SABMiller's Strategic Position by 2011 - Essay Example

? Strategic Management Task: Company's Strategic Position by Introduction SABMiller is a globally renowned corporation that endears itself as an excellent beer producer and renowned bottler for handful corporations with a global spread. The prime dealing of the organization is the production of beer, malts and an assortment of soft drinks, in particular, the carbonated archetypes. The company is reputable for a number of varied global brands that include Urquell, Peroni Nastro Azzuro, Miller genuine draft and an equally enormous base of local brands that serve its dissimilar macro and micro marketplaces spread across the globe. These localized brands include Miller Lite, Aguila, Tyskie and snow. Overall, the organization claims patent of over 200 dissimilar alcoholic brands. With headquarters in London, the corporation claims presence in all sections of the globe. This massive marketplace is steered by a global staff of 70000 professionals spread across its key five worldwide sections. The sections are regionally lumped constituting critical administrative units for their extensive supply chain. These sections include South Africa, Africa and Asia, Europe, North America and Latin America. This write up is an analytical paper focusing on the corporation. The principal focus is on its present strengths and weaknesses as well as its future strategies in the backdrop of the recent recession. Strategic Analysis of SABMiller From SABMiller (2011), it is evident that the organization has endeavored to achieve sustainable advancements through its evident ambitions for accelerated growth while keeping in line with both the global and internal manufacturing standards. Its ambitious expansion efforts are evident in its 2002 acquisition of the American Miller brewing corporation as well as its recent accelerated expansion agendas. According to SABMiller 2011, it recently acquired a lucrative bottling deal with coca cola as well as the reported takeover of the Australian's Foster's brewing corporation. These are evidence of its ambitious expansion programs that has seen it raise to the second global leading beer manufacturer. Obviously, this beer manufacturer has employed key strategies that has responsibly sailed it through the past riskier yet increasingly lucrative outlays. Additionally, a critical examination reveals that its key value of owning its own expansion strategies is responsible for the enormous expansions of the preceding decade. Additionally, its ownership of a critical value chain component in the form of brand is central for its extensive success. a. PESTEL Analysis Politically, the organization has increasingly faced a number of drawbacks in regards its key area of specialty. Johnson, Whittington & Scholes (2011) observe that, over the past year, numerous nations have instituted regulations that stringently direct alcohol utilization. Observably, the state control is the result of the recent examinations of the physiological and psychological consequences of alcohol consumption which revealed repugnant results. Similarly, despite the huge market inherited in the Miller deal, the American market remains among the stringently proscribed alcohol marketplace. Economically, the organization's rapid expansions have seen it embrace marketplaces with huge dissimilar economic constructs. According to Johnson, Whittington & Scholes (2011), the Miller deal attracted huge costs in comparison to other division across the Africa and Asian sections. SABMiller (2011) is cognizant of the regular alcoholic drink policy issuance across its subsidiaries to enforce its social responsibility of enlightening on responsible alcoholic consumption. Similarly, the report is observant of their involvement with HIV campaigns across the globe to assist the on going efforts in curbing the predicament. Additionally, SABMiller has persistently contributed to the global technological enhancements through introduction of novel manufacturing procedures as well as newer brands of produce. Johnson, Whittington & Scholes (2011) observes that over the decades, the corporation has developed software based solutions that have increasingly eased the systematic planning and administration within its branches. Consequently, SABMiller remains cognizant of its ecological responsibilities as well as the dissimilar legal frameworks in dissimilar nations. a. SWOT Analysis The PESTEL analysis gives an overview of the organization's strengths and weakness as well as its enjoyed opportunities and the persistently lingering threats. According to Johnson, Whittington & Scholes (2011), SABMiller's key strength is its ability to internalize strategy process. Evidently, the corporations has managed to entrench itself in critical marketplace through extensive analysis of marketplace variable prior to sanctioning huge outlays. Secondly, among its distinguishing strengths is its ability to extensively diversify its product base. This is observably in the overwhelmingly numerous brands it has launched in marketplaces across the globe. Furthermore, it has succeeded in establishing reputable localized brands across the globe. Additionally, its successful supply chain administration has gained it respect within the beverage and alcoholic marketplace. Similarly, the corporation has managed to attract and retain hugely talented personnel of close to seventy thousand. SABMiller (2011) identifies the corporation's extensive corporate social responsibility and sustainable advancement as key to it success. Evidently, its ability to shuffle through the recent fiscal recession is a testimony to its stable fiscal systems. The SABMiller (2011) points out that the corporation enjoyed unbelievable 9.4 percentage point