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InBev Company: Competition and Strategy Essay

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Updated: Oct 14th, 2021

Abstract

The InBev Company is the largest Brewery in the world, that has the annual net income more than $3 billion. The departments and subsidiaries are located all over the world, but mainly the industry is concentrated in Europe. However the South American market is also among the largest. InBev owns 50% of the Mexican Brewery, and 27% of Chinese brewery. The current paper is aimed to analyze the historical perspective, Strategic Business Unit identification that classifies the whole corporation as the world Corporation, Relative Positioning, Corporate Culture, and Stakeholder Mapping. These parameters and points of business activity shape the manner of business leading, and give the clear realization on the perspectives. It is necessary to mention, that this analysis is essential for the business forecasts, and for theorizing the models of successful business activities. These models may be applied for the action of the Trans National Corporations, which aim to serve several brands.

Introduction

Anheuser-Busch InBev is one of the leading breweries in the world, that enters the top five of the consumer preferences list. Anheuser-Busch InBev is a real consumer-centric, sales regulated company, that manages over 200 brands all over the world, that include global, multi-national and local beer brands. Budweiser, Stella Artois and Beck’s are among these brands. The sales are held in more than 130 countries (Brito, 2008).

Geographically expanded with the objective exposure to the developed brands, and the bands that are currently developing, Anheuser-Busch InBev manages the staff of more than 120 thousand workers, employed for the operation in more than 30 countries all over the world.

InBev is the subsidiary of the Anheuser-Busch InBev, and it is necessary to emphasize, that it existed absolutely independently at first, soon after its creation. In 2007, it owned the market of €30.6 billion, and the net profit entailed €3.2 billion. The sales volumes were €13.3 billion.

Historical Perspective

In 2006 it was confirmed, that the company’s brewing factory would move from Hoegaarden, where the equipment for brewery was regarded as obsolete, to Piedboeuf brewery in Jupille. Originally it caused numerous protests of the employees, and the disappointment of the citizens of Hoegaarden, who were proud of the status of the town, as the hugest brewery in Europe. As for the quality of the production, it should be mentioned, that it essentially increased because of the innovative technologies, and the re-equipment of the factory. Currently, the beer is made of the very special yeast, that is difficult to keep alive for a long time, and it is not cultivated somewhere outside Brussels.

Originally, the brewery in Jupille-based was not capable to keep the necessary level of quality and production volumes, and everything, that the management could do in the circumstances was to get back to Hoegaarden. This getting back caused too much sarcasm in the mass media, and within the citizens of Hoegaarden. Nevertheless, the brewery was continued in 2007.

In 2008, InBev proclaimed, that the incomes resulted US$46 billion. Currently, the negotiations are arranged, and, if successful, InBev would join two of the world’s four hugest brewing companies, and thus the company will be created, that brews three of the most popular beers in the world: Bud Light, Budweiser and Skol. InBev management also argued that this unification would not cause any U.S. brewery closures, and the management and running of both companies would be supported.

Originally, the history of InBev is not so huge, as the history of most other breweries, that is why there is no an opportunity to speak of the historical perspective. Nevertheless these few years appeared to be rather fruitful for the company’s development and the increase of quality and sales volumes, essential for the equal unification with top US breweries, and for the joint brewing of three top beer brands (Lager Going Flat as Beer Thirst Declines; Brewing, 2007).

SBU Identification

Only the company itself may best describe the structure, as the essential part of the identification. The official web page provides the following facts on the structure:

  • 6 operational Zones: North America, Latin America North, Latin America South, Western Europe, Central & Eastern Europe, and Asia Pacific.
  • Stella Artois and Beck’s connect with consumers across the Globe.
  • Leffe, Brahma, Staropramen and Hoegaarden also represent InBev’s premium multi-country brands across continents
  • Over 200 local brands worldwide continue to form the bedrock of the business.

As for the structure of the production, the following units re required:

  • Raw materials delivery
  • Glass industry (bottles)
  • Tin industry (cans)
  • Paper industry (labels)
  • Brewing works
  • Refrigerators
  • Net of dealers
  • Delivery services

Strategic Event

The most significant strategic event happened when the company was created. Anyway, all the successes could be achieved only with skillful and experienced management, that constantly lead the company to the welfare and rapid development. In November 2008 the company signed the treaty of the year, acquiring the Anheuser-Busch for $52 billion, and thus, InBev became the world’s largest brewer (even overtaking SABMiller). The created Anheuser-Busch InBev now owns the product list consisting of more than 200 beer brands, and this list includes global best-sellers Budweiser, Stella Artois, and Beck’s. The company also produces the long list of regional beers, that mainly act the role of supportive brands, or the brands, which the people got used to (before the local breweries united with InBev). These are Leffe and Hoegaarden, as well as a slew of local favorites, such as Michelob, Skol, and Brahma. Currently, the company possesses approximately 50% of Mexico’s brewing industry (Grupo Modelo, brewer of Corona beer brand), and approximately 27% of Chinese breweries (InBev Practices No-Frills Approach to Corporate Leadership, 2007).

