Internal and External Analysis of Sabmiller - Case Study Example

Strategic Management SABMiller Contents 1 3 Introduction 4 Discussion, analysis and findings 4 SWOT Analysis 4 Value Chain 5 Core Competency 5 Pestle Analysis 5 Porter’s 5 Forces Model 6 Conclusion 6 References 8 Abstract The research paper analyses about the growth of the emerging market and also the employment strategy and how it have been imposed on the local brands. It will help to develop the geographic coverage and it considered the most effective opportunity for expansion of the business. It will also describe the internal and external analysis of SABMiller and the current position of it and where do it stand after a long time span. The two models SWOT and Pestle will discuss about the entire economic, social, political, economical, legal factors of that particular brands. The strength, weakness, opportunity and threats of the company will be identified by the SWOT analysis for SABMiller. Introduction SABMiller is the world’s second largest brewing company under the belt of Anheuser-Bush, Inc. It is now based in London but the company did not take any breweries in the United Kingdom, but the home country of this company is South Africa. It was founded in 1985 and today SABMiller holds share of 98% in the beer market. The firms have operated seven breweries in South Africa and it sold 14 brands of beer. It includes the local larger Castle (which is the most demanding in Africa). The company also maintains the presence in the soft drinks market with a 74% interest in the Amalgamated Beverage Industries. SABMiller is the very popular brand in the South Africa among the liquor companies. The hot trend in the market today is merger and acquisition with the other companies with the aim to capture the market position of those particular brands. The directors are dedicated to maintain the highest standards of the corporate and are also responsible for effective functioning of the company. SABMiller is evolving in the market and to keep the focus on brewing, it has experienced high rapid expansion globally. It has also expanded globally in the North and South America to create a vast business in those countries. It has double entering London Stock Exchange which was introduced in the year of 1999. Their main focus was to emerge the business in the global market and they could use their competencies for the incremental growth and both organic and the acquisition which was made in the holistic way. The strategy of this company is to make balanced global growth in all the countries. They are more to support their vision for maintaining a global beer industry, and it is all about to make understand the developing of markets, respecting the heritage of the country as it is the older company and it is being known to everyone for its popularity, and it also providing a sustainable growth to the market. In the year 2006, they have changed their vision for making the acquisition and SABMiller have also moved back to the developing economics. SABMiller has also got an aggressive strategy to make the volume and productivity in the major markets which will help in seeking for adding value to improve the position in the global markets (Barney, 1991, pp.99-120). Discussion, analysis and findings SWOT Analysis The SWOT analysis can be broken down into Strength, Weakness, Opportunity and Threats of the company. The Strengths and the weaknesses are the internal factors and the opportunities and the threats are external factors of the company. Strength: The strong branding strategy will help in the local and the international brands to show the capability of the company and will also act as the catalyst in preserving the taste of the consumers for whom the branding will be done. The broader geographical presence of the company (SABMiller) is in more than 2000 brands with a positive financial condition which makes the market tapping in a positive way (Kotter and Schlesinger, 1991, p. 48). Weakness: The Investment of the company came down to 198 million in 2000 while it was 501 million earlier. Consumers may be concerned about the percentage of glycerine content in the products. The other weakness which can be thought of is the certainty of impurities presence in the packaging bottles (Meyer & Schwager, 2007, p. 93). Opportunity: The opportunity of SABMiller is the growing and emerging markets for making the product more affordable and can be afforded by all the people in the market. The company can also diversify the product from alcohol to fruit bears and cold drinks because the alcohol market has become stagnant. Threats: SABMiller has some lower growth rate which helps the growth prospects in the industry. The saturated global market and existing of recognised brands is a threat for the company (Schermerhom, 2009, p. 29). The consumer preferences are also one of the major considerations in the liquor industry as the targeted customers are becoming more sophisticated. Value Chain The value chain analysis are both responsible and efficient in the business to take benefits of reducing cost, to improve the quality and to secure more relationship which can be sustained for a long term and to maintain competitive position in the market. It helps in developing the packaging of the material that is being supplied and it also supports the distributors and the retailers who are doing business in small scale. SABMiller is creating a sustainable chain for supplying to identify the practices that are being compatible with some of the existing framework (Johnson, Whittington and Scholes, 2011, pp. 88-92). Core Competency The core competencies of SABMiller are the skills and abilities by which the resources are optimised and contribute in enjoying the adhered advantages. SABMiller has changed South African’s culture and have put it in a shape of the strategic development of the company. It is the culture that makes it capable for entering into an emerging market (Kim and Mauborgne, 2005, p. 128). The Africans have given