Strategic Case Analysis Of Us Brewing Industries Commerce Essay

The U.S. Brewing industry was first originated and established by Dutch and English settlers dating back to the mid sixteenth century. “Dutch immigrants quickly recognized that the climate and terrain of present-day New York were particularly well suited to brewing beer and growing malt and hops, two of beer’s essential ingredients” (Stack, 2003). There is evidence that shows the profitability and popularity of producing and selling beer even in the earlier centuries of its existence. But with these financial opportunities also came problems within the Brewing industry.

The emergence of competition from other alcoholic beverages, distributing, home manufacturers, and later prohibition threaten the business’ profitability. “Bottling was expensive, and beer did not travel well. Nearly all beer was stored in, and then served from, wooden kegs. While there were many small breweries, it was not uncommon for households to brew their own beer. In fact, several of America’s founding fathers brewed their own beer, including George Washington and Thomas Jefferson” (Stack, 2003).

During the early eighteenth century brewing began to expand, what first started off

as small scale and local began to expand as demand and consumption increased. At the end of the civil war beer became a significant industry because of five main reasons,

“First, widespread immigration from strong beer drinking countries such as Britain, Ireland, and Germany contributed to the creation of a beer culture in the U.S… Second, America was becoming increasingly industrialized and urbanized during these years, and many workers in the manufacturing and mining sectors drank beer during work and after. Third, many workers began to receive higher wages and salaries during these years, enabling them to buy more beer. Fourth, beer benefited from members of the temperance movement who advocated lower alcohol beer over higher alcohol spirits such as rum or whiskey. Fifth, a series of technological and scientific developments fostered greater beer production and the brewing of new styles of beer” (Stack, 2003).

From 1920-1933 these years were know as the dark years because of prohibition. Prohibition meant the end of many small breweries that had been profitable, and that, taken together, had posed a formidable challenge to the large shipping breweries. The shippers, who had much greater investments, were not as inclined to walk away from brewing” (Stack, 2003). So companies began to sell secretly while others left the market, by 1933 this ban had ended and alcohol was again aloud to be sold.

Today the brewing industry continues to grow and has become an enormous part of culture, industry and source of income for U.S. companies. It is a main feature in the media with advertising as a focus.

Growth of the craft brewing industry in 2009 was 7.2% by volume and 10.3% by dollars compared to growth in 2008 of 5.9% by volume and 10.1% by dollars.

Craft brewers sold an estimated 9,115,635 barrels* of beer in 2009, up from 8,501,713 in 2008.

Overall, US beer sales were down 2.2% in 2009.

Imported beer sales were down 9.8% in 2009, equating to a loss of 2.8 million barrels.

The craft brewing sales share in 2009 was 4.3% by volume and 6.9% by dollars.

Craft brewer retail dollar value in 2009 was an estimated $6.98 billion, up from $6.32 billion in 2008.

1,595 breweries operated for some or all of 2009, the highest total since before Prohibition.

(Brewers Association, 2010)

* 1 barrel = 31 US gallons

Here are some of the key players in the industry (Top Breweries by Production in the U.S.)

Anheuser-Busch InBev St. Louis, MO

2. MillerCoors Brewing Co. Chicago, IL

3. Pabst Brewing Co. Woodridge, IL

4. Boston Beer Co. Boston, MA

5. D. G. Yuengling and Son Inc. Pottsville, PA

6. Sierra Nevada Brewing Co. Chico, CA

7. Craft Brewers Alliance, Inc. Woodinville, WA

8. New Belgium Brewing Co. Fort Collins, CO

9. High Falls Brewing Co. Rocheste, NY

10. Spoetzl Brewery Shiner, TX

Anheuser-Busch, Miller, and Coors have established as the leaders in the industry forming an oligopoly.

Segment

“The market for beer in the U.S. consists of essentially the following ten segments imports, domestic specialties, super-premium, premium regular, light, ice, malt alternatives, malt liquor, popular regular, and others” (Apex Publishers, 2009). The beer industry has shown modest growth, while some segments have remained constant or descended. But through this there have been segments that have seen a large increase, those being light, imports, domestic specialties, and super-premium. (Apex Publishers, 2009)

Light

As far as domestic segments go, the most significant and unstoppable trend in the beer business is the continued momentum of light beer. Since the creation and marketing of the first light brands in the mid-1970s consumers have increasingly been attracted to these beers for their smooth, mild taste and lower calories.