Originally, all the strategic events that were undertaken by InBev management had successful consequences, as even the getting back to Hoegaarden, after leaving it for Jupille, first reasoned the sarcasm and hostility, but, consequently turned successfully, and InBev acquired the reputation of the company that would not stop before any obstacles to achieve success.

Business Environment

The business environment for the company, that that is regarded to be the largest brewing company in the world can not be inauspicious. At InBev, management and employees are committed to holding all the business activities in socially responsible manner. The industrial process is supported by the extensive social support of the working staff, as the working conditions include the protection of the employees, stakeholders, customers and the environment.

The management issues, both local and global, are regarded to be responsible for the fulfillment with all the applicable lawful and corporative requirements and will offer the leadership, that is essential for creating the positive business environment, and overcoming the troubles of inauspicious surroundings, that may harm the implementation of the policies and principles. The operating model for any business environment looks the following:

Operating model.
Figure 1. Operating model.

In order to adapt to any business environment, the following principles of the adaptation are used.

Strategic Premises
Winning Brand Portfolio Winning at the Point of Connection World Class Efficiency Targeted Mergers & Acquisitions
Innovation
People / Culture
Financial Discipline

The fact is that, these principles can not be regarded as original and unique, nevertheless, the InBev has succeed in their implementation as any other company. As for the Winning Brand, it should be emphasized, that the same Brand will be sold differently in different business environments regardless of the promo campaigns intensiveness, the resources spent for the promo campaigns and other factors. The fact is that, different brands are differently accepted by the consumers: thus, Brahma will be better sold in Latin American States, Stella Artois or Staropramen – in Europe. Beck’s, Budweiser are the global brands. Actually, there is no much difference in the tastes or technologies of brewing (though the brewers always emphasize the unique technologies, exclusive equipment and so on), and similar brands (Light, Dark, Premium) taste similarly. The only difference is in the brand name and brand image and the way it is represented on a market.

The Winning at the Point of Connection requires the implementation of thoroughly elaborated wholesaler strategy, customer management strategy and the occasion based activation of the necessary effect. It is claimed, that the winning point of connection generally depends not only on the business environment, but also on the marketing strategy, and, surely, the preliminary market research. The good tool of starting the successful campaign is the intriguing of the potential customer, so the customer should be puzzled. InBev rarely uses this strategy, however, if used, it has the immense effect, as it is bright, eye catching, intriguing and easily remembered.

World Class Efficiency is closely linked with the “winning brand”, with the only particularity, that it requires the implementation of production optimization. It requires the deeper understanding of price drivers in the particular regions and clear realization of the target audience.

Positioning

The issues of positioning of the InBev Company are regarded as the up-to-date, but contradictory in some moments. Some brands are positioned as the brands for the youth, and the advertisement campaigns emphasize, that it is fashionable to drink beer. Other brands are aimed at the elder generations, and the campaigns claim, that these brands are brewed in accordance with the ancient traditions of brewery. It is emphasized, that drinking noble beer is prestigious, and is attributed to those, who succeeded in life. Here is the first contradiction: all the commercial videos highlight, that drinking too much beer is harmful for health. Surely, the advertising departments would take of all the warnings, nevertheless, the national laws often require these warnings to be included, as people should be aware on the harm that drinking of beer may cause.

All the brands are positioned as high quality beer that is brewed in accordance with the ancient traditions and recipes that were used by the monks in Europe (especially if the brand is European). On the other hand, it is claimed, that the beer is brewed with the latest equipment that provides the highest quality of the beer.

Another positioning contradiction is the emphasis of the preservatives, while the beer without preservatives may be stored no longer than 24-36 hours. The brewed beer is supposed to have the keeping time at least for a month.

However, these are just the marketing tricks, that marketers got used to retort to in order to increase the sales volumes. The fact is that, the same tricks are used by the other companies, so InBev may also use them free hearted, especially, taking into account the fact, that InBev is the sales leader, and people select this production as the high quality.

The contemporary design of the bottles is another marketing trick. The manufacturers aim to use the innovative shapes, that correspond the spirit of the current times. Actually, nothing changes in the taste of the beer when the shape of the bottle changes, however, the consumers are glad to know, that their preferred brand has not stopped in developing, and the manufacturer aims to improve not only the quality, but also the appearance of the bottle.

Thus, UK department of InBev launched the new-look bottle of Stella-Artois that is aimed to raise the brand’s profile, and increase the sales opportunities for retailers.

