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ANHEUSER-BUSCH INBEV: GLOBAL VERSUS LOCAL CULTURE

INTERNATIONAL BUSINESS STUDY
by

vidya mohd

on 11 November 2012

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Transcript of ANHEUSER-BUSCH INBEV: GLOBAL VERSUS LOCAL CULTURE

Electrolux in the United States
came up with the slogan ‘Nothing sucks like an Electrolux’. It later reworked its strap line.
Coors in Spain
Coors beer had equally bad luck in Spain with its ‘Turn it loose’ slogan. It translated as ‘You will suffer from diarrhea’
Vicks in Germany
Vapour-rub manufacturer Vicks failed to attract much custom for its products in Germany. The problem was that ‘V’ is pronounced as an ‘F’ in German, meaning Vicks sounds like the German equivalent of the ‘f ’ word. One way the brewer can compete its mature stage is to introduce more and more new products and to create new categories; drafts, dries lights and ultra lights. The reason for added competitive intensity as the beer market seems too stagnant for the last decade. Government restriction on drunk driving had given impact to publics. The small breweries also contract to brew beer for the larger players, because their brands are not established in the marketplace yet. Due to their scarcity, the microbreweries are able to charge high prices which make them comparable in prices to imports. Midsize brewers think so, too. During the protests, Haacht, a brewery employing 450 people with annual sales of €100 million ($139 million), took on Anheuser in an ad campaign. The slogan: "Haacht is a real Belgian brewery, family-owned and independent," a dig at Anheuser's size and international management. If the ABI’s business keeping like this, of course it would alienate the ‘average’ Belgian. Some firms failed at their home country as they focus more on their global market.
The corporate strategies of the MNC’s differ across different locations as the Government policies and regulations are different in different countries. The goals and the means to achieve them differ according to the customer size and the market adaptability in different countries.
The collaborations with the local partners also create a difference in the corporate strategies because they also have their company’s policies and requirements. It also differs according to the company law of the respective countries. The terms and conditions of the local partners differ, which causes significant variations in the corporate strategy (Dunning 1993). This also can be relating on the home country. Targeted external growth
to strengthen our positions in developed markets, and continue to maximize opportunities in high-growth markets. World-class efficiency
drives every part of our business, wherever we do business, and whatever the wider economic circumstances.
focusing on a range of initiatives including our Voyager Plant Optimization program, which is bringing about a real step-change in brewery performance.
entails raising the status of our procurement processes to maximize purchasing power, helping us gain the best results when we are purchasing a range of goods and services Winning at the Point of Connection
the moment when consumers ultimately choose to purchase or consume our brands.
This entails building sales and merchandising capabilities, achieving preferred supplier partnerships with customers, and consistently building the equity of our brands. A few years ago, a few bars stopped selling Anheuser beers as the prices increase. Some would have complaint that ABI is losing its identity by buying so many foreign breweries and taking its focus off Belgium.
Belgian realized that Belgian beer isn't Belgian anymore. Since the January protests, the demand had went half the orders as they did before and complaint that people are drinking less sugary, more bitter beers than ABI makes. But tensions have been growing along with Anheuser's size.
Many bars and drinkers decided they didn't want any more. There was a psychological reaction against InBev.
ABI’s sales in Belgium were down 30% in January. The company declined to comment on the figure. THANK YOU Schweppes Tonic Water in Italy
In Italy, a promotional campaign for Schweppes Tonic Water failed when the product name was translated as ‘Schweppes Toilet Water’. Subsequent campaigns have had better results. Examples of product failure due to cultural conflict:- Because cultures vary so widely across the globe, understanding the differences in culture is vital to the business environment. A person's culture impacts the way he communicates. For example, in Japan people do not like to say the word "no." In a business meeting, a Japanese business person may mean no, but never directly state it. This can cause confusion. Another cultural example is in Saudi Arabia. Never discuss women, even to ask about a female family member's health. In Saudi Arabia, you may be having a business meeting and the person may leave the room for up to 20 minutes. The Saudi person may have gone to prayers as he considers the business meeting more of a discussion than a formal meeting. Businesses are selling products around the world. Partnerships are being formed with people from diverse cultures as business relationships are formed. Each country and cultures within a country bring communication challenges to businesses.
Good communication practices help maintain these intricate business dealings. Bad communication practices can cause loss of business and even international tension among countries. Communication is intricately blended with non-verbal communication and etiquette. Do you see this conflict happening in other industries where cultural identity is closely associated with a product or service? Say, for example, within the automobile, watch, or perfume industries? Can you think of any others? From the later discussion, it had proved that the average beer drinker cannot accept the dominance of ABI international culture. This can be proof by the decline of local demand by 19% in the last decade. Of course the average Belgian can accept the dominance, because they have many more brands that they can stick to while maintaining their culture elsewhere. As most of ABI’s income derived from outside Belgium borders, small and midsize breweries have the chance to position their products in their local market. The first mover disadvantages would create opportunity to other rivals. Rivals can easily positioning their product by correcting the mistake that the first mover advantages done.
There were also opportunities for microbreweries or brew pubs. Their output and sales are only a fraction of those of the giants, but the small breweries often cater to local markets and they take advantage of consumer’s constant quest for new products. The competition in beer industry has been very intense. The economies of scale in production and marketing pose a high entry barrier to newcomers, so the only way to compete is via finding the niche in highly segment market.
During the ABI labor protest, many small and midsize breweries took this situation as their opportunity. Public saw this as a breach of trust between consumer and MNCs firm. They won’t trust ABI anymore as they felt that this firm only focusing in profit maximizing. What future do you see for small and midsize breweries in Belgium? Will they have the capabilities to compete efficiently with AB InBev? We found that these firm strategies were not portrayed on the real business are made. As we knew that Belgium represents just 1.6% of Anheuser's global sales. The company should set a set of strategies that interpret on their global business and differed base on market zone. Arguments:- Winning with Consumers via our Winning Brand Portfolio
Consumers come first at Anheuser-Busch InBev. Our promise is to create enduring bonds with consumers so that they enjoy our brands time and again. Company Strategies:- Strategies are the means to the ends, or what a firm’s going to do to meet its objectives. Successful strategies help organizations establish and maintain a competitive advantage that competitors cannot imitate easily. Is the company’s strategy used in Belgium correct? Do you think this will eventually alienate the ‘average’ Belgian? At first, Belgians are gratified that a company originating here has been transformed through mergers into a global enterprise, recording $27.4 billion in sales the first nine months of 2009.
The Stella Artois, Hoegaarden and Leffe, and are pleased these brews have helped make Belgian beer famous. More than 2,700 people work for the company in Belgium. Mergers and acquisitions normally have relatives relations with firms expand, as they went global. Firm internationalization has promoted firms to standardize their product.
Beer is a religion in Belgium, feelings here toward the brewing giant combine a mixture of a love, fear and doubt. How did the various mergers and acquisitions by AB InBev change the way Belgian beer was brewed? The SWOT Analysis of AB InBev The History of AB InBev We agreed that AB InBev has expanding growth globally. This brand strength is undeniable. AB InBev has a strong brand portfolio with rapid product line expansion thru the growth mergers and acquisitions across the borders. Nevertheless, AB InBev still expanding and had established position in emerging markets. Conclusion Belgians are fiercely loyal to their local brews and take their beers as seriously as the French take their wines. You'll find beers corked and wired like a bottle of Champagne, and some beers will mature in the bottle up to 6 years. Just like wine, certain beers are paired with certain dishes to create the ideal food pairings. Each beer has its own distinctive glass, and colorful cardboard coasters, which make nice (and free) souvenirs! Beers are served cold, cool or at room temperature to bring out their respective subtleties of flavor. Will the average Belgian beer drinker accept the dominance of AB InBev with its “international” culture, or will he or she look to maintain his or her cultural identity elsewhere? The Five Forces of Beer Industry Vidyamala binti Mohamad
Hasmani binti Othman
Zalinda binti Ghazali The Case Study of
AB InBev: Global versus Local Culture Perhaps ABI’s greatest strength is their size and dominance in the marketplace. As the largest brewer in the world, ABI is going to be earning strong revenues into the future. They are protected by a diversified and popular portfolio of products. There is a global recognition of their brands, and with the implementation of their new synergy plans there is great potential to make ABI’s products even more globally known.
Their major weakness is their current level of debt. However, the company has a plethora of cost-cutting, divestiture, and motivation initiatives aimed at reducing this as quickly and effectively as possible. Another weakness is the potential synergies between the two companies that have not been fully realized. ABI is currently working on realizing this potential.
The threats ABI faces are the threats faced by any global seller of consumer products. Interest rates, exchange rates, taxation rates, are all external factors which cannot be controlled, except by hedging, which ABI attempts to do. Through aggressive R&D, ABI attempts to keep up with changing consumer preferences, and has been successful so far in doing so. Many opportunities present themselves to ABI, including the sponsoring of both the FIFA World Cup and the Olympics in Brazil, one of BUD’s largest markets. Also, continued global expansion and product development lend themselves to more growth.
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