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Heineken Case Analysis

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Caitlin Hill

on 20 February 2013

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Transcript of Heineken Case Analysis

Heineken Caitlin Hill, Carl Cross, Ty Wilson, and Zack Toates The Global Beer Industry Recommendations Heineken's Strategy The Competition Financial Stability Challenges and Changes The overall industry has low attractiveness. Two of the strongest forces are high competition from rival sellers and a high power coming from substitute products. The weakest of the five-forces is low new entrant power. High Rival Sellers Buyer demand is declining in key markets
Less costly for buyers to switch brands
All rivals are similar in size in the global market High Substitute Power Wine, Spirits, other liquors
Switching costs are low
Legalization of marijuana and other forms of entertainment International acquisition strategy By procuring established brands in international markets, Heineken is able to increase market share and presence in the industry without the added costs associated with developing new brands. Strengths High product recognition with green bottle and keg can
Regional diversification
Global anchor beer
Brew and sell 200+ regional, local, and specialty beers Weaknesses Anchor beer is high priced in comparison to domestic options
Not an attractive brand for new/young drinkers
Shift to a CEO that isn't a family member
Promotions are directed towards a male audience Opportunities Heineken Premium Light can develop into a leading light beer
Russian and Asian market development Threats New alcohol legislation
Nationalism within international markets
Poor economic conditions
Exchange rates
Other big brewers are acquiring/merging to become global players Grupo Modelo's Corona has reached out to Hispanic Americans to capture a fast growing market
Belgium's Interbrew, Brazil's AmBev, and Anheuser-Busch have merged and are now the largest global brewer
Anheuser-Busch is also expanding without acquisition through equity stakes in partnerships with international firms The acquisition of Scottish & Newcastle increased sales by 2 billion euros from 2007-2008 in Western Europe Profit Margins:
2006 10.24%
2007 6.42%
2008 2.42%
2009 6.92%
2010 8.90% In order to combat a difficult decision making process because of the consensus culture, Heineken reorganized its management and executive structure
Through the acquisition of BBAG and Scottish & Newcastle, Heineken fought the globalization of the industry Develop and focus on making Heineken Premium Light a leading light beer
Increase advertising to reestablish Heineken's personality and brand recognition
Maintain the green bottle
Implement the new company culture that was established in executives throughout the organization
Develop a beer more attractive to women Questions?? Low New Entrant Power High cost advantages by industry incumbants
High capital requirements
Poor economic conditions make industry outlook uncertain Debt to Asset Ratio:
2006 .575
2007 .542
2008 .769
2009 .720
2010 .615
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