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Name: Ly Quoc Hien

Subject: SIM337
Word Count: 3024

ecological. I will use PESTEL factors as the methodology to analyze the external impacts on the operation of Heineken and its importance. not only the behavior of clients will be influenced by external factors including religious. criminal and traffic accidents in the . 2014). social environment can influenced to customer eats. The second part of the report will be done and mainly discussed about global regulations affecting beer markets which are the area of Heineken’s business. In the first part. All of these are external factors that affect purchases” (Tim Friesner. Because of over using alcoholic products may harm the health of the users. Evaluation will be included to assess how well that Heineken response to the changes of those regulations. Technology and Ecological Political and Legal In 2013. External factors are components that completely outside of the company but it influences internal factors and create opportunities and threats for firm. Task 1: The primary external influences on Heineken and their importance: “The culture customer live in. wears and believes. this consumption makes Viet Nam is the king in terms of drinking beers in ASEAN regions and ranked third in the Asia just after China and Japan and 28th over the whole world. Socio-cultural. disorder security. Heineken Lager Beer is an organization which owns approximately 170 beer brands and being a giant in the industry of alcoholic beverage. Then according to Tim Friesner. Heineken also is influenced by four or these external factors which are: Political and Legal. the total amount of alcohol consumed is 3 trillion liters and per one man is 32 liters.Executive summary This report’s content will focus on researching about the influences of external environment to the chosen company which is Heineken and then evaluate the effectiveness of the firm’s response due to the government’s regulations. etc but it also affects organizations. family. otherwise it is reason for many serious society problems such as violence. political. Economical.

Because alcohol is addictive then the government excises it by putting heavy taxes on emerging beer markets. Water Quality Conservation Law enacted in 2005 of to protect the environment According to the research “Developing system using water to adapt to climate change” by Tokyo University. about 10% of the urban water is not undergone treatment process and 36% of it comes to the lake and river. the customer must pay very high price to buy beers. alcohol when goes to a human body just 2-8 percent of it are excreted through sweat. it may affect their profit but still they have to follow it. According to the World Health Organization (WHO) . Heineken and other companies in alcoholic beverage industry in Vietnam have to follow the environment protection laws including Air Pollution Control Law enacted in 1999. the amount of it is greater than that many times so the government is going to prohibit selling beers after 10p. around 20 per cent of the beer at the pub is made of for tax. The problem of CO2 emission is also noticeable if we looking to the data from this graph below: . urine and breath. The recommendation of WHO is that men shouldn’t take more than 2 units of alcohol and women no more than one unit per day but it Vietnam.m in bars and restaurants. the issue is water contamination has the signal to increase dramatically in recent years. which is a very high rate. The Excise Tax Law edited in 2015 of Vietnam’s government raise the tax percentage from 50% to 65% since July 1st 2015. Heineken and other company in alcohol beverage industry will be impacted by this change. the rest is absorbed directly to the In Vietnam. In Australia.

. the prices of the ingredients which used to produce beer is increasing recently such as glass in European rise 50% because of the usage of offices goes up and supply shortages.. Economical There are many factors within the economical scales will affect directly to the operation of Heineken. the price of grain in the US has been rising for 35% in just last two years which crucially impact to the production line of business like Heineken. This is the problem of commodity and so far its hedging with financial counterparty by Heineken is limited to aluminum. which are done with risk policies. For example. Also. One more key problem is that the increasing of unemployment globally. grain and gas hedging .

Looking at the diagram we can see that the rate of unemployment all around the world is extremely needed to concern. As high as the number of people are unemployed will lead to the problem that less money will be spent on leisure time and drinking beer is absolutely be affected. most of the major market of Heineken is seeing this issue. .

For example. Another factor that can impact on Heineken is the high advertising cost if you are a beer brand in most countries.a company competes with Heineken.The graph shows us the visualization of the fluctuation of Euros. For example. but in June 2016 it would have been worth $3 million less. which is one of the highest contracts to advertise in terms of sport broadcasting. Intra-Heineken’s finance in foreign currencies is major in US dollars. the exchange rate of EUR/USD is 1. Swiss Franc. has to pay $9million to buy one minute advertisement in the Super Bowl events. with these rapid changes it will affect on many businesses including Heineken.33 as 29th July 2015. British Pound and Polish zloty. Heineken can choose to manage the currency of them through business practices and they might think of setting all the contracts in their core currency to avoid the risks.32 for hedging and the net US dollars inflow is expected at about US $527 million and 96% of it is hedged at EUR/USD 1. in June 2015 it would have been worth $15 million. Budweiser. In fact. In the first half year of 2015. Heineken has a policy of hedging exchange risks which will postpone the influence on the financial result. they can eventually end up with much more or less than they expected depending on the movement of US/EUR exchanges rate. If a US-base organization makes EUR 100 million. Meanwhile Heineken must pay $70 million to sustain the contract of them with the UEFA Champions League per year. .

