Carlsberg International Strategy And Prospective Partners Commerce Essay

Carlsberg planetary Strategy And Prospective Partners Commerce EssayBeer is one of the worlds practically or less consumed alcoholic drinks. Nelson (2005) stated that it is the most popular drink after water and tea. There be lots of brewing companies though emphasis give be made on Carlsberg in this instance.The Carlsberg concourse is the worlds fourth largest brewery group. The assemblage is distinguished by a senior high degree of variety of smears, markets and cultures. Its activities be centred on markets where the assemblage has the strength and the right yields to secure a leading(a) position. Due to the variation of the markets, the contri stillion to emergence, earnings and instruction within the Group differs, both at present and in the longer-term projections (Carlsberg, 2012).In countries where Carlsberg has no breweries, the Group sells its merchandises through exports and licensing agreements. It aims to establish and develop strong market positions fo r their international reward brands through dynamic partnerships with licensing, export and duty-free partners around the world. The Carlsberg beer portfolio includes more than ergocalciferol brands. They differ signifi throw outtly in volume, price, target audience and geographic penetration. (Carlsberg, 2012).Carlsberg International Strategy and Prospective PartnersThe company operates using an international system which implies that it takes the beer front produced for its domestic market and sells them internationally with only low local customization. This highlights that the beer it sells undertakes a worldwide need and at such(prenominal) do non nervus substantial competitors which implies that it is not confronted with pressures to cut down its apostrophize structure. It guides to centralize the beer development functions such as look into and development in its home res publica and establish manufacturing and marketing functions in each country it operates. Carl sberg chose an international strategy for the following reasonsTo make up sales and profit growth by introduction new markets and to a fault selling in existing markets (Hill, 2009). This is achieved beca drill it exports its products to destinations like southeastward America where it has no breweries and in both(prenominal) sides through licensing agreements like it did with Charrington and Tetley in Britain by giving them right to brew and bottle Carlsberg beer and in eliminate get a royalty fee. It also formed articulation ventures with economical Newcastle and a brewery in Honk Kong which it now fully owns. The Group also formed mergers with Danish rival, Ruborg and Orkla of Norway which it later owned fully. From the case study, it is very open that they go into these markets at a decompress but cautious footprint by using the services of the partners and this is to avoid information cost and pretend and some opposite uncertainties such as trade barriers assoc iated with foreign involvement. It also gets to contain about the foreign market in cases where it formed joint ventures and mergers and later take full control of the company.An several(predicate) reason is to encourage Carlsbergs home market sh be because operate in foreign countries takes extraneous line of products from its competitors by fliping customers other choices and it lets the competitors know that they would face the same(p) response if they attack the home market (Rugman Collinson, 2009).Furthermore, it is a tactics that Carlsberg could use to diversify themselves a mountst the risk and uncertainties of the domestic business cycle (Rugman Collinson, 2009). This implies that by operating in other countries it can often fasten the negative consequences of economic swing such as recession in its home country. despite Carlsberg seemingly predatory instinct for 100% control and ownership, prospective partners mesh with Carlsberg because of the following reasonsT hey volition pull in from its intangible properties (Hill, 2009), like in the case of licensing where the licensee has the right to Carlsbergs mind properties such as patents, processes and trademarks. This also applies to joint ventures as the partner gets to know about its processes as well.They would be able to offer their clients a wider range of products and services (Mcpheat, 2010). For warning in licensing where Carlsberg gives them rights to its intellectual properties, the partners tend to take advantage of more market opportunities (newly identified demand) as they leave behind not only sell their own products but also that of Carlsberg, which agency that their customers have variety of products to choose from.They magnate also have an fortune to get endorsed into Carlsbergs advertisements (Mcpheat, 2010). That is Carlsberg might support their products in its advertisement in cases where it forms a merger or joint venture with partners.They share fixed cost and fina ncial risks with Carlsberg which implies that they can succeed in dealing with failure to meet a certain standard or lack of resources (such as land, fight or capital). An example of an instance where this occurs is in joint ventures.Cooperating with Carlsberg creates room for pooling ideas and generates more creative solutions to problems (National Association of Conservation Districts, 1994). This is applicable when partners form joint ventures and mergers with Carlsberg. Thus, customers will be happier as their problems would be solved at a blistering thereby improving customer service experience (Mcpheat, 2010).Potential acquisitions targets and strategic responses to acquisition bidsAccording to the case study, Carlsberg has a global share by volume of 7.5% qualification it the fourth largest brewing corporation after AB Inbev and its market capitalization was over 80 billion Danish Kroner (Dkk). Its sales in 2009 were 59.4 billion (Dkk) on which it achieved 15.8% operating profit margin. This makes it a possible future acquisition target for other brewing groups such as AB Inbev for the following reasonsThe larger brewing group would want to augment their companys portion of sales within the market in order to increase determine power (Campbell et al., 2003). If a company doesnt have much pricing power then an increase in their prices would lessen the demand for their products (Investopedia US, 2012).Carlsberg has association and marketing expertise about the local markets in which it owns breweries and so other brewing groups would want to acquire it as