Functional, Business and Global Strategies Essay

a. The module focuses on the company’s/division’s business level strategies and global strategies. You will need to answer the following questions. Anheuser-Busch Inbev is one of the largest breweries in the world. â€Å"Currently, Anheuser-Busch InBev has a product list of more than 200 beers, including global best-sellers Budweiser, Stella Artois, Beck’s, multi-country brands like Leffe and Hoegaarden, and strong â€Å"local jewels† such as Bud Light, Skol, Brahma, Quilmes, Michelob, Harbin, Sedrin, Cass, Klinskoye, Sibirskaya Korona, Chernigivske, and Jupiler, among others that have helped to make the company so successful. In addition, to their own brands, AB InBev owns a 50 percent share in Grupo Modelo, which is Mexico’s leading brewers that own the global Corona brand. AB InBev also owns a 27 percent share in the China brewer Tsingtao. (Workman, 2009)† Since Anheuser-Busch InBev has a vast variety of markets throughout the world we could see different stages in the life cycle through these different markets. For example Western Europe has a Consumer resistant (declining stage of the life cycle). USA, UK France, Switzerland and Latin America have a mature market. Eastern and Central Europe have a market that consolidation considered life cycle and Africa, China, India and Indonesia have a fragmented or introductory life cycle. To be able to do the analysis we will be considering the beer industry life cycle stage as a whole, this stage according to the analyst, the life cycle stage of the beer industry and Anheuser-Busch Inbev has already entered it’s maturity stage. â€Å"In this stage product features may be enhanced in order to differentiate them from competitors, pricing is normally lower, distribution is more intensive, and promotion emphasizes brand image and product differences. (workman, 2009)† Ghebrial,2009) 1. Based on these product, market, or distinctive competency choices, what generic business-level strategy is your company pursuing? AB InBev has a chosen a differentiated strategy offering unique or distinctive products to many kinds of consumers, where their main focus is to gain market share from highly concentrated and competitive US markets and also to focus on international increasing potential markets expanding its global market. Because brands are the foundation of AB InBev, they place major value on their relationship with consumers. These strategic involvements can be traced back to the original establishments of both Anheuser-Busch and Inbev, before they merged. They established brand loyalty with their consumers and due to this AB InBev has chosen to focus their current and future investments on specific brands that have proven to be profitable. These specific brands have been identified as Stella Artois, Beck’s and Budweiser. â€Å"To date, the brands chosen have outperformed other InBev products and announced in the Q3 Press Release on November 6th, InBev had gained or maintained market share in eight of their ten markets† (AB InBev, 2011). As for the differentiation strategy AB InBev we should expect products to be renovated and innovation to be a high predominance in the company (e.g. updating packaging and brand image). As a whole AB Inbev plans to keep the original strategies that Anheuser Busch and Inbev had proven to be effective (differentiation strategy). (Ghebrial,2009) 2. Discuss how your company has attempted to develop a competitive strategy to protect its business-level strategy. For example, if your company is operating in an embryonic industry, discuss the ways it has attempted to increase its competitive advantage over time. If it operates in a mature industry, discuss how it has tried to manage the entry and rivalry. AB InBev has protected its own business-level strategy in many different ways. As a company[s main mission to be the greatest beer in the world, they have achieved competitive strategies to be able to protect their business-level strategies; Sprinkler Expansion strategy, Aggressive Marketing Strategy and Consumer Responsiveness Approach. Sprinkler Expansion Strategy As the world’s largest brewer, AB Inbev has the ability to compete in new and foreign markets as a strong threat. Due to their enormous capital and expansion-based strategy, they can enter any market as a challenger and shutdown competition to become the leading brewer in this market. As an aggregated note we can also see this in domestic or already dominated markets because due to economics of scale they can achieve differentiated products at a low cost. Aggressive Marketing Strategy AB InBev has been characterized in the US and in international markets as one of the most aggressive marketing in the world, these is due to their differentiation strategy and the sprinkler expansion strategy. AB InBev utilizes their extensive capital to capture as much as the market as they can and be able to be number one, in all markets they can. Another added value to this strategy is making all AB Inbev consumers brand loyal, this meaning that they can retain their customers. Consumer Responsiveness Approach Consumer responsiveness approach or Customer-focused approach is the strategy that maintains this brand loyalty through the brand. I believe that AB InBev is one of the best breweries that respond to consumers in every way. As we can see in the chart below AB InBev focuses on costumer responsiveness to assure their business-level strategy. Ghebrial,2009) b. Your company is already doing business in other countries. AB InBev is the largest brewery in the world, and has as a mission to be the world’s greatest beer company in the world. Having more than 200 brands and have expanded to more than 30 countries explains in simple statistics the growth pattern of this company. As they explicitly site in their Annual financial statement â€Å"At Anheuser-Busch InBev, we are focused on building a world-class consumer product company for the 21st century- and delivering on our exceptional potential for value creation through consistent top-line growth and expanding profitability in the world.