Strategy is regarded as the plan or course of action which assist organization in accomplishing its major goals along with objectives. Further, it allowed business to carry out operations in the competitive environment and in turn acts as development tool for the enterprise. At different levels strategies are developed and its effectiveness allows company to focus on its overall aims along with objectives. Further, it is well known fact that presence of effective strategies provides support in grabbing growth opportunities and in turn delivers long term benefits to the business. Apart from this with the motive to analyze external environment techniques such as PESTLE and porter are effective with the help of which businesses are able to know what the external factors are affecting business operations. Considering the present study organizations such as AB Inbev and SAB Miller have been considered where recently AB Inbev has merged with SAB Miller and both companies are working together. In the entire report, strategic analysis of activity such as takeover through which businesses have obtained large number of benefits. Various tasks have been covered in the study which involves evaluation of relevant levels of strategy, critical evaluation
EVALUATION OF THE RELEVANT LEVELS OF THE STRATEGY
Different types of strategies are present which business undertakes with the motive to enhance overall performance in the market. At present the strategy of merger employed by AB Inbev is quite effective where business has merged with SAB Miller. Both the companies are operating in beverage industry where Inbev is multinational beverage and brewing firm and holds around 25% of the global market share. Apart from this, SAB Miller is also a beverage firm and is regarded as the major bottler of Coca Cola. Both the firms are well known in the market for range of products it offers to its target market. Further, at different levels strategies have been developed which has been discussed below:
Corporate level strategy
At this level of strategy AB Inbev takes different type of decisions which are directly associated with the growth and development of business in the market. Further, it directly assists in accomplishment of desired aims and objectives of the enterprise. Apart from this decisions are taken in relation with the allocation of resources through which internal strength of the business enhances. Top management of the company holds responsibility to take various decisions and this has supported in performing better. The decision regarding merger has been taken by top authorities of Inbev and this has allowed company to operate efficiently in the market.
Business level strategy
It is the next stage which focuses on different businesses of the firm and each one is treated as separate department. Further, main aim is to determine the independent product along with market segment . Apart from this, product range of AB Inbev is diversified due to which company has segregated its business into different parts and this in turn has enhanced profitability level. For every brand portfolio business has developed effective strategies and this has positive impact on the brand image of enterprise in every possible manner.
Functional level strategy
The strategy developed under this area allows business to carry out all the functions in effective manner. Further, it is well known fact that all the operations carried out by AB Inbev requires presence of effective strategies and due to this reason, business focuses on each and every functional areas so as to gain large number of benefits with the help of this. AB Inbev has developed effective plans and objectives are set in relation with allocation of resources etc. So this directly allows business to serve its customers in better manner. In short functional level strategy has assisted AB Inbev to merge with SAB Miller and both the companies jointly are working with each other. So, the overall effectiveness of strategies at functional level is allowing company to focus on its goals and objectives.
So, these are some of the strategies being employed by business at different levels which are most crucial for the business. AB Inbev focuses on each and every level and this is one of the main reasons behind success of firm in the market. Organization focuses on each level and this has allowed in gaining competitive advantage. Strategic choice such as merger has allowed business to serve different type of markets and products are offered to them as per their expectations. Apart from this, each and every strategy at different level enhances long term strength of the business and in turn it becomes easy to deal with the challenges faced in the global market which can reduce efficiency of the company. In short, through the strategies undertaken at different levels business is able to satisfy need of its parties associated with it.
Bowman’s strategy clock
This model supports in exploring the options for strategic positioning and helps in highlighting the brand of business in the market. Eight positions present in this model are as follows:
- Focused differentiation
- Risky high margins
- Monopoly pricing
- Loss of market share
- Low price and added value
- Low price
Considering all the strategic options, the most appropriate one in case of AB Inbev is Hybrid where this position takes into consideration some elements of low price and attributes of product differentiation is also present. This option is appropriate for business as other companies are also present in the market who is indulged in the activities of manufacturing bottles for beverage companies. Therefore, in this case, prices of bottles have to be kept low or moderate and this supports the firm in satisfying the needs of businesses to which such bottles are sold in the market.
CRITICAL EVALUATION OF THE KEY STAKEHOLDERS
Stakeholders play most important role in the organization and they are directly interested in the affairs carried out by business. Main parties which are associated with AB Inbev are customers, suppliers, government, financial institution, employees etc. Considering need and requirement of each and every party is must for business and it allows in gaining competitive advantage. As per view of Abraham (2013) stakeholders supports business to survive in the competitive market and due to this reason it is necessary for company to satisfy their need. Presence of effective strategies has allowed AB Inbev to satisfy its key stakeholders and it is leading to development of company. Customers are regarded as one of the main stakeholder of business where they expect beverages of high quality from company at an affordable price . Therefore, to satisfy their need company has developed its brand portfolio and through this business is able to serve its customers in better manner. Further, product range is modified timely and this is one of the main reasons behind success of business in the market. In short it has provided long term benefits to the business and has acted as development tool for the entire company.
