SABMiller PESTLE and SWOT Analysis

SABMiller PESTLE and SWOT AnalysisINTRODUCTIONSABMiller is an international create from raw material company which not only relates with brewing championship but also deal with hotels and gaming world. SABMiller Company comes from the organization SAB (The southbound African Breweries Limited) which was founded in 1895 and the slur of SABMiller in todays merchandise place is they ar having 98% share of the beer merchandise. The main objective of an organization is to achieve commercial success in beer and other beverages by gaining customer satisfaction over quality and services as well as by fulfilling stakeholders expectation. For achieving this objective organization fulfill their goals of business result and maximized long shape shareholder value. SABMiller plays an important role in the South African soft drink market by holding 74% interest in amalgamate Beverage Industry Ltd, the worlds largest bottling company of Coco-Cola products with an ownership of Appletiser South Africa Private Ltd. At the end of 31 M arch 2009, SABMiller is listed on the London and Johannesburg stock exchanges, the radical reported US$3,405 million in adjusted as pretax cyberspace and group revenue of US$25,302 million. http//www.sabmiller.com/index.asp?pageid=180 (Accessed 17/12/2009)HISTORICAL increaseBECOMING A GLOBAL BREWERHISTORY OF SABThe South African Breweries Limited (SAB) was founded in 1895 and today SABMiller holds 98 percent share of the beer market. Jones, Adam (2003). In 1895 The South African Breweries Limited (SAB) is incorporated in London. SAB gain an ownership of Castle Brewery in Johannesburg, South Africa. In the same year company got a listing on London stock exchange, a brand new product Castle Larger got launched from a new commissioned lager beer makery having dexterity of 50,000 barrels per annum.In 1897 SAB got a position in Johannesburg Stock Exchange, SAB was the stolon industrial company which got listed on the Johannesburg Stock Ex change and got first industrial share.In 1898SAB started producing Castle lager, which becomes a phenomenal success.In 1911 SAB started importing seeds free of charges and reduced to buy crop at market prices which results in stimulation in topical anaesthetic market.In 1925 by buying a stake in the Schweppes Company, SAB diversifies into soft drinks.In 1950 SAB moved head office from London to Johannesburg.In 1956 SAB purchased Ohlssons Cape Breweries and Chandlers marriage Breweries take, resulting union of three largest South African brewing companies and SAB gained 90 percent of the domestic market..In 1994 by gaining joint venture with China Resources Enterprise Limited, SAB accessed in the Chinese beer market.In 1999 SAB reestablished headquarters in London. SABs divestment program reduces interests in beer, soft drinks, wines and spirits, and hotel and gaming.In 2000 SAB gain an accessed in Indian market by acquiring Narang Breweries and purchased its first brewery plant.ht tp//www.sabmiller.com/index.asp?pageid=27 (Accessed 17/12/2009)ESTABLISHMENT OF SABMILLERIn 2002 Company changes its name to SABMiller as SAB acquired number two U.S beer maker Miller brew Company for $3.48 one million million in stock.In 2003Company purchased 60% stocks of Birra Peroni, Italys number two brewer. This was the first major investment SABMiller did in Western Europe.In 2005 Company merge with a Grupo Empresarial Bavaria, South Americas second largest brewerIn 2008 SABMiller got control over Grolsch by acquisition and announced the construction of a new beverage plant in Juba, southerly Sudan. http//www.sabmiller.com/index.asp?pageid=27 (Accessed 18/12/2009)STRATEGIC POSITION OF SAB IN 2007According to many authors, Strategy plays an important role in organization for achieving objective and getting exposure in the corporate market, for example according to Andrews (1980) outline can define various cistrons of an organization such as company policies, its range of b usiness, its forgiving and economic organization and its contribution to stakeholder. Johnson and Scholes (1999) cited outline as a scope and direction of an organization over the long term period. To meet the proper(ip) look at of markets and to fulfill stakeholder expectations, organisazation must utilize proper configuration of resources within a flexible environment to gain advantage. According to Grant (1995) corporate strategy deals with the ship canal in which a corporation manages a set of business together.By understanding the cin one casepts of these authors and to identify the Strategic position of SAB it is must to analyze factors same(p) business environment, midpoint competencies, capabilities and stakeholder expectation, and these factors testament be analyze by using PESTEL analysis and SWOT analysis.SABMiller is a operating throughout the world and its networking is globalized if we compare its position