SAB Miller: Strategy Analysis and PEST

SAB moth miller Strategy Analysis and PEST mental hospitalSAB moth miller is a southwest Afri atomic number 50 give rise from raw stuff union and is the secondly gear largest create from raw materialer in the world, with sales and distri just nowion across six antithetic continents. SAB Miller with wide brand portfolio, both international premium beers to topical anesthetic anesthetic brands it has come a long way, weathering turbulent times and political crisis. It is in any case superstar of the largest bottlers for Coca Cola.VISION AND MISSION OF THE GROUPVISIONTo be the most admired society in the global beer laborinvestment funds of choiceEmployer of choicePartner of choiceMISSIONTo own and training local and international brands that are the first choice of the consumerVALUESOur mint are our enduring utilityAccountability is clear and personalWe change state and win in teamsWe understand and respect our customers and consumersOur reputation is indivisible merged STRATEGIES EMPLOYED BY SAB MILLERSAB Miller being one of the oldest (100 plus) brew company it had tremendous experience in the brewing field and the strategies utilise by SAB Miller are categorized as followsPoliticalAcquisitions and mergers entire portfolioBrand valuePOLITICALSAB being oldest brewing company in entropy Africa it was battered by political crisis during the 20th century. It has emerged as a company with building its trading operations in emerging and mature securities industrys. During 1948 collectable to racist system of Apartheid, there was opposition to the company. SAB also came across various(a) other forces during this period they areBusiness restricted to the country notwithstandingRestrictions on doing trading with international companiesInvesting in or trade with southwest African companiesSAB formulated solution in order to obey with Government restrictions they wereIn 1950, SAB moved its HO from London to Johannesburg.Focused on expansio n mostly in southern parts of Africa and South Africadominating the local commercialize and domestic beer turnoutExpanding its product portfolioFirst company to employ the code of non-discriminatory employmentIn 1970 SAB became fully incorporated in South Africa and by the year two hundred0, it dominated the South African foodstuff to such an extent that 49 of every 50 beer consumed were brewed by SAB.IMPLICATIONS due(p) to the political conditions in South Africa SAB had very less room of doing lead internationally, but these restrictions helped them to create a monopoly in South Africa. It owned a 99 percent mart touch here. It also incorporated its train quarters to Johannesburg, which helped it excogitate its merchandise in Africa. Employing non-discriminatory code of employment helped it to amass public support. It expanded its portfolio by buying local breweries and started producing locally brewed Guinness, Amstel, and Carling grim label.ACQUSITIONS AND MERGERSD ue to the restrictions on local companies by the presidential term, SAB had to settle in for the local South African grocery store. Dominating the local market and eliminating competition was the destruction of the company at the time and it was achieved by acquiring other local breweries and distribution facilities and by rationalized production. SAB also obtained the licensing of locally brewed Guinness, Amstel and Carling black label.SAB made study acquisitions immediately after when the imposed restrictions were relaxed due the finalized process for establishment of a multiracial democracy in 1990.SAB compassd Stellenbosch Farmers Winery in 1960.In 1993, SAB acquired Hungarys largest brewery, Dreher that assailable new door for barely developments into central EuropeIn 1994, SAB in joint venture with Tanzanian government it revitalized the brewing industry and also in countries like Zambia, Mozambique and Angola, SAB gave boost to production and distribution.During the 90s SAB established operations in China, Poland, Romania, Slovakia, Russia, and Czeck Republic.Acquiring 100% stakes in the Miller brewing company in 2002 was one of the most significant acquisitions made by SAB and becoming SAB Miller in the process.Licencing of shebeens and launching them in retail mainstream.SAB Miller also bought out its joint venture partner in India.SAB Miller in 2005 merged with South American brewer Grupo Empresarial Bavaria.IMPLICATIONS OF ACUSITIONS AND MERGERSSAB controlled an estimated 99% of the market share in South Africa and had dominating positions in Swaziland, Lesotho, Rhodesia and Botswana.SAB was able to transform their business through joint ventures.Due to fragmentation and small-scale business in Europe and Asia SAB was able to create profitable and fast ontogenesis business.Launched quality products than their competitors for which the consumers had to pay more.SAB promoted their premium brands.Developing countries have growing economies therefore opening doors for piquant markets.SABMiller sends in both technological and distribution teams for revaluation before it enters the marketScare of HIV pandemic cost SAB pricy labor, decrease in productivitySAB business spread provided them with portfolio businessWith fickle market in emerging economies where in SAB incurred legal age of its earnings, it had indirect imprint in confidence of SAB in these countries.SAB listed itself on LSE to give boost to its infrastructure. apportion impairment throw up by 15.5% relative to FTSE 100 in the year end Nov 2000Acquiring Miller create from raw material fraternity made it second largest brewer in the world.SAB could balance wheel out loss in one country with profits in other countries.Expanding production capacity and fosterage the quality of product in India.Dip in share price of SAB Miller after acquiring Miller create from raw material Company.Introduced new package with new sales and distribution system and en hanced the flexibleness of their production facilities.SAB Trained around 6000 newly licensed taverniers in business skills.SAB introduced broader and segmental brandsSAB gained untouchable and profitable market in South America profits went up by 25%.PORTFOLIO EXPANSIONSAB Miller brewing company is the second largest brewing company and has a wide portfolio globally, it has over 200 varieties of alcoholic and non-alcoholic beverages, produced and distributed. The major premium brands are Pilsner Urquell, Peroni Nastro Azzurro, Miller