advancements in revenue the past years. This shows its strong and stable fiscal operations as well as a stable base of clientele. However, critical examination reveals a number of considerable weaknesses. According to Johnson, Whittington & Scholes (2011) the corporation has over the past decades engaged global expansions. Reportedly, these ambitions have led to a disregard to local infrastructural improvement as well as advancement. Given this backdrop, it is evident that the corporation find's it increasingly difficult to leverage operations in tandem with their evident extensive external outlays. Consequently, this could suggest an inadequate strategic decision making guidelines within the corporation. Additionally, the corporation has over the years assumed the distasteful character of clearing offshoots in production through increments of product prices. Johnson, Whittington & Scholes (2011) observes that the corporation trade in merchandise that are reliant on demand and supply trends which hugely impacts on product stability. However, it enjoys a variety of opportunities that includes extensive markets as well as investing in disposable markets across the globe. According to Johnson, Whittington & Scholes (2011), its Asian and African marketplaces are increasingly expanding. Similarly, its huge and varied product base is inline with the evident dissimilar client demands in its varied markets across the globe. Similarly, its successful expansion is in reaction to the varied marketplace opportunities across the globe. Lastly, the observable successes are not in defiance of potential threats within the brewing industry but rather a result of tactical and careful strategic planning. Mid the numerous threats are the evident emerging multiple substitute brands. Johnson, Whittington & Scholes (2011) observes that given the increasingly alternating client taste an preferences, it is easier for clients to substitute brands in the backdrop of multiple brands form competitors. Similarly, over the past decades, the brewing industry has faced fierce competitions. Johnson, Whittington & Scholes (2011) observe that this competition is emanating from emerging brewers who are increasingly offering alternatives to the present brands. Proposed Strategy from 2011 to 2015 The proposed strategy for the next five years are derived from its extensive strengths both brewing and retail enterprise across the globe. This would include a persistent advancement of the present brand portfolio as well as a continued development of customized brands for the respective marketplaces. Secondly, designing policies that would ensures developments newer marketplaces as well as sustaining locally established industries. Evidently, this would create a system with an excellently and globally balanced outlook as well as multiple profitable outlays. Thirdly, the corporation should extend the sustainable business model to the local enterprises which would appreciably increase profitability. Lastly, the corporation should ensure equitable training opportunities to ensure uniform levels of professionalism across all areas of interests within the globe. The subsequent analysis considers the first two proposals. Analysis Using SFA criteria Expansion present of Product Base and development of localized Brands Johnson, Whittington & Scholes (2011) identified increased competition as principal threat to the expansion projects undertaken by SABMiller. Observably, as the corporation expands, it delves into newer markets with dissimilar dynamics. These markets demand newer and novel approaches that are dissimilar to the generalized ways of business. Additionally, they require customized products that will not only appeal to the locals but will also attract them to similar brands produced by the corporation. According to Johnson, Whittington & Scholes (2011), entrant to newer markets expose the corporation to newer competitions and a possible client disloyalty. In her article, Cooper (2011) is observant of the fact that despite SABMiller's acquisition of Foster, there share price remained relatively flat. This could suggest a number of facts. Reportedly, apart from the share price stagnation, the latest brands experienced equally normal sale volumes. This suggests that the customers remained loyal to the brands and not disturbed by the new market entrant. Evidently, these results are contrasting with the ones experienced when SABMiller merged with Coors in 2007. According to Johnson, Whittington & Scholes (2011), the 2007 merger caused marketplace ripples within the globe. Reportedly, both the corporations' share values rose significantly in the aftermath of the merger. Similarly, SABMiller's share prices rose significantly across the globe with that specific announcement. These two cases highlight the significance of expanded market place as well as brand expansion. However, it is vital to consider the effect such expansion has on existing brands. Evidently, the diversification of brand base ensures the satisfaction of the variant and geographically dependent tastes of clients. However, an overall focus on expansion leads to the neglect of already localized units. This results in poor infrastructural developments within old and neglected units. It is vital that as the corporation considers future expansions, it should balance amid the expansion strategies as well as the maintenance of the present projects. Evidently, given the frailties that are evident in the present strategies, the corporation should reconsider the strategic execution of all their expansion projects to harmonize the extensive expansions with sustenance of present acquisitions. Additionally, Johnson, Whittington & Scholes (2011) identified a number of key issues that include ecological as well as