Imports

Imports have made significant incursions into the U.S. beer market, mostly at the expense of domestic brands. Indeed, imports made a major impact on the U.S. beer market in 2007 and did so despite uncharacteristically slow volume growth that actually lagged that of the market overall. In 2007, the market share of imports was 14.0% with a volume of 29.9 million barrels.

Domestic Specialties

Although growth in domestic beer segment has been relatively flat except for light beer, the domestic specialty segment has shown strong double-digit growth that should continue in the foreseeable future. This segment includes brewpubs, microbreweries, and regional special breweries.

Big Brewers Get Crafty

In response to the significant growth in the craft-beer industry, the three major brewers-Anheuser-Busch, SAB-Miller, and Molson Coors Brewing Co.-have all entered this fast-growing market, either through developing their own specialty craft beers or by acquiring or forming partnerships with existing craft brewers.

Super-Premium

Like imports and domestic specialties, the super-premium segment has experienced strong growth over the past several years. This too can be attributed to the fact that Americans are becoming more yuppified and “trading up” to better products across the board in food and beverage.

(Apex Publishers, 2009)

The focus of this paper is to address the industry and firm analyses of Coors, and ultimately present a coherent strategic recommendation. I will provide insight on the brewing industry as a whole and compare and contrast how and where Coors fits into that equation.

Caveats:

I found difficulty in finding annual reports and even the consistency within the firms. I also found that many of the questions throughout the paper layout related so I blended many parts into one or just omitted that section because it was covered in other parts of the analysis.

II. Socio‐Economic

(P.E.S.T.)

Political-There is some government regulation on the Brewing Industry, one government regulation is the age of consumer (21) as well as the amount of alcohol that can be present in a beverage. Also high taxation levels, restrictions, strict regulatory rules, and the small brewers excise tax not present the market is affected.

Economic- The brewing industry has experienced consecutive years of growth but has experienced a pause in its growth because of the economy. Beer is in the mature stage of the product life cycle; however growth remains present because of the amount of people turning of age every day.

Social- in the American culture it has become a social aspect or occasion for adults to socialize over a beer. In this culture often times when reaching the age of 21 you see people going out for a drink. Today customers are interested in the wide range of beer, ale, and other alcoholic beverages. Because of this niche markets are present, and demands are on the rise.

Technological-With the technological advancements and information systems the brewing industry is using this to promote growth and brand. The industry is interested in a few different segments like light, imports, domestic specialties, and super-premium. Many companies are developing specialty beverages or are forming partnerships.

III. Porter’s Five Forces

Rivalry: There is a lot of competition in the brewing industry with hundreds of breweries present, but three of those companies stand above the rest. These three include Anheuser-Busch, SAB-Miller, and Molson Coors Brewing Co. Between these three they take up 80 percent of the market share (45%, 23%, and 10%). The rivalry among existing companies is medium to high, even though the demand for the product is decreasing. It is easy for consumers to switch cost, and currently with the flat consumption rate because of greater alcohol awareness.

Threat of Substitutes: The industry focuses on exclusive styles, taste, and even the amount of calories in beer. This causes product differentiation within the industry, but with so many companies, and competitors the threat of substitute is very high because they provide so many choices with brands, taste, and price. They also must take into account other beverages that may or may not be alcoholic or beer. You have to also those individuals who don’t drink or rarely drink.

Barriers to entry: In the brewing industry, barriers to entry are also high. This is because of the legal costs, manufacturing, and distribution economics of scale that must be present in order to compete in this competitive market. It will also be difficult for new entrants because large capital requirements and inadequate contact to distribution channels. You see this throughout the market with companies fighting to have only their breweries carried or marketed by wholesalers. Beer is regulated differently according to state regulation which also makes it difficult to enter.

Buyer Power: The buying power of customers is medium. Because of all the alternative choices (substitutes) for wholesalers have available to them they have a voice in how much companies pay for products. They also force companies to produce high quality products, advertisements, and even consumer niches, since the switching cost is so low, unlike the brewery companies. This provides wholesalers with the choice to change brands which could hurt the company and the chances of building customer loyalty.