With a broad way of advertising then can give Heineken more favorable opportunity to penetrate new market in the future. increase 4 percent from the same period in 2012 which is a good sign for Heineken because they are having the chance to attract more and more range of customers. more people choose to drink beer on their meeting then it benefits for organization like Heineken. US and Brazil leads to the drop of 8% in beer sales because the cold weather keep people to stay indoors instead of going out to have a beer for . a survey of Chris Crowell. And in an era of fast pace life. In the past. more women are drinking beer. with a smart phone. which may lead to the decreasing of sales in beers. they understand the dangerous things can come to them if they drink too much beers. it also have an big impact for Heineken. only short advertisement on TV or stickers on streets can get them close to the clients but now. a reporter of Craft Brewing Business shows that 26 per cent of women named beer as their favorite alcoholic beverage in September 2013. there was a time that an unseasonable cold weather in Europe. The percentage of violation about intellectual property in 2009 of Vietnam is 85%. Radio and Internet usually talks about the harm of alcoholic then people are more conscious in the act of drinking beer. a very high rate. in 2013. facilitating businesses like Heineken on many ways such as the company is easier to approach to their customers. with the existence of more and more bars and pub. In Vietnam. Technology Technology is instantly developing every single day. For Ecological. Health is precious. They also create an app call “Heineken experience” on mobile to give the users the feature and information about their products in a fascinating ways. This lead to the risk for Heineken’s identity to be misused which can harm and damage to their brand’s image.Socio-cultural Nowadays. everyone can order a package or beer to drink with their family very fast. most of the violated websites are registered in the international domains or in anonymous form to avoid from being banned. in the past people might not aware of it but now many channel like TV. people know that. to handle with copyright infringement is very hard because of indicating the owner of the website.

.87 billion comparing to the number of $4 billion in 2012.example at outdoor coffee. And there is a period in 2013 that decreasing in sales results in the fall of net profit by 53% in which is $1. which is a big fall.

Heineken and APB . n. In the period of 1979 to 1986. Union Law about business contracts between the foreign investment and Chinese and regulations to perform. When China joined the World Trade Organization led to the decrease in foreigner alcohol importing (from 35% to 17%) (China Business.which is the number one alcoholic beverage market in the world is expected to bring the highest growth rate to Heineken which is 12 per cent when comparing to 8 per cent of other regions. In 2006. This task will analyze some regulations that significantly impact on Heineken and what’s their move to react with those changes. Being a company that operates in many countries and governments. the Chinese government also raised the tax rate and limits the import of high strength alcohol into the domestic market and denies extending new production’s licenses for foreign spirits manufacturers leading to the decline in the market that period.Task 2: Government regulation of market: Government regulation of market is inevitable one of the most influencing factors that will directly related to the capability of a company to develop and sustain in a country. Heineken is a multinational firm so they need to cope with the changes within different market and its regulations. recommendation of what thing that Heineken can do to improve the current situation. With this result. China had released a combination of laws about FDI including Enterprise Law of business.d) In 2012. Also. The regulation can either enable the company to have more opportunity or may be a threat to the operation of them. China adjusted their Foreign Investment Law through basic change is to enable the foreign investors to purchase and merge with state business. Heineken won the control of Asia Pacific Breweries (APB) after the $5. Heineken has to follow all of the regulations provided so as to avoid the penalties which can affect to their reputation and profitability. And in 2014. In the late of 1990s. Heineken has the ambition to even more have higher growth in Asians market and China. with the purpose to urge the Mergers and Acquisition to be more active. Government’s regulations of markets with its impact to Heineken decision making: China is always very cautious when adjusting the policies related to the issue of Foreign Direct Investment.6 billion offer is approved by Frase and Neave. China gathered these above laws as Business Law for Industrial using FDI in April 1986 to make the legal implementation to be more effective and consistent. the main shareholders.

that is being or has been consumed. In April 2012. as well as programs likely to appeal particularly to audiences below the age of 18. The Responsible Marketing Pact marks the first time that beverage companies came together to seek common standard throughout the EU and it has these main priority areas: Prevent minors from accidentally seeing the alcoholic beverage communications through marketing by social media.000 people die and one eighth of them is caused by drunk drivers in the US between 2006 and 2010 (Centers for Decease Control and Prevention. establish the common demographically standard across all media which could limit the exposure of minors to drink advertisements. there are about 88. Every year. China. Heineken has been a sponsor of the UEFA Champions League-the world most exciting club football . because Heineken is a brand containing less than 5% of the alcohol concentration so they are freely to do the advertising program . 2010). This move marks the milestone of 20-year effort of Heineken in cultivating the Chinese market and aim to the long term strategy in this country to take the growth to higher level.In many countries. or that give the impression. Heineken with other producers in beer industry agreed to implement the common standard of responsible advertising aimed at adult of legal purchasing age.These regulations have negative impacts because it makes Heineken to lose partly of their customers by the most interacting channel in term of advertising beer which is through Television. it’s illegal to promote alcohol on TV and other broadcasting channels. visually or in sound. Heineken and Wieden&Kennedy are reached to an agreement of terminating the global advertising contracts for the Heineken brands which is a big move after their 5 years relationship. Government in Europe protects their young generations by prohibiting those advertisements related to alcohol: “Alcohol advertisements are banned from appearing in and around programs commissioned for or principally targeted at audience below the age of 18.” In Canada. In 2015. there is rule against showing “scenes in which any such products is consumed.China took their commitment even further by opening the largest brewery in the Zhejiang Province.” In Vietnam. prohibit any alcoholic marketing that might be attractive to minors by ensuring that the contents of adverts are more appeals to adults. Alcoholic beverage always received many attentions by every government in the world because of its addictive and effects on the society.

