NAME: JANE NJERI NDERI

REGISTRATION NUMBER: K24/3086/2018

UNIT CODE: EAE 203

UNIT TITLE: MANAGEMENT IN CONTERMPORARY GLOBAL ECONOMY

LECTURER NAME : DR JAMES MAINGI

 EAST AFRICAN BREWERIES LIMITED (EABL)

East African Breweries Limited (EABL) is one of th e leading branded alcohol manufacturing

companies in East Africa. The company was formerly known as Kenya Breweries Ltd. It is

principally engaged in the pro duction, packaging and marketing of alcoholic and non-alcoholic

beverages. The product portfolio of the company includes beer, spirits and non-alcoholic

beverages. These products are sold under the Tusker, Tusker Malt, Pilsner, White Cap, Bell,

Allsopps, Gu inness, Johnnie Walker, Smirnoff, Richot, Waragi, V & A, Bond 7, Malt Guinness

and Al varo brands. The company principally operates in Korea. East African Breweri es Limited

is a subsidiary of Diageo plc. East African Breweries Limited has managed to be th e most

dominant player in the brewing industry in Kenya due to an extended portfolio across beer,

RTDs and spirits, with a variety of mid-priced and premium products that ens ure high volumes

and healthy profit.

It was founded in 8th November 1922. It's headquarters are in Nairobi, Kenya. It however has

subsidiaries in Uganda, Tanzania and Southern Sudan. It also has distribution partners in

Burundi, Democratic Republic of Congo and Rwanda.

It has a renown foundation called the EABL foundation which is it's corporate social

responsibility arm founded in 2005. It assists people in Kenya, Uganda and Tanzania through

water supply, education and training, health, environment and special projects. It also provides

scholarships for undergraduates.

HOW IT EXPANDED GLOBALLY

when EABL wanted to start competing globally, the strategic decision on entry was made and it

fundamentally benefited the firm, including its operations and its management. The study

established that EABL had plans to develop new product policy and strategy that is sensitive to

market needs, competition, and company resources on a global scale. Several reasons

influenced the firm to internationalize in emerging markets. These include to gain a greater

market opportunity, maximize on profits of the company and to expand and have a greater

feeling of the market.

the need to originate, produce, compete and market beer industry products worldwide

influenced EABL to go international. The choice of the correct entry mode for a particular

foreign market is a critical marketing decision.

FACTORS THAT HAVE INFLUENCED EAST AFRICAN BREWERIES LIMITED TO GO

INTERNATIONAL

When EABL wanted to start competing globally, the strategic decision on entry was made and it

fundamentally benefited the firm, including its operations and its management. the top

executives in EABL decided on the form of entry strategy on the specific channels.

EABL has established its production abroad not to enter new markets but to protect what they

have already gained through exporting. The firm choose to establish operations in the host
country at the beginning of their internationalization effort, while other decision were that the

firm use one of the other entry methods initially and later invest in facilities in the host country.

EABL has the plans to develop new product policy and strategy that is sensitive to market

needs, competition, and company resources on a global scale. Since the firm has already been

involved in international markets it is making entry decision in the context of an existing

network of international operation several reasons influenced the firm to internationalize in

emerging markets. These include to gain a greater market opportunity, maximize on profits of

the company and to expand and have a greater feeling of the market.The profit seeking motive

made EABL to go international by exploiting new innovative ventures in new markets and using

those new opportunities as a competitive advantage to enter into the market.EABL wanted to

diversify its distribution channels and stations that are used to serve and promote its

products.other motives that drove the company to internationalize are search for expansion,

production of new products in the new markets, motivation and saturated and very competitive

domestic market.

To gain new ideas about products, services and business methods, better serve key customers

that have relocated abroad, be closer to supply sources, benefit from global sourcing

advantages, or gain flexibility in the sourcing of products, gain access to lower cost or better-

value factors of production, develop economies of scale in sourcing, production and marketing.

The respondents further indicated that to confront international competitors more effectively

or thwart the growth of competition in the

home market as well as investing in a potentially rewarding relationship with a foreign partner

are the EABL motivation factors to move to the international market.

On the environmental and socio-cultural considerations for the host country and local

surrounding of EABL foreign sub units, essentially the firm sought to understand the culture,

customs and economic conditions of the country where they wanted to do business. Price

levels were set to minimize the difference among markets and to maintain a price corridor

rather than purely to reflect local market conditions. Environmental laws guided the EABL to be

responsible for the retrieval and disposal of the packaging waste it creates and produce

packaging which is recyclable. The study found that the company chooses to develop its activity

on new markets, similar to the ones they are already acting on and developing a new line of

products similar to the ones they already have and which will be sold on similar markets

entering a market as an exporter strategy was adopted by EABL because it ensured that the

company networks with the customers and enabled it to understand their tasted and

preferences and thus produced products that were readily in line with consumer preferences.

Other strategies that were deemed important for succeeding in the foreign market were

international strategy, joint ventures, franchising and turnkey projects as well as licensing.

Competitive strategies typically depended on the market environment and the positioning and

product portfolio of the existing players.

Source of raw materials

EABL purchases it's raw materials locally from farmer. EAML plays a vital role in supplying

quality brewing raw materials in the form of Malt, Barley and Sorghum to the brewing units of

the EABL group.

In return, EABL provides farmers with free inputs (seeds), fertilizers, extension services and

other technical and financial support needed for farming.

FACTORS INFLUENCING COMPETITIVE ADVANTAGE BY EAST AFRICAN BREWERIES LTD WITHIN

BEER MANUFACTURING SECTOR IN KENYA

EABL faces stiff competition from Keroche Brewery Company, SAB Miller and the Heineken,

local brews such as chang’aa and Distell from Kenya Wine Agencies Ltd (KWAL), a government-

owned wines and spirits distributor.high quality beer products, superior customer service and

achieving lower costs than its rivals has enabled EABL to achieve competitive advantage in the

market.The organization was also found have adopted various changes in its principal brewing

and bottling technologies by investing in new equipment so as to make competitive products.

EABL was indicated to have made changes in the ranking of their goals. Survival now ranks as

the most important goal, while before liberalization, profitability was the most important.

Various policies have also been changed. The current marketing strategies being employed by

the firm advocates for more aggressive approach to be adopted in sales and at the same time

adjusting product and promotion strategies depending on the product brand. These has come

about due to the intensive level of competition from other players especially Keroche Breweries

and SAB Miller. The products strategies have been significantly formulated and implemented to

improved products in quality, features and variety. Advertising expenditures have been
dramatically increased. In market research the firm has significantly increased competitive

intelligence strategies on competitors and customer needs.On whether strategies implemented

by EABL influence effective control of resources that results in achievement of superior beer

production over it competitors, the interviewees indicated that through competitive strategies

it has employed, EABL has increased its market penetration especially in the new markets such

as Southern Sudan.

Dues to change in customers demand, the organization has been able to develop and launch 3

new beer brands in the last 8 years. This was noted to require substantial amounts of resource,

both manpower and financial resources to actualize them.

the innovation formulation and implementation had led EABL to be strategically positioned as

ideal beer industry for regional businesses in East Africa. They indicated that the innovation

approach adopted by the EABL enabled the company to develop new beer products such as

Balozi, Allsopps, Guinness, and Bell brand names, non-alcoholic drinks such as Malta Guinness

and Alvaro brands and spirits under Johnnie Walker.the company has enhanced its delivery

system by realigning its human resources, depots location, modern transporting vehicles fitted

with cooling plants and fittings and equipment that are used in handling the company loading

and off- loading.

From the strategy of outsourcing the distribution strategy, it was found that EABL has been able

to achieve cost savings from its operation.

TARGET MARKETING STRATEGY.

Another strategy that was employed by EABL to gain a competitive advantage in the local beer

market was target marketing. This is due to the cognizance of the local market that different

consumers prefer different types of products depending on their prices. The East African

Breweries Limited (EABL) through innovation strategies has introduced quality Balozi beer

brand in the local market which was a malt based, sugar-free brand and senator which were

low cost beer products to attract the middle and low income earners increase and increase its

market share. They further observed that due to its innovativeness the Company produces and

effectively markets, distributes and sells an extensive portfolio of alcoholic beverages flagship

beer brand, Tusker Beer, Baileys, Smirnoff and Black Label. The organization was found to

continue engaging in development of new products aimed at creating different new brands and

engaging in traditional liquor segment

COST MANAGEMENT TECHNIQUES

Employee training and development was significant in affecting performance of EABL. HRM

plays an important role in managing their organization. there is continuous training and

development of employees on the job. The training and development was tailored to the job

descriptions of all staff, EABL staffs possessed appropriate skills to better organizational

performance and training enabled their staff have a better career life and career growth was

based on well experienced staffs with advanced trainings.

Supply chain integration was significant since it affected performance of EABL. Internal

integration was aimed at improving EABL overall performance. The respondents networked

with their suppliers for timely delivery of supplies, technological systems were used to ease
their communication with suppliers and respondents worked hard to expand their networks

with stakeholders. Stakeholders’management was significant in affecting performance on EABL.

Stakeholder management reduced conflicts and its negative effects on performance, they were

engaged in decision making process at all stages of their operations and East African Breweries

Limited allocated enough funds and skills to projects. Inventory management program

positively influenced performance on EABL. It enabled continuous flow of production. They

practiced lean inventory practices to have sufficient cash flow. timeliness in inventory delivery

ensured improved performance. The used just-in-time method saw that they saved on storage

costs, respondents did material requirement planning to cut on underproduction or

overproduction and market share had grown due to proper management of inventories.