in year 2007. It is having a good highly-developed and m ature market in many countries throughout the world, such as South Africa (Local market), Rest of Africa, Asia and Eastern Europe, the States and Western Europe, Latin America. Let us discuss divergent markets of SABMiller throughout the world.SABMiller is having a well known and traditional market in South Africa. SABMiller monopolized different industries. Sales show that the growth potential is very low but profit factor is still there as customers are trading up to the segments. AIDS is a huge threat for the company in terms of availability of work force and this will play a negative impress on the disposable income of the population which will affect SABMiller. The market in South Africa is under threat.The market in Rest of Africa is exceedingly potential having explosive political landscape. Business in Rest of Africa is explore and presence in Tanzania, Zambia, Mozambique, Angola and many on and still continue to grow, which is helped by clear segmentation strategy and by border distribution. These markets trade in soft currencies which is a very perily factor as seen in Botswana. By analyzing these markets in SABMiller portfolio the risk factor might lose confidence from stakeholders, as many core competences of SABMiller were developed in these markets.Markets in Asia and Eastern Europe show different characteristics like extremely fragments, increasing disposable income and Due to these characteristics SABMiller gain an comfortable access to enter into these markets. While penetrating in Indian and Chinese market, SABMiller faced different problems like regulations and naughty competition but they are still exploring and expanding themselves in the markets like Vietnam.The markets in Western Europe and USA are very different to the once that SABMiller used to operate, as these are highly saturated and concentrated. Due to the perception made by stakeholders they traded too much using soft currencies. Miller started losing market quickly and S AB took an advantage over it and bring its own performance rating System to monitor employee.SABMiller perform very well in Latin American market. They were constantly doing their best in Latin American market. SABMiller put great efforts to take over Grupo Empresarial Bavaria and they have done it.PESTEL ANALYSIS(P)OLITICALWhile dealing with giving medication a great political sensitivity is needed.SABMiller faced problems in Regulation and Quality laws (e.g. Countries like India and China) for producing beer in large quantity and to gain economy of scale.productiveness got affected due to the political stability in certain countries like Botswana.(E)CONOMICSABMiller got really hurt because of devaluation of soft currencies.Markets in India and China gave very low profit margin.A highly move up cost of energy and aluminum affects the profitability.Latin market of SABMiller increased from 25.2 to 52.1 % which make harder to get out money from the market.Development of break marke t facilitate easer takeover.(S)OCIALSABMiller got adversely affected by new trends like wines and Spirits.Lifestyles in emerging markets have changed and beer consumption got increased due to the increase in the availability of disposable income.A devastating effect(T)ECHNOLOGICALDue to modern machinery, new packing can be easily introduced as evidenced in Czech.Easier to manage the ever broadening distribution network.A variation of beer got introduced in to the market.(E)NVIRONMENTALSABMillers profitability adversely got affected due to weather condition in Latin American market in 2006.(L)EGALDue to the local law, takeover attempts may generate problems.SWOT ANALYSIS(S)TRENGTHSVery strong in local market. small portfolio and a large brand.High operational productivity.Different skills to succeed in developing markets.Economy scale is very high due to large market shares in some markets.Strong distribution channels and global networking.(W)EAKNESSESTendency of acquisitions.Dependa bility over the Soft currency.Expertise limited to the brewing industry only.political science acts as a key player, as main market are in highly volatile areas like Africa and Asia.