Bahamian Commonwealth Brewery’s Strategic Management Report

Introduction

Commonwealth Brewery is a Bahamian beverage company with extensive coverage across the Bahamas; it has many employees, breweries, and high incomes. The long-term objectives for a strategic management plan should be formed based on the company’s marketing strategy, financial results, strengths, and weaknesses. While marketing and accounting are processes that allow the company to develop and increase its profits, strengths and weaknesses are the internal factors that follow from its structure, industry, and mission.

Marketing

Advertising is an essential part of a beverage company, as its potential customers should be well-connected with its goods; in other cases, they may be felt as unnecessary. Efficient marketing consists of customer evaluation and sales promotion, enabling Commonwealth Brewery to realize its products successfully (Aghara, 2018). As it is a brewery company, its target audience is people of all ages and social groups interested in drinking alcoholic and non-alcoholic beverages. Teenagers are interested in soft drinks and non-alcoholic beers and are often happy to help perform their marketing via social networks (Fleming-Milici & Harris, 2020). In the beverage industry, sincere and equal communication with customers, for example, via social networks, is especially valued (Mongkol, 2014). In that way, a good connection with all categories of the target audience would be highly beneficial for Commonwealth Brewery, increasing its sales and involving its clients in marketing.

The beverage industry is often associated with unhealthy food, which may be the reason for its bad reputation and, thus, a decrease in income. The mentioned interest of adolescents in soft drinks is often considered wrong and unhealthy and, therefore, discouraged (Fleming-Milici & Harris, 2020). However, establishing a strong brand reputation helps overcome this inherently bad reputation (Putri et al., 2020). Commonwealth Brewery does that by active participation in various community events, charity, and social advertising. Customer service is well-developed, too: everyone may contact the company’s representatives via email or social network. Developing those two strategy elements will facilitate the development of Commonwealth Brewery and increase its brand attractiveness to customers.

Accounting

To maintain profitability, the company should calculate its profits and expenses and analyze all its sources. According to its financial statement, Commonwealth Brewery in 2021 experienced solid growth in its revenue compared with 2020 (Commonwealth Brewery Limited, 2022). Tourism is the most important factor that stimulates its financial growth, as the Bahamas are a popular tourist destination, and travelers are usually interested in relaxing and drinking beverages. More than 70 percent of expenses are for raw materials; the other 30 percent are for personnel salary, amortization, and depreciation (Commonwealth Brewery Limited, 2022). Corporate responsibility is another important factor that is especially valued in the beverage industry, increasing the company’s reputation and efficiency (Putri et al., 2020). While it means expenses in the short-term, for example, for charity or wasteless manufacturing facilities, it increases profits in long-terms, making the company more attractive and its manufacturing processes more efficient.

Internal Factor Evaluation Matrix (IFE)

The IFE evaluates a company’s internal factors, namely strengths and weaknesses, and analyzes how they are interconnected. The matrix is a list of factors-strengths and factors-weaknesses, which are consequences of the company’s strengths and weaknesses. Then, each factor should be weighted according to its relative influence on the company’s processes (David, 2011). It is done mostly on intuition rather than a solid scientific approach; despite that, such a matrix is useful in evaluating a company’s objectives and perspectives. Five factors-strengths and three factors-weaknesses are defined for Commonwealth Brewery; each is weighted, and the total sum of all eight weights equals 1.

