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Heineken fresh cold draught at home

Heineken fresh cold draught at home

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Published by mihir

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Published by: mihir on Feb 25, 2008
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12/21/2015

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The BeerTender is a good example of Heineken’s technology strategy at work. The
partnership between France’s Groupe SEB and Heineken in co-developing this technology is a
testament to Heineken’s ability to collaborate with other large international companies. By
effectively utilizing Heineken’s central R&D resources, operating companies can utilize the
BeerTender innovation to drive value in their local markets. This activity both complements and
is consistent with the firm’s differentiation strategy.
Background. Groupe SEB is a world leader in small domestic appliances.218

With its
presence in almost as many countries (120) as Heineken, Group SEB employs fifteen thousand
people worldwide and carries a broad portfolio of branded products.219

In 2002 Groupe SEB
purchased the failing operations of competitor, Moulinex. In the deal, Moulinex sold off its food
preparation and brunch line businesses, which included four of Moulinex’s 26 subsidiaries.220
The four operations sold to SEB were Krups GmbH, Moulinex Espana, Vistar SA and Krups
North America. With this purchase, Groupe SEB’s market share increased to 15% of the global
market in small appliance sales.221
SEB Strategy. Groupe SEB’s strategic objectives focus on becoming “the world
reference in small domestic equipment.” Consistent with Heineken’s view on technological
superiority providing greater value, Groupe SEB focuses on providing value through innovation
at the optimal “price-performance ratio”.222

The company is dedicated to building competencies
in product development. In order to execute on this objective, Groupe SEB co-developed
software in 2002 to implement a “product features” modeling tool. This system helps Groupe
SEB determine which product features are most relevant for customers and, in turn, are worth
more in the market.223

As of last year, Groupe SEB employed 400 people and spent 1.8% of

revenues on R&D.224

Innovation metrics are important to the firm. Management measures the

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“rate of new products” and “patent performance.” Each year the firm files about 50 to 70
patents.225

The company’s supporting activities include customer support, coordinating productive
and flexible manufacturing and maintaining a broad portfolio of products. Support services
offered by SEB include call centers, Internet sites, a “Customer Welcome Centre” in France, and
exhibition centers in Brazil.226

In order to improve the quality of customer support, the company
upgraded its call center software last year. New CRM software will allow better processing and
control of calls.227

SEB’s supply chain processes have been enhanced with “order-driven
production.” This change was implemented to get away from sales driven forecasts and improve
supply targets.228

Improving efficiencies in production is of particular benefit to SEB given that

it produces 80% of all of the products it sells.229

These products include cookware, food and
beverage preparation appliances, linen care products, personal care devices, and floor care
products. Groupe SEB strives to offer a complete choice of small appliances in “every market
segment and all potential consumer targets.”230
Strategic Sourcing Framework: Both Groupe SEB and Heineken have core capabilities
in R&D. Heineken’s motivations for partnering with Groupe SEB to develop the BeerTender
were probably driven from its lack of technological expertise in small appliances. Heineken has
no resources to produce such appliances even if they could invent such a device. The fact that
Heineken, in developing this beer-dispensing product, would have to source it from an appliance
manufacturer, gives relevance to the strategic sourcing framework.231

As suggested, it was
Heineken’s lack of capabilities that outweighed its need to control development and
manufacturing. Supply is a major strategic issue for Heineken given the innovative nature of the
product. The unknown elements of demand increase the risks of supply and gives Heineken
motivation to devise well thought out penetration plans for the product. While not impossible, it
is highly improbable that Heineken will ever expand its capabilities to include BeerTender
production.

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