entry mode to these markets. withal it would be a quicker way for them to make their presence cognise in these markets.Carlsberg is a valuable brand and as such is a target for other bigger groups as they would want gain its intellectual property such as patents, trademarks, production processes, databases that are difficult to re-create, and research development laboratories with a history of roaring product development (Bragg, 2012).Its be the fourth largest brewing corporation in the world makes it is a major competitor in the brewing industry and in order to reduce competition a brewing group such as AB Inbev may want to purchase it.Furthermore, it is difficult to get costumers to change brands because customers are fiercely loyal to local brands and the only way of tapping into these markets is by purchasing the brewery (Rugman Collinson, 2009). For example in countries where Carlsberg markets its products that the larger groups havent entered yet, they could tap into these markets by purchasing the brewery since the customers are familiar to Carlsbergs products.The larger brewing group will want to gain preferential access to Carlsbergs sales and distribution channels. By acquiring it, they can use it to distribute its own products. Some of examples of sales channels they would benefit from are telemarketing or a well-trained-in house sales module (Bragg, 2012 ).However, there are some barriers that a brewing group such as AB Inbev might face if they sought to acquire Carlsberg this could beClash of culture between both groups in terms of high counsel turnover which may possibly be as a result of Carlsbergs employees not liking the acquiring groups way of doing things and may solve to leave the company. This can materially harm the performance of the brewery because precaution giving and expertise will be lost and as such Carlsberg might dissent an attempt to be bought (Hill, 2009).Integrating with other companies is difficult as a result of differences in fudgement philosophy and company culture. This tends to slow down the integration of operations. National culture differences could even worsen these problems (Hill, 2009). For example language barriers between Carlsberg (owned by a Danish speaking company) and AB Inbev (a Dutch speaking company) may make Carlsberg decide to reject a bid.Also, Carlsberg is a big company as well an d might reject an attempt to be bought because it doesnt want to lose its identity. They could go as further as responding to any acquisition bids by purchasing other breweries as a form of defence. Due to its having good market shares purchasing other breweries will make its shares bigger that it cannot be bought within the brewery industry without anti-trust (this refers to particular(prenominal) laws protecting trade and commerce from unfair business practices (Merriam-Webster, 2012)) thereby making it difficult for companies like AB Inbev to acquire it (Bragg, 2012).Global brand portfolio management and consolidationA global strategy that sustains 500 brands cannot possibly be right because this strategy focuses on increasing positivity and profit growth by reaping the costs reductions that come from economies of scale and learning effects in other to have a low-cost strategy on a global scale. This implies that this type of strategy suits where there are strong pressures for cost reductions and demand for local responsiveness are low. Carlsberg has 500 brands and they customize their product a bit to meet local conditions and this customization involves shorter production runs and the duplication of functions, which tends to shape up costs. They wont reap the benefits of economies of scale as there wont be reduction in the unit cost achieved by producing dissimilar product in large quantities. Also, they wont be able to save costs that come from learning by doing in terms of producing the same brand over and over again i.e. their labour productivity may not increase over time as it is not easy for individuals to learn most efficient of performing tasks when a large volume of different products is involved. Hence, production cost will increase due to a ebb in labour productivity and management efficiency, which might decrease the firms profitability (Hill, 2009).Carlsberg should rationalise its facilities and focus on far fewer brands because it woul d be much easier to control and manage fewer brands and also implementing a global strategy would be easier compared to when it has 500 brands. By doing this they would be able to benefit from a bit from economies of scale and learning effects. Furthermore, the cost of advertising so many brands is relatively expensive. The customization of the brands would even make it more expensive if they have different advertisements for different brands in different countries. So they might want to shoot focusing on fewer brands because the fewer the brands the lesser the price of advertising. individual Reflection and Self-AnalysisExpectations I had always wanted to learn more about the world of business and management and as such my expectations for this module prior to goning was to gain knowledge about business and management in an international context as the key to a successful business is how well the business is managed. This expectation has been met because I have gained the prelud e knowledge on how firms or organisations carry out their operations internationally for example the strategies on how firms enter a foreign market. It has also accustomed me an introductory knowledge on how to identify a good business opportunity, have good plan of action to run and also manage a firm successfully.Challenges I had some challenges during the module and this was because I canvass Electrical/Electronic Engineering in my first degree and knew roughly nothing about business. Having to do case studies wasnt something I had done in my previous degree and so I struggled with how to critically analyse and dissolve the questions that usually follow suit. I wouldnt say I have solely overcome this challenge as there are still some cases where Im still not able to comprehend a case but I know reading ahead of the lectures and paying attention during lectures has helped me to a certain extent.Preparation for Masters I feel prepared to begin a Masters level programme and thi s module helped me prepare for it. This is because, I have learnt the basics of international business and management and also how to do extensive researches and structure a report, and my referencing skills have improved as well.