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Beer is one of the world's most consumed alcoholic drinks. Nelson (2005)
stated that it is the most popular drink after water and tea. There are lots of
brewing companies though emphasis will be made on Carlsberg in this
instance. The Carlsberg Group is the world's fourth largest brewery group.
The Group is distinguished by a high degree of variety of brands, markets
and cultures. Its activities are centred on markets where the Group has the
strength and the right products to secure a leading position. Due to the
variation of the markets, the contribution to growth, earnings and
development within the Group differs, both at present and in the longer-term
projections (Carlsberg, 2012). In countries where Carlsberg has no breweries,
the Group sells its products through exports and licensing agreements. It
aims to establish and develop strong market positions for their international
premium brands through dynamic partnerships with licensing, export and
duty-free partners around the world. The Carlsberg beer portfolio includes
more than 500 brands. They differ significantly in volume, price, target
audience and geographic penetration. (Carlsberg, 2012).
the foreign market in cases where it formed joint ventures and mergers and
later take full control of the company. Another reason is to protect
Carlsberg's home market share because operating in foreign countries takes
away business from its competitors by offering customers other choices and
it lets the competitors know that they would face the same response if they
attack the home market (Rugman & Collinson, 2009). Furthermore, it is a
tactics that Carlsberg could use to diversify themselves against the risk and
uncertainties of the domestic business cycle (Rugman & Collinson, 2009).
This implies that by operating in other countries it can often reduce the
negative consequences of economic swing such as recession in its home
country. Despite Carlsberg seemingly predatory instinct for 100% control and
ownership, prospective partners engage with Carlsberg because of the
following reasons: They will benefit from its intangible properties (Hill, 2009),
like in the case of licensing where the licensee has the right to Carlsberg's
intellectual properties such as patents, processes and trademarks. This also
applies to joint ventures as the partner gets to know about its processes as
well. They would be able to offer their clients a wider range of products and
services (Mcpheat, 2010). For example in licensing where Carlsberg gives
them rights to its intellectual properties, the partners tend to take advantage
of more market opportunities (newly identified demand) as they will not only
sell their own products but also that of Carlsberg, which means that their
customers have variety of products to choose from. They might also have an
opportunity to get endorsed into Carlsberg's advertisements (Mcpheat,
knowledge and marketing expertise about the local markets in which it owns
breweries and so other brewing groups would want to acquire it as entry
mode to these markets. Besides it would be a quicker way for them to make
their presence known in these markets. Carlsberg is a valuable brand and as
such is a target for other bigger groups as they would want gain its
intellectual property such as "patents, trademarks, production processes,
databases that are difficult to re-create, and research & development
laboratories with a history of successful product development" (Bragg,
2012). Its being the fourth largest brewing corporation in the world makes it
is a major competitor in the brewing industry and in order to reduce
competition a brewing group such as AB Inbev may want to purchase it.
Furthermore, it is difficult to get costumers to change brands because
customers are fiercely loyal to local brands and the only way of tapping into
these markets is by purchasing the brewery (Rugman & Collinson, 2009). For
example in countries where Carlsberg markets its products that the larger
groups haven't entered yet, they could tap into these markets by purchasing
the brewery since the customers are familiar to Carlsberg's products. The
larger brewing group will want to gain preferential access to Carlsberg's sales
and distribution channels. By acquiring it, they can use it to distribute its own
products. Some of examples of sales channels they would benefit from are
telemarketing or a well-trained-in house sales staff (Bragg, 2012). However,
there are some barriers that a brewing group such as AB Inbev might face if
they sought to acquire Carlsberg this could be: Clash of culture between both
reaping the costs reductions that come from economies of scale and learning
effects in other to have a low-cost strategy on a global scale. This implies
that this type of strategy suits where there are strong pressures for cost
reductions and demand for local responsiveness are low. Carlsberg has 500
brands and they customize their product a bit to meet local conditions and
this customization involves shorter production runs and the duplication of
functions, which tends to raise costs. They won't reap the benefits of
economies of scale as there won't be reduction in the unit cost achieved by
producing different product in large quantities. Also, they won't be able to
save costs that come from learning by doing in terms of producing the same
brand over and over again i.e. their labour productivity may not increase
over time as it is not easy for individuals to learn most efficient of performing
tasks when a large volume of different products is involved. Hence,
production cost will increase due to a decline in labour productivity and
management efficiency, which might decrease the firm's profitability (Hill,
2009). Carlsberg should rationalise its facilities and focus on far fewer brands
because it would be much easier to control and manage fewer brands and
also implementing a global strategy would be easier compared to when it
has 500 brands. By doing this they would be able to benefit from a bit from
economies of scale and learning effects. Furthermore, the cost of advertising
so many brands is relatively expensive. The customization of the brands
would even make it more expensive if they have different advertisements for
different brands in different countries. So they might want to consider
focusing on fewer brands because the fewer the brands the lesser the price
of advertising. Individual Reflection and Self-Analysis Expectations: I had
always wanted to learn more about the world of business and management
and as such my expectations for this module prior to beginning was to gain
knowledge about business and management in an international context as
the key to a successful business is how well the business is managed. This
expectation has been met because I have gained the preliminary knowledge
on how firms or organisations carry out their operations internationally for
example the strategies on how firms enter a foreign market. It has also given
me an introductory knowledge on how to identify a good business
opportunity, have good plan of action to run and also manage a firm
successfully. Challenges: I had some challenges during the module and this
was because I studied Electrical/Electronic Engineering in my first degree
and knew almost nothing about business. Having to do case studies wasn't
something I had done in my previous degree and so I struggled with how to
critically analyse and answer the questions that usually follow suit. I wouldn't
say I have completely overcome this challenge as there are still some cases
where I'm still not able to comprehend a case but I know reading ahead of
the lectures and paying attention during lectures has helped me to a certain
extent. Preparation for Masters: I feel prepared to begin a Masters level
programme and this module helped me prepare for it. This is because, I have
learnt the basics of international business and management and also how to