Shareholders are another key stakeholder of AB Inbev as they invest funs in organization by purchasing shares. Further, they expect some return from business and their needs are efficiently satisfied by company as profit margin of company is high due to which it becomes possible to provide them high return. According to Olson (2008) the most effective way to satisfy shareholders of business is to deliver them high return as per their expectations. So, this has also enhanced performance of AB Inbev and the merged business SAB Miller in the market. Apart from this, shareholders are interested in obtaining financial information regarding the company and their need is satisfied by providing them accurate and up to date information regarding the operations carried out. Suppliers of company are also the most crucial stakeholder where they are indulged in the practices of supplying different materials which are used in the production of beverages.
Further, company provides them payment for the material timely and through this their needs are satisfied by AB Inbev. Organization considers their requirement very important and same is satisfied with the help of large number of strategies. However Blokdijk (2015) argued that without satisfying need of suppliers it is not at all possible for business to operate efficiently and in turn it acts as hurdle while serving customers in the market. Government is next crucial stakeholder of the business where different laws and regulations are developed which companies operating in the beverage industry have to follow (Blokdijk, 2015). Therefore, management of AB Inbev ensures that its practices comply with the guidelines introduced by government and this has positive impact on the brand image of organization. As per view of Massingham (2004) every business operating in the market has to ensure that its operations are in accordance with government guidelines and in case if management is not able to comply with practices of regulatory authorities then it has adverse impact on overall performance. Financial institutions are also one of the major stakeholders of business as AB Inbev carries out all the operations on wider basis due to which financial requirement of the company is high. Therefore, business has to obtain loan from different financial institutions. Apart from this they are interested in knowing the liquidity position of the enterprise through which banks can know repayment capacity of the company (Massingham, 2004). Therefore, AB Inbev satisfies their need in efficient manner and appropriate information is delivered to banks for operating efficiently in the market.
Therefore, in this way, these are some of the key stakeholders of AB Inbev and their needs are satisfied by company by indulging into different practices which are crucial for business. In short, it has enhanced overall performance of the business in the market and in turn long term survival in the market has become easy. Apart from this, by satisfying the needs of different parties, company is able to expand its operations in the different market and as positive impact on the brand image of business which is one of the main motives of company behind operating in the market.
In order to have effective identification of key trends that are associated with the environmental aspects of Ab Inbev and its subsidiary firm Sab Miller, the business organization can focus on Pestle analysis. It covers number of factors that can influence the work culture of the business firm (Ratna, 2011). Classification of factors can be as political, economical, social, technological, environmental and legal.
As per the structured study, it can be stated that the Ab Inbev and Sab Miller operates its business in international market so it is essential for management to focus on political aspects of different nations. If business organization is not considering political aspects in appropriate manner then number of conflict situations can be occurred. Sab Miller management mainly focuses on Asian countries such as China, India, Nepal, etc. In the support of this, political aspects of Asian nations are stable and they are looking forward to activities that can attract more and more foreign companies to operate business within nation. There are number of policies that need to be followed by management of Ab Inbev while operating business in different nations. Taxation policies are also beneficial for Ab Inbev and its subsidiary firm Sab Miller. Asian countries are making easy policies for corporate world that provides better opportunities to the Ab Inbev. Currently, management of Ab Inbev is more focused towards European nations to expand its business but with an assistance of its newly take over firm Sab Miller the company can also search for new opportunities within Asian nations. If political aspects get changed in any form then it will have direct impact on the operational activities of beverage and brewing company.
It is also necessary for management of beverage and brewing company to focus on economical aspects so that business can have impressive level of success. In this respect, the management of Ab Inbev and Sab Miller needs to focus on economical aspects of international beverage and brewing industry. Classification of key economical factors can be as exchange rates, GDP, income level, etc. If global exchange rates are increasing then it is possible that they may face economical conflict. Moreover, the global economic recovery remains uneven around consumer disposable income for beer due to continuing high unemployment, rising food prices and increasing energy costs. For example, the company is looking for business expansion activities within Asian nations. In this respect, the economical aspects of Nepal, India and China are more dependent upon agricultural aspects so management needs to consider it as critical element. Ab Inbev is a beverage and brewing company so the agricultural products are also key sources for the organization (Freud, 2014). Economical elements within Asian nations are having dramatic progress that also enhances the opportunities for organization. UK economic system and European economical aspects are facing crises as compared to other nations which may influence business in negative manner. Governments of different nations are more focusing on easy design of corporate policies such as low interest of currency exchange. It allows provides better opportunities to the beverage and brewing company at global marketplace.
