Corona and Apple - Assignment Example

Case Study Analysis: Corona and Apple Student’s Name: Instructor’s Name: Course Code: Date of Submission: Corona beer questions 1. What are the dominant business and economic characteristics of the global beer industry? Competition The beer industry is the largest sector in the alcoholic beverage industry. It is estimated that the industry generates over $325 billion globally. However, one thing that must be noted is that the market for beer in developed world has reached saturation as many companies have come into play with the quest to serve the already reached target markets. A good example of this situation is the one demonstrated by companies such as Anheuser-Busch, Heineken, Ambev, Miller Brewing, South African Breweries (SAB) and Interbrew. These companies and many others have immensely contributed to the kind of the competition that is being witnessed in the industry currently. The market in some of the developed countries like the United Kingdom and the United States, growth potential has continued to become more and more limited. The end result has been for the companies facing these problems to pay attention to emerging markets (Czaban and Whitley 2000). This is what can be learnt from the two major importers of beer to America namely Heineken and Modelo. In general, ability to play in the competition is the key factor to operating in the industry. High cost of investment The industry is one of the most expensive to penetrate and more especially in the market where there are already established companies. This can be learnt from the establishment and control of Grupo Modelo. For example, when Modelo chose to renovate its facilities in order to increase its production and cover for the new demand, it could spend $300. This is just an amount for renovation and not in any way associated with the establishment of a new beer distributing company something that can be very expensive for any single individual to start. This high cost can also be related to the distribution channel to other far or even foreign markets (Harris et al 2008). Marketing Marketing is always aimed at promoting the company brands in the market and is particularly important in attracting new customers as well as retaining the available market. For the beer industry, marketing is a major business activity especially for global companies that want to introduce their brands to new markets (IBIS. 2012a). This is the reason as to why Corona has given independence to the local distributors to take full charge of the marketing activities in their respective markets. The reason for giving this approach is to ensure that marketing activities are able to incorporate different preferences and tastes of the local market. This is because apart from providing quality beer, image is also very important and this can only be achieved from excellent marketing strategies. 2. Based on your analysis of the global beer industry and Grupo Modelo’s situation, what problems and issues does the company’s top management need to address? Consumer tastes and preferences In any market, consumer tastes and preferences take a center stage as they are important factors which determine the demand for a given product and service. This case is similar to the beer industry and more important here is that people of different cultures have different choices of which dictates what they will purchase and what they will not. This can be learnt from the company case where some countries such as Italy and France mostly prefer wine taking while in case of Germany and Ireland, beer is more preferred. What this means for Grupo Modelo is that in going global, tastes and preferences of different target markets must be taken into account if it is to gain relatively large market share in a highly competitive market (Harris et al 2008). Distribution Distribution is also a major challenge for Grupo Modelo and is also one of the major problems that are experienced by many different companies operating in the global beer market and wish to expand into new markets. This problem arises because Grupo Modelo like any other company is not able to have all the required information about the market dynamics and the best channels of distribution. Currently, the company is trying to use the local distributors especially in the United States to have its beer reach the target market. However, what should be noted and taken as a major concern is the stability of the channel as they not in any way influenced by the beer company (Harris et al 2008). Competition Competition is also a major problem that Grupo Modelo managers must deal with if at all the company is going to remain stable in the global market. Competition for the company can be in form of rival companies and the existence of beverages that can be used in place of beer (IBIS 2012b). This is a problem because stiff competition will reduce the market share while the availability of other products that can be used in place of beer like wine and spirits, could easily reduce the demand for beer and consequently decline in market growth. A good example to illustrate this problem is the decline of beer consumption in the United States from 56% in 1999 to 53% in 2004 as result of increased consumption of other beverages (IBIS 2011). 3. Recommended action Different problems have been identified that could be a major obstacle for the company to become a global leader and they include consumer tastes and preferences, distribution and competition. In order to help the company become more competitive in the global market, the following specific recommendations have been proposed: 1. Manufacture its major brands based on tastes and preferences of different markets 2. Establish local beer manufacturing plants in the importing countries to reduce distribution costs 3. Penetrate into less developed countries where competition is not so advanced and also diversify its brands to include wines and spirits. Apple case 1. What firms would you identify as Apple’s closest global strategic rivals? Give your reasons. In every business in a global environment, there are atleast two or more firms competing for the available market in order to be able to gain as much market share as possible so as to be able to multiply their revenues and consequently gain more sustainability. However, it is now emerging that different industries are experiencing different levels of competition a situation that has been prompted by a number of factors which include change technology and constant change in demands by the market (Palfrey and Urs 2008). One such industry that is affected most by change in technology is the electronic and communication industry. What differentiates one firm from the other is the strategy and more particularly the one the global market. One good example of a company that is experiencing stiff competition on its global strategy in the electronic and communication industry is Apple Inc. Apple Company is subject to competition by several other companies that are looking for ways and means of penetrating and taking leadership of the global markets. Apple for very many years has been a global leader in the manufacturing and marketing of personal computers (PCs) originally known as Apple 1 that later was followed by the development of Apple II that was launched in 1978. The main competitors for Apple in this field are IBM and Microsoft. This is because the