International Business Management in Carlsberg - Case Study Example

International business management in Carlsberg Introduction Multinational companies often survive in the competitive global market by enduring in strategies that would enable them survive in the market profitably against competitors. The brewing industry is competitive based on geographical locations, economical status, and the demographical compositions in the different countries. Carlsberg breweries approached the variables as opportunities in pursuance of goals and objectives profitably (Pitt and Koufopoulos, 2011:326). The company expanded to different countries through amalgamation, licensing, and acquisition. Carlsberg merges with prospective brewing companies and later on acquires whole ownership to the business entity (Blocker, et al 2003:140). The script entails the various predatory yet convincing strategies that Carlsberg Company employs in acquisition of new companies. Further, there are outlines on the on the future growth prospective, despite the fact that, the company still lags behind at a fourth rank. Lastly, there is a critic statement discouraging the ownership of more than 500 brands across different countries in the world. 1. Carlsberg strategic moves and predatory tactics in partnership, ownership, and control Carlsberg group entered the brewing industry late when other giant companies were in operations. The owners understood that such a company was vulnerable to stiff competition and failure in the market if they did not engage in proper strategies. The company realized that it could not concentrate in the local market whereas intending to yield profits and grow competitively (Mital, 2008:184). The presence of existing competitors threatened the infant company thus Carlsberg group merged the father-son two different businesses in order to counter extremities of competition. Carlsberg diversified investment to Denmark, U.S.S.R and the Asian countries over a period of almost eight decades. These tactics enabled the company grow profitably through economies of scale and prominent returns on investments (Estrin, 2004:271). The company analyzes the various trends in the markets and decides on the various tactics to endure, thus enhancing venture opportunities. The company analyzes the various environmental constraints in different regions, thus endures on formulae, which enable easier entry into the markets (Lopes, 2007:10). The company enters most of the markets through direct exportation and distribution in the different markets that depict chances of success. Carlsberg owns global brands, for example, the Carlsberg, Elephant, and Pilsner brands distinguish the company’s image above the other beer companies (Ahlstrom and Bruton, 2010:189). Therefore, the company wins consumer loyalty on venturing into the foreign markets due to brand recognition. The strategy adopts consumers in the new markets despite possible competition and at the long run; Carlsberg realizes growth in the market share. Another aspect is that Carlsberg adapts to a criteria model that enables the realization of tastes and preferences of consumers in the new markets, and this leads to brand customization to meet them satisfactorily (Halley, 2005:122). The strategies revolve around the objectives of profitability, competitive edge, and consumer value and satisfaction hence, the company strives to achieve them adequately. The strategies threaten indigenous beer companies who often seek options for cooperation in the market operations (Grunig and Morschett, 2012:240). Carlsberg group strategically engages in joint ventures to diversify investments and levels of profitability, hence always welcoming to coming seeking to form mergers. The company tactically targets to acquire the over fifty percent of the share holding capacity in every merger over the rival partner or affiliates. This criterion secures managerial prowess, and increased profit sharing rates over the partners who find it hard to survive, thus leaving Carlsberg to the sole ownership of the company after compensation. Carlsberg Company is easy at price manipulation, and product redefinition to suit the emergence of new consumer needs and contain possible threats of competition. Therefore, Carlsberg produces quality products and similarly low costs, unlike the competitors. The high number of share capital in every joint venture enables Carlsberg to dictate terms on pricing, relatively lower and to that extent, the partners find co-existence relatively hard and surrender their rights to the company (Grunig and Morschett, 2012:241). 2. Carlsberg growth strategies through acquisition of mergers and response to future bids Carlsberg Beer Company operates in over 150 countries throughout the world; it has shown prominence with the available 500 brands in the product line (Bhatia, 2012:290). The company has built a profound corporate image through brand recognition. Since the year 1847, the company endured in value-oriented prepositions to cater for the buyers needs which also gained accreditations from Winston Churchill and Elizabeth the second. The involvement in strategic approaches seeking to deliver value and not necessarily yield profits, are the key factors to growth. The strategy serves as a competitive edge as competitors find it hard to overthrow the company in the chosen markets for the consumers already perceive product loyalty (Colicchio, 2011:222). The brewery industry engages all the firms in tremendous strategizing practices to curb inflationary rates, maintain favorable market segments, and forecast on future growth. The Carlsberg Company forecasts on the above aspects to survive amid negative tremors and amass the available opportunities. Through speculations on the variations of the production materials, the company resolves to the best sustainable objectives to survive during such times, which also influence dynamics in the foreign exchange rates (Conklin, 2006:114). Through ascertainment of the possible dynamics, the company establishes programs that redefine consumer perspectives towards the company, such that the customers continuously show devotion despite the negative changes. The company responds quickly to consumer related trends of tastes, preferences, which vary in terms of demographic, economic, political-legal environments. After strategizing on different needs, the company produces products that suit them the needs effectively, and chances of market share growth increase accordingly. Therefore, this aspect serves as a growth over competitors, thus ascertaining competitiveness, profit maximization, and achievement of long-range plans (Hooijberg, 2007:102). The company targets to enhance future growth by ensuring new product development to suit emergence of various needs both at the local and global markets. The engages in continuous research, which avails information on variants in the consumption models, brand loyalty and brand switching, satisfaction of the product, and the extent to which the consumers may perceive change in the product design and composition (Hansen and Christensen, 2004:111). Therefore, the company stands out as the only brewer globally owning