multinational corporations and obtaining
government assistance while obtaining funding from SABMiller and other companies.
Government - Boosting the favourable relationship between the government and MNEs while
increasing taxes for the benefit of the economy. Farmers, on the other hand, receive salaries,
which they spend on a variety of goods, including some alcohol, resulting in tax payments to
the government.
NGO's - Funding for the new plans was received from the private sector, and the model was
also displayed as an example of sustainable models that other countries could use as a model
and follow the steps.
6-Is SABMiller contributing to the Mozambican economy? Should it be concerned
about the role it plays?
SABMiller is a significant employer in three sections of the country, in addition to its
subsidiary CDM being named the Best Taxpayer in Mozambique for the past two years. They
contributed 2.4 percent of the country's GDP and 7.2 percent of total taxes in 2010. They also
assist in the transition of people from subsistence farming to paid employment. Selling
alcohol will always be associated with user health issues, but in this situation, the benefits
significantly outweigh the drawbacks in terms of the primary players.
SABMiller employs a considerable number of people in three regions of Mozambique, and its
subsidiary CDM is the country's best taxpayer. The majority of the workers in Mozambique
are subsistence farmers who SABMiller assisted in finding jobs and earning a living. As a
result, in 2010, it contributed 2.4 percent of GDP and 7.2 percent of tax revenue to the
country. However, alcohol sales will always be linked to health concerns, but in this case, the
benefits outweigh the disadvantages when considering the country's overall benefit.