SABMiller that confidence to make a self belief that it can be the best in the developing countries. It has also got lots of experience in dealing with the local community people and the government as well. SABMiller have also used some expert management skill that has rated for using in the Miller (Roy, 2011, p. 51). This analysis includes the leadership quality of the staff and the manager of the company to keep a good work environment. Pestle Analysis The Pestle analysis can be broken down into the following ways: The Pestle analysis is done to make understand the macro-environment that affects the firm with all the external factors of it. The pestle analysis is done in the following ways: Political: The government contributed to political growth and acquisition which has influenced in some of the countries in the year 1994 and they are being invited to participate with the Tanzanian government in a joint venture to introduce new brewing industries (Henry, 2011, p. 36). Economic: The economic factors which can affect SABMiller can be the exchange rates and the global economic recovery which caused unemployed and accordingly people are expected to spend less on beer expenses (Hasan, 2013, p. 61). Such an impact will affect the company in the adverse way. Social: The taste and preferences of the consumers are changing day by day and it has become more sophisticated resulting in increase in the beer consumption (Byars, 1991, p. 16). Technological: The Company under consideration uses the best available technology in the manufacturing processes. It can improve the process by importing further sophisticated methods which require less man power and the volume of production can be made better in less time (Dransfield, 2001, p. 74). Legal: SABMiller has entered in the new market for doing the business in which it has got an excellent knowledge of obtaining the license for using the idle outlets. It will have to abide by the legal frameworks existing in that market before taking the decision of market venture. Environmental: The carbon tax is being imposed on the company and it is liable to pay those taxes. Environmental issues like pollution, global warming can also be taken care of by the company (Porter, 1985, pp.55-65). Porter’s 5 Forces Model The five forces model introduce the Threats of Substitute, Threats of entry, bargaining power of suppliers, bargaining power of buyers, and competitive rivalry. Threats of Substitutes: The tastes are changing for the alcohol and it has changed into wines and spirits. The wines have become very popular among the European markets (Andrews, 1971, p. 82). The threats of substitute changes the tastes of the consumer which has changed into wines and spirits and wines have become very popular among the European markets. The threats of entry describe the threats of entering the market and it also imposed a high taxation from the government. Threats of Entry: It includes the amount of taxation imposed by the government Campaigning like not to drive after drinking may shy away the customers from the pubs and bars. Societal restrictions upon drinking beer can be one of the major entry threats (Ferrell and Hartline, 2012, p. 84). Bargaining power of suppliers: the bargaining power of suppliers is high in the brewing industry since if the suppliers decide to stop their supplies in the market and in the shops, the entire supply chain process will get hampered (Allen, 1994, p. 61). They do have the option to shift their business towards spirits and soft drinks. The bargaining power of the suppliers is very high in the market and since it has stopped their supplies in the shops. Bargaining power of buyers: The bargaining power of buyers is medium since there are lots brands available in the market and they can easily shift to other brands in times of needs. But they seem to prefer a brand according to their likings and spend their money to buy that brand only (Bohm, 2009, p. 27). Competitive Rivalry: The competition is always been very tough among in the market since there are always local and international brands available in the market. The local brands are priced less and attracts the consumers with low disposable income. On the other hand the already existing brands hold a major market share and some premier steps like discounts and gifts will pave the path smoother (Prahalad & Hamel, 1990, pp.79-91). Conclusion This paper discusses about the external and internal factors of the company SABMiller which is a South African based company. SABMiller is now one of the most renowned brands in South Africa and enjoys an annual return of around 156 million. The brand has tried to do its business in Japan but unfortunately it failed because they tried to develop their business very fast which resulted in failure As we know that SABMiller has a very aggressive strategy which has been discussed for the developing market and has also added some value for the opportunity to improve the position in the global market. The core competency of the SABMiller includes the leadership quality of the company and also the skills and the ability of the employees which contributes in enjoying a adhere market. It is the culture of South Africa who helps the brand to enter in South Africa. The country has given South Africa the confident to make a self belief to hold the market position and can be best in the developing countries. The paper uses some of the models to make the analysis and the findings such as the SWOT analysis for the company SABMiller, so that the strength, weakness, opportunity, and the threats of the company can be analysed. The second model that is being used in the paper is Pestle analysis in which the political, economic, social, technology, legal and environment factors to make understand the market position of the company. The third model that is being used is the Porter’s 5 forces model that is used to make understand the bargaining power of the company with the supplier, customers. 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