Genuine Draft, and Grolsch.They started their expanding its portfolio by gaining control over Stellenbosch Farmers Winery in 1960.Between 1960s- 70s it obtained license to brew locally Guinness, Amstel and Carling black label.In 1987, SAB acquired Lion Match Company.Re-launch of Miller geniuine drawing with high end positioning of mainstream market.Launch of Peroni Nastro Azzurro.EFFECTDominating the South African MarketLeading match manufacture in South AfricaBetter market positionIncrease in sales moneymaking production and distributionCapture of demographic marketCompetitive advantage on the world stageImprovised marketing, sales and distribution annual report emphasized the importance broader portfolio in the companys corporate success.PEST epitomePEST compend of an organization is an important part of strategical planning, as it looks at the external environment in which the firm operates.PEST analysis helps company to develop strategies. The factors taken into account arePolitical frugalSocial scientificPolitical FactorsUnder Political factors we have is the government rules and regulations on operations of a firm or company.For SABMiller the following factors haltSouth African government regulationsCrisis due to racismInternational relations and trading restrictionsEmployment lawsEconomic FactorsEconomic factors allow exchange rate, taxation, market growth trends, GDP, disposable income, inflation, production volu me, etcIn SABMillers case, the following apply volatility of the exchange rate in developing countriesEconomic growth in developing worldsListing on LSTEAcquisition of Miller Brewing CompanySensible product pricingProduction and distribution costs choice and labor costLabor unrestSocial FactorsSocial factors include the demographic and cultural aspects, health and living standards, population shifts and so on.In case of SABMillerChange in consumption patternAttachment to locally brewed beerConsumers becoming heath consciousClass structureTechnological FactorsTechnological factors include new invention, improvised tools and techniques, communication etc. It can dismantle barriers to entry, can lower down minimum efficient production levels, and work on outsourcing decisions.In SABMillers case are as followsResearch and development humans class Automation in developing countriesProduction and distribution expertnessTechnology improvementsQA1. Identify the corporate logics that SABMi ller have adopted over the course of the case.As discussed above SABMiller has adapted various strategies in order to be a leading brewer, they areDealing with political rules and regulationsAcquisitions and merger on a global scaleBroader portfolioBusiness in developing economies e.g. China, India dislodge and re-launching of productsBuying controlling stakes in newly privatized brewery2. Strategya. develop the strategic position that SAB finds itself in 2007.As described SABMiller has good strategic position apart from fierce competition by Anheuser-Busch.Dominating positions in South African and South American markets with good market share in EuropeSAB has expanded globally especially in profound and Eastern Europe, China apart from Southern part of Africa. It has operations in over of 18 countries with 30 breweries, with capacity 30.5 million hectoliters capacity and 22 sorghum beer with 8.5 million hectoliter capacity thus can create major market in these countries.Though SA BMiller lost the bid to acquire Harbin Brewery to Anheuser-Busch, it had competitive market in China with market growth by 6-8 percent per year.With wide portfolio, SABMiller was able to capture the demographic market.SAB was able to balance out loss in one country with profits in other countries.With growing economies in developing countries, there was increase in disposable income, which gave way for better market share and profits with attractive pricing.Even though SABMiller had a few problems with share price drop due to listing company in LSE and acquisition of Miller Brewing Company, stakeholders must have a firm belief in the SABMiller as it a FMCG company. The chance of losing share value is rare and with globalization of the company, the chances are high profitability and higher dividends to shareholders.Acquisition of the major breweries and winery has helped SAB in dominating as well as having monopoly in countriesSABMiller had a strong and wide portfolio with launch of new products and attractive pricing, creating strong demographic market and flexibility in the system.SABMiller could use its world-class technology and operation expertness to develop market in continents and also SABMiller sends in both technical and distribution teams for inspection before it enters the marketAfrica Has around 99% market share in South Africa and dominates in the rest of Africa.Asia/E.Europe Has breweries is Asia pacific but with fierce competition and growth of market in India. Good market share in Russia, Romania, and Czeck Republic and with acquisition of Hungarys brewery Dreher which paved way for further developments in Europe. However, the future here remains uncertain until any major take over is carried out.Latin America Merger with Grupo Empresarial Bavaria second largest brewer in South America consolidated SABMillers position.4. Acquisition of Miller Brewing Company is the only major deal by SAB and becoming 2nd largest brewer, but has a tough time because of stiff competition by Anheuser-Busch.5. SABMiller has a strong and diversified business with broad portfolio that will lastly pay off as it creates a demographic market and flexibility in operations.6. Joint venture with Grupo Empresarial Bavaria 2nd largest brewer in South America opened doors in Latin America, with lower investment and creating opportunities for itself3. On the basis of your analysis, recommend the strategy that SAB should follow.In my opinion SABMiller must develop their markets is Asia i.e. in China, India, and Asia Pacific. Though the market remains volatile, the chances of profit making are high. SABMiller must look forward to acquire Harbin brewery in China, as the market growth rate is 6-8 percent per year. SABMiller must try acquiring majority stakes in Bavaria brewery, as there is growth in market.SABMiller can dominate the local market and develop excellent operations by acquiring breweries with low performance, but with dominating market share with its expertise in production, distribution operations.