Heineken Case Study
Introduction
With more than 170 international premiums, regionally, locally and speciality in beers, Heineken has established strong leading portfolios of beer brands. The company was established back in 1864 by Gerard Adriaan Heineken who purchased a brewery in Amsterdam. The company owns and manages varying varieties of beer brands with speciality beers ranging from Heineken, Amstel, Cruzcampo, Tiger, Zywiec, Birra Moretti, and Murphy’s and Star. The company operates in Europe, USA, Africa, Middle East and Asia Pacific. The company has acquired quite substantial shares within the beer industry based on various strategies that the company has enacted. The company headquarters are in Amsterdam, Netherlands with over 54,004 individuals employed by the company in relation to their 2007 report. The number could have increased based on the strategic approaches deployed by the management in reference to ensuring efficiency and effectiveness to their service delivery on their customers.
The company strategies to improve on sales attributed to the company increase in revenues in their 2007-2008 report indicating a 6.2 respectively. Heineken is one of the leading brewers in the world based on sales and profitability. The established international networks in various geographical locations with diverse cultures can be attached to the dominance and the competitive advantage achieved by the company. The global network facilitate effective distributors and breweries, the company enjoys substantial shares in the Europe market being the largest brewer and beverage distributor (Meldrum and McDonald, 2007).
The company operates in five segments in relation to geographical locations that is; Western Europe, Central and Eastern Europe, Americans, Africa and Middle East and Asia Pacific. In the Western Europe precisely where the company is the leading brewer it has over 48.7% of the total market share in Netherlands, 31% in Spain and Italy at 31.1% with France largest second player holding a 31.2% and Ireland with 22.2%. In Central Europe the company dominates the market with Poland and Australia among other states receiving the company brands such as Heineken, Edelweiss, Amstel, Alfa, and Guinness among other popular demands. In the Americans the company offers their products in the US, Central America and the Caribbean while in Africa the company owns over 54% shares on the Nigerian Breweries, 50 % stake in Consolidated Breweries on the two giant brewers in the country. In Egypt the company owns one of the country’s leading sole supplier of beer termed as Al Ahram Beverages Company (Heineken, 2008 Report).
Based on the stipulated analysis depicting the company’s historical and geographical operations forms an essential aspect towards offering an in depth analysis on the company strategic approaches examining SWOT analysis or aspects. This is stipulated in the preceding analysis.
SWOT analysis
As depicted earlier, the essentiality of exploring the company strategies or performance based on strengths, weakness, opportunities and threats is based on the fact that it aids on examining the internal and external environment contributing or limiting the performance of the company. Heineken like every business venture within the market in respective industry is implicated by opportunities and threats. The preceding analysis offers a clear insight on the company strengths, weaknesses, opportunities and the threats.
Strengths
Heineken has established a competitive advantage within the market that can be attached to the dominance enjoyed by the company. The company enjoys various attributes that strengths the performance of the company on varying geographical locations this include; a strong portfolio of brands, large network of breweries and robust revenue growth. These factors among other range of aspects directly form the cornerstone in relation to the company performances. The company portfolio is evident based on the over 170 international premium, regional, local and specialty beers established. Heineken and Amstel brands are the principal brands that propel the company performances with over 20% of the company total beer volume attached to Heineken brand a flagship of the company. The strong brand portfolio established by the company aids on creating a favorable image on the company market ensuring stability and consistent revenues. This is also a significant aspect as the company seeks to expand their brands to other unexplored markets globally (Hooley et al., 2012).
Weakness
Business ventures normally depict both weaknesses and strengths within their market operations based on internal or external environmental factors. This notion is also depicted on Heineken operations where it portrays number of weaknesses, this includes; having a week liquidity position and weak inventory management. This two aspects or factors are some of the leading weaknesses that the company depicts in their operations. Weak inventory management is evident on the company operations based on the fact that the company records a high level of inventory. The company records indicated their inventory turnover ratio being lower compared to that of the competitors such as Anheuser-Busch Companies and SABMiller. The weak liquidity position affects the company’s operational efficiency limiting their growth initiatives of the company.
Opportunities
The company has various opportunities which upon full exploitation can position the company on a strategic position to counter competitions while minimizing the identified weaknesses. Some of these opportunities include; the company acquisition of Scottish and Newcastle, the strategic agreements and the rowing Indian and Russian market. The company acquisition of Scottish and Newcastle in April 2008 opened new beneficial opportunities as the company increased dominance while offering more services and products to their customers on border angles. The agreement by these companies was aimed to witness Carlsberg controlling Baltic Beverages Holdings on a fifty-fifty joint venture between Carlsberg and Scottish and Newcastle with Heineken controlling S&N operations in India and Britain (Fifield, 2007).
This acquisition was one of the essential undertakings of the company as it seeks to grow the flagship of Heineken brand on more profitable markets as a leading brewer on the highly profitable European beer market. S&N acquisition significantly enhanced the company performances by boosting profitability. Strategic agreements engaged by the company to partnership have yielded diverse market opportunities. Growing Indian and Russian Markets with consumptions increasing rapidly offers numerous opportunities to the company increasing sales. Russia indentified as among the world’s leading markets offer diverse opportunities if fully explored. The two countries markets are attractive with increasing consumption being a defining aspect towards increasing brand recognition. Enacting more strategic approaches aimed at fully exploring these markets offers the company with significant baselines towards increasing sales while increasing dominance in the industry.