two companies were well advanced in their technology and were selling their software to other companies that were willing to incorporate them into their hardware (Kelm 2009). This was a strategy to go global and reach other firms. The other major competitors for Apple included such companies as Dell, Hewlett-Packard, Apple, Acer and Toshiba. These are competitors in the PCs market and some were in the lead as can be established from the 2007 and 2008 market shares. For example, companies like Dell and Hewlett, both beat Apple in terms of market share for PCs during this period. For example in the case of ‘Dell, for the year ended February 2008, the company posted $61.1 billion of revenues, 32 percent of which came from sale of desktop PCs. This is the field that Apple was also pursuing. The same scenario duplicated for the other major competitor in the manufacturing of PCs, which is Hewlett-Packard where during the same period, 35 percent of its total revenue came from sale of PCs. Other companies in the same category that are also employing the same global strategies as Apple are Acer and Toshiba which are growing and gaining in terms of the market share nearly reaching and overtaking it going as per Q2 of 2007 and 2008 respectively. Apple is also a dealer in the media player industry since its launch of the iPod to compete with the previously commonly known Walkman. However, the competition could not end there as different companies globally are trying to come up with different innovations the most convenient and comfortable media devices in the market something that led to the development of the iPhone and iTunes to replace the MP3s and iPods. Significantly, this line has attracted many competitors including Samsung and Nokia who are now in the market of iPhones where Apple is thriving to dominate. What has been a major drive for global strategies by different companies is the need to have a stable revenue source and the way to do is to embark totally on innovations so as to be able to improve on the functionality and portability of different products as per the market demand dictates (Vahagn 2011). 2. What are the chief elements of Apple’s strategy? How well do the pieces fit together? Is the strategy evolving? As established in the company scenario, it is evident that its strategy is to be a global leader not only in manufacturing of PCs but also in other fields like media and communication as can be seen from its embark on different innovations to develop different products for the market. However, the success of this strategy is depended on a number of elements which are considered key pillars for any global strategy and they include responsible leadership, product diversification, innovation, system design and development and having expansive geographical touch. To start with, Apple’s first element to its strategy is strong, determined and committed leadership since its foundation which promised to make innovation top on priority so as to be able to deliver on customer expectations (Vahagn 2011). Among those who have provided strong leadership that has led to the development of different products that are very important to the market are Spindler and Steve Jobs. For example, in 1997 when Jobs took over the leadership of the company, he could be able to articulate very well about the company goals and the intention to make the company one of the most profitable in the industry something that went a step further to trigger positively the company stock prices. The company also is ahead in product diversification and innovation to boost its strategy. The promise to uphold innovation has enabled the diversification of the product base to meet the demands of different markets. On the list of elements of the company strategy, is the design and development of its operating system and hardware as well as software applications and other technologies that could be used to offer solutions and excellent products to the customers (Cambini & Valletti 2003). The company has also global touch after opening its retail outlets in various parts of the world including North America, Africa, Europe, South America, Middle East and Japan. This is important in reaching the global market. The strategy for Apple has been evolving because it has been changing with the change in the market environment and this can be learnt from the way it is adapting to the new changes more especially in terms of technology from PCs to iPhones. 3. Does it make good strategic sense for Apple to be a competitor in the computer, digital music player, and mobile phone industries? Yes it real makes a lot of strategic sense for Apple to be a competitor in computer, digital music and mobile phone industries. This is because the three product lines contribute immensely to the revenues of the company. Further, some products are good for the brand and they are therefore are used to maintain the company brand (Cambini & Valletti 2003). However, with the current trends, it’s now becoming very necessary to embark more on mobile phone industry and more especially the iPhones as they can both play the role computers and digital music thus making it more relevant in the global market that has highly advanced in terms of technology (Palfrey and Urs 2008). 4. Which of the three products categories (Computers, digital music players, or mobile phones) do you think is most important to Apple’s future growth and profitability? Why? Among the three product categories namely computers, digital music players and mobile phones, the mobile phones product line is very critical in the company’s future growth. This is because the iPhones have products features that can be developed and used as cameras, digital music players and computers. In addition, they are convenient and more portable thus preferred most by the market (Palfrey and Urs 2008). References Cambini, C & Valletti, T 2003, "Investments and Network Competition," CEPR Discussion Papers 3829, C.E.P.R. Discussion Papers. Czaban, L. and Whitley, R 2000, Incremental Organizational Change in a Transforming Society: Managing Turbulence in Hungary in the 1990s, Journal of Management Studies 37, p.371-393. Harris H., Hillwig B., Naik P and Bhargan A 2008, Business environment analysis: The global beer industry, retrieved on 8th February 2013, available online: http://www.scribd.com/doc/18709189/Environmental-Scan-The-Global-Beer- Industry IBIS. 2012a, Global Beer Manufacturing - Global Industry Report, viewed 10th Feb 2012 from http://clients.ibisworld.com.silk.library.umass.edu/globalindustry/default.aspx?indid=390 IBIS. 2012b, Global Wine Manufacturing - Global Industry Report. viewed 10th Feb 2012 from http://clients.ibisworld.com.silk.library.umass.edu/globalindustry/default.aspx?ind id=410&rcid=0. IBIS. 2011, Global Spirits Manufacturing - Global Industry Report. viewed 10th Feb 2012 from http://clients.ibisworld.com.silk.library.umass.edu/globalindustry/default.aspx?ind id=400&rcid=0. Kelm, O 2009, Teaching the cultural aspects of international business. Journal of International Education in Business. 2(1). Palfrey, J, and Urs G 2008, Born Digital: Understanding the First Generation of Digital Natives. New York: Perseus Books Group, Basic Books. Vahagn J 2011. "The Telecommunications Industry and Economic Growth: How the Market Structure Matters," DEGIT Conference Papers c016_027, DEGIT, Dynamics, Economic Growth, and International Trade. Read More