Module 9

9.1 Has your company ever pursued a horizontal integration strategy? What was the
strategic reason for pursuing this strategy?

Undeniably, Backus has pursued the horizontal integration strategy: it is currently a

conglomerate of 27 companies, including, Bavaria, Compañía Nacional de Cerveza,
Cervesur, among others. This joint business was formed because it would allow bring
together their synergies, benefiting the beer industry. Along with that, being a sole business
made easier to deal with the legal restriction existing in their industry and ensured their
market control capabilities.

9.2 How vertically integrated is your company? In what stages of the industry value-
chain does it operate?

Backus and Johnston are both in backward and forward vertical integration, which means
they dominate every stage of their product, from the raw materials used through how their
costumers acquire their drinks.

First, the supplies they use to brew their alcoholic beverages come from qualified suppliers
who manage barley selecting, cleaning, drying, and roasting. Besides that, the water
processed in their plants emanates from their own water wells, which are over 140 meters
beneath the surface

Second, the intermediate manufacturing is also under their control. Beer requires water,
which comes from their water plant that produce San Mateo water as well. This reduces the
bureaucracy and shipping issues when producing their alcoholic and non-alcoholic drinks.

Third, the manage product packing, i.e., bottling and labeling. This process is being carried
out by sophisticated machinery that identifies and classify each product, so they are correctly
placed in their respective boxes, waiting for the allocation.
Fourth, they manage countrywide distribution. Backus possesses seven producing plants, five
of which are in different Peruvian provinces: Arequipa, Cusco, Motupe, and Pucallpa.
Equally, their 42 distributors are in numerous zones though the country, allowing Backus to
reach every channel they sell through.

And fifth, they additionally sell directly to end-users and bodegas. Their platform BackusYa
permits anyone to order their favorite or demanded beverages. This way, emerging and
growing convenience stores, as well as consumers, can easily place their orders and wait
three days for the delivery to arrive.

In this way, Backus and Johnston are within six business groups which are the group of food
and beverages, containers and packaging, transportation, services and have companies of
social projection and investment in securities.

9.3 Assess the potential for your company to increase profitability through vertical
integration. In reaching your assessment, also consider the bureaucratic costs of
managing vertical integration

"Vertical integration is a strategy whereby a company owns or controls its suppliers,

distributors, or retail locations to control its value or supply chain." (Kenton, 2020). Vertical
integration brings benefits to companies because it gives them the power to control all
processes to reduce costs and improve efficiency.

Backus has managed to be self-sufficient by following vertical integration, today this

company is most of its main distributors. In addition, as we mentioned above, Backus is a
monopolistic company that despite experiencing a time of pandemic continues to increase its
marketing channels.

According to Carrillo Mora, C., & Kocnim Chiock, G. (1994), within the entire beer industry,
vertical integration makes it more difficult for other monopolistic companies to form that
neutralize power. In addition, it increases the efficiency in the use of inputs, that is, it avoids
transaction costs as well as the risks of running out of stock. Lastly, vertical integration
broadens the client portfolio, at the same time increasing the degree of internal competition
in the markets within the beer industry. In words, Backus has a few major comparisons to its
competitors and vertical integration suits them because greater share within the market is
more efficiently utilizing economies of scale.

Finally, with this method, you will reinforce your mechanism, further reducing transaction
costs, avoiding the risk of shortages, and ensuring product quality, especially at that time of
Covid-19. Unfortunately, there are also threats because Backus is vertically integrated,
making it difficult for them to leave the market because it has packaging companies,
transportation, distributors, and others focused and established within the industry. Even so,
this last point could encourage them to further expand their empire within the country and
not lose the position of the monopolistic company in the country.

9.4 On the basis of your assessment in question 3, do you think your company should
(a) outsource some operations that are currently performed in-house or (b) bring some
operations in-house that are currently outsourced? Justify your recommendations.

