961 Beer Case

1. If you are Hajjar (at 2008), will you consolidate or expand? Please explain.

The definition of consolidate and expand should be explained first to answer the
question. In 961 Beer Case, consolidate means that the company needs to optimizing the
productions and operations to meet the growing demands. In the other hand, expand
means that the company will expand their business across Lebanon. This will be a good
option if Lebanon’s political issue still raising.
An approach will be applied to analyse the problem of the case, which is the Ansoff
Growth Matrix. Ansoff Growth Matrix is a tool that helps businesses decide their product
and market growth strategy. Ansoff Growth Matrix suggest that a business attempts to
grow depends whether it markets new or existing products in new or existing markets.

Market Penetration
The first quadrant in the Ansoff matrix is market penetration. It is a strategy when the
organization has an existing product with a known market and needs a growth strategy within
that market. The consolidate terms in this case means Market Penetration in Ansoff Matrix. The
961 Beer needs to optimizing their products and operation to penetrate more to increase the
market share.

Market Development
Market development is the second market growth strategy in the Ansoff matrix. This
strategy is used when the firm targets a new market with existing products. In this case, the
terms of expand means Market Development in Ansoff Matrix. The company should enter
international markets for expansion. The company need to expand their brands across new
global markets.

Product Development
Product development in the Ansoff matrix refers to firms which have a good market share
in an existing market and therefore might need to introduce new products for expansion.
Product development is needed when the company has a good customer base and knows that
the market for its existing product has reached saturation. In Product Development, the market
penetration strategy is no longer practical. A new product development strategy that caters to
the existing market is a better approach.

In 961 Beer case, this approach will not be considered as an option because their product
already the new development in the industry. Besides, the market in this industry does not
reached the saturation yet.

Diversification
The diversification strategy in the Ansoff matrix applies when the product is completely
new and is being introduced into a new market. In this case, the company needs to focus more
on existing products rather than create a new product into a new market.

DECISION
Above approach leads to a decision that the company should choose Market Penetration
(Consolidate) to win the domestic market first and Market Development (expand) their business
across Lebanon after consolidate and win the domestic markets.

Why Market Penetration? Because their customers love the products. Customers also love
the value of the company which is “change” that bring different high-quality taste of traditional
beer into the market. Customers also sought attachment to their region agriculturally, beer
drinkers valued local ingredients in their beer. So, there is a lot of potential in the future for the
company.

“Best beer I ever had with best story behind it as well” (961 Beer Facebook page) … (p. 22)
“Where can I buy 961 T-shirts in Beirut?” (961 Beer Facebook page) ... (p. 22)
“Did I ever tell you how much I luuuv the fact that Leboland actually has its own micro-
brewery (!).” (Deedee McFly, “Lost and Looking for Support) … (p. 22)

It means that actually 961 Beer already has their segment or customers, but need to
penetrate more in the market and adapt with the political situation in Lebanon. The prime
concern is being able to stick to quality and meet the growing demands of the region.
 How the company consolidate? The company needs to optimizing the operations in order to
stop the deficit between cost per case and revenue per case (exhibit 3). This can be best done by
hiring professionals who can make desirable changes to the production unit to bring the unit
cost down and reversed the profit profile and meet the growing demands continuously. This
option will stabilize the company to face the external threat which is political issue in Lebanon.

After the company success penetrate more and win in the domestic market, the company
can expand their business across Lebanon immediately. It will be good option for the company
regarding the political turmoil in Lebanon.