† AB InBev has not only shown this through the last years but has a consistent growth pattern through the years, as we can see in the two pictures below, InBev the father company of AB InBev has grown through the years creating this brand loyalty and acquiring new companies to strive and become the greatest beer company in the world. (Ghebrial,2009) 1. What strategy is your company pursuing to compete globally? In your opinion, is this the correct strategy, given cost pressures and pressures for local responsiveness? The company has established a well rounded plan to be able to expand globally: Dream-people Culture platform, Right Brands, Right markets, Industry Leading Reach and Resources and Financial discipline. Dream-People-Culture AB InBev are able to drive the execution of their strategies because their unique platform. The people represent the major sustainable competitive advantage. The culture is based on accountability, integrity, continual improvement and mindset of doing the right thing for the long run. Right Brands The Brands constitute a big advantage, â€Å"†¦comprising one of the strongest brand portfolios of any consumer products company, including 14 brands with estimated retail sales value of more than 1 billion USD.† (AB InBev, 2011) The chosen brands entitle a great advantage in being able to expand into markets throughout the world. Right Markets The company positions itself in the right markets. A good share in most of the world’s premier markets for beer, â€Å"†¦including the industry’s most profitable beer market, as well as Brazil and China. (AB InBev, 2011)† The balance of their expansion and the fast growing emerging markets promotes profitability in the long-term. Industry-Leading Reach and Resources AB InBev has the ability to compete effectively on a global scale. Due to the Industry-Leading Reach and Resources, â€Å"including their presence in 23 countries and uniform processes that ensure consistent performance globally. (AB InBev, 2011)† Financial Discipline Another major factor in this global strategic plan, is the competency of cost efficiency, â€Å"which enables us to convert â€Å"non-working money† in areas as administrative overhead into â€Å"working money† to be devoted to investments in growth. (AB InBev, 2011)† 2. What major foreign market does your company serve, and what mode has it used to enter this market? Why is your company active in these markets and not others? What are the advantages and disadvantages of using this mode of entry? Might another mode of entry be preferable? Holding business in 23 different countries, AB-InBev has developed number one or number two positions in diverse markets throughout the world, including North America, Latin America South, Latin America North, Western Europe and Eastern, Central Europe and Asia. As a major expanding company as we say in the previous graph, we state that one of the major entry modes of AB InBev has been steady in acquiring or merging with powerful companies in the market of interest to be able to compete in a number one or number two position. The company uses this mode of entry to be able to compete in the present market, use their capital and become the leading company in the market. Having the power and capital, they prefer to enter the market with global brands know to everyone like Stella Arlois and Budweiser, as well as to adopt the current â€Å"favorite† beer (e.g. Corona, Quilmes) to compete as a global and local company. As we can see AB InBev is in all the major markets of the world being successful in most of them, as their financial statement says, they search markets where they can provide extreme customer responsiveness and achieve profitability and growth. In the below graph we can see what companies AB InBev has acquired or merged with to for the most important markets in the six regions described before. AB InBev has chosen this method of entry, but there is one more specific entry mode that can be argued to be a better fit for the company and this is to form a wholly owned business in the new market. This could bring the benefit of owning all of the business and creating a culture of their own and being as successful as they have been in their home markets. In my consideration this would be a mistake and should not be done any other way than their original and current plan of expansion. By investing too much capital and taking the whole risk on their own they have a much better chance to take over other companies keep selling their top brands as discussed before and enter the market with their world famous beer, that have exceeded revenue expectations in the past.