Threats
Though the company is exposed to the vast opportunities on the external environment, it is evident that the existence of threats presented within the market cripples the company strategies towards increasing sales and dominance within the market. The threats are normally based on the external aspects that the company is exposed to despite the long existence within the industry. These threats if not strategically approached exposes the company with loopholes upon which sales, dominance and consumer satisfaction levels can be adversely affected. The enacted approaches should seek to address the issues portrayed by these threats. Some of the threats exposed to Heineken include; industry consolidation, changing consumer preferences and rising raw material prices. Based on these aspects it is evident that Heineken is exposed to varying or wide range of threats that seeks to cripple their performance, regional growth and development plus sales reduction. Industry consolidation is implicated by the increasing competitive pressure on the alcoholic beverages by competitors among other aspects. The rising raw material prices such as barley and molasses key ingredients on alcohol production are adversely affecting the company performance. The prices of these raw materials increase on annual basis limiting projections with barley prices having an annual increase rate of 13%. The consumer preferences are dynamic with daily changes experienced on daily basis. This is attributed by the increasing or high growth on the beer markets offering consumers with wide ranges of brands to cater for their needs. This is further worsened by the changing trend where consumers are proffering spirits and wines in relation to beers. The age brackets are setting a unique aspect where the young adults are developing a common notion or perspective viewing beer as old-fashioned. This is limiting their use on beers with a large number opting for spirits and wines hence affecting the company in relation to sales and brand preferences.
Recommendations
Short-term goals marketing programs
Recommendations on Enacting long-term Goals
When enacting and developing strategic marketing on the long-term strategic perspectives forms the baselines for marketing management in relation to diversification and segmentation.
- Empathizing on the long term implications
- Corporate or the firms input which are basically corporate culture, corporate publics and corporate resources
- Premising on the varying roles for different products or markets offered by the firm
- Organizational level
- Relationship to finance
The following factors should also be considered by the company in strategic marketing programs. They are cornerstones of a successful business marketing programs upon full consideration.
- The company position in the market. This in relation to the firm which is entering the market for the first time it should consider the position that it is more likely to possess.
- The company mission, policies resources and objectives. These factors should form the baselines for the company marketing strategies.
- The competitors marketing strategies, this review on the competitors’ strategies facilitates the enactment of the firms’ strategies. By reviewing competitors’ strategies, the firm can be able to adjust or improve their strategies.
- Anticipated life cycle stage of the product based on consumer behaviors
- The universal economic conditions under which the firm is going to operate under
These factors provide a clear insight on the expectations and the considerations of enacting marketing programs. The ability to develop effective and competitive marketing strategies is one of the most significant essentials determining the success of the firm. Implementation, evaluation and control are normally based on the success on developing the programs. The firm should incorporate other stakeholders when developing these programs as failure to involve them can cause minimal performance in some sections of the firm.
Organizations have discovered the magic behind understanding both organization buyer behavior and consumer behaviors Kotler (2004) developing the recommended marketing strategies that reflects the consumer behaviors is an essential aspect towards catering for consumer needs. There is a distinctive divergence between organizational buyer behavior and the consumer market behavior. A clear similarity on the two aspects is a defined notion that both project acts that are displayed by each when searching for, purchasing, utilizing, evaluating and disposal of products and services aimed at satisfaction of their needs. Formulating and effective strategic mechanisms that is aimed at analysing the aspects behind the behaviors stipulated by their consumers is essential in plentiful ways. The essentiality of analysing these behaviors is the need to reflect the outcomes on the products and service delivery to the consumers. They are the acts projected by the consumers as they search for, purchase, use, evaluate and dispose products and services expected to satisfy their needs. It focuses on the vast ways that the individual consumers, families or household formulate decisions on how to utilize their resources such as money and time on the consumption of the related products (Speh, 2004). Analysing this ways projected by the consumers as they make purchasing decisions is essential as it will help Heineken company identify areas to offer more resources and improve on with the aim of increasing sales as they increase customer satisfaction. There are aspects that normally influence individual consumer purchasing decisions. These aspects may be internal, external or situational or even a combination of all. Identification of these factors by the firm such as Heineken is essential as it forms baselines’ of their product development in relation to increasing sales and customer satisfaction on long-term goal.
Conclusion
The stipulated analysis on Heineken Company one of the world’s leading beer or beverage companies offers a distinctive approach of the strengths, weakness, opportunities and threats that defines the company performance within the industry. The strategic approached enacted supplementing the analysis with a comprehensive recommendation on strategies that can be enacted to enhance performance of the company based on both short-term and long-term goals. This is essential in reference to enacting mechanisms aimed at offering an effective framework towards increasing performance on the company operations.
References
Hutt, M.D., Speh, T.W. (2004) Business Marketing Management. Hagerstown, MD: South-Western
Kotler, P., Keller, K. (2006). Marketing Management. New Jersey: Pearson Education Aaker, D., Aaker, V., Kumar, G. (2007). Marketing Research. New Jersey: John Wiley & Sons, Inc
Kotler, P., Armstrong, G. (2004). Principles of Marketing. New Jersey: Pearson Education
Meldrum, M., McDonald, M. (2007). Marketing in a Nutshell. Burlington, MA: Elsevier Ltd
Heineken Annual Report 2008-2009
Heineken Annual Report 2011-2012
Hooley,G, Saunders,J, Piercy, N. (2012). Marketing strategy and competitive positioning. Third edition.
Fifield, P. (2007). Marketing Strategy. Great Britain: Elsevier Ltd
