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Ukessays.com Business Internal External Analysis

Ukessays.com Business Internal External Analysis

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Published by Diabolical Venge
Business Internal External Analysis
Business Internal External Analysis

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Published by: Diabolical Venge on Aug 21, 2014
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Business external analysis
Identify SABMiller's Strategic position:
In order to Identify the company's position; it is important to carry out its Business external analysis; it isalso essential to identify its core competences and capabilities as well as stakeholder expectations in order tosuccessfully identify the company's strategic position.
SABMiller's External Analysis:
In order to asses SABMiller's external analysis; I have constructed a PESTEL analysis (appendix 1); Porters 5forces (appendix 2); THE BCG matrix (appendix 3) and its competition Analysis (appendix 4). After conducting Porter's five forces of the Brewing Industry; I have found many interesting outcomes relating toSABMiller as the overall markets of the brewing industry aren't clearly attractive; its performance depends on theability to expand its market share and exploit opportunities in the emerging markets. However, the brewingindustry in growing markets, which SABMiller operates, is highly attractive but not for new entrants; it's especiallyattractive for the dominant players in the Industry; which in this case SABMiller is one of them. After analysing myPorter's 5 forces; it is conclusive that it would be extremely hard for new entrants to compete in these emergingmarkets due to the high dominance of the main competitors.I have also observed other good points such as the low level of power within suppliers; however the power of suppliers is increasing especially in USA due to the rising costs of energy and Aluminium but in under developedcountries; it is conclusive that SABMiller has the overall power of its suppliers; as it's an international brewer;finding suppliers wouldn't be a major issue.Its Conclusive that the power of Buyers is very high; due to the end consumer having a growing number of choicefrom other brewers as there are no switching costs; the end consumer can choose any drink to have so it's up tothe brewing companies to emphasise its targeted customers to drink its products.It is also conclusive that the power of substitutes is low but it is significantly growing. Due to the modernconsciousness of healthy living; low calorie beers and non alcoholic beverages are increasing in volume; thisdoesn't affect SABMiller as much compared to other brewers as the company it self produces alternative productsto beer such as the low calorie versions; SABMiller has also recently entered wine and soft drinks market in Africaas I'm predicting more of this similar strategic activity will occur in other markets.From the PESTEL; Porters 5 forces and the Competition Analysis; I am concluding that SABMiller operates indeveloping as well as matured markets. These markets include very "challenging" aspects which in the past haslimited the threat of new entrants. These markets include very tough competition; as rivalry in the BrewingIndustry is increasingly high. These markets tend to have a fragmented brewing industry and it is essential tohave extensive capital and knowledge to setup a brewing enterprise. In developed and more matured markets the industry is consolidated and dominated by a few, larger players. Assuch, these large companies, like SABMiller tend to own multiple brands with different market positions. In thismarket, it is much easier for competitors to launch rival products that compete directly on price and thus erodingmarket share. After analysing the company's competition; SABMiller has and still is experiencing this problem; For example in North America; especially recently where InBev has bought Anheuser-Busch; this has helped thedominant Brewer to enlarge a further space between themselves and SABMiller; which has affected thecompany's market share future plans deeply. SABMiller now has to come up with new innovative ideas to try andclose the gap between them and A-B InBev.
The American Industry is the largest brewing market by value as rivalry is now more intense than ever;meaning more competitors are entering into a price war with SABMiller. This has become a huge threat for SABMiller; but it does also hold opportunities to weaken this threat down. For example the company has theopportunity to acquire more stakes in the Brazilian Market; or become the owner of China resources which is the largest brewer in China. Both these markets I havementioned are matured yet and still hold many growing estimates. After conducting a stakeholder analysis; I have come up with simple assessmentsthat SABMiller had to make some strategic choices to please its key players. SAB'sacquisition of Miller was largely due to the pressure from the London StockExchange. It is felt that SAB was at risk due to it's over reliance of soft currencies incertain market. This resulted in a poor performance in the London Stock Exchangein the year of 2000. Even though their core competences were elsewhere, SAB wenton with the takeover to please the stakeholders. Media and analysts have come out with unfavourable reports onSABMiller. These particular stakeholders needed to be pleased. From my BCG Matrix; its conclusive that its'Western European operations are a 'dog' and SABMiller should ideally get out of the market as further investmentwill end up little positive results. But this won't be possible due to the investors' expectations of a market presencein Western Europe.
Internal Analysis: SABMiller's Core Competences:
Core Competences are the skills and abilities by which Resources are deployed through an Organisation'sactivities and processes such as to achieve competitive advantage in ways that others cannot imitate or obtain.(J.S.W. 8th Edition; p852: Glossary)From the very beginning, SABMiller had developed unique competences in analysing its' business environment;meaning that the company expertises in analysing a market that is aiming to operate in. SABMiller's activities areheavily influenced by the political, social and legislative environmental factors within which it operates; meaningthis has made the company proactive when dealing with macro factors.SABMiller's South African culture has shaped the strategic development of the company. It is this culture, whichmakes their distinct capability of entering emerging markets less imitable. As highlighted in the case study,SABMiller's strategy represents a 'synthesis' of learning based on the historical developments of the company(J.S.W. 8th Edition; Case Study: SABMiller; McQuade, 2006).Mapping out the early days in South Africa, SABMiller's strategy was flexible and responsive to the market.SABMiller acquired local brewing businesses to enable them to grow and overcome certain business restrictionsthrough acquisition. SABMiller also expanded their portfolio to include wine, matches and the Sun City casinoresort. When the political regime and the regulatory environment lifted, SABMiller developed three mega-breweries in South Africa. By being at ease in these types of challenging environments it enables SABMiller toaggressively grow and capture market share when arguably other firms would be paralysed by fear. Instead,SABMiller are able to scan their external environment and turn threats into opportunities. In doing so, providing adistinct set of capabilities, which is very difficult to imitate.The tough African roots have given SABMiller the confidence and self belief to come up with solutionsduring tough conditions in developing markets. The company is also very experienced in dealing with verysensitive governments and local communities. These efforts also show that they are very flexible.SAB used its expert management skills learnt from Africa, to turnaround Millers' fortunes. Traditional SAB systemof employee performance rating was used in Miller. These efforts earned them the name turnaround specialists.The parenting style of SABMiller adds value to the breweries. In the new markets they retain the brand, buttransforming the business by adding quality and consistency to the beer. They develop the marketing, distributionproductivity and capacity of the business.SABMiller is highly experienced in acquisitions and takeovers. This competency gave them the confidence to take

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