Social needs of different nations also need to be considered as critical aspect so that business can have better opportunities in global market. If business organization is offering goods and services without any consideration of social needs and elements then management can face critical failure issues. It has been spotted that the taste and behaviour of customers is changing rapidly in the global market so management of Ab Inbev must have focus on social needs identification activities. In addition to this, it can be said that the increasing ratio of population is also enhancing the opportunities for the company. For example, the beer consumption in Asian nations is also increasing due to high acceptance of western culture. It creates better opportunities for the Ab Inbev and Sab Miller in the Asian market. On the other side, European nation’s citizens are already in favour of beer consumption so beverage and brewing company is easy attaining better profit in this segment. In other aspect, it can be stated that the social needs of customers can be differ according to their culture so management must understand global culture for better opportunities in the market.
It has been spotted that the technology plays a key role in success of every organization. In the support of this, it can be said that the number of technological changes has taken placed within market. New bottling machines have introduced in the market that creates better opportunities and cut down cost of operational activities. Management of Ab Inbev is constantly focusing on technological updates according to needs of business. Number of changes has taken into account in respect to Technology so that business can have impressive level of success. Other than this, Sab Milleris is also a well known for use of the finest ingredients and best technologies. Company is continuously focusing on improvement in beers and brewing methods through assistance of technological tools (Delgado, 2009). Organization can also have easy accessibility of technological equipments within Asian nations that boost its opportunities within Asian market. Government of India and China is focusing on technological and infrastructure development that creates better opportunities for beverage and brewing company.
It is also essential for beverage and brewing company to have improved focus on environmental aspects. Management must ensure that the business organization is not affecting any kind of environmental aspect. The Beer consumption must not affect health conditions of people. Packaging and bottling methods must have proper consideration of environmental standards so that nature can be preserved from any harm. Plastic bottles must not be used to protect environmental aspects.
There are number if legal aspects that need to be considered as critical aspect because any kind of illegal activity may influence business in negative manner. Permission for beer production and sale is essential for ethical work conditions. If business organization is operating business without license and permission then organization may face critical issues that may lead business to failure conditions.
Threat of substitute
It is high because there are number of substitute products that attracts customers and impacts the sales of beer. Developing nations are more focused towards wine and spirits that may influence business of Ab Inbev and Sab Miller. It clearly indicates that the treat of substitute products is high for the company.
Threat of entry
It is low because it is a business that demands high investment and government permissions. It is not easy for new organizations to enter in market because the government charges number of taxes on production of beer which impacts their business in negative manner. The increased level of awareness about alcohol use also influence the business of beverage and brewing company. Less support of government in establishment of these products are creates barriers for the new entry and boosts the opportunities for Sab Miller (Freud, 2014). Advertisement of beer and alcohol products is banned in international market that also creates issues for the new businesses. Gaining better brand image without marketing and advertising is one of key among beverage and brewing industry.
Bargaining power of suppliers
It has been spotted that there are number of suppliers in the market that provides high quality of resources at low price. It means the bargaining power of suppliers is low in the industry (Swanepoel, 2010). If any supplier is not meeting the key needs of organization then, management of beverage and brewing company can contact any other supplier for better opportunities. Beer is made of fruit juice so fruit suppliers are key aspects for the industry.
Bargaining power of customers
It is high because there are number of competitors are available in the market. In other aspect, it can be said that the company is facing high ratio of competition in the market which also creates better opportunities for the customers (Huth, 2013). If Ab Inbev will not provide products and services as per the social needs then, customers can buy products and services of its competitors. It may influence the business of Sab Miller and Ab Inbev in negative manner.
Company is facing high ratio of competition in the international market that impacts business of Sab Miller and Ab Inbev in a diverse manner. The global pressure of different competitors within the industry influences the cost and benefits of beverage and brewing company (SChristensen, 2015). It is necessary for management of Ab Inbev to focus on rivalry operational activities in order to lead business to impressive level of success.
As per the above study, it can be concluded that the strategic analysis is significant for every business organization because it provides information about various factors that can impact the operational activities. In support of this, it can be said that the environmental analysis and industrial analysis also facilitates management of Ab Inbev in effective designing of strategies. Company is facing high ratio of competition in the international market that also influences business opportunities in great context. Management of Ab Inbev and Sab Miller can focus on different strategies while operating activities at different levels.
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