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Heineken - MGT Capstone

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Tom Gray

on 7 April 2011

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Transcript of Heineken - MGT Capstone

Heineken Case Analysis Porter’s
Five Forces: • Threat of New Entrants – Low

•Bargaining Power of Suppliers – Low

•Bargaining Power of Buyers – Low to Moderate

•Threat of Substitute products – Low

•Intensity of Rivalry Among Competitors – Low to Moderate Questions? On the night of June 30th, 1863, Gerard Adriaan Heineken wrote a letter to his mother about a brewery he was planning to buy in Amsterdam.

Dutch brewing was in serious decline.

Heineken first Dutch brewery to use ice and cooling systems in the brewing process - this lead to international requests to see the innovations.

Alfred Heineken studied management of brewery in the US. He went back to Amsterdam and began a revolution within the company incorporating the Heineken brand as focal point.

In early 1980’s Heineken available in 145 countries. Merged with and acquired many smaller breweries.

Focus on innovation and expansion has been emphasis for growth.

Quality has been differentiator in product and reflects in market. History & Milestones: Very diversified - brews and sells more than 200 international premium, regional, local and specialty beers and ciders, including: Amstel®,Foster’s®,Kingfisher®,Tecate® Sol®

Globalized - 125 breweries in more than 70 countries in 2009

Bottle recognition – Green bottle, mini kegs Strengths: Weaknesses: • Price difference compared to domestic $10 vs. $6

• Niche market - Most of the people who consume Heineken are older; the average consumption age is 30. Heineken has been trying to create an image which can be accepted by young adults and local markets in different countries.

• Advertising – Heienken’s advertising compared to budlight and miller has no chance S.W.O.T Opportunities: Threats: • Low calorie beer – Heienkens light beer is 99 calories compared to MGD 64 which is only 64, and Budweiser select 55 which is 55 calories.

• Focus on Russia and Asia markets – since their population is growing rapidly.

• Merge with a USA brewery – Heinkens only distributes imports into the USA. • Drunk-driving increases the rate of car accidents, and more laws were established to reduce the incident. This can affect the sales on alcohol products.

• Competitors aggressively increased their market shares and acquisitions with other breweries; some of the brewers are even larger than the Heineken’s.

• At risk of being affected by environmental and social situations due to the extreme amount of globalization
•Brew new low calorie beer in a new designed bottle. Strengths - Opportunities • Use advertising to promote drunk driving awareness. Strengths - Threats •Merge with domestic brewer and offer lower prices. Weaknesses - Opportunities • Use international operations as an advertising and marketing advantage since they’re globalized and have a wider audience. Weaknesses - Threats Valuable Resources-Heineken's Brand Image, one of the world's largest beer companies V Rare Resources- Ability to enter new markets and acquire other brewers quickly.
R I E N Nonsubstitutable Resources - Every resource has played its role in the companies growth and things would be different if things were substituted. Inimitable Resources - Heineken prides itself on operating in different countries, but others can do so also. Exploitable Resources- Heineken does not exploit its resources to the fullest in the U.S only 25% 6 Segments Wide product line reach. Employ almost 54,000 people who operate over 125 breweries in 70 countries. Demographic Sociocultural Heineken expands their product line to appeal to specific markets in different countries and continents: Newcastle Brown Ale (UK), Kingfisher Lager (India), Tiger (Asia) Sol (Mexico). Heineken generates over 16 billion Euros in revenue, or 2.4 billion Euros in profit. Their assets as of 2010 reached 26.5 billion Euros. After prohibition the company started increasing their stock price by purchasing smaller breweries. Economic Political / Legal In 1995 the Heineken company was accused of racism for attempting to pick and restrict which races they wanted at a large scale PR event.
In 2007 Heineken was fined 219 million Euros for engaging in a price fixing cartel with two of their largest competitors. Heineken is very technologically inclined for a brewery. They have spearheaded innovations in home kegging systems with both their popular ‘mini-keg’ and the Beertender kegerator machine. Technological Global Heineken organizes the company into five global territories which are then divided into regional operations. These territories are primarily on different continents. They all sell the original Heineken as well as the Heineken owned local brands.
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