Then the solution of Heineken is to reduce the percentage of possible air pollution during their process of transporting. 2014). the percentage of group beer volume in Asia Pacific according to the Regional Review is 6. This will cause the air to be polluted and negatively affect to human health. When the beer is transferred by truck.2 percent and 11. 2013). . Moreover. The strong performance of ABP with pro-forma organic profit up goes up by 14%. strengthening our competitive position. the business must comply with all the regulations during producing the alcoholic beverage with the awareness of protecting the environment. the sales volume grows by 27 per cent which leads to the growth of Heineken brands in the international premium segments. For the transportation.” It’s obviously that Heineken takes full control of APB leads to the positive of the company operation. Continued investment in our brands delivered strong growth in key market. Heineken proved that waste water in fact is still useful by building a very large aquarium using the waste water from their factory to indicate that it’s safe for the environment (BrandVietnam. It’s a cornerstone to promote and marketing the brand globally. In China. According to the Environmental Protection Law.tournaments since 1994 and this contract between these two will continue in a long term. Chapter 3. President Asia Pacific. In Vietnam. there are many regulations by the government about alcoholic beverage industry. which use petrol then the amount of CO2 emission is noticeable.3 percent in 2012 and 2013 respectively. Heineken has been trying to apply many methods as a way to contribute to the environment protection. Heineken joined Vietnam in 1992 so they have to follow these terms as other company operating in Vietnam. the carriage of beer is replaced by truck to rail (Vietq. 17th Article. 2013) Heineken is a partner in a project call ICOOL which developing the more sufficient refrigerator to reduce to emissions of CO2 across the operation. Effectiveness of organization’s response “The integration of APB was successfully completed. And for the first time Heineken surpass 1mhl in China. And according to Theo de Rond. “The acquisition of APB has given us direct access to a number of high growth markets and strengthen Heineken’s brand portfolio.” (Roland Pirmez.

which is well above the US beer sector average proportion. Beer sector .The spending of Heineken in sports sponsorships is appeared to be paid off. Beer sector The number of potential customer that Heineken has reached is a very high figure as its advertising is seen by around 47 million fans per week. Purchase consideration for Heineken vs. Adults over 21 years old are indicated to have a high awareness of Heineken advertisement and they have the intention to buy the brand’s product next time. The Americans said that they are preferred to buy their beer during some Champions League games. Ad Awareness for Heineken vs. Purchase Consideration research tells that Ad Awareness among Adults in America increase from 13 per cent to 16 per cent in the quarter-final stage of the tournament.

2013). From 2010.2014). Heineken ensures that the quality as well as the requirement of safety issue is guaranteed because they have one of the most modern machines in term of manufacturing beer. Appendix . . they also has the sustainability program which is supported by EcoVadis as a tool to cover the risk about material. . ISO 9001. Also Heineken always prepare for recalling their products if it’s not reach to the standard of Quality Assurance.Heineken Vietnam is proud to be the first business to set up a waste water treatment system which can reach to the international standard. ISO 22000 (BrandVietnams. Heineken Vietnam has achieved the quality management system of ISO standard such as : ISO 14001. This system helps the company to succeed in processing all of industrial water discharging from the factory to ensure that their parameters are standardized. ICOOL prototype has been delivering an improvement of 80% in energy consumption. The image of the company is widely expanded leads to the result of 2000 billion VND in revenue of Heineken last year (Superbrands. Having a strict process of producing the beer. which is a step forward in preserving the environment resources of Heineken.

136 employees Revenue €19. The company is continuing in their path to increase the presence within emerging markets to keep the instant growth in the future. Heineken is ranked as number one brewer in Europe and 3th in the world in term of volume.257 billion Heineken was establish in 1864 has the long history as an international global brewer.1. Today.theheinekencompany. the company is committed to enthusing the customers everywhere. Enjoyed in 178 countries all around the world with unique footprint with operations in more than 70 July 12. Netherlands www. Company name Industry Headquarters Website URL Founded Founder Area served Number of Heineken Beverage Amsterdam. which is broader than any other brewer. Reference .1864 Gerard Adrian Heineken Worldwide 76.

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