Question 1:
In the recent past, global markets for beer have gone through rapid processes of change. In most of the economic and societal developments have resulted into the emergence and development of new beer markets. Transformative improvements targeting the quality as well as the appeal of certain beer brands necessarily results in strengthened organic expansion of the beer category today. Developing markets are also undergoing intensive changes as the main brewers hurry to respond to the constrained and declining consumption trends of beer consumption (Som, 2009). The Gaining of competitive capabilities is one of the new trends in the beer sector. The enterprises want to generate things to utilize certain resources that are in its shortage. They also lack the desired knowledge, technology as well as expertise. These global markets need to constantly develop these capabilities in order to have competitive hand over other firms.
It is for this reason that strategic alliance are established to avail opportunities for such enterprise. This solely serves as a directive towards achieving the main objectives under the aspect. Further, in later instances the global beer markets also use the recently acquired abilities and resources for their own purposes. There has been an ongoing trend towards easier assessment of target markets. Most global markets introduce the beer products into new markets are complicated and costly. This exposes the major enterprises to the various obstacles including entrenchment of competition, regulation of hostile government conditions and incremental operating complexity. Also, there are risks of escalating opportunity costs as well as direct financial losses resulting from improper evaluation and assessment of the actual market situations. As a result, the choice of a strategic alliance as one of the competitive elements overcomes various problems and helps in the reduction of operating costs.
Question 2:
Modelo’s international expansion strategic has received much support from various strategic partnerships. Ideally, the levels of beer consumption are on the constant rise in Asia, Latin America and Africa, which are triggered by the growth and development of population against incomes. A major improvement in the quality and appearance of beer has also contributed to Modelo’s strategic expansion. In this context, most beer consumers are willing to shift from more informal trends to unregulated consumption of alcohol. Further, aspiration and attractively-branded provide safer commercial alcohol products. Beer categories are therefore overwhelmingly growing at the evaluation of subsistence alcohol.
Some of the other future developments and trends include informing business decisions as well as adding the weight of the various marketing presentations to marketing materials. It also allows the provision of better techniques that allow saving of time in establishing entry-level research (Som, 2009). Through Market Definition, Modelo has widely hit the beer market such as through elements of retail premium lager, sales of ales, low and no alcohol beers, stouts and bitters, specialty beers and standard lager. The marketing strategy of Modelo is valued in accordance to retail selling price and the inclusion all applicable taxes. For every currency conversion in Modelo, it is clear that there is extensive usage on the creation of market report to calculate viability. This is only achievable through using annual average exchange rates that are rather constant.
For instance, in order to generate favorable beer brands and image in the mind of the consumer, resources should be availed to cater for the costs as well as time consumption. In this connection, Modelo as a beer enterprise needs to decide on the criterion to introduce new alcohol products. This is made possible through engaging strategic arrangements with other enterprises that are related and have ready images and reputations in the market. In conclusion, a strategic alliance one of the most beneficial approaches that Modelo can employ to ensure existence in many forms. Clearly, by strengthening cooperation in sharing and comparison of skills and technology, production facilities, marketing of each party’s beer products, and combining of knowledge, co-funding of projects and making use of the existing distribution networks are some collective avenues of ensuring strategic alliances.
Question 3:
Some of the emerging markets that Modelo should consider venturing into include Angola, Ghana, Tanzania, Nigeria, Uganda, Congo and China. These markets have continuously recorded a growth of 6% by volume. Further, despite all inflationary pressures and subsequent factors, there is a spectacular increment in the volumes of consumption of beer products. Africa as a continent fostered a healthy increase of 8% due to the increase in volume. The main reasons for this factor include the fact that beer products were categorized into more affordable segments in terms of price. Modelo beer volumes can grow by a considerable percentage due to substantial reductions in material tax (Som, 2009). In addition, these markets are in such a way that they offset rapid fluctuations caused by irregular market growth. The case scenario in this case is product development which is introducing new products to existing markets.
Modelo will have to engage in aggressive entry modes to achieve multiple acquisitions to allow effective market entries. All activities at this point are aimed at building a long term strategy more than improving existing business units in the local. However, these strategies will require higher capital resource commitments. Multiple acquisitions are a very probable criterion that the Modelo could employ as an aggressive entry strategy. The fact that these markets have small local firms, single acquisitions do not necessarily suffice the attaining of strong market positions. This is especially the case if the target mass market is in environments in which there is thorough emphasis on economies of scale. The assets directed towards achieving this objective in acquiring other company’s assets and goodwill are commonly referred to as high local esteem brands. A combination of all aspects of aggressive acquisitions ensures that Modelo invests in providing aggressive routes into these markets.
Question 4:
Some of the problems that are posed by competition include the capability of InBev becoming a competitor. This is necessarily negatively influential to the well being of the company as it not only lowers the market share in the very end, but also lowers the profitability in the short run. The other challenge is the fact that responding to all entries of new and competitive beer products is both costly and distractive to the organizational focus. This means that instead of the organization seeking to achieve its goals and objectives; it concentrates on putting up with the existing competition, which is not a first-mover advantage. Developing a strong working base for competitive marketing strategy evokes responses of offensive and defensive kinds from the competitor (InBev). Some of the strategies that Modelo may include in its program for competitive marketing strategy include establishing market penetration strategies aimed at achieving competitive advantage (Som, 2009).
Modelo should also consider diversifying its sources of information on competitive advantage packages. Through prior anticipation, preemption and reactions to the InBev’s actions, Modelo could ably overcome some of the challenges posed by competition. Competing to achieve brand equity is also a strategy aimed at addressing the challenges posed by potential threat in new markets. Competitive pricing simulation is very impactful in beer industry and it is for this reason that Modelo needs to involve scenario planning to ensure that all stakeholders in the new market are included in policy formulation.
Question 5:
There are hosts of reasons that Modelo needs diversify. It is not only a survival strategy but also it makes much sense to consider market diversification. Extending the company’s portfolio of processes, products and services ensures regular revenue streams throughout the year. Other benefits of business diversification include the fact that one can sell more to existing customers and at the same time reach out to unexplored markets. This supercharges growth prospects and is probably the principal reason for diversifying. It also extends the reputation of a brand into new markets, making Modelo (as a business) grow bigger than ever-imagined (Som, 2009).
Modelo can diversify its business activities through natural progression. For instance, it can start selling its by-products to willing buyers. It could also serve as a supplier of some of its major raw materials such as yeast. The fact that it buys in large scale; there are hefty amounts of trade discounts, which it could resell at a considerable profit. More radically, brand extension can be availed through offering a wider range of beer products that nonetheless appeals to the same market. Alternatively, it can utilize its strong points of the brand to venture into other markets.
References:
Som A., (2009) Corona Beer: From a local Mexican player to a global brand. New York: McGraw Hill
