Strategic Position For The Future Of Sabmiller Commerce Essay

In the brewery industry, SABMiller, which has been operating across six continents, is now one of the world’s leading brewers. Regarding of the business environment, the company has started from a developing country, South Africa, and has successfully entered into both developed and developing markets through acquisitions and joint venture. According to the financial report for the last five years, the company has been doing quite well (SABMiller, 2012).

For the strategic capabilities, the firm’s resources and competences are taken into account. Firstly, in 1950, the firm was able to move its headquarters from London to Johannesburg in order to expand its business in Southern Africa due to the restriction of trading between the country and the international businesses. Secondly, the firm is able to raise capital through its listing on the London stock exchange. Thirdly, the firm has entered into the global market by acquiring some major brands such as Dreher from Hungary, Miller from USA and forming a joint venture in China. Then, the company also has made other acquisitions, joint ventures and brewery investments in other countries in recent years. However, acquisition may not be applied for SABMiller anymore in the future because of fewer larger transformational deals and lower prospects of high financial of returns. About the management structure of the firm, it practices decentralization as local managers understand deeper about the local businesses (Johnson, Whittington and Scholes, 2011).

3.2 The new vision statement, mission statement and the strategic objectives

Vision

The best in the world in providing the most various choices for beer drinkers

Mission

Increase product portfolios

Find more business partners

Provide the most comfortable working environment

Strategic objectives

Increase profit to 15 % annually

Increase the sale of premium beers

Forming more joint ventures with local brands

Upgrade the latest technology in administration and manufacturing.

As time goes by, SABMiller has been growing larger enormously through acquisitions and joint ventures, and it has almost earned much profit from these business deals. Therefore, a new vision statement for the firm is to be the best in the world in providing the most various choices for beer drinkers.

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In order to support the vision, SABMiller’s mission is to increase more product portfolios for the consumers. The firm will find more business partners to grow bigger and bigger in the brewery industry. The firm will provide the most comfortable working environment that employees will be most satisfied and efficient by providing the most advanced- technological conditions.

Those missions must be carried out in specific strategic objectives. First of all, the firm’s aim is to increase its profit by 15 % annually. Secondly, It needs to increase more types of beer, especially international premium beers to meet the rising demand in emerging markets. Thirdly, it also needs to find out more opportunities for growth with its existing product portfolios through joint ventures in local brands. Finally, the firm needs to upgrade the latest technology in administration as well as manufacturing, so the employees will feel more convenient and put more effort in their work.

3.3 Three alternative possible strategic options for SABMiller

The first strategic option recommended for the firm would be the product development, which deliver new products into the existing markets. In terms of Generic strategies, this strategy should focus on differentiation by building more premium types of beer. The reason is that the beer consumption is growing in these emerging markets, and the people here are earning more (Simon, 2012); therefore, they are willing to pay more for their drink as well. Another reason is that consumers nowadays still prefer high quality beer during the economic crisis (Nadine and Simon, 2012). Although this strategy will fall into question marks in the Boston’s BCG matrix as these premium beers are totally new products, they are more likely to turn into stars as the market share is growing, and the consumers will pay more as well. Product development is also a strategy belongs to the Ansoff matrix, so SABMiller needs to add more new premium beers to its brand portfolios in the existing markets such as in China, Latin America and South Africa, which are also emerging markets.

The second strategic option would be the market development, which the firm will penetrate into new markets with the existing products. Even though the target markets here are Africa and Asia, which SABMiller has already entered, it can actually bring more brands from North America, Latin America and Europe to these countries due to the lack of its brand portfolios in these two regions. This is also a cost-focus strategy, based on the Generic strategies, for the firm as the costs of labor and raw materials in African and Asian countries such as China and Vietnam are cheaper, so it is an advantage for the company to cut costs in manufacturing. In terms of the BCG matrix, this option also fall into a question mark as local brands from Europe, for instance, are new in Africa and Asia. However, there will be a high chance to become a star within a short time as consumption is rising up in these regions. Market development is another strategy belongs to the Ansoff matrix as the firm’s current products portfolios from North America, Latin America and Europe are totally new for consumers in African and Asian countries.

The last option, which SABMiller is capable of doing and actually has succeeded before, is joint venture. Based on the case, the firm can consider entering into a joint venture with Dos Equis Brewer Fomento Economico Mexicano (FEMSA) from Mexico, or EFES Breweries International from Turkey. According to Generic strategy, this can be known as a cost-focus strategy for SABMiller because these two brands are currently doing alright in emergent markets like Latin America, Africa and Asia; therefore, SABMiller is able to have a good start as it is also operating businesses prosperously in these markets. In the BCG matrix, both SABMiller and these two brands are having high market share and growth in those emergent markets with their current product portfolios; therefore, if joint venture takes place, there will be no doubt that SABMiller’s market share and growth will boost up continuously. In terms of Ansoff matrix, this strategic option actually help SABMiller increase its market share in its current markets, Latin America, Africa and Asia with the current and combined product portfolios of both the firm itself and it partners (Johnson, Whittington and Scholes, 2011).

Lower cost

Differentiation

Broad target

Cost leadership

Differentiation

Narrow target

3

2Cost focus

1Differentiation focus

Competitive advantage

Competitive scope

Table 1: Porter’s Generic strategies

Market share

High

Low

High

3Stars

2

1Question marks

Cash cows

Dogs

Market growth

Low

Table 2: BCG matrix

Products / services

Existing

New

Existing

3Market penetration

1New products & services

New

2Market development

Conglomerate diversification

Markets

Table 3: Ansoff matrix

Strategic options

1 Product development

2 Market development

3 Joint venture

3.4 The most recommended strategic options for SABMiller

Out of the above three strategic options, join venture would be a great move recommended for SABMiller. In fact, the firm has succeeded in forming joint ventures with others firm, so it clearly shows that the company is capable of doing such kind of thing. Furthermore, the two considerable firms for forming joint ventures, FEMSA and EFES, are doing quite well in Latin America, Africa and Asia, where SABMiller is also having a good taste with its business, so it will be an advantage for SABMiller as it can achieve more growth, reduce competitors in these markets. In addition, forming joint ventures also helps SABMiller to expand its product portfolios into other current markets. To sum up, forming a joint venture can be seen as a safer option as the current product portfolios are “star” products with high market share, while the other two option might be a little bit riskier as the products and the markets are new and unpredictable to measure successes.