over 17,000 different bottle designs in the museum. This aspect implies that, the company seeks to satisfy consumer tastes and preferences that focus on design (Lehu, 2007:148). Carlsberg Company strategically placed an offer and eventually acquired up to 96% of the Russian Baltika Breweries, which serves as a growth strategy, bearing in mind that the Russia ranks fourth in general consumption of liquor. The company realized that the home market promised lesser chances in growth, and thus decided to offer 74% share rights of the Copenhagen Danish site at a price of 335 million Euros to Danish investors (Clifton and Ahmad, 2009:73). The amount enables the company to venture in new markets, as the home market does not promise possible new opportunities. Further, the company monitored the first leading beer consumer market, China, and established strategic growth approaches to acquire a desirable consumer market profitably. The company readily avails twenty globally recognized brands to the Chinese market, with Tuborg brand leading as the only brand that has an easy pull top. This strategy assimilates more consumers under the company’s consumption bracket, and thus the loyalty stimulates growth and profitability. Carlsberg Company continuously acquires shareholding capacity and realization of presence in the local firms, for example, the company acquired 29% shares of the Chongqing Brewery, thus standing out as the major shareholder (Estrin, 2004:279). Under a new charter, the Carlsberg A/s Company focuses growth through redefined strategies that would help in overall acquisition of all markets. The company maintains an innovative program meant to enhance value to the existing products to cope with the dynamics changes in the marketing environment. The strategy enables the company to cater the needs of consumers effectively in accordance to existing changes, an aspect that stimulates growth, reduces expenditure on research and development, increases market share, and the overall profit margins (Lopes, 2007:170). Due to different market dynamics, the company seeks growth upon each segment with tailored approaches. Bearing in mind that, different markets depict deviations in the environmental variables Carlsberg group ensures that it caters for consumer needs in a special manner. For example, the company produces beverages to reach the soft drinks market segments; by diversification, the company is certain of survival and existence (O'guinn, et al 2009:170). The company’s growth opportunities are on the high end considering the strategic approach to the five-factor model. The company recognizes that, beverage consumers are price sensitive, thus sets prices seemingly below the competitors and which leads to increased marginal consumptions of the products. Carlsberg Company ventures in new markets with renowned brands, therefore, being able to counter competition and acquire an edge that allows a favorable flow of the returns on investment (Ahlstrom and Bruton, 2010:190). Further, the company chooses logistics channels that would affect the flow of products to reach the consumer at the desired degree of efficiency. On the third aspect, the company adapts to close monitoring of close substitutes and the extent to which buyers may turn brand loyalty to benefit the rival companies. Therefore, Carlsberg Company redefines the market approaches with an aim of future growth and this encourages the continuous repossession of weaker companies in promising markets with the available capital reserves (O'guinn, et al 2009:172). 3. The proposition that Carlsberg should rationalize and focus on fewer brands The company may perceive that owning a wide range of brands throughout the markets wins consumer loyalty. However, these perceptions are often ill fated, as the consumer is stupefied on which brand to prefer over the other yet bearing the same name. The consumers are unable to establish the differences among the brands and thus show slow responses towards the brands. The consumptions patterns among the brands may be extremely varied such that, some brands will not sell due confused prepositioning and eventually the brewing company will incur expenses trying to maintain such a brand to perfect, or will acquire less profits whenever Carlsberg invests profits earned from other brands to revive the dwindling ones. Carlsberg Company is likely to witness that, an increase in the consumptions level of a brand leads to a decrease in the consumption of another and this will project uneven forecasts on consumer loyalty to the brands. The factor will affect future prospects, whenever the company will anticipate increasing output on the brands, rendering impossibility to the extent that they cannot tell which brand the consumer favors or neglects. Carlsberg realizes the original Carlsberg brand as the one that calls for preposition to incline in terms of consumptions and increase levels seemingly above the current 10%. The move would determine a competitive edge and realization of the other brands under the company’s production lines (O'guinn, et al 2009:173). The company owns over 500 local beer brands in the global markets and but the Carlsberg brand is the only that produces the highest turnover rate. The fact that, Carlsberg manages some brands through licensing, would be fateful since, the licensee companies may learn of the product formulae, decline on renewal of the contracts and reach the customers with a different brand name, with the same original taste (Clifton and Ahmad, 2009:77). Therefore, many brands may perpetrate the company’s operations rather than safeguard. Conclusions The company should adapt to the minimized brand production compared to the current tally of 500. Economic crisis are prominent in the day-to-day business life, bearing in mind that, at such times, the Carlsberg Company will incur hefty losses due to foreign exchange currency fluctuations. The global market is currently an arena of constraints towards the different production and marketing practices. The constraints often coincide with the code of ethics, and the various stipulations imposed form obstacles to the company’s endeavors to reach a wider market. For example, there are stringent rules on advertisements and this would incapacitate the company the ability to create awareness on the 500 brands (Ahlstrom and Bruton, 2010:189). Conclusions are that Carlsberg Company poses as one of the world’s premium breweries, with the strategies set, achieving the desired goals accordingly. However, it is advisable for this global giant to realize the market dynamics that target to reduce beer consumption patterns across the globe. The company will expound on the number of profitable brands and define new investment opportunities (Clifton and Ahmad, 2009:78). Bibliography Ahlstrom, D., and Bruton, G. D. 2010. International management: strategy and culture in the emerging world. Australia: South-Western Cengage Learning. Bhatia, V. K. 2012. Discourse and practice in international commercial arbitration: issues, challenges and prospects. Farnham: Ashgate. Blocker, J. S., Fahey, D. M., and Tyrell, I. R. 2003. 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