Corporate Culture

The issues of Corporate Culture are generally associated with the management level and experience of the executive departments and their teams. It is the only criteria of the organization that can not be estimated precisely without the manager. Corporate culture is the gathering of all the subtlety, particularities and features of managing the human resources, sales, marketing, advertising etc. The InBev culture is mainly focused on the HR management. Carlos Brito stated the following: While some businesses prefer to hire mid-career employees who have cut their teeth elsewhere, InBev seeks out recent graduates and molds them into leaders embracing InBev’s hard-driving, no-frills, results-focused culture. Leaders can be formed, they can be trained, they can enhance their skills,” (InBev Practices No-Frills Approach to Corporate Leadership, 2007)

Taking into account the features of the HR policy and the corporate culture, associated with the policies and regulations within the teams, it is necessary to emphasize, that the manner, in which business is lead, depends on the corporate culture, and the people. These people are employed with taking into account the future of the company, and plans, which are aimed to be implemented. “We say the leaner the business, the more money we will have at the end of the year to share,” said Brito. This aggressive manner of leading business often disappoints the employees, as some of them got used to perform the business more gently. However, if a person is unable to lead the aggressive business, he or she will not be satisfied with the aggressive HR policy: the workers do not get corporate cars, surely, they do not get free beer, and they have the wide range of responsibilities that should be fulfilled. Nevertheless, their jobs are highly paid, as the company aims to have the best workers in the teams.

We don’t have corporate jets. I don’t have an office. I share my table with my vice presidents. I sit with my marketing guy to my left, my sales guy to my right, my finance guy in front of me,” the better to hold a steady stream of impromptu meetings, Brito said. High achievers thrive in the no-holds-barred atmosphere. “They like to be where the action is. They like to be exposed,” Brito explained. “Most talented people want to be connected with winning teams.” This emphasizes the fact, that everyone is equal in the company, and the responsibilities and obligations are of the highest priority, but not the privileges and personal ambitions.

To attract and retain the best workers, Brito said, the brewer rewards its highest achievers, not necessarily those with longevity. We have 85,000 people, but 250 are really the ones who make a difference. Those people are managed in a different way, because we want to make sure they are excited and are not going to leave the company.” (InBev Practices No-Frills Approach to Corporate Leadership, 2007)

Stakeholders Mapping

The stakeholders, who are generally involved into the business sphere are divided into four categories:

Sponsors – the owners of the projects, that are aimed to be developed and implemented for the development of the company. They often initiate the mobilization of the resources, and they direct the projects accordingly.

Change teams. These are responsible for the performance of the projects, and coming up with the solutions to the change requirement.

Reference Group. Change teams refer them in taking the solutions. The reference groups ensure, that the changes will take place, and will be performed properly.

Users are the group of people, who benefit from the changes.

Sponsors (own the requirement)
Figure 2. Sponsors (own the requirement)

The principle, that is used to manage the stakeholders is included in the following table:

Low Power high Keep Satisfied Manage Closely
Monitor (Minimum Effort) Keep Informed
Low interest high
  • High power, interested people: these are the people the company must fully engage with, and make the greatest efforts to satisfy.
  • High power, less interested people: the company puts enough work in with these people to keep them satisfied.
  • Low power, interested people: these people should be adequately informed. They can often be very helpful with the detail of your project.
  • Low power, less interested people: these people are monitored, but not bored with excessive communication.

Conclusion

In conclusion it is necessary to mention, that InBev brewery is regarded to be the largest Trans National Corporation, that performs the business activity in the most aggressive manner. The criteria that were aimed to be analyzed (the historical perspective, Strategic Business Unit identification that classifies the whole corporation as the world Corporation, Relative Positioning, Corporate Culture, and Stakeholder Mapping) revealed, that the model of the successful transnational business activity is applied by Carlos Brito. This aggressive manner is resulted in the immense net incomes and rapid development and the unification of the companies, inclused into the brewery sphere. As it has been emphasized in the SBU identification chapter, this industry involves numerous spheres and departments, which require to be perfectly arranged and managed. The management tools reveal the fact that this aggressive HR, Marketing, Advertising and other policies act the best, as the consumers and employees require leader, that will give the rhythm of production, manufacturing and management.

References

  1. “Lager Going Flat as Beer Thirst Declines; Brewing.” The Birmingham Post (England) 2007: 24.
  2. “Sales of Cider Rise as Lager Loses Its Appeal.” Western Mail (Cardiff, Wales) 2006: 33
  3. “Tesco’s Blind Taste Gives Top Marks to Welsh Brewer’s Magic Lagyr.” Western Mail (Cardiff, Wales) 2007: 12.
  4. “Your MONEY: Trouble Brews; JOBS FEAR AS RIVALS BUY NEWKY BROWN FIRM.” The Mirror (London, England) 2008: 40.
  5. Brito, C.. Inbev.com. 2008. Web.
  6. ” Stanford Graduate School of Business. 2007. Web.
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