occupational wellness and safety issues. These critical issues require speedier considerations to sustain the novel acquisitions especially in Africa and Asia. I believe that the strategic plans could gain significantly from a consensus approach. Evidently, a consensual decision making approach with strict consideration of suggestive responses from all stakeholders could appreciably solve the apparently turbulent approach. The insignificant response of the Australian marketplace in the aftermath of the takeover of Foster by SABMiller is an indicator of an insufficient analysis of the local market prior to the takeover. Similarly, it shows an inappropriate timing of the takeover. Cooper (2011) indicates that the extensive trading characterized with the festive period had dismal impact on the sales volume. Strategically, this is indicative of inadequate local and international materiality examination. Observably, an extensive materiality analysis would guarantee a considerable level of marketplace response. Johnson, Whittington & Scholes (2011) observes that materiality examination at both business fronts significantly consolidates the dissimilar corporate needs at all levels of the enterprise. Additionally, such considerations could exclusively elaborate on the use of present strategies to drive future corporate value. It would assist in unraveling associated risks flanking the particular strategy and build and equally maintain likeable line of brands. An excellent comprehension of both local and international materiality is significant in initiating innovativeness at both fronts that are inline with the corporate strategic objectives. Johnson, Whittington & Scholes (2011) observes that materiality has the benefit of inspiring knowledge based innovativeness. Evidently, this would require the treatment of the principal units as centers for knowledge innovation. Johnson, Whittington & Scholes (2011) observe that the conceptualization of knowledge innovation has the additional benefit of inspiring critical assessment of situations which could inspire massive and qualitative production. In this regard, in my opinion, it is essential that SABMiller considers an extensive analysis to identify the areas with critical needs for innovative administration. This knowledge would assist in the allocation of relevant personnel within the dissimilar marketplace environments. Additionally, this approach may require the formulation of specialized grouping tasked with the objective of investigating novel knowledge resources that are in line with the strategic plan. With this backdrop, sales force analysis becomes vital in isolating the functional attributes of the varied personnel as well as the resources required by the strategic functions. SFA identifies a number of functionalities. In line with the two strategic objectives, which included developing brands that identifies with the local clients as well as developing sustainable markets, AFA identifies the following functionalities. Firstly, there is vital need for the appropriate management of opportunities. As the corporation advances into newer markets, able mangers are required to ensure the profitability of the opportunity. Johnson, Whittington & Scholes (2011) observes that SABMiller advanced by retaining local personnel to manage the acquisition through control of the different stakeholders. Evidently, this is vital in ensuring continuity but may require an injection of newer policies and strategies to ensure an integration of the foreign brands into the new market. A successful integration could increasingly boost sales. Additionally, the SFA criteria identify an important aspect of the strategic objective, sales forecasting. Given the two strategies, it is evident that sustenance of both local and international units and the development of newer brands will significantly increment their sales volume. Evidently, brands that are appealing to the local market will enjoy better sales in the coming projected years. Similarly, given their established ability to inspire future sales, it is evident that the two strategic objectives would sustain the corporation as principal market leader. Additionally, they could aid in the accounting for the enormous outlays by establishing newer and stable markets within such areas. Similarly, they provide a framework for analyzing the extent of the territorial penetration vis-a-vis the realized sales volumes and revenue generated. Sustenance of local industries in tandem with international units ensures a harmonious product quality in addition to similar professionalism that is critical for enhancing to corporate image. Conclusion From this analysis, it is evident that brand acquisition is a critical motive behind the extensive expansions witnessed in SABMiller since its inception in 1985. Over the years, it has extended its operations to countless nations across the globe. Consequently, it has acquired approximately over 200 beer archetypes. Because of this, it has entrenched itself as a principal beer producer globally. Recently, it acquired Foster of Australia, giving it command of over 50 percentage point of the Australian beer market. In addition to its brand expansion strategy, the corporation is presently, coca cola's chief bottler. Evidently, the corporation's diversifications enabled it shuffle through the recent global recession emerging as one of the few corporate associations which made considerable profits. List of References Cooper, R 2011, "SABMiller froth flattened despite Foster's fizz," The Telegraph, Viewed, 9th January 2012. Johnson G, Whittington, R. & Scholes, K., 2011, Exploring Strategy, Pearson Education limited, United Kingdom. SABMiller plc 2011, Annual report 2011, SABMiller. Viewed, 9th January 2012. Read More