1. Factors-strengths:
   1. Recycling facilities (0.05): the company’s strategy aligns with eco-friendly initiatives, and more than 50 percent of its bottles are produced in its own recycling plant.
   2. Corporate responsibility (0.15): the company participates in various social events and charity, such as helping those suffering from natural disasters; in addition, it maintains the high quality of its drinks.
   3. Own retail stores (0.05): with more than 50 stores across the Bahamas, Commonwealth Brewery has facilities to realize its drinks and beverages under its own conditions.
   4. Diverse production (0.05): as the company produces various alcohol (beer, wine) and non-alcohol drinks, different drinks may be sold to different population groups, multiplying Commonwealth Brewery’s opportunities.
   5. Industry leadership (0.25): the company already has a solid reputation, extensive coverage, and a client base, which creates a large competitive advantage and makes Commonwealth Brewery’s opportunities more vivid.
2. Factors-weaknesses:
   1. Dependence on the tourism industry (0.10): a large part of Commonwealth Brewery’s profit in the Bahamas is connected with active tourist influx, as they are most interested in buying its drink.
   3. Dependence on marketing campaigns (0.10): as alcohol and non-alcohol drinks are not essential goods and people can easily live without them, good marketing campaigns are necessary to show their benefits and attract customers.
   4. Bad reputation as “unhealthy drink” (0.25): alcohol production and soft drinks are often condemned by the public as wrong for the population’s health, which is actually true for low-quality drinks, worsening their reputation.

To summarize the IFE matrix results, the most important strengths and weaknesses of Commonwealth Brewery are, respectively, industry leadership and an inherently bad reputation. Both of them have a weight of 0.25; industry leadership creates a solid basis for the company’s development, while alcohol and soft drinks’ bad reputation is an obstacle to this. Corporate responsibility has a weight of 0.15, as it is especially important for the beverage company, and Commonwealth Brewery has a strong corporate responsibility (Putri et al., 2020). It builds a good brand image and overcomes the inherently bad reputation of alcohol and soft drinks.

Objectives and Perspectives

Being a large Bahamian beverage company, Commonwealth Brewery has good opportunities to increase its revenues and efficiency by using its strengths and reducing weaknesses. Its three-year strategic plan should include recommendations on how to do that based on the IFE. Long-term objectives are measurable, realistic, understandable points that describe what the company should reach in the next years, why, and how (David, 2011). Based on the company’s strengths and weaknesses, three main objectives for Commonwealth Brewery may be defined:

• maintaining its leadership position in the market, strong reputation, and customer satisfaction by promoting the brand image.
• creating viable marketing strategies by establishing good communication with customers and understanding their needs;
• promote corporate responsibility by maintaining drink quality and participation in social events.

It means that the development of customer-centered marketing strategies and brand image, facilitating direct communication with customers, and increasing community-oriented activity will benefit the company’s development in the next three years.

Conclusion

Commonwealth Brewery’s strengths are its leadership position in the market and strong brand image, which creates good opportunities for its development. Weaknesses and challenges are in the company’s dependence on the tourism industry, marketing, and the inherently bad reputation of alcohol and soft drinks. Marketing is a vital part of the company, as it is necessary for it to attract people and create a good brand image to maintain a brand’s reputation. Accounting and cost distribution helps manage the company’s budget and create long-term objectives, such as corporate responsibility, which may increase expenses at first but promote the company’s development and profits in the future.

References

Aghara, V. N. O. (2018). Sales promotion as a leverage strategy for improving sales and profitability in the alcohol beverage industry.International Research Journal of Management, IT and Social Sciences, 5(4).

Commonwealth Brewery Limited. (2022). Commonwealth Brewery Limited. Web.

David, F. R. (2011). Strategic Management: Concepts and Cases. Pearson Education.

Fleming-Milici, F., & Harris, J. L. (2020). Adolescents’ engagement with unhealthy food and beverage brands on social media.Appetite, 146(1), 104501.

Mongkol, K. (2014). Integrated Marketing Communication to Increase Brand Equity: The Case of a Thai Beverage Company.International Journal of Trade, Economics and Finance, 5(5), 445–448.

Putri, M. M., Firmansyah, A., & Labadia, D. (2020). Corporate Social Responsibility Disclosure, Good Corporate Governance, Firm Value: Evidence from Indonesia’s Food And Beverage Companies. The Accounting Journal of Binaniaga, 5(2), 113.