South African Breweries Essay Example for Free

randomness African Breweries EssaySAB has the leading position to produce and distribute both alcoholic and non-alcoholic beverages. its been registered in 1895 in London and since and so with momentous profit and prevailing market position it has develop its business in home sectors as well. SAB was fully incorporated in 1970 after the unsteady of its head office from London to Johannesburg. Government put high restriction on the expansion and international business of SAB. From 1955 to the fol pitifuling seven years beer yield was the highest taxed beverage and SAB had to respond to competitors acquisition and production and distribution rationalisation. In 1960 it took over Stellenbosch Farmers Winery and obtained brewing license locally for Amstel and Carling, Black Label and Guinnes which played major turn of its expansion. Within 1979 SAB could capture about 99 per centum South African market alongside major control over Lesotho, Swaziland and Rhodesia. SAB was the fir st physical composition in the country which published a non-discriminatory employment code in 1978. The Lion Match Company merged with SAB in 1987. SAB concentrated on evolution three mega breweries in the country in 1990 and the invention of joint venture in Zambia, Mozambique and Angola followed in the following years.The connection got dominance over 98 percent of market and confront a little left expansion in local business and tried to expand globally in 2000. It made its demeanor to central Europe in 1993 with the acquisition of the largest brewery of Hungary Dreher. In the following year it established operation in Czech Republic, Poland, Romania, Russia and Slovakia. SAB had spread small business with roller Black Beer one of the breweries in United States of America as well. Then 2001 it expanded its business into Central America.In 2001 SAB had production of 77m hectolitres of alcoholic and non- alcoholic beverages and predominate as the fifth largest brewer in the world covering 21 countries. In 1990 the head quarter moved back to London. In this report i would like to narrow down my focus on SABs expansion globally by acquiring the second largest brewery of America the moth miller Brewing Company and having forward-looking name as SABMiller in 2002 and it became the second largest volume in the world. Though it is facing some profit margin difficulties in North America because its competitors argon lowering down the price of beer.To keep up with the market over there SABMiller has to compromise with the margin of profit. Challenge for the Company No arguments come when SAB admits that South African market is fully dominated by them. Though it had made some tactically poor judgment while expanding in Hungary and US market. Among the challenges SAB faced were In 2001 it acquires 58 percent interest in breweries in Hunduras and El Salvador which cost them US$ 500million. Further it spent a sum of US$5. 6 bn when it acquired Miller from Altri a. To expand its business in Western Europe SAB acquired a major company in Italy named Peroni and spent US$ 270 million.In Africa SAB had to encounter problems when for low income in Malawi the industry does not appear to be set up. Again in Ghana SAB has made its entrance where there is already good contest between Guinness and Heineken. In Nigeria governments has imposed restriction on importing brewing materials as barley. So quality and consumption dropped sharply there. After the acquisition of Miller in US SABMiller faced problem within six months. SAB had to go on with the existing CEO as head of SABMiller and later on the raped him. Altria holds 23 percent shares of SABMiller.According to some experts debates SAB has spent too much for acquiring Miller. Again SABMiller is also facing difficulties to keep up in the opposition with the competitors in US market. In addition to this in America the Beer market is in downward trend as the Americans are continuously and increas ingly round to wine than beer. This has adverse impact on SABMillers profit margin. Another market dominant competitor Anheuser-Busch (AH) upgraded its profit margin to 17. 3% by training its production where Millers and Coors has (9. 3%) and (8. 9%) respectively.Then to compete with AH SABMiller and Coors went as a joint venture which has very positive impact on their business. Policy/ strategy The long term direction and scope of a company which are aimed to achieve advantage for the organisation using its configuration or resources in a challenging surrounding is set forth strategy. In other sense strategy is -The place where the business aimed to reach in time span. -The market where the business pass on compete and activities of the competitive market -The process of doing better in this competition -Required ability or resources How to get up with the external and internal environmental factors -The value and expectation of the stakeholders According to Henry Mintzberg s trategy comprises five Ps Plan, Position, Pattern, Perspective and Poly. Andrew (1998) states the term strategy in form of decision in a company which cares identifying and disclosing the target, underlying objectives and company goals. Strategy helps to create major policy and plan to achieve company objectives. The range of the business to follow for the company is also described by strategy. Micheal Porter narrates strategy is about being different or laughable.According to him within strategy an organisation purposely sets up a unique package of activities to deliver a mix of value. Paradoxes and debates around strategy The theory of strategy is an academic field which is diversified by many experts as they evince on the base of different understanding. Thus theories derived from different experts have contradiction as well. Some of the renowned experts as Whittington (2002), Mintzberg (1990, 1998), Schendel (1994) and Kuhn (1996, 1970) have described strategy with the help o f several schools. In this study i will try to focus on Mintzberg and Whittington theories.