SAB Miller Company Analysis

3.1. SAB Miller Company profile – South African Breweries acquired with American brewer Miller in 2004 and formed as SAB Miller which leads the company as second largest brewer by volume in the world. SAB Miller has an international network as the company acquires other breweries and obtains great brand portfolio all over the world in South Africa, Asia, East Europe and Western countries.

3.1.1. Implications of current strategic position – SAB Miller are operating beer breweries in many countries around the world during last four decades. When the company use acquisitions with local brewer as a strategy and get the market information about local customer behavior so that they can penetrate into market with upgrade quality brand. Nowadays acquisition can no longer useful as a strategy because of the company growth is already limited from acquisition so that SAB Miller needs to change strategy in order to differentiate with other beer breweries. The company can use the understanding of different culture from various countries to support the SAB Miller coming out with new brand which is acceptable for all level of customers and become a global beer brand. Having wide network of distribution, good relationship with stakeholders will raise the profit of SAB Miller whereas external and internal forces that can impact business operation need to be take into account when deciding for new strategy.

Vision

To be the number one beer brand as well as available in any country over the world.

Mission

Win the customer first choice in both quality and price which also create the value for stakeholder.

Strategic Objectives

Create the global beer brand and expand the business to raise the wealth of SAB Miller

3.2. New vision together with Mission Statement and strategic objectives -SAB Miller acquired breweries from many countries and operated beer breweries in global standard. Currently the company can only operate in South Africa, China, Vietnam, etc. By having vision that stated in above, the SAB Miller aim to be available in any single country all over the world in future.

As mission, the company should target to win the customer first choice in both quality and price which also create the values for stakeholders. The company mission is a goal as well as motivation the staff to reach there. So the SAB Miller staff is equally important to be valued as customer which will motivate all the stakeholders relating to SAB Miller.

Today business world is very competitive so that SAB Miller needs to create the global beer brand and expand the business in order to increase the level of profit earned which is taken into account as strategic objective.

Option 1-Diversified into different business units such as hotel and tourism industry

Option 2-Joint Venture with other breweries from those countries which has less domestic beer breweries

Option 3 -Product development in Asian Countries

Table 2: Three Strategic Options

Differentiation

(1) (3)

Cost Leadership

(2)

Focus

Table 3: Porter’s Generic Strategies

Market Penetration

Product Development

(3)

Market Development

(2)

Diversification

(1)

Table 4: Ansoff’s Matrix

Star

(2)

Question Mark

(1) (3)

Cash Cow

Dog

Table 5: The Boston’s BCG Matrix

3.3.1. Strategic option 1 – Diversification into other business unit as strategy such as operating as a hotel and tourism industry in Asian countries where a lot of European interested to travel. The company also operates with global network which can support the new business in Asia.

Generic Strategies -Nowadays hotel and tourism industry is popular because many business operators travel around the world to find business opportunities. Most of Asian countries are developing countries compare to Western countries, so that it will attract the foreign investors. Therefore, hotel business is profitable for SAB Miller which can differentiate from existing business operation.

Ansoff’s Matrix – SAB Miller needs to diversify into new business unit when the original business unit cannot expand anymore. Hotel business is popular for high returning but for the new entrant it may be a risky business. The lack of market experience and country culture can raise the risk of diversification.

Boston BCG’s Matrix – The option 1 is in question mark sector of BCG’s matrix because when a company diversifies into new business unit there is a specific level of uncertainty and risk due to the lack of experience in market situation and environmental factors such as competitors. Even operating hotel business is not totally new business for SAB Miller, the relative market share is low whereas the potential growth is also high.

3.3.2. Strategic option 2 -SAB Miller may have joint venture with breweries from other countries where there are only a few local breweries. For example; Myanmar only have a few beer breweries where the customer has less choice so that SAB Miller can obtain joint venture with breweries from countries like these which has less competitive and undeveloped beer market.

Generic Strategies – SAB Miller can focus on new market where the less competitors in breweries. Going into countries having less local breweries may be a new opportunity to focus on potential market penetration.

Ansoff’s Matrix – Partnership with Myanmar local breweries, the company can establish the new brand portfolio which the customer are needed in new market. On the other hand, the imported beer are having high price due to the imported tax rate. Myanmar has low labor rate and abundant resources for raw materials therefore SAB Miller can penetrate such kind of less competitive beer market through joint venture and develop the company business in new market.

BCG’s Matrix – The option 2 is possible opportunity for SAB Miller. Investing in under developed beer market through joint venture with local breweries and also SAB Miller have operating experience in different beer market will return more profit for company where both relative market share and growth is high.

3.3.3. Strategic option 3 – Another option that SAB Miller can pursue is product development in Asian market sectors. The company can launch the lower level of alcohol or light beer for female consumers or other new products which may compact with that particular country’s culture.

Generic Strategies – The survival of business also depend on how SAB Miller attract the customer interest and increase demand. Customer interest on product and their requirement always change so SAB need to continuously develop the new products such as innovation for less alcohol level in beer for female consumer that is different with other brands.

Ansoff’s Matrix – Since SAB Miller is well-known breweries in beer industry with mature experience constraints are supporting for new product development. The return on investment fund in research and development is a large amount but the experience of company profile can reduce the risk level. Launching new product in existing market will attract the customer interest on SAB Miller brand portfolio.

BCG’s Matrix – This option is situated in portion of question mark because the new product has certain level of risk. SAB Miller has strong market place for existing product so that will support the potential of market growth but the area of market share for new product is low.

3.4. Recommendation on Strategic option – I recommend choosing the strategic option 2 since the opportunity to grow SAB Miller in that country is high. Moreover partnership with local breweries will reduce the political risk where the labor rate is consider to be low will bring higher level of profit for company. According to BCG’s Matrix, it is in star quadrant which is at the peak level of investment. In Ansoff’s Matrix, it is located in market development where the beer market of that country is under-developed. The competitors are not significant in figure so that mature experienced company like SAB Miller entering into that country market is a good opportunity to expand in term of market development.