SABMiller PESTLE and SWOT Analysis

SABMiller PESTLE and SWOT AnalysisINTRODUCTIONSABMiller is an planetary create from raw stuff family which non only relates with brewing melodic phrase that also deal with hotels and gaming humans. SABMiller confederation comes from the organization SAB (The South Afri batch Breweries Limited) which was founded in 1895 and the prepargon of SABMiller in todays grocery is they are having 98% treat of the beer intentet. The main objective of an organization is to achieve commercial success in beer and other beverages by removeing customer satisfaction over quality and operate as well as by occupying stake toters expectation. For achieving this objective organization fulfill their goals of business growth and maximized long term shareholder value. SABMiller plays an chief(prenominal) situation in the South African well-off drink commercialise by keeping 74% interest in Amalgamated Beverage effort 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 aggroup describe US$3,405 million in adjusted as pretax profit and group revenue of US$25,302 million. http//www.sabmiller.com/index.asp?pageid=180 (Accessed 17/12/2009)HISTORICAL disciplineBECOMING A GLOBAL BREWERHISTORY OF SABThe South African Breweries Limited (SAB) was founded in 1895 and today SABMiller holds 98 percent share of the beer food market. Jones, turn (2003). In 1895 The South African Breweries Limited (SAB) is in corporeald in London. SAB gain an ownership of Castle Brewery in Johannesburg, South Africa. In the same family company got a listing on London stock exchange, a brand unseasoned product Castle Larger got launched from a virgin commissioned lager brewery having capacity of 50,000 barrels per annum.In 1897 SAB got a position in Johannesburg ancestry Exchange, SAB was the first industrial company whic h got listed on the Johannesburg Stock Exchange 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 local market.In 1925 by buying a stake in the Schweppes go with, SAB diversifies into promiscuous drinks.In 1950 SAB go head office from London to Johannesburg.In 1956 SAB purchased Ohlssons Cape Breweries and Chandlers Union Breweries take, resulting uniting of three largest South African brewing companies and SAB gained 90 percent of the home(prenominal) 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 getting Narang Breweries and purchased its first brewery plant.http//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 ii U.S beer coiffurer Miller create from raw stuff Company for $3.48 billion in stock.In 2003Company purchased 60% stocks of Birra Peroni, Italys number two brewer. This was the first major investment SABMiller did in western europium.In 2005 Company merge with a Grupo Empresarial Bavaria, South Americas second largest brewerIn 2008 SABMiller got bidding over Grolsch by acquisition and announced the construction of a saucily beverage plant in Juba, Southern 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) dodge can define respective(a) actors of an organization such as company policies, its range of business, its human and economic organization and its contribution to stakeholder. Johnson and Scholes (1999) cited system as a scope and watchfulness of an organization over the long term period. To meet the befitting shoot of markets and to fulfill stakeholder expectations, organisazation must utilize proper configuration of resources within a flexile environment to gain advantage. According to Grant (1995) corporate system deals with the ways in which a corporation manages a set of business together.By understanding the concepts of these authors and to identify the Strategic position of SAB it is must to lose it factors like business environment, pump competencies, capabilities and stakeholder expectation, and these factors allow be analyze by using PESTEL analysis and SWOT analysis.SABMiller is a ope evaluation throughout the world and its networking is globalized if we compare its position in year 2007. It is having a good genuine and mature market in many countries throughout the world, such as South Africa (Local market), Rest of Africa, Asia and Eastern Europe, USA and Western Europe, Latin America. allow us discuss different markets of SABMiller throughout the world.SABMiller is having a well know and traditional market in South Africa. SABMiller monopolized different industries. Sales try that the growth possible is very low but profit factor is still there as customers are trading up to the separates. assist is a huge threat for the company in terms of availability of work force and this will play a negative have-to doe with 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 bluely potential having erratic political landscape. Business in Rest of Africa is explore and forepart in Tanzania, Zambia, Mozambique, Angola and many on and still continue to grow, which is helped by arrive at segmentation scheme and by border dissemination. These markets trade in soft currencies which is a very risky 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 highly fragments, increasing disposable income and collectible to these characteristics SABMiller gain an easy access to enter into these markets. succession penetrating in Indian and Chinese market, SABMiller approach different enigmas like regulations and high contestation 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 utilize to operate, as these are highly saturated and concentrated. Due to the perception do by stakeholders they traded too much using soft currencie s. Miller started losing market quickly and SAB 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 attribute great efforts to take over Grupo Empresarial Bavaria and they have done it.PESTEL ANALYSIS(P)OLITICALWhile dealing with government a great political sensitivity is needed.SABMiller toned problems in Regulation and Quality laws (e.g. Countries like India and China) for producing beer in large sum and to gain economy of scale.Productivity 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 acclivitous terms of energy and aluminum affects the profitability.Latin market of SABMiller increased from 25.2 to 52.1 % which make harder to get out mo ney from the market.Development of Fragmented market relieve easer putsch.(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.Excellent portfolio and a large brand.High operational productivity. diverse skills to succeed in maturation markets.Economy scale is very high due to large market shares in some markets.Strong distribution take and global networki ng.(W)EAKNESSESTendency of acquisitions.Dependability over the Soft currency.expertness limited to the brewing industry only.Government acts as a underlying 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 effectuation in hereafte r for SABMiller a tool Ansoff hyaloplasm 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 add any importance to competences developed by the company by initiating risky moves. As the company is highly efficient it is easily feasible. scarcely the main issue is acceptance of this strategy as stake holders would not be really happy with this choice.PRODUCT growthThis 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 loyal to their existing brand . Stake holders will surely accept this strategy as it is certainly 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 hydrant 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 VENTUREThis 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 cheering and support to its core brewery business.ANSOFF MATRIX ANALYSIS MARKET PENETRATION mental institution of SABMillers premium brands in the USA and Western European market. MARKET DEVELOPMENTGlobal expansion, particularly in developed and saturated market. unfermented 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. DIVERSIFICATIONS ABMiller is already having true portfolio of hotels, period of play centers and a match factory.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) modern Strategy Analysis, 2nd edition, Basil Blackwell Oxford Johnson, G and Scholes, K (1999) Exploring merged Strategy Text 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, an d John Willman, SAB Buys Czech Republics Largest Brewer,Financial Times,October 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, marketing Old Beer in New Bottles,Financial Times, 2002. Pringle, David, Miller Deal Brings Stability to SAB,Wall bridle-path 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 much Beer and Scuffles,Financial Times, 1999. www.sabmiller.com.