Boston Beer - Essay Example

Boston Beer Jim Koch an American Entrepreneur who despite his financial difficulties had strong determinationto be his own boss started Boston Brewery Company. Boston beers are made from traditional concoctions, which make the beer tantalizing. Jim wanted to follow the precedence of his great-great grandfather who had a brewer in St Louis. Despite working for Boston consulting group for six years, Jim had the dream of being a giant beer producer in the world. He started with as little as $100,000 helped by his friends and relatives to raise t$ 140,000.To reduce on production costs, he contracted Pittsburg Brewing Company to help in manufacturing the beer. For a small entrepreneur, this approach aided in cost reduction and profit maximization so that he will be able to compete with the big boys in the market such as Anheuser. Over time, Samuel Adams beer gained market recognition and was able to expand to international markets. Conversely, Samuel Adams beers are flavored with natural ingredients, which made the beer tasty accruing many awards for example Great American Beer Festival. Boston Beer started at a slow rate but was able to change with time due to new product development and specification. At first, Jim produced beers depending on the stock turnover in the market to avoid over production. Normally, products take a long time to get market acceptance. American beer market was already flooded with both small and large- scale brewers who charge reasonably low prices. Boston entered the market with quality brewed beer but expensive. To counter his competitors, Jim engaged in massive advertisements, which criticized imported beer and encouraged local consumption. Personnel employment rather changed drastically. During commencement, Jim had hired his secretary at Boston Consulting Group to help in sales promotion. He commenced with less than a dozen in 1989 but by 1994, he had amassed more than seventy nationwide. Concisely, Boston beer brewery was able to accrue profits that made it sell its shares to customers at the Initial Public Offerings. Shares traded within a short period compared to other leading companies. Boston beer Company adopted creative attempts to conquer the market. Firstly, Boston assessed the market and found that small- scale entrepreneurs produced tasty beer but squandered their chances of getting a lot of profit. Due to this, he adopted his grandfather’s brewing methods that produced balanced and complex beer, which won various awards. His beer encountered Luke warm reception in the first week but he went from bar to bar and convinced bar tenders to sell his produce. At the year-end, he had sold more than five hundred barrels of beer in all the fifty states of America and more so, expanding to West Germany. Jim went to media houses to advertise his beer while undermining foreign beers, which flooded the market. Innovation is a way of improving on an existing item so that it can match and compete with commodities in the market. Boston beer started from a traditional industry, which produced one type of beer using recipes from natural herbs. By 1992, Boston beer had added new brands of beer such as Stout, white beer and Cranberry Lambic. This product improvement restored customer trust on the company products. Sales persons were highly trained so that they can offer personalized and expert attention to customers compared to competitors who deal with many products. New product development Jim named his beer after revolutionary war patriot called Sam who was a brewer. Every brewer needs his product to acquire market recognition within the shortest time possible therefore, naming the product after Sam made consumers compare the product with his superiority during war. Name creates tranquil commencement of development since a bad name portrays unpleasant picture of product. Moreover, Boston beer was not selling in the bars and restaurants. This prompted Jim to go from bar to bar and it at times took him fifteen minutes before a customer could accept his brand. Boston beer entered into the market as an entrepreneur therefore, he could not compete with big boys who have established customer base in the market. They advertised their produce according to the social class of consumers. To counter this and develop his new product, Jim started by attacking foreign beer, which bore stiff competition. He visited conferences and media stations to convince customers that his beer was expensive but of high quality. Market for the beer expanded slowly from Boston, Washington DC, New York, Chicago, and California. Development led to high stock turnover of the company. Jim started with $ 240,000 and during 1995 initial Public stock, he had accrued 5.3 million shares. Firstly, shares traded at fifteen percent but later at twenty percent per share .After two days, New York stock exchange sold the shares at thirty percent. The company had grown in terms of resources and customer base. Capital was high making it compete with the largest brewer in the world. On the other hand, shares increases product recognition and acceptance in the market therefore, made Boston beer acquire market. Production of beer increased in a slow rate since the company commenced .Between 1990 to 1994, sells doubled and the company experienced fifty percent growth. The company produced seven hundred thousand barrels of beer. During the same year, Boston beer had introduced massive twelve different beers in the market including six seasonal, with three hundred wholesalers distributing them. Advancement in production techniques led to the production of Triple Bock, which had seventeen percent beer content that no other beer crafted in domestic beer industry matched it. Influence of new technology and product differentiation Louis Koch brewed beer locally in his old brewery thus producing full-bodied beer, which were lower in quality compared to Budweiser and Miller. Jim hired modern technology from Pittsburg brewing company, which enabled him produce large quantity of beer while maintaining the same quality. Small -scale brewers had difficulty in increasing production while keeping the quality of the product. Technology in this regard was highly beneficial in advertising of Boston beer. Jim used media that most citizens heard and saw making the product famous within a short time frame for instance, he used $ 100,000 in campaigns in the local market. Boston beer had different flavors with differentiated tastes, which made it unique compared to competitors. Triple Bock was a fine brandy beer without carbon packaged in a cobalt bottle with a cork. Cranberry Lambic beer had fruit flavor which attracted both the young and the old since it is suitable for all the generations except the under age. Boston had prestigious market differentiation because its marketers dealt with one line of product compared to rival companies whose marketers engaged with many commodities at the same time. This however made Boston beer prominent due to direct customer contact, which restores trust for the product. New and Joint ventures Boston beer entered the market as a single venture but later merged with Pittsburg Company, which aided in the manufacturing of their beer. Nonetheless, Jim became a sole entrepreneur and depended on funds from friends and relatives to expand his business. He made decisions by himself, which led to quick decision- making and efficiency in production and distribution of products. Joint ventures are at times risky for company operations since it involves joint decision- making, profit sharing, and capital contributions. It becomes difficult for management to operate freely because all the shareholders should mutually agree actions. Although Boston beer sold its shares to the public, Jim Koch remained the General Shareholder, which in return led to smooth operations of the company. Joint ventures can lead to dissolving of business operations especially when the company cannot sustain itself without support from outsiders. Performance Boston company performed significantly well since its introduction into the market. Guided by Jim Koch, the company was able to amass many customers due to quality of its products. Product differentiation and healthy competition with rival firms enabled it receive many awards. Good performance is the goal of each company therefore, every manager tussles to ensure success of companies they command. Economic and social benefits Boston brewery Company played a key role in the economic development of America. It increased investment in the economy, which bring foreign exchange through selling of beer and taxation. Employment opportunities increased for instance, Boston beer had employed more than three hundred wholesalers in the country, which raises standard of living and social order. Individual development depends on the ability to have good principles. Dreams and desires come true when one is willing to persevere. Jim Koch had little money but risked to be his own manager despite having a well paying job in Boston Consulting group. It took him some time to catch up with the big boys who dominated the industry. Prosperity of an industry depends on the management strategies, policies, and decisions made by shareholders. References Craig, T. (1996). the japanese beer war:Initiating and responding to hypercompetition in New product development. Organization Science, 7, 302-321. Michael B. (2000). Breaking the code of change. Havard: Havard University Press. Plunkett, J (2007). Plunketts Almanac of Middle Market Companies 2007. Texas: Plunkett Research Limited. Read More