Supplier Power: This is medium for suppliers because of the amount of competition in the brewery industry, and growing. Suppliers know they can supply other breweries, giving them the choice to charge higher prices or approach different companies if they wish. But at the same time with three companies leading the industry they are the only players who compete with each other money wise and can afford to out pay all other companies. Also with the amount of suppliers and the availability of the ingredients to create beer farmers and companies compete with suppliers in gaining position.

Working Capital

It is very expensive to join the industry as companies have cemented their feet with suppliers, and customers. Brand recognition has been created, as well as unique taste and trends have emerged. It is very difficult for a new player to emerge in the business as I mentioned in the Porters Five Forces of barriers to entry. One must consider the cost of suppliers, startup, brewery’s, employees, and storing the products and becoming a key player the case study talks about the cost of just Coors moving to Virginia and creating a brewery. To pay for something of that level it would take 250 million to 300 million for a company with the ability to produce 5 million barrels and store it. Keep in mind that this cost is dating back all the way to 1985 so cost has increased with inflation, the current state of the economy, and evolving technological advances (Harvard Business School) Some examples of cash flows within the industry reside in these graphs from these companies. These numbers show you how expensive it is to run a company in this industry of this stature; it can be very high maintenance.

Molson Coors Brewing Company Cash Flow Statement

All amounts in millions of US Dollars except per share amounts.

Dec 09

Dec 08

Dec 07

Net Operating Cash Flow

824

412

616

Net Investing Cash Flow

(194.1)

(269.5)

(439.1)

Net Financing Cash Flow

(117.2)

(266.9)

8.4

Net Change in Cash

512.9

(124.9)

194.8

Depreciation &Amortization

187.4

273.4

350.7

Capital Expenditures

(124.7)

(230.5)

(428.3)

Cash Dividends Paid

(173.3)

(159.4)

(114.8)

(Morningstar Inc., 2009)

Consolidated cash flow statement (SAB-Miller)

for the year ended 31 March

 

Notes

2009

US$m

2008

US$m

Cash flows from operating activities

 

Cash generated from operations

27a

3,671

4,276

Interest received

 

275

228

Interest paid

 

(997)

(730)

Tax paid

 

(766)

(969)

Net cash from operating activities

 

2,183

2,805

Cash flows from investing activities

 

Purchase of property, plant and equipment

 

(2,073)

(1,978)

Proceeds from sale of property, plant and equipment

 

75

110

Purchase of intangible assets

 

(74)

(59)

Purchase of available for sale investments

 

(14)

–

Proceeds from disposal of available for sale investments

 

4

5

Proceeds from disposal of businesses

 

119

71

Proceeds from disposal of associates

 

–

2

Acquisition of subsidiaries (net of cash acquired)

 

(269)

(1,284)

Overdraft disposed with subsidiaries

 

2

–

Cash disposed with businesses

 

(4)

–

Purchase of shares from minorities

 

(5)

(49)

Investments in joint ventures

 

(397)

–

Investments in associates

 

(4)

(179)

Repayment of investments by associates

 

3

–

Dividends received from joint ventures

 

454

–

Dividends received from associates

 

151

91

Dividends received from other investments

 

1

1

Net cash used in investing activities

 

(2,031)

(3,269)

Cash flows from financing activities

 

Proceeds from the issue of shares

 

23

39

Purchase of own shares for share trusts

 

(37)

(33)

Proceeds from borrowings

27b

4,960

6,492

Repayment of borrowings

27b

(4,096)

(5,038)

Capital element of finance lease payments

(1)

(7)

Net cash payments on net investment hedges

 

(12)

(16)

Dividends paid to shareholders of the parent

 

(877)

(769)

Dividends paid to minority interests

 

(217)

(197)

Net cash (used)/generated in financing activities

 

(257)

471

Net cash (outflow)/inflow from operating, investing and financing activities

 

(105)

7

Effects of exchange rate changes

 

26

(113)

Net decrease in cash and cash equivalents

 

(79)

(106)

