Locheim Breweries

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Introduction

Locheim Breweries is a new brewery that will enter the South African markets. In this task the vision, mission and long term objectives of Locheim Breweries will be produced.

Vision

Locheim Breweries' vision is to supply consumers with a high quality, broad variety of beer and ciders.

Mission

Locheim Breweries' mission is to be one of the big breweries in South Africa while still maintaining the experience and service delivery to customers that is supplied by micro breweries. In the process Locheim Breweries will become an innovator within the brewery industry. This will be achieved with new age techniques and technologies, while still staying true to old styles, tastes and purity (the Reinheitsgabot laws of 1516). It will be the pride of Locheim Breweries to be very responsible for its corporate citizenship. Employees will not be forgotten, they will be made aware of their value to Locheim Breweries. Through the level of quality with regards to the products Locheim Breweries will become a big brand. This will ensure profitability and opportunities for growth.

Long Term Objectives

  • Attain a reasonable market share, that is between 20- 30%, by year three
  • To reach production capacity as well as the sales capacity by year six
  • Dependant on the completion of objective two, Locheim Breweries must relocate to a bigger and better premises by year eight
  • Establish an adequate community skills development programme by year three

Task 2

Report

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The internal environment is the business itself. In this case it refers to the inner workings of Locheim Breweries. This internal audit will survey the strengths as well as the weaknesses of the brewery. These combined with the threat and opportunities make it possible to formulate strategies, goals and objectives. Objectives and strategies are there to make the strengths that a business has, work for them and minimise, remove or transform weaknesses into strengths. Below is the internal audit for Locheim Breweries.

Strengths

  • Locheim Breweries premises is located on a natural spring meaning that fresh water is available right there
  • We have secured five brew men with over thirty years experience each who are willing to train other younger workers
  • A supplier of top quality malted barley and hops at an acceptable, feasible price has been located
  • There has been a very positive response to the launch of the first brands of beer and ciders
  • The guided tours around the brewery are becoming increasingly popular
  • All indicators are showing Locheim Breweries ending the financial year above the predicted return
  • We have began exporting to Namibia and Mozambique

Weaknesses

  • There is an ongoing law suit between Locheim Breweries and a major local brewery for their mischievous business activities.
  • A labour strike resulted in vandalism to the offices, which are now under repair
  • A new sales manager had to be hired after the last one being arrested or assault.
  • The marketing department is understaffed for the amount of work

Task 3

David (2009:104) states that the key external forces of the external environment can be divided into five groups:

• Economic forces

The impact caused by the economic factors in the external environment is direct on the appeal of whichever strategies the company may look to implement. The economic forces are factors include the interest rates, the inflation and the cost of living.

• Social, cultural, demographic and environmental forces

They can often have a huge impact on products and services produced and thought of by the business. They shape the consumer, their buying patterns, and their choice of products and services thus forcing the companies to keep up to date with the new trends in order to be able to satisfy the customers.

• Political, governmental and legal forces

These look at the government's legislation and regulations on companies. Changes in the laws and regulation can affect the business greatly for example the rise in tax rates affect them as well as the activities they perform. In order to avoid legal litigation the business needs to make sure they abide by the laws.

• Technological forces

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This enables the company to keep up to date with the ever changing technology. The internet, for example, is growing rapidly and is changing the nature of opportunities and threats in the sense that modifications are being made to product life cycles and is increasing the rate and range of distribution. Another example is the cellular phone which means a person can make important calls anywhere.

• Competitive forces

This can be divided into three sections which are awareness, competitive intelligence and cooperation amongst competitors. Awareness deals with the situation of the business acknowledging the competitive forces it has to contend with. This is done by identifying who its competitors are, what are their strengths and weaknesses and how strong they are in comparison. Competitive intelligence deals with the amount of information the business knows about its competitors and how it uses this information to formulate strategies. Cooperation amongst competitors deals with the joining of forces between competitors as a more effective strategy. This is however illegal for them and may result in litigation and serious fines to the businesses involved.

The Competitive Profile Matrix (CPM)

Below are three competitors to Locheim Breweries who due to legal technicalities cannot be specified

Task 4

4.1 Strategy Development

The strategies chosen for Locheim Breweries are:

  • Market penetration
  • Market development

According to Grobler (2009; 85) market penetration strategy seeks to increase market share for current products through tougher marketing efforts. Market development involves introducing present products into new geographic areas.

  • For the market penetration strategy Locheim Breweries the brewery will increase the staff in the marketing department and increase the Locheim Breweries through social aid and increased advertising. This will increase over the period of two years. Ensuring the long term objective of attaining a reasonable market share, that is between 20- 30%, by year three.
  • For the market development the strategy is already in motion. The brewery is exporting products to Namibia and Mozambique. With these two countries plus South Africa Locheim Breweries products will be in the three top tourist areas in southern Africa. This will ensure international tourists try it out and enjoy so that when there is enough room for total global expansion there will already be an existing market for the products.

Task 5

5.1 Recommendations

The first point is that within Locheim Breweries it is the policy to involve as many members of the company as possible in strategy formulation. This is to ensure that such conflicts are at a minimum. These conflicts are; however, inevitable so to sort them out there is a specific procedure. This procedure can be time consuming but it is better to invest the time while the problem is relatively small and manageable. Te procedure is firstly the employees are made aware of the grievance system in which they can report any problem hey may experience. It is the policy of Locheim Breweries to take every grievance seriously but abuse of this system will result in disciplinary action. Once a grievance has been lodged a meeting is called with all the parties involved. Then each party will have their chance to state there side and negotiations will take place to see how everyone can leave satisfied. Once a compromise or solution has been reached, if a change has to be made, everyone who is influenced within the company will be called to a meeting where the changes will be communicated. Everything from the grievance form to the very last minutes of the meeting will be recorded, documented and stored for future reference.

6. Bibliography

  • David F. (2009) Strategic Management concepts and cases Twelfth Edition, Pearson Education: United States of America Retrieved: 23 August 2009
  • Grobler W. (2009) Business Strategy Learner Guide Retrieved: 28 September 2009