(O)PPORTUNITYStrongly growth of emerging markets.It is easy for SABMiller to buy in to a market with the help of highly fragmented developing mark(T)HREATSAIDS problem in South Africa.Constantly rising cost of energy and aluminium affects the SABMiller profitability.Strong competition in countries India and China.SABMiller got affected adversely due to the new trends like wines and spirits.STRATEGIC IMPLIMENTATION IN FUTUREA current strategic position of SABMillers has provided information about opportunities and challenges which it face in its business environment but it does not match with stake holder expectations, core competences and market reality because of which a dilemma got generated for SABMiller.To get proper strategy implementation in future for SABMiller a tool Ansoff Matrix is used. There are different choices available to SABMiller.CONSOLIDATIONBy holding firms in the developing market this strategy will focus on reducing market risk like Western Europe, USA and Africa. This does not give any importance to competences developed by the company by initiating risky moves. As the company is highly efficient it is easily feasible. But the main issue is acceptance of this strategy as stake holders would not be really happy with this choice.PRODUCT nurtureThis is very flexible and aggressive strategy where by company can respond by developing new products to the market. Premium beer segment is rapidly growing, as company will get a good product opportunity. For most parts, this strategy will be a usual business strategy and will build on what company has been doing throughout the year. But the growth of future is balance without any guaranty as customers (Drinkers) can be fiercely true to their existing brand. Stake holders will surely accept this strategy as it is certa inly feasible.MARKET DEVELOPMENTA new market segment is called as market development. SABMiller is having an excellent reputation in the brewing industry and by using this strategy SABMiller can easily tap out its competitors. African market is having a high potential for expansion of SABMiller. But small factors like AIDS, political instability and soft currencies are worrying the stakeholders if SABMiller decided to expand in Africa. This strategy will give highly profitable in markets like Asia, Eastern Europe and Latin America, as Miller gain success in Russian market by using this strategy. The problem which may occur will be of stakeholders expectation and which totally depends on market condition.JOINT feignThis is the strategy which will be useful for the SABMiller in USA and Western European market. A joint venture with a major western brewer can bring to the table what SABMiller lacks (Penetration into competitive and saturated market). But the problem is of risk factor. As it is very risky business, opening up the developing markets to high profile competitor.DIVERSIFICATIONIt is the least attractive strategy which SABMiller can use as an option. SABMiller is one of those companies which are having a true portfolio management. The implementation of synergy portfolio logic will be interested to see as it can work in favor of SABMiller by adding business to its portfolio which gives compliment and support to its core brewery business.ANSOFF matrix ANALYSIS MARKET PENETRATIONIntroduction of SABMillers premium brands in the USA and Western European market. MARKET DEVELOPMENTGlobal expansion, particularly in developed and saturated market.New breweries in countries like Indian, Chinese and Vietnam.Development in border distribution channels in Africa. PRODUCT DEVELOPMENTRapid growth of premium segment offers product development opportunity to SABMiller. DIVERSIFICATIONSABMiller is already having true portfolio of hotels, gambling centers and a match f actory.CONCLUSIONFrom the past history SABMiller has shown a core competency in developing strategies and environmental scanning. The failure of penetrating in the saturated market and to defend its market from emerging competitors must be a challenging task for SABMiller. In future SABMiller have to face tough competition from its rivals. The key to SABMillers success will be a proper implementation of strategy and its brand portfolio.REFERENCES Andrews, K.R. (1965), The concept of corporate strategy, New York Dow Jones-Irwin. Grant, R.M (1995) Contemporary Strategy Analysis, 2nd edition, Basil Blackwell Oxford Johnson, G and Scholes, K (1999) Exploring Corporate Strategy schoolbook and cause (5th edn). Harlow Person Education. www.sabmiller.comhttp//www.sabmiller.com/index.asp?pageid=180 (Accessed 17/12/2009) http//www.sabmiller.com/index.asp?pageid=27 (Accessed 17/12/2009)BIBLOGRAPHY Anderson, Robert, and John Willman, SAB Buys Czech Republics Largest Brewer,Financial Times,Octo ber 8, 1999, p. 23. Andrews, K.R. (1965), The concept of corporate strategy Ansoff, H.I. (1965), Corporate strategy an analytic approach to business policy for growth and expansion, London McGraw-Hill. Bobinski, Christopher, and Roderick Oram, South African Breweries in Polish Acquisition,Financial Times, 1996. Grant, R.M (1995) Contemporary Strategy Analysis, 2nd edition, Basil Blackwell Oxford Johnson, G and Scholes, K (1999) Exploring Corporate Strategy. Martin, Peter, Selling Old Beer in New Bottles,Financial Times, 2002. Pringle, David, Miller Deal Brings Stability to SAB,Wall Street Journal, 2002. Simon, Bernard, An Old School Brewer for Miller,New York Times, 2003. Trouble Brewing for the ANC,Economist, 1994. Willman, John, and Robert Anderson, SAB Is Prepared for More Beer and Scuffles,Financial Times, 1999. www.sabmiller.com.