Based on the evolution made in item 3 on the vertical integration of Backus, we consider that
Backus should continue to bring the operations that it performed by subcontracting in order
to reduce its operating costs, as well as efficiency in its productive processes, costs and a
flexible distribution channel. As it did with its premium product, the Cusqueña beer, which
in the year 2019 exceeded 8 million dollars in exports being its main market Chile, in this
case Backus took the decision to bring the Cusqueña production to Chile in order to reduce
the production costs, as well, Backus announced the expansion of its plant in Chile for the
treatment of affluent water, which will allow it to reuse the water for other internal processes,
all with the objective of tripling its productive capacity and substituting its imports and being
able to manufacture almost all the brands it sells in that country, and also to be able to
compete with the Chilean market (Gestión, 2020).
9.5 Is your company involved in any long-term cooperative relationships with suppliers
or buyers? If so, how are these relationships structured? Do you think that these
relationships add value to the company? Why?

Being Backus & Johnston the largest beer company in Peru, it possesses a lengthy list of
suppliers and buyers. The suppliers provide not only raw materials, but also resources for
implementation, management, and revision of certain machinery. In addition to the services
the company handles, Backus is considered an export company as well. That is it has an
international-client portfolio. Backus’s main exporting market is Chile, which represent over
70% of their international sales.

In 2009 Backus suffered a drop in liquidity levels, this occurred due to loans to the company's
concessionaires, also causing an increase in debt. However, as of 2015 liquidity has been
marginally reduced, this was due to a reduction in accounts receivable and greater bargaining
power with its suppliers and distributors, thus normalizing the situation and Backus being
able to move forward.

9.6 Is there any potential for your company to enter (additional) long-term cooperative
relationships with suppliers or buyers? If so, how might these relationships be
structured?

I believe that if, since these relationships can strengthen the ties they have with suppliers or
buyers, since Backus's competences may

Also want to have contact or capable already have contact with themselves. Then Backus if
it is in your interest to have cooperative relationships as it is a strategy alliance to have the
trust of those suppliers and buyers. The structure they would have to take is to organize to
become mutually dependent, and a parallel supply policy with suppliers for critical inputs
needs to be developed

The alliances that arise after a cooperative relationship can reduce the need, for example, for
vertical integration since it is a commitment to support each other, but what should matter is
the market discipline that must exist between the two because it is important that they have
a responsibility already that they will work together for a long term
 Module 10
10.1 Identify the rationale for pursuing a restructuring strategy.

In a context where Backus and AB InBev merged as one company in the last part of 2016,
there were changes to redesign the operation processes of Backus to suit the new organization
structure. As mentioned by Fenández-Maldonado in Diario Uno (2017), the circumstances
allowed Backus to develop an outsourcing strategy in areas of the company. Like many other
restructuring strategies in multinational companies, the main objective could have been
lowering their costs over time when another enterprise takes over the operations of specific
tasks. Getting deeper into the topic, we know that the firm intention was to separate their
intangible property from their production and distribution processes. Therefore, they divided
their patrimonial block into two companies, which are: "Backus Marcas y Patentes (BMyP)"
and "Backus Servicio de Ventas (BSyV)." That decision ended up having consequences that
some of the company's workers would pay. As an illustration, there were unfair resignations
influenced by the company were involved in the process.

At the end of this process, Backus outsourced tasks related to marketing and sales to a
multinational enterprise called Teleperformance. Although they did not direct the entirety of
their marketing campaigns now, the essence of friendship and the creation of new
connections are concepts that still alive in their brand to this day.

10.2 Pick one industry that your company has exited from during the past 10 years.

Backus has been in the alcoholic and non-alcoholic beverage industry for many decades from
now. As the pursuit of their business has not changed over the years, there has not been an
intention of the company to enter new industries in the past ten years. As an alternative, we
will present some of Backus' failed attempts to introduce new products in the market. This
time will focus on two main ones, which are Quara and Backus Ice.

To cover a larger portion of the market, Backus planned the introduction of Quara in 2009, a
beer that aimed at female consumers. We can describe the beverage by highlighting the
absences of hops and the fruity flavor it had. Besides, the company intended to develop
campaigns that focus on positioning the flavor of the beer as inspired by women. However,
it did not obtain the necessary demand to keep in production. The low demand could have
been influenced by the Peruvian consumers that rather stick with the classic beers.