Cash and cash equivalents at 1 April

27b

188

294

Cash and cash equivalents at 31 March

27b

109

188

(SABMiller, 2010)

Proprietary product differences

Coors doesn’t rely on a secret formula to their success, but they do have a different taste that helps distinguish them from other beers. Coors beverage is brewed with Rocky Mountain water, and premium high country barley. They’re focus as far as brewery and beliefs remain unfaltering. They use the same ingredients of many other companies, although some companies take a different approach. These companies may rely on a special flavor, or taste as described in the market segment, porters five forces (threat of substitute), and the PEST Analysis (social) with niche markets, but Coors just isn’t one of them. Coors tries to promote its brand, existence and experience in the field. On their home web page they proudly advertise the legend and that they have been around since 1873 and have kept everything the same. This is their approach and how they distinguish themselves from the rest of the market.

(Coors Brewing Company, 2010)

Absolute Cost Advantages

Although companies have a certain taste with so much competition in the field it is impossible to have your own unique taste. People will make copycats, that may have one or two ingredients fewer and the taste between the products will be very similar. (See Porters for threats of supply and substitute.

Brand Identity

This is important in the industry with the three leading companies being established in 1873 (Coors), 1895 (SABMiller), 1852 (Anheuser-Busch). These are the three leading companies ranked from 3rd to 1st, and as you can see they have been around for a while and built brand loyalty in the economy. These are also the same three companies that occupy 80% of market share, and have been the key players in the industry. Although the threat of substitutes is high, and the competition is steep (check Porter’s) with so many companies competing, making cheaper similar products, the only thing missing is that name (brand.) Without this it seems as if the other companies have not had as much success at becoming a key player.

Brand is important through interviews with beer consumers I noticed that the type of beer that was brought was name brand when dealing with the market segment of 26 years old or higher. They have a special preference and drink the same kind of drink (loyal customers). While I also noticed that when dealing with those individuals from ages 21-25 I noted that they preferred a beer of a brand but often didn’t have the money to afford the more expensive beer leading them to usually get the cheaper (generic) product. I will attribute this to brand loyalty not yet being build because they are still experimenting with alcoholic beverages and have just recently become of legal age, and haven’t had a stable income yet, job, or taste preference.

(Coors Brewing Company, 2010) (SABMiller, 2010) (Anheuser-Busch, 2010)

6. Access to distribution

The Buyers are sporting organizations (NBA, NFL, MLB, and college sports), bars, clubs, retailers, events (concerts, entertainment) and wholesalers. Coors would target these collegiate and professional teams to have their Beer sold over others usually leading to a bidding war between companies and sponsorship. The same also goes for fighting for suppliers, retailers, and wholesalers. They would need to come to them and make an offer to have their product sold over other competitors.

7. Expected retaliation

Through research it industry is dominated by three main players; it is hard for the smaller companies to compete. They must target local or regional areas to be profitable because they cannot compete on the global and national scale with the amount of money and brand recognition these companies have. The bigger companies will always be able to offer retailers higher prices and also get the sponsorships and be present in the media which dominates the culture today. This hurts many breweries, but the positive to have a smaller brewery is that you can get tax benefits or exemptions, and you don’t have to lose money when storing so many barrels because of losing its freshness.

There are an abundance of examples of smaller companies being brought out like Northern Breweries, Iron City Brewing Company, and Anchor Brewing Company. These companies were bankrupt and brought out in , 2009, and 1965 and experienced struggles as some of the smaller airlines who tried to compete with the larger companies (St. James , 2002) (Answers Corporation, 2010).

B. Suppliers

Do suppliers have power over breweries, the answer is low even with the stiff competition it is difficult to bargain with companies and negotiate for higher prices and the right to look for other companies because three companies dominate the market and their competitors. The brewing industries must purchase ingredients for the beverages and provide these companies with the product at hand. But the problem is that breweries can got other places to get supplied because the products can be made but not at the capacity at which the larger companies may wish. This is where suppliers can have some power depending on what brewery they are supplying and at what production rate they can produce the ingredients.

