Introduction
The following business report analyzes the company Anheuser Busch to identify the issues that it is facing pertaining to its strategic position as the market leader. For this purpose the report provides a brief overview of the company, its mission and vision. The issues that are faced by the company have been identified. Recommendations and an associated implementation plan has been proposed to enable the Anheuser Busch to counter and resolve the issues that are threatening the leadership position of the country in the market.
Company Background
The Anheuser-Busch company has been the industry leader in the international market for the brewing industry. The company has its main operations based in the United States and holds the major shared of the market for beverage based products all over the world. The largest market for beverages exists in Europe and the Anheuser-Busch company has a strong presence as well as a leadership in the European market even though other strong local players are present in the local European market. The primary focus of the company in terms market is the United States where the company dominates the beer segment of the market.
The mission of the company has been to be leading beer company in the world that is present to satisfy and entertain the global target market while bearing profitable returns for its shareholders.
The claim to fame that Anheuser-Busch has had for its operations and success resulting in the current leadership position that they have in the market pertains to the innovation and the technology that they have employed for the manufacturing, storage and processing of their beverages
Identified Issues
An analysis of the company has provided that the company has been facing increasing sales revenue in the local and the international markets however the market targeted by the company is shrinking. The consumer perceptions about alcohol consumption have considerably contributed to the change in the preferences of the customers as alcohol beverages along with the lifestyle choices that they make.
It has been identified that the company is highly dependent on its local/ domestic beer division for driving its revenue and profits for the operations. The company is well established in the international markets, however around 70 percent of the company’s sales are made within the United States only. Aside form this company is also highly dependent wholesaler for its beer sales in the face of a lacking retailing solution.
Other threats that have been identified which hamper the business for Anheuser Busch pertain to prohibition of widespread marketing of alcoholic beverages in the mass media, the governmental regulations, and trade barriers between that prevent the company from attaining a higher market share in its international operations.
Analysis
In order to determine how the business can overcome the issues that have been highlighted to through an in depth analysis of the company and its operations would be taken. This analysis would take the form of a financial analysis of the business over a period of five years to determine how the business has been able to establish itself in the market amongst its competitors. An industry analysis would also be undertaken to compare and contrast the performance of Anheuser Busch with its competitors.
The market analysis of the Anheuser Busch for its sales has depicted that the company sells more than 70 percent of its beer based products within the United States only. “During the fiscal year ending 2006, company generated approximately 74.8% of its total revenue from the domestic beer segment. In contrast the other three segments accounted for only 25.2 % of the total revenue during the same period. Strong dependence on a particular segment increases the business risk of the company thereby putting it in a competitive disadvantage.” (‘Anheuser-Busch Companies Inc.’, 2007) This is depicted in the following graph.
The consolidated financial statements for Anheuser Busch have shown that the financial indicators for the company in the past five years from 2003 to 2007 pertained to return on equity of 64.0 percent and a return on assets of 12.9 percent. The overall sales for the company has grown as depicted by the increasing revenue from sale, however the costs of operations for the company have also grown resulting decreasing performance of the company in the market. The marked reduction in the ROE and the ROA in 2007 as compared to previous years is an indicator of this.
Recommendations
The strengths of the Anheuser Busch Company pertain to its well established network for beverage distribution, storage and transportation to wholesalers and retailers, and the prestigious and premium brand names that are owned by the company under the umbrella of Anheuser Busch. This gives the company a leadership position in the market right now increasing the chances of the company getting financial leverage and support from financial institutions based on its goodwill. The diverse range of breweries owned by the company in the international markets also provides it with the opportunity to divulge into diverse beverage based markets in the home front as well as in the international regions of its operations.
Therefore in order to make use of the resources and strengths that it has the Anheuser Busch Company should diversify into other markets aside form beer and beer based products/ beverages.
The company should diversify its sales to different markets as well targeting different segments of the market within the United States.
The company should attempt to analyze the profitability of its entertainment ventures and theme parks, closing down those that are slowly loosing customers and showing a decreasing trend towards customer attraction/retention.
The company should diversify not just its operations as well as its product line and services in its international regions of operations to take advantage of the increased market that would be exposed to the company through this.
Implementation Plan
The following presents the implementation plan for the recommendations that have been highlighted above.
In order to diversify into other product lines and beverages that do not include alcohol or beer, the company will have to invest in supporting infrastructure and the set up of facilities and plans in the US to cater to the non alcoholic beverage drinking market. Moreover the company can also use the plants and infrastructure that is owned by it through mergers, consolidations and joint ventures in the international markets to manufacture the products and ship them to the United States.
The same strategy can be applied to target the markets in the international beverage industry as well. The company can use the existing resources pertaining to beverage manufacturing plants, and logistics supports to provide wine products and healthier beverage drinks in the international markets along with its signature beer brands to increase the percentage of revenue that the company can make from its international operations. This would also help in decreasing its concentration and focus in the US only enabling it to have contingency markets to fall back when alcohol and beer consumption reduces in the US.
Concluding Remarks
- Signage
- Employee uniform
The best strategy that can be employed by Anheuser Busch to alleviate the issues that it is facing and work around the threats that have been highlighted above is to diversify its target market from a concentrated US market to a global beverage market. The company can provide its line of signature premium brands of beer as well as non alcoholic drinks and fruit based beverages to cater to the different demands of the international markets in its regions of operations. This will help increase the profitability of the company further while enabling it to sustain its strategic advantage of being the industry leader.
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