Likewise, we have the case of Backus Ice in 2014. It was a product designed to be the coldest
beer in the market. Additionally, Backus promoted the new arrival using TV ads, radio
commercials, and other channels to reach their target—men who are between 25 and 35
years. Despite the efforts, the brand never took off, which resulted in getting discontinued.

10.3 Identify the strategy used to exit from this particular industry. Do you think that
this was the best exit strategy to use? Why?

According to Xie, Ma, and Lu (2016), There are for types of exist strategies a business can
use: (a) retreat, passively getting rid of all value-eroding assets; (b) redeploy, reactively
reutilizing the remaining resources and knowledge to boost the still owned business; (c)
realign, proactively adjusting each business unit to focus on the core values and vision while
getting rid of those which cannot be adapted; and (d) reconfigure, exceedingly changing the
whole corporation with buying and selling many business units, driving the firm to a
groundbreaking vision.

While other corporations attempted to create new business units, Backus stayed focused on
the drink industry, standing out on their beer brewing. However, as mentioned before, the
firm tried to create new beer brands to expand their portfolio but failed miserably. As a result,
Backus’s case is contrasting from other firms.

Extrapolating the information, Backus’s strategy to leave Quara and Backus Ice was similar
to retreating. The benefits prompted were avoiding unnecessary costs on futile marketing
campaigns. Nonetheless, the product might have performed better if they had adapted the
advertising to the demographics they pursued—women are not mostly soccer-fanatics nor
abusive drinkers. Instead of absolutely abandoning these brands, they should have
experimented for a longer time until finding the appropriate segment. In closing, although
Backus’s surrendering saved some money, it stopped them from innovating and leaving
behind their always-the-same beverages.

10.4 In general, do you think that exiting from this industry has been in the company’s
best interest?

For the most part, Backus’s interest was not quitting selling trailblazing products. They were
encouraged to expand its portfolio besides the typically, same-tasting brands they have been
selling for years. We are convinced that Backus must stop trying to make every brand they
invent a huge success. The mass market only accepts classic products that do not vary
significantly. For example, Cristal and Pilsen are too close in price and flavor that people do
not mind swapping from one to the other. Similarly, Cusqueña is an iconic pseudo-upper-
class brand that represent national pride, which makes it popular. Further, the classic version
of the latter is not far from replicating Cristal’s flavor with a different price tag. What can
make diverging new brands, specially Quara, mildly profitable is to allocate them in the
proper scenarios because it is impossible to create another Cristal whose flavor is the total
opposite and does not represent the same social identity. To sum up, Backus and its mother
business, AB InBev, must learn that you cannot turn a totally unknown product a million-
billing in few months.
 Module 11
11.1 Identify the main stakeholder groups in your company. What claims do they place
on the company? How is the company trying to satisfy those claims?

For Backus, we can identify that their main stakeholders are: Communities, suppliers,
customers, governments, employees, and shareholders. The relation between each one of
them and the company can be portrayed by their claims. We are going to specify these claims
in the next chart.

Stakeholder groups Claims

Communities • Programs for entrepreneurship.
• Efficient use of water.
• New job opportunities.
Suppliers • Stable contracts.
• Operational Integrity.
Customers • Low price alternatives.
• Brand new products.
Governments • Official diagnosis of socio-environmental indicators.
• Increase the reuse of solid waste and by-products from
the plants.
• Transparent and communicate the progress of their
environmental management.
Employees • Safe environment.
• Job stability
Shareholders • Business performance.
• Stock’s stability

There are plans for attending most of the claims in the previous chart that we can review to
have a clear notion of the progress in those situations. We can start with the agreement
between Backus and the Minister of Agriculture that was related mainly to the use of
resources in the production processes and alternatives to reduce their environmental impact.
As well, Backus has developed programs like the Corona Challenge that let anyone interact
with their ideas, having the chance to influence the decisions of the enterprise in certain topics
like Efficient use of water and reuse of resources. At last, we have the agreements between
the employees and Backus to protect the employment in situations like the Covid 19
pandemic that had an impact in the demand and production.

11.2 Evaluate the performance of the CEO of your company from the perspective of (a)
stockholders, (b) employees, (c) customers, and (d) suppliers. What does this evaluation
tell you about the ability of the CEO and the priorities that he or she is committed to?

The current CEO of Backus is Sergio Rincón, a man that has been Sales Vicepresident in the
operations ABInbev has in Mexico, and has been in charge of Backus since January 2020.
Knowing this, the following are some insights in the activities and decisions that affect or
have the participation of some stakeholders with the purpose of evaluating the performance
of the current CEO.

Stockholders.

Handling the company's stocks in a context where every process has been affected by
several restrictions was not an easy task for the current administration. Regarding this, a
report published by Diario Gestión (2020) in late October mentions that, due to the
volatility of the circumstances, Backus is not going to pay the intermediate dividends to
the shareholders. There is no explicit statement from the shareholders regarding this issue,
but this choice may have weakened some of the relationships between these two parties.

Employees.

With eyes on the Emergency State and the health restrictions, Backus was not able to
produce nor sell alcoholic beverages for a little period of time and was affected by the
new commerce restrictions as well. The new circumstances put into risk the permanency
of some employees of different areas. So, the enterprise conceded agreements with 80%
of their workers while this situation lasted. There were licenses with credit and statements
like maintaining the salaries that form part of the contract.
 Customers.

Against all odds, the prices for Backus’ products remained stable, and the demand was
satisfied despite the restrictions and obstacles. The consumer perception of an enterprise
that keeps compromise with their people and still tries to innovate grows in a sustainable
way due to the confidence it transmits to the average customer. Likewise, the fundraising
for store owners and the campaigns to help communities go through this difficult times
ads to the fact that sustainable grow is a priority for the company.

Suppliers.

With the new entries to their catalog, and despite the current circumstances that influence
every step in the supply chain, Backus kept on strengthening its compromise with
Peruvian farmers. Along with decisions like the purchase of 45,000 tons of corn from the
Barranca community in alliance with the Ministry of Agriculture, the interaction with
national suppliers helps the economy to develop in times of crisis. From the perspective
of the people that feel the support of the firm, it allows the creation of new jobs and helps
small producers to survive.

As a whole, the efforts of the current CEO kept on satisfying the company’s customers,
employees and suppliers more than their shareholders because the first three groups may be
the ones that need more help in a context like this global pandemic that shrinks the
opportunities without external support and incentives to maintain a strong relationship with
the company.
11.3 Try to establish whether the governance mechanisms that operate in your company
do a good job of aligning the interests of top managers with those of stockholders.

As we know and has been mentioned previously in this work, Backus is a company that not
only cares about its growth and remains positioned as one of the most important in Peru, but
also ensures that its consumers as well as its shareholders and investors are favored for the
achievement of the company.

Both the company and its investors aim for it to become international, although the company
exports its products to certain countries and wants to grow and expand even more. In addition
to the commercial relationship between corporate companies, it must be established
equitably, prioritizing their competitiveness. Finally, what senior managers are looking for
is to generate a timely response capacity in the face of changes in the environment. Let's not
forget that larger organizations often use corporate governance mechanisms to manage their
businesses due to their size and complexity.

The governance mechanisms that exist in the company Backus encourages suppliers to make
investments for transactions in foreign companies, these increase the efficiency of the
company's production. Although it has been a bit difficult for the company to induce them to
make investments, the results have been favorable not only for the company but also for its
investors and shareholders, which has approximately 10,038 registered shareholders in
December 2019. Making these investments to improve the management of the company
carries risks since great changes can be made which result in failure; But so that this does not
happen, Backus presents the projections of these to the board of directors, in this way to make
the company known as a beneficiary and percentage of profit.

The company continues to grow and has managed to cope efficiently with the situation; so
they take risks and encourage new investments, which up to now have been mostly
successful. Not only because it is very well positioned and has a high production with a wide
variety of clients, Backus also projects and analyzes its projects so that they are supported by
investors, not lose shareholders and above all grow.
11.4 Pick a major strategic decision made by your company in recent years and try to
think through the ethical implications of that decision. In the light of your review, do
you think that the company acted correctly?

One of Backus’s latest strategies was broadening its business units through acquiring
Barbarian in late 2019. Bearing in mind how small craft beer sells are in comparison to
Backus’s beer, Barbarian currently has the highest likelihood to succeed among its peers. As
an outcome, Candelaria and others small brewers will have a lower chance to gain market
share. However, was this behavior ethical? To ascertain an accurate answer, it is necessary
to explain what ethical is and its context within three perspectives.

Ethical is defined as something related to the moral principles or the branch of knowledge
dealing with these. (Oxford Languages, 2020). That is to say that a certain action can be right
or wrong depending on the background it is developed on as well as the culture and social
values that surround it. Not every monopoly is economy-eroding, nor all of them are true
market aids. Nevertheless, as a philosophical term, it ends up embracing a vaster field of
situation in which every case is unique, requiring a context once again to be physically
applicable.

The first standpoint, stated by Amadeo (2020), is that monopolies are usually bad unless it
guarantees no shortage for extremely needed products—water and electric utilities, she
exemplified—and it is governmentally regulated. Under this perspective, Backus would be
acting selfishly; it unnecessarily extends its control to raise profit no matter collateral
damage. However, the author also suggested a particular situation in which a monopoly could
be beneficial, being the best at what you do, thus the only good option. As a result, Backus’s
state would change to an ethical one because there is not any other company able to offer
good beer at affordable prices, which would affect Barbarian lowering its price.

The second standpoint, stated by Velasquez (2012), proposes the monopoly companies are
bad since they disrupt consumers’ freedom to choose any other option, businesses’ place in
market, and fair prices. Considering these statements literally, Backus is partially acting this
way. Most distribution channels for beer only offer Backus’s Peruvian and foreign brands,
making it hard to find a Candelaria beer in a bodega or a small restaurant. Whereas Barbarian
is benefiting off of this as it is found in any Tambo, a common Peruvian convenience store.
As a result, companies are left out and consumers get reduced options, yet the latter are not
conscious about this.

The third standpoint, stated by Read (1960), remarks that monopolies can only be bad if they
are created using coercive force and not competitive advantages. The use of intimidating
strategies leads to a solid market position, but devasting to consumers as it generates price
inflation and long-term obsolescence. On the contrary, he mentions that monopoly originated
out of becoming exceptional in product performance is not just harmless, but also beneficial.
This second panorama is the one Backus would have fallen in. Through reaching outstanding
economies of scale and scope, developing a massive list of small and big sellers, and
investing on better technology and marketing, Backus has reached a position almost
unbeatable. The noteworthy consequence would be, therefore, the same, better Barbarian
beer with lower prices.

All in all, on the light of the review, Backus acted correctly. Backus is not a malicious
monopoly that tears apart the basis of an industry, instead it tries to keep it fresh with new
investments and products that give great products to its customers at the cost of outshining
any rival.
 Module 12
12.1 How large is the company as measured by the number of its employees? How many
levels in the hierarchy does it have from the top to the bottom? Based on these two
measures and any other information you may have; would you say your company
operates with a relatively tall or flat structure? Does your company have a centralized
or decentralized approach to decision making?

Although in the closing of the year 2019 Backus mentions in its annual report that it has 3400
collaborators, according to a report of May 2020 it currently has 2889 collaborators. As for
Backus' hierarchical levels, according to the organization chart in its annual report, there are
four levels, starting with the executives, officers, employees and workers. In this sense,
although Backus has four levels in its organizational structure, it is horizontal (relatively flat),
since it implies a more direct contact and relationship between the superior of the company
and the rest of the employees. It also has the benefit that the response time and orders are
faster, since it eliminates the presence of middle managers.

Due to the type of organizational structure that Backus has, it has a decentralized approach
in its decision-making by assigning or transferring authority for decision making to its lower
levels; likewise, decentralization is divided into two types: vertical and horizontal, which in
the case of Backus would correspond to horizontal decentralization, since it displaces power
outside the structure line.

12.2 What changes (if any) would you make to the way the company allocates authority
and responsibility?

In this sense, we consider that the way the company manages its organizational structure is
the right one, because it allows it to have quick results, which is optimal for this type of
industry, so we would not make any changes. However, it is important to evaluate the
disadvantages of this type of organization and to have clear company policies, since some
control could be lost at the lower levels and the complexity of the standardization of internal
policies could increase. Although, Backus has known how to manage its organization well,
because it is a company that cares and invests in the training of its employees with its different
talent programs, such as commercial and logistics, in order to improve the leadership skills
of young people, which translates into good results and profits for the company.

12.3 Draw an organizational chart showing the main way in which your company
groups its activities. Based on this chart, decide what kind of structure (functional,
product, or divisional) your company is using.

Companies always go through constant changes. Above all, today we had to face a global
pandemic, which completely changed the strategy of companies. In addition, due to our time,
new technologies are introduced, which can favorably affect new proposals of greater value,
adapted to the new times.

Organigram

Administration

President of the
company
Communications

Planning and
Psychology
corporate affairs

Law

Industrial
engineering

MANUFACTU SALES MARKETING DISTRIBUTIO FINANCE HUMAN SUPPLY

RE N RESOURCES CHAIN

Engineering Administration Administration Administration Administration Administration Administration

Industrial Accounting Communications Informatics Communications Communications Communications

Technical Engineering
Careers Economy Economy
Economy Economy Economy
Economy

Industrial Industrial Industrial Industrial Industrial

Industrial
engineering engineering engineering engineering engineering
engineering
 Commercial Psychology Commercial Informatics Law

Technical Technical Engineering

Careers Careers Source: Backus

When the organizational structure of a company is very rigid, it is difficult for it to innovate
and adapt its organization. In this case, Backus has a functional structure, as we see in the
organization chart since it has different functions by department: marketing, sales, finance,
etc..

12.4 Why did your company choose this structure? In what ways is it appropriate for
its business model? In what ways is it not?

This company chose the functional organizational structure because, as we mentioned in the
previous point, they are structured according to the different functions with which Backus
works. The company studied is divided into manufacturing, sales, marketing, and
distribution, which belong to the president of the company. Then, finance, human resources,
and the supply chain that pertains to corporate planning and affairs. At these points are the
administration, communication area, psychology, law, and industrial engineering. In short, a
hierarchical structure is followed where each employee is grouped by specialties, the division
of labor is grouped by the main functional activities.

The advantages of having a functional organizational structure functioning structures, the

work environment, communication between employees, and the environment. Initially.
Initially, their structures are simpler since they are specifically divided between the items.
Employees maintain good communication, maintaining a suitable work environment, and
thus achieving better productivity. In addition, maximum specialization can be achieved in
each organ, allowing each load to focus exclusively on its tasks and increase the efficiency
and productivity of each worker. On the other hand, specialization at all levels allows for
better technical supervision.

But this organizational structure also has disadvantages, which undermine strategic
objectives and communication. It is not so easy to align productivity, objectives, and
communication between departments that can become poor. Besides, the principle of unity
in command can be lost, generating possible conflicts of authority since there are many
specialties and supervisors. Another disadvantage is the possible confusion and multiplicity
in objectives because multiple subordination and autonomy of decision are needed, creating
conflicts between the general functions of the company. Finally, group specialization can
create competition, but also rivalry, causing potential conflicts, divisions, and creating a tense
work environment.

In conclusion, the functional structure of a company is born with the need to have specialists
at different hierarchical levels. Each employee has a supervisor and the teams are grouped
by specialties. This can bring good effects or defects that harm the company, it always
depends on the other factors and how this structure is applied to the company.

12.5 What kind of integration or integration mechanisms does your company use?

We have previously seen that Backus & Johnston has been able to handle both types of
integration mechanisms, both horizontal and vertical integration, and they continue to use
them to date.

Regarding horizontal integration, Backus has joined with different breweries over time such
as Compañía Nacional de Cerveza S.A., Cervesur, Bavaria, among others; and this
integration is one of the main reasons for the creation of the Unión de Cervecerías Peruanas
Backus & Johnston. What is more, its last integration of this type was with AB InBev with
whom it merged in 2015.

