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Global expansion strategy widens the geographic scope to improve brand awareness based on SABMiller's existing strategic, thus it is moving to the new heights of global participation. It establishes a long-term interest relationship through global acquisition and integration of marketing to get maximum influence of spread at the lowest cost.
Acquisition strategy can eliminate competitors come from the same industry and expand market share as well as increase SABMiller's monopoly strength or form the scale effect. SABMiller can obtain control power through the purchase of the target company's share capital, or the purchase of assets to transfer the liabilities to the target company, thereby reducing the risk.
Table1: Vision, mission and strategic objective
SABMiller hammer at building a world-class beer factory and striving for the leading company with most innovation power in the industry and also to product consumer favorite environmental and healthful beer. SABMiller produces high-quality beer based on low investment and advanced technology, then sell to the masses at reasonable prices to win support from the masses, thereby enhancing brand reputation.
SABMiller adopts "First class" as the long-term goal and focus on quality to play the biggest advantage of brand. Technology drives SABMiller to implement the input-output model that can get best benefits. It focuses on enhancing the consciousness of quality in the whole company. SABMiller carry out a variety of effective quality education such as blackboard, shop window and staff training courses. Quality management is the most important of all, thus SABMiller will formulate a set of thorough quality standards system aim at each operational step to implement all-around monitoring. SABMiller will establish the feedback mechanisms of quality. Only strict quality management can gain reputation for the brand.
Of course, technological development also bring high efficiency for SABMiller, research and development of new products add vitality constantly for it, which makes it become the market leadership and achieve a virtuous cycle in the trends.
SABMiller makes internal management market-oriented through linking operating costs and wages, which can effectively reduce costs. In order to conform to the requirements of the market and improve enthusiasm of employee, SABMiller does an in-depth research before decision-making and to grasp the ideological pulse of workers, then encourage and inspire them to make suggestions and recommendations to provide comprehensive and accurate basis for decision-making; employee provide brainstorm in the decision-making process; what is more, SABMiller use propaganda to unified understanding after decision-making implemented, which can increase transparency, and on the other hand, lead the cadres to check the workshop and to visit departments, tracking the full implementation of the decision-making process, therefore they can timely dredging, remote the impediment and troubleshooting.
Also, SABMiller improve the quality of employees from many-sided. It organizes political school for employee and organize employee to visit the advanced enterprises to broaden their views. In addition, SABMiller launches a variety of activities such as knowledge contests and speech contests.
SABMiller can use the profits of core products to develop diversified regions such as hotels and casinos so as to realize coexistence of diversity and specificity. Furthermore, SABMiller take advantage of the existing beer brand to develop new markets to enhance the brand penetration. Moreover, it develops new products in the existing market to meet the special needs of consumers.
Table2:Porter's generic strategies Table3:Ansoff Matrix
Table4: BCG Matrix
3.3(1) Product development:
SABMiller produces a large-scale of new beer that caters to local tastes at a relatively reasonable parity prices to provide consumers in India according to conditions there.
SABMiller has sufficient production facilities of scale, automated assembly and global sales volume that conducive to sharing development cost. Very low management costs, cheap labour and high-efficiency training program that due to frequent staff mobility made SABMiller in pursuit of a low-cost under the premise of quality assurance, thus it wins the initiative through cost leadership strategy.
SABMiller utilize the condition that consumers' awareness and recognition of existing brand to use local raw materials for new products that fit for local tastes to cater to the customers' mentality of seeking changes, therefore it can quickly capture the market and get profit quickly at a lower risk. This is not only to meet the needs of more consumers but also adapt to the needs of different price levels.
Usage of large-scale production facilities and even personnel training in India all need to put a lot of investment. And the brand reputation ensured the market growth rate of products, so that consumers are willing to try new products. Although new products have some potential for the company's future development, it not always wins profits for SABMiller in the short term.
3.3(2) Market development:
SABMiller built factory in India and then provide existing beer brand to local consumers.
The existing beer brand that SABMiller provide to local customers and local cheap labour as well as large-scale production facilities that be establish in India not only reduce the cost of research and development, but also reduce the overall operating costs. SABMiller's original brand image also saves the expenses of advertising. Moreover, maintaining good relationship with local raw material suppliers provide long-term guarantee to do large-scale production at a lower costs.
SABMiller aware of the needs of local consumers and then disinter potential customers in India, which gives it an opportunity to enter new market. SABMiller has adequate financial and human resources to develop new markets due to local cheap labour and low-cost inputs. SABMiller also can increase the sales channels through local brokers to expand market share.
SABMiller develop Indian market with existing beer brands, however India is a new market and the existing beer brands have not fully extend to the whole country therefore the market share of products is impossible to rapid growth in the short term. Nevertheless, the needs of new market have enough potential to make sales of SABMiller to growth rapidly.
3.3 (3) Diversification:
SABMiller invests in diversified regions of several emerging markets that have potential, such as hotels, casinos and so on.
Hotels and casinos are all be founded for special customers or for specific regions and markets, thus SABMiller can serve for particular target with high efficiency and better effect by using the strength and resources of entire industry. This way make SABMiller has more competitive advantages than other businesses in the same industry within a certain range to obtain a steady and substantial income.
Hotels and casinos are not the key areas but the diversified regions that SABMiller invest and develop with the profit and human resources. SABMiller can capture and open up more markets as well as can avoid risk of single operates.
Hotels and Casinos are all investment districts with a very high growth rate on current market of, which suggesting that these regions have good development prospects and have market opportunities. However, the core products are beer instead of hotels and casinos that are unrelated to key areas, so the market share in these areas is very low. SABMiller does not have enough funds to invest in these areas so that the profit margins are relatively low.
3.4 The third strategy is to develop the diversified regions, scattered resources of diversification increase the risk of operation of core products. SABMiller is easy to be overwhelmed because it cannot against the strongest competitors under facing the impact of the financial crisis. Moreover, entering the regions that are irrelevant to the core products is a long-term and dynamic process. Changing competitive situation increase the risk.
The first strategic and the second strategic are capture advantage of low cost. The first strategic introduces new products through awareness of original brands however the customer brand loyalty will be reduced because it is a new product. The situation also can lead to the increase of cost and even make customers difficult to distinguish products therefore it must exists a certain of risk. The second strategy just put original products into new markets, thereby it has no risk of development of new products and the investment is relatively much smaller. Of course, it is easy to exit the market once the new market has no potential to develop.
Therefore, I suggest that SABMiller choose market development.