Case Study in Cobra Beer

University of Westminster
Westminster Business School

BKEY601
Strategic Perspectives





Assignment 3

Name: Manuel Carvalho

ID Number: w1510576

Seminar Leaders: Gostavo & Debora

Seminar Date: Mon 2pm M6O2

Word Count:3754

Abstract

This report investigates the current state of Cobra Beer Ltd, both PESTEL and Porter Five forces tools are use to analyze the company internal e external environment and then on tangible and intangible resources. The analyses show a very competitive and saturated industry, with consumers that value brand image and product quality.

The report then looks at PR crises that had a negative effect on company image and financial performance, looking on what strategies where used do overcome those difficulty’s.

Lastly the report focuses on identifying the current company strategies and then determine how can Cobra beer best implement them based on is actual performance.

 

Table of contents

1.Introduction

2.Anaysis of the external environment

2.1 Macro Environment Analysis – PESTEL

2.2 Micro Environment Analysis

3.Analysis of the internal environment

3.1 Tangible resources

3.2 Intangible resources

4.Analysis of PR crises

4.1 Global Financial Crises

4.2Boycotted by Indian Restaurants  

5.Strategic Analysis

5.1 Business Level Strategy

5.2 Corporate Strategy

5.3 Strategies Suggested for future/Evaluation

5.4 Implementation Modes/Techniques and Final Suggestions

6.Conclusion

7.References

1. Introduction
   

The purpose of this report is to review the business strategies for the Cobra Beer LTD. By examining a range of published journal articles and Internet sites on Cobra Beer Ltd this report analyses external and internal environment of the company.  Furthermore identifying issues that affected the image of the company, either internal or external.

1. Analysis of the external environment
   
   2.1 Macro Environment Analysis – PESTEL

The beer market is forecasted to growth 2.4% by revenue during the period 2016-2020 (Allied Market Research, 2017).

The whole sector is very conducive to consolidations, a trend which has intensified in recent years, due to the fact that a large company ensures a bargaining power with distributors allowing it to increase operating margins simultaneously in a context of costs of Financing (Allied Market Research, 2017).

In the global beer market, market leaders are more geographically dispersed, as the four main: Anheuser-Busch InBev, Carlsberg Group, Heineken, and SABMiller (Allied Market Research, 2017). Those companies are responsible for almost half of the world's total beer production, together they and their subsidiaries produce 47% of the beer on the planet (Allied Market Research, 2017). The concentration of production in the hands of these companies was very rapid. In 2004, there were 10 companies that accounted for 51% of world production. This domination is also reflected in profits. The big four make up 74% of the world's brewing market (Allied Market Research, 2017).

The beer industry experiences principally the expansion in excise duties by governments and controls. Most of the population are in agreement with the taxation on everything that does bad to health and some, immediately associate to tobacco and alcoholic (Griffin and Weber, 2006).

Technology of the industrial revolution made a huge impact on brewing.A lot has happened in the brewery world for the last 30 years, especially with regard to automation. Today, internet-connected sensors and digital control systems are driving this art into the Digital Age. It all comes down to the pursuit of perfection and consistency(Griffin and Weber, 2006).

In Germany, considered the main cradle of Industry, industrial automation already works under new parameters, in which processes are almost completely automated (Industry.siemens.com, 2017). One of the technologies that have been tested and closely observed by the German industry and the government, with expressive results of performance and return in industries as diverse as the brewer and the automobile, responds by the name of Simatic(Industry.siemens.com, 2017).

In Amberg, Bavaria, a whole line of hardware works without interference from employees thanks to Simatic. In the first step, a printed circuit board is inserted into the assembly line by human hands and from there on, everything runs independently and automated(Industry.siemens.com, 2017).

In relation to the consumption of natural resources, the brewing sector is characterized as a consumer of large amounts of water, which, in general, must be of excellent quality. In addition, due to the nature of its operations, centered on fermentation and full of cleaning steps, the flow of effluents generated is high, with moderate or high organic load and suspended solids((Fillaudeau, Blanpain-Avet and Daufin, 2006).

In the past years a lot companies are already adopting measures to reuse the water used to cool the must, mixing malt with other components and hot water (Fillaudeau, Blanpain-Avet and Daufin, 2006).

2.2 Micro Environment Analysis – Porter’s 5 Forces Model

The influence of substitute products on the brewing market is a moderated force if we consider the long tradition of beer that was probably born in the middle Ages and to this day is savoured by consumers. What exerts a strong influence in this market is the relation of dependence between the level of income of the population and the consumption of beer (Larimo, Marinov and Marinova, 2006). Many people fail to replace it with another alcoholic beverage in periods of unfavourable financial conditions, but this cannot be considered a substitution since the desire for the beer product remains, and as soon as the economy and income level improve, consumers return to choosing it over others (Koksalan, Erkip and Moskowitz, 1999).