Now speaking of vertical integration, it is the one that has been added more recently to the
company. Backus manages the 5 stages of the value chain, starting with the raw materials
where they have their own water wells, continuing with the fact of being their intermediate
manufacturer since they have plants in charge of producing their beverages and it also applies
to the stage assembly, distribution is also by them, with 42 distributors nationwide, and
finally they also reach their end user with their new Backus Ya platform, which was launched
this year, in response to the pandemic situation, and its purpose is to facilitate the sale and
distribution of its products.
12.6 What are the main kinds of control systems your company is using? What kind of
behaviors is the organization trying to (a) shape and (b) motivate through the use of
these control systems?

Unión de Cervecerías Peruanas Backus y Johnston S.A.A. makes use of the three types of
control systems, both output control, personal control, and behavior control.

Output Control.

Within the first type of control, which is the control of departures, we have everything
related to the exit of operations, as well as the final products, where a quality control is
needed to see that they arrive in good condition at their destination final. For this Backus
has the ISO 9001 certificate, this determines the quality system used in the products, the
quality policy and its assurance throughout the production process. In addition, due to
COVID, Backus has also taken the necessary measures to continue operating in a
responsible and safe manner, within these we have:

• The DS 044 - 2020 - PCM, which is in charge of security activities with respect to
water and carbonated beverages.
• Electronic authorization, which allows the distribution of stocks of packaged beer,
water and soft drinks.
• Official Letter 103 - 2020 - PRODUCE / DGDE, which allows them to pack the
contents of their tanks for your drinks.
• DS 080 - 2020- PCM, where export orders are given for their beers.

It should be noted that all these measures were approved by the Occupational Health and
Safety Committee, and were correctly registered with Siscovid, and apply to its 7
production plants, in addition to having health security protocols for the entry of its
personnel.
Personal Control.

Continuing with the personal control, of which human resources is in charge, we have
that the company is always looking for the best for its personnel, since they take them as
the motor of the company, they are vital people for the company to move forward. This
is why they tend to establish friendships with their staff and so everyone knows
everyone, in order to form the great family that Backus is. In addition, training is
provided for its staff and at all levels, with the aim that they are increasingly prepared in
their area. Thus, they are motivated to achieve their personal goals and objectives. Lastly,
Backus has a compensation, wellness and health program to take care of its employees.
Within this we have the latest event, where Backus acquired 12,000 COVID-19 tests,
applied to his staff so that they could return to work, help regulate their situation.

Behavior Control.

The last one is behavior control, we have that this consists of the different methods that
ensure that employees perform their tasks as they should, as planned. For the
performance of employees to be as established, there are control mechanisms such as:

• The selection process, where human resources is demanding when recruiting staff.
Backus has a 7-step process, where the applicant is constantly tested to see if they
really fit the bill.
• The organizational culture is the model that the company follows for all its
employees, in the case of Backus it is results-oriented, and this influences the
behavior of all employees since it motivates them to meet their goals.
• Degree of formalization, where administrators describe their tasks to employees and
clarify the rules, policies and procedures of the company. In the case of Backus, it
provides programs to train its leaders so that they know how to manage a good work
environment.
So, we see how they select, develop and retain the people who can be best for the teams
within the company.

Now with regard to the behaviors based on the organizational culture of Backus & Johnston
which is results-oriented, we can say that it tries to shape the behaviors of integrity, quality
and responsibility, to obtain the expected results. Likewise, the company encourages the
behaviors of improvement and success, since it motivates its collaborators to achieve their
goals set both at work and personal level, demanding by giving their maximum performance
and obtaining merit for this.

12.7 What role does the top management team play in creating the cultures of your
organization? Can you identify the characteristic norms and values that describe the
way people behave in your organization? How does the design of the organization's
structure affect its culture?

BACKUS As a company always looking for good results, the senior management team plays
a great role since they will think about the benefits of a cultural creation and this team will
teach us how important it is for the company to have a cultural organization.

One of the main characteristics is to promote a culture based on diversity, since this invites
collaborators to dream big and can challenge the paradigms with creative and innovative
thinking.

Also the executive teaches us a message of optimism so that they can face in difficult times
for the power of the union.

They teach us about responsible and moderate consumption as a beer cultural key that has
been spreading for many years and will continue to do so.