Global competition- it is increasing and rising but is not a threat yet

IV. Conclusion

The opportunities and threats facing firms in the brewing industry are weighed heavily on deciding how to approach the field and if breweries wish to enter. Some threats in the field are competing on the local, regional, and national scale. Smaller companies are unable to compete at the national level and don’t garner the recognition, brand awareness, as the large companies. It also is harder for them to compete with other companies while negotiating to wholesalers. Some strength in this field includes tax exemptions or benefits, and the ability to purchase from smaller suppliers and also being able to keep beer fresher. While larger companies like Coors can dominate the market, have control over suppliers, and reach large audiences with advertisements and media. Some more threats are barriers to entry with the high startup cost and lack of brand awareness it makes it hard for other players to emerge but is positive for companies already in existence.

A. Critical Success Factors

Efficiency- lower barriers to entry, with high startup, and fix cost value is decrease and the chance of another company emerging is low. This would help spread some of the power of the breweries and allow other players to have a voice in joining the market or becoming a key player.

Distribution Channels- This is a problem and causes an imbalance with bigger companies having more convenient channels as far as location, time, and money they can get what makes sense logically and financially before the smaller players.

Technological- There must be something created that preserves the beer freshness. With such large packages delivered by wholesalers and the amount of beer that most be stored before it is sold they must find a way to preserve this longer. This will save money, allow less products to be wasted and will be financially logical. This is a significant cost that companies must bear.

B. Prognosis

The brewing industry is in a mature phase there is some growth even through it has hit a rough patch in the economy. The growth will be realized by companies already involved in the industry well those who wish to enter have no chance really with the high barriers of entry. I see this industry continue to slowly grow seeing that the population is continuously turning 21 and drinking has become a social event or a part of culture.

I. Current Situation/ History

Coors is doing quite well; it holds the 3rd biggest market share in the industry and is one of three dominant players. They have over five billion dollars in U.S. sales. “Coors is a regional division of the world’s fifth-largest brewing company, the Molson Coors Brewing Company and is the third-largest brewer in the U.S… Coors is also renowned for operating the Golden, Colorado brewery, the largest single brewery facility in the world” (Coors Brewing Company, 2010)

Coors was founded in 1873 where it established itself in the beverage industry. The company was founded by Adolf Coors and Jacob Schueler (who was later brought out by Coors) in Golden, Colorado of the United States. Coors for the majority of its history was a regional product (beer) present in the American West before expanding.

In 1977 Coors ran into some troubles when, “the brewery workers union at Coors, representing 1,472 employees, went on strike. The brewery kept operating with supervisors and 250 to 300 union members, including one member of the union executive board who ignored the strike. Soon after, Coors announced that it would hire replacements for the striking workers. About 700 workers quit the picket line to go back to work, and Coors replaced the remaining 500 workers, keeping the beer production process uninterrupted. In December 1978, the workers at Coors voted by greater than a two to one ratio to decertify the union, ending 44 years of union representation at Coors. Because the strike was by then more than a year old, striking workers could not vote in the election.

Labor unions organized a boycott to punish Coors for its labor practices. One tactic employed was a push for state laws to ban sales of unpasteurized canned and bottled beer. Because Coors was the only major brewer at the time not pasteurizing its canned and bottled beer, such laws would hurt only Coors. Sales of Coors suffered during the 10-year labor union boycott, although Coors stated that declining sales were also due to an industry-wide downturn in beer sales, and to increased competition. To maintain production, Coors expanded its sales area from the 18 western states to which it had marketed for years, to nationwide distribution” (Denver Post, 1977).

Late they pondered opening a brewery in Virginia, but I don’t thik this would solve their problems and make them more competitive in the industry. I think the cost of opening and starting this company would be too extreme and would not be wise. I feel like it’s a better decision not to open it or start it. The better decision would be to focus on the current products and expanding segments outside of beer.

The company changed the industry by introducing the first all-alluminum two piece beverage can. Coors countinued to provide innovation in the industry and has seen present success in the industry. Coors continues to strive as a key player and is a force in the industry (Coors Brewing Company, 2010). Molson Coors and SAB-Miller have since merged and become a bigger palyer in the industry, which is a common trend that larger companies do to become a larger player in the market.

B. Mission Statement

Our community investment mission is to promote the health and well being of individuals and communities where we do business. Our investments treat all people and resources with integrity and respect.

Through community investment, Molson Coors aspires to have a positive and meaningful impact by supporting:

Active engagement of people in their communities

Responsible enjoyment of our products

Environmental stewardship

Porters Strategy

Rivalry: There is a lot of competition in the brewing industry with hundreds of breweries present, with Coors being the 3rd dominate player. Coors focuses it misses of foster and environment and experience that other companies cannot offer. They want to be active in community by giving back, and want to set product taste, and responsible enjoyment apart from the other companies.

Threat of Substitutes: The industry focuses on exclusive styles, taste, and even the amount of calories in beer. This causes product differentiation within the industry, missions, and services. Coors seeks to distinguish themselves apart from these substitutes by fostering a community environment but with so many companies, and competitors the threat of a substitute company is present if companies don’t foster a good image outside of just making a god tasting beer.

Barriers to entry: In the brewing industry, barriers to entry are very high. So with Coors approach they have had success in developing a rapport with the market seeing that only common key player’s organizations are present. With all of the legal costs, manufacturing, distribution, and economics of scale it makes it difficult for others to compete outside of dominant forces.

Buyer Power: The buying power of customers is medium. Because of all the alternative choices (substitutes) for wholesalers have available to them they have a voice in how much companies pay for products. That’s why it’s essential that companies become versatile in fostering a positive and meaningful impact in and outside the community.

Supplier Power: This is medium for suppliers because of the amount of competition in the brewery industry, and growing. Suppliers know they can supply other breweries, giving them the choice to charge higher prices or approach different companies if they wish. This is why it could help to have and practice a mission similar to Coors.

II. External Environment (Opportunities and Threats)

The opportunities and threats facing Coors in the brewing industry are weighed heavily on deciding how to approach the field and if they should make some moves. Some threats in the field are competing regionally, and nationally. Threats are the top two companies are the running away and taking even more of the market. The high tax rates that apply to large companies are certainly seen as a weakness.

While larger companies like Coors can dominate the market, have control over suppliers, and reach large audiences with advertisements and media. Some more threats are barriers to entry with the high startup cost and lack of brand awareness it makes it hard for other players to emerge but is positive for companies already in existence. Another advantage for Coors is that smaller companies are unable to compete at the national level and don’t garner the recognition, brand awareness, as the large companies. It also is harder for them to compete with other companies while negotiating to wholesalers or to new forces to enter the market. Suppliers or buyers don’t dictate cost too much and there are options available to Coors, as well as much strength. Another opportunity that Coors takes advantage of because they are a controlled company is that, “controlled companies tend rely on exemptions from certain corporate governance-related requirements, including the requirement that the board have a nominating committee composed entirely of independent directors with a written charter addressing matters specified by the NYSE. Molson Coors has elected to rely on this exemption” (Coors Brewing Company, 2010).

Management

Coors management is active in deciding the long term survival of the company. They are active in the media with advertisements. This is raising brand awareness and can even help target new individuals unfamiliar with the taste. They are the official NASCAR sponsor, they own 80% of the Montreal Canadians, have naming rights the Colorado Rockies baseball field (Coors Field), and more. They are active in fostering a community environment and building rapport with some of the positive things the business is doing in the community and state as a whole. With these long term sponsorships and aggressive moves in and out the U.S. Coors is looking to grow and improve with the community while at the same time growing financially as well (Coors Brewing Company, 2010). They are putting a good effort into the long term future of the company.

Board Of Directors

Peter H. Coors

Chairman of the Board

Molson Coors Brewing Company

Andrew T. Molson

Vice-Chairman of the Board

Molson Coors Brewing Company

Peter Swinburn

President and Chief Executive Officer

Molson Coors Brewing Company

Francesco Bellini

Chairman, President and Chief Executive Officer

BELLUS Health Inc

Rosalind G. Brewer

Senior Vice President and General Manager

Wal-Mart Stores Inc

John E. Cleghorn

Chairman of the Board

Canadian Pacific Railway

Charles M. Herington

Executive Vice President

Avon Products, Inc

President, Avon Latin America

Franklin W. Hobbs

Partner

One Equity Partners

Geoff Molson

Vice-President, Marketing

Molson Coