What is the impact of effective formulation and implementation of strategies for venturing in international and global operations in Heineken Inc?
Abstract
Global business strategy depicts the process under which organizations assesses the future prospects of the firm towards achieving its objectives. Every successful organization engages in strategic planning plus those with global business operations as they seek to position themselves towards taking full advantage of the worldwide trend and opportunities. The notion behind the strategic decisions is normally based on the specific objectives, power, relationships, performance, economic and resources, technological, social and cultural result in change of the strategy. International strategy embraces the determination based on the correct balance between the global standardization and the integration plus the local responsiveness. Heineken Inc which is one of the global the specific multinational corporations (MNCs) specifically depict that strategic planning is vital towards competing with the increasing global competition and towards controlling their overseas operations. This normally involves the identification and selection of appropriate goals and courses of action plus taking the right decision based on the actions that can help an organization achieve its goals. In relation to the detailed analysis, it is evident that MNC’s takes decisions to enter new market focus based on research and utilization of favorable resources respectively as proffered in the study. The study provides some of strategic undertakings on the impact of effective formulation and implementation of strategies for venturing in international and global operations in Multinational Corporations (MNCs).
Chapter one
Introduction
There numerous attached entities that emerge from diversification as varying companies’ ventures in the respective markets have been on the increase. This is in relation to ensuring that they tap the benefits attached to globalization and technological developments. According to Debanjan, (2002) there is need for fundamental approaches towards ensuring that the structures developed in relation to the growth vectors are achieved. The notion behind the stipulated analogy is based on the respective factors which are attached to the market share extensiveness and also availing the consumers with goods and services that meets their expectations. The analogy encompassed under diversification is based on developing strategies aimed at increasing the market share through the varying strategic measures such as; how to extend on the market and based on the market development, product development among other strategic approaches.
As companies continue to venture in the international markets and the global operations, the respective resources used are required to reflect the profitable ventures that the organization seeks to invest. This depicts the essence of expensive market research on the most profitable areas to venture and also expand into. Firms are extending on their respective operations based on the nations which are profitable and where the market is growing. This is evident in relation to the statistical figures that stipulate how the western companies are venturing and expanding into the East and African markets based on the high market and the low labor value. Heineken Inc. is one of such companies which have been formulating and implementing strategic approaches aimed at ensuring successful venture into the global market. However, the success towards the respective venture in the global market requires efforts in relation to some of the risks and the respective impacts likely to deter such implications. Global competition in the international management entails strategic approaches that define the ability of the organization to extend its operations on the cross borders markets. Aspects attached to the entities attached encompass some of the respective issues that the organization needs to undertake towards the formulation and the implementation of strategic entities in relation to the international and the global operations.
Based on the stipulated analysis, it is evident that there is need to examine some of the essential strategic approaches that organizations can develop towards ensuring successful venture into the global market. The study, embraces such approaches by examining the essence of formulating effective strategies in vast nations globally and enable the organizations dominate the market. The study not only avails some of the essential entities in relation to formulating the respective strategies, but also presents some of the dynamic strategies on the reasons that the organization may undertake to venture in the international market based on the formulated and implemented strategies. This is achieved through a detailed analysis on the international markets strategic formulation process plus the respective steps towards developing the international and the global strategies in varying international management concerns. Furthermore, the study avails a detailed theoretical approach where some of the sensitive aspects in relation to the company’s strategies to venture in the global market are concerned. The stipulated essence of the study is based on the increasing need for dynamic strategies based on the increasing reasons why organizations seek to venture into the international markets. Based on the recent research on some of the companies that have ventured into the global markets, it is not an easy course as some of the companies have been doomed based on poor strategic approaches hence failing to dominate the market. This is based on the fact that such companies fail to develop effective strategies hence crashing hence massive losses on the investments. Based on the stipulated analysis, the study avails a detailed analysis on how the company needs to develop strategies which are aimed at ensuring that they avert competition and create a competitive advantage in a given industry. Through backing up on the respective approaches attached to the international management as stipulated earlier in the study, the formulation and implementation under which the some of the essential entities in relation to defining the success of an organization operating on the global and international investments is availed.
Company History and Profile
Heineken inc. is an international companies which over 170 international premiums; the company has been able to establish strong and leading brands in the global markets. The company is widely known based on the fact that it is a leading portfolio of the beer brands. Having been established back in 1864 by Gerard Adriaan Heineken who purchased a brewery in Amsterdam, the company has been able to create a competitive advantage within the global market. The ability of the company to manage wide variety of brands and have a specialty in beer that ranges from Heineken Amstel Cruzcampo Tiger ZywiecBirra Moretti and Murphy s and Star .The Company operates in Europe USA Africa Middle East and Asia Pacific, the company has been able to establish and venture in global operations effectively. Some of the regions under which the company operates include in Europe, USA, Middle East, African and Asian Pacific. To increase on its global operations, the company has also been able to acquire or create substantial shares within the beer industry as availed on the respective operations and the strategies that the company has undertake. In Amsterdam Netherlands, the company’s headquarters are located with over 54 004 employees employed by the company as stipulated into their 2007 report.
Based on the disparity on the years, the number may have increased based on the increased operations and the management strategies as the company seeks to ensure effectiveness and efficiency in service delivery in relation to the consumer demand. Based on the 2007 to 2008 report, the company had enacted strategies that were aimed at improving on the sales and revenues generated by the company. This indicated a 6.2 percent hence positioning Heineken as one of the leading brewers in the world in relation to the sales and profitability. The company has been able to achieve such developments based on the currently developed international networks and extensive geographical locations that embraces diverse cultures hence ability to dominate and create a competitive advantage as achieved by the company. However, the respective global networks are marginally defined by the ability of the company to adopt in the respective cultures and also ensure effective distribution on the company products hence the brewer able to enjoy substantial shares within the European market where it is positioned as the largest brewer and beverage distributor. Through five segments under which the company operates, based on the geographical locations which are; Western Europe Central and Eastern Europe Americans Africa and Middle East and Asia Pacific, the company has been able to establish differing percentages based on the market dominance. This is availed in the preceding analysis (Heineken, 2008):
- 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
- 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 suppliers of beer termed as Al Ahram Beverages Company
The availed analogy is based on the strategic plans which the company has undertaken which are vital towards defining the success on respective ventures that the company has engaged in within the local and the international markets. Defined as the process where the organization leaders are able to evaluate and discover the future prospects of the firm, strategic planning allows effective decision making based on the respective decisions or strategies that the company enact hence ability to achieve the set organizational long term objectives. The process also integrates the strategic basic approaches under which the company is able to compete with the competitors plus also the ability to create a competitive advantage. The notion behind the ability of the organization to create a competitive advantage is based on the fact that it defines the success of the organization in relation to engaging on the long range strategic planning which embraces the global competition and also the essence of coordinating on the respective operations. Some of the changes that the organization is likely to make such as changing on the leadership are likely to affect the effectiveness and the efficiency on the implementation of the strategic plans as availed by varying scholars. This notion is based on the fact that the change on the leadership style may have varying ideologies on the previously set strategies. The analogy attached to the stipulated notion reflects the presumption that the managers needs to indulge the employees and other stakeholders in decision making process. This can be based on the notion stipulated reflects the respectful approaches attached to the
international management which highly depicts the respective level of dominance or success achieved by the organization by venturing in to the selected markets globally. The presumption stipulated falls under the notion that tat the role played by the managers is marginal in relation to an organization venturing in to the global markets and creating a competitive advantage, the managers are required to formulate competitive strategies which are essential towards aiding the organization achieve the set objectives. The stipulated presumption correlates with the fact that the organization has to ensure that the formulated strategies are the founding entities towards achieving the set objectives. The notions stipulated in the availed analysis are some of the theories availed by researchers in relation to the variables of the study, through a detailed research, the paper seeks to develop a detailed approach where the respective variables stipulated are achieved based on the study objectives. Successful diversification has numerous benefits to the organization; this is based on the fact that the foreign market avails numerous opportunities if effectively explored and threats which are likely to cripple the organization seeking to venture in the respective region. The analogy stipulated articulates the essence of enacting strategic mechanisms towards the development, implementation and the control of some if the diversification strategies enacted by the company. According to researchers, some of the firms fail to successfully venture and achieve the set global objective based on their failure to strategically develop good and effective strategies with poor implementation or performance evaluation and the control models.
Problem statement
Heineken’s strategic approach has been based on changing concepts in the international market definitions. Within the proximity of its business endowment, the aspects which play important roles range from the
International businesses in various managerial aspects have played a very important role in making sure that the businesses meet the minimum requirements for growth. Hurley (1991) in his study explains that this important role that International business play is attributed to their efforts to improve their businesses and gradually improve their financial positions. These studies have been further supported by their important decisions that they contribute in view of creating better gains from their businesses. The improved investment which has been shown by their business involvements has made them to be achievers and this has turn around the way businesses are conducted today in various managerial aspects and beyond. Carter and Allen (1997) agrees with these indicators and further explained that International business have more advanced organization skills which make them to be well set for newer business engagements. By far and wide, entrepreneurship is composed of the core values including collective bargaining, growth management as well as highly defined market compositions. The remarkable definitions by Hurley (1991) provide an a level of collective responsibility and this has completely supported the growth of International business entrepreneurs. In spite of the key attributes that contribute to significant methods of doing business, the perspectives which are today taken by International business are well marked by relatively new. Hurley (1991) illustrated that markets grow when there is involvement of major parties and this has meant that a continuous set of factors are relatively based on business growth and how people tend to engage in creating new businesses.
Heineken Strategic Approaches
There are respective questions which are the baseline of the tactical diversification strategy (Toivanen, 2004). They include:
Where to venture; this is the initial and yet the very challenging decision that the organization has to make. The answer to the question calls for detailed analysis on the respective factors such as the internal factors of the market plus the external factors whether they favors the desired mode features and the transaction specific behavior. When to penetrate; this follows after a successful research and analysis on the initial questions, the answers to the question are also vital to the organization hence detailed consultation during the decision making. This is normally based on the fact that there is the need for a detailed examination on the appropriate period on when the company should venture in to the specific market. A firm may seek to be the first mover or the later mover as (Lafontaine, 2005) explains, this is based on the firms perception on the new market based on the detailed research conducted by the firm. He stipulates how some of the respective advantages and disadvantages are likely to undermine the respective decision made. The firm which makes the decision to venture has the merits of technological, pre emption of the scarce resources, ability to effectively establish entry barriers learnt later by the late movers and creating a strong brand. The late movers also enjoys the respective merits and demerits based on the entry and the opportunities includes the ability to learn and enjoy from the first mover strategies and the performances and also effectively adapt in cases of market fluctuations.
How to enter: the question seeks the essence of developing specific strategies and approaches on how to venture into the identified market which is core in relation to determining aspects to incorporate towards achieving the set objectives by the firm in relation to the diversification motive. As a firm seeks to venture into the global markets, it is essential to have a clear insight on some of the regulations and standards enacted by the respective countries in relation to the entry modes, but in cases where the country tends have such strict regulation, prior analysis is recommended to avert legal issues. The firm has to follow the respective regulations if it wishes to operate in such markets while those countries with minimal regulations tend to favor firms hence marginal investments. According to Mitra, (2002) it indicates how some of the entry models such as the equity and the non equity models have varying implications. He indicates how the non equity model, the business is required to opt for exporting directly or indirectly or indulge other businesses through contractual agreements such franchising or R and D contracts. The equality model entails cases where the firm is availed with the options of creation wholly owned subsidiaries WOS, Green field, Acquisitions plus others such as Joint ventures or through minority joint ventures or equal joint ventures or also through majority joint ventures.
Objectives
The research conceptualization is established within the changing components of the global markets. Therefore, within a more dynamic environment, the effectiveness of the strategies are established comparatively within a measured level.
The objectives of the study include:
- Examining the relevance of Heineken Inc. effective formulation and implementation of strategies in the process of venturing into the global markets.
- Establishing some of the formulated and implemented strategies and approaches for venturing in international and global operations
- Defining the relationship between Indicating strategies that Heineken and other multinational companies need to adopt towards achieving a competitive advantage within the global environment
The Scope and significance of the study
Through examining the respective global operations of Heineken Inc, the study develops a detailed theoretical approach where the respective objectives of the study are achieved. There are vast theories that are attached to the notion of effective formulation and implementation of strategies, the study seeks to explore such theories and use the respective approaches attached towards achieving the set study objectives. The parameters governing the study are based on accessibility of secondary materials through focusing on the websites of the respective company and other research materials that researchers have availed in relation to the study. The study through primary sources collected and gathered data related to the variables under the study. This was achieved through conducting an extensive survey through online platforms such as emails on organizations and specialized scholars on international markets in relation to the variables of the study. Formulation and implementation processes plus the impact such entities renders on a company such as Heineken are some of the respective strategic approaches that the study is embraces. Through the use of company annual reports, the study avails a vital tool that can be used by respective stakeholders towards making informed decisions on global market venture. Multinational companies are availed with a detailed systematic tool that outlines some of the essential strategies that depicts the opportunities and the threats within the global environment. Thus, the study offers a clear approach towards achieving global market entry and operations based on strategies availed. The study provides international companies with an effective tool to venture in international market and also offers some of the effective approaches developed by companies such as Heineken on the global market to dominate as they venture in the global market.
Introduction
The review on literature incorporates developing a theoretical approach where varying secondary sources that retains information related to the study are reviewed. Through a detailed analysis on some of these sources, the study is based to examine the opinions, facts, and findings by other researchers on some of the variables that are attached to the study. Review on the literature ensures that the study examines some of the theories, approaches and existing gaps on the secondary sources that other researchers have availed. The approaches examined ensure that the respective strategies enacted by the study are within the set parameters while also seeking to examine some of the effective strategies that the study can embrace. This is also essential towards ensuring that the study incorporates vital entities where resources that relate to the study are evaluated. The notion attached to the need to review the literature ensures that the theories used by other researchers are examined and used to build on the theories applied in the study. This is also essential towards examining some of the gaps that the respective researchers failed to address when they were conducting research in reference to some of the variables of the study. Based on the availed analysis, the study develops a detailed theoretical approach that incorporates the respective policies and standards set towards ensuring validity and reliability of the study findings is made. The literature review section is divided into various sections; this section ensures that the respective resources attached to company under the study, that is, Heineken Inc are examined plus those under the respective strategies on effective formulation and implementation of the strategies on venturing to the global and international operations plus the essence or some of the reasons under which companies opts to venture into the global or international market.
Analysis
In relation to the availed analysis, it is evident that there are varying entities which are attached to the need to examine the respective aspects attached to venturing into the global operations. Vast researchers have examined the respective variables attached to strategies formulations and implementations and the essence of venturing into the global operations. Based on the extensive research conducted, the study offers a detailed approach which incorporates vital entities those other studies fails to embrace. This is based on the fact that study incorporates extensive research on strategies formulation and implementation through conducting a detailed research on a global Multinational Corporation. This is essential towards ensuring that the study variable are examined while offering an effective tool that can be used by the respective stakeholders and policy makers towards successfully venturing into the global or international operations.
According to the Heineken financial reports, it is apparent that there are varying strengths, weaknesses, opportunities, and threats under the environment where the company ventures and operates under. The respective notion is apparent in other organizations operating on the global environment. The essence of examining such approaches avails a clear insight on the company internal and external environment and how it enacts strategic approaches towards achieving the set corporate objectives. According to (Bhagwati, 2004), the external and the internal environments under which the firm operates are likely to have marginal impact on the effectiveness of venturing into the global and the international markets. He emphasizes on how the respective factors within the external and internal environments have the capability of undermining the ability of the company to venture into the global markets. This is based on the fact that such factors tend to favor or undermine the strategies that the company undertakes while venturing and operating into the global environment. This is also based on the fact that the dynamism within the external environments attributed by technological changes, cultural aspects, economic fluctuations and political instability can marginally impact the operations of a given organization within the global environment. Researchers depicts how controlling and financing has the ability to cause the collapse of some of the global operations by some of the companies. The notion behind success in some of the regions while also recording failure in some of the parts, according to (Khanna, 2004), such cases normally arises based on the fact that such organizations fails to embrace essential strategies in relation to how to venture in such markets or embracing the cultural aspects within the respective environment under which the company operates. Success of companies such as Walmart in regions such as China and America but failed in regions such as Germany is intriguing based on the success that the company has been able to record in other regions globally. Heineken has been able to create a competitive advantage in vast of the regions under which the company has ventured into globally. The ability of the company to dominate the global market is based on strategies formulated.
There are varying notion behind the need to analyse the company strategies based on the performances. This is normally achieved through conducting a detailed analysis on the respective strengths, weaknesses, opportunities and the threats. The preceding analysis incorporates some of the respective theoretical approach in respect to the variables attached while examining the internal and the external environments which largely contributes or limits the performances of the company. The notion attached to the stipulated analysis depicts how Heineken like any other business venturing into the global market within the respective industry where threats and opportunities are normally exposed to the company. The preceding analysis avails some of the threat, the weaknesses, strengths, and opportunities of Heineken Inc hence a clear insight on the company operations towards venturing into the global market.
In relation to the strengths that the company has been able to establish, it is evident that Heineken has been able to create a completive advantage within the market based on the dominance that the company has created in some of the areas that the company has ventured into. The ability of the company venture into the global market has enabled it to create diverse attributes that strengthens the company performance on differing geographical locations. This include; the strong portfolio of brand on the large network of breweries which has enabled the company to record robust revenue growth. Such factors among others form the cornerstone of the company operations and the performances. the company portfolio can be identified on the over 170 international premium regional, local and global aspects based on the speciality beers established by Heineken and Amstel brands which are some of the principle brands which propels the company towards global performances with over 20 percent of the company total beer volume sold globally being under the flagship of Heineken brand. The strong brand based on the company portfolio has enabled the company have a strong brand image to the public and the market in general hence stability and consistency in revenues recorded by the company. Through the use of the strong brand name that the company has been able to create, it is evident that it is easy for the company to expand its brands to other unexplored markets globally.
As stipulated in the prior analysis, it is evident that as organizations seek to venture into the global market, there are weaknesses strengths that such a company experiences. Based on the stipulated analysis, Heineken is also posed with similar weaknesses as it ventures and operates into the global environment. Such weaknesses recorded by the company in the global operations include the week liquidity position and the weak inventory management portrayed by the company. As the company operates into the global environment, it is evident that the two stipulated weaknesses have the potential of limiting the effectiveness and efficiency on operations. The weak inventory management is availed based on the notion that the company operations are normally based on the high level of inventory that the company normally records. This is also apparent based on the fact that the company records indicates that their inventory turnover ratio is lower compared to that of some of the leading competitors such as Anheuser-Busch Companies and SABMiller. The weak liquidity position marginally impacts the company effectiveness and efficiency in operations hence limiting their initiatives. Based on detailed analysis based on some of the researchers approach on weak inventory management, marginal losses can be recorded by the company based on the sensitivity of inventory. The notion can be reflected on the increasing concerns by the experts on effective inventory management. This is more emphases on companies venturing into the global environment where such costs and risks may increase based on the varying regulations attached.
Although Heineken has been able to create a competitive advantage within the global market, the company has not been able to fully explore some of the opportunities. Full exploration on some of these opportunities can aid the company position itself in a competitive environment where it will be able to avert competition and also minimize the stipulated weaknesses. Such opportunities exposed to the company are effectively exploring the opportunity behind the acquisition of the Scottish and Newcastle in April 2008 where a widow on new beneficial opportunities was opened. The company can use such an opportunity to expand dominance while also offering effective services to their customers on broader areas. The respective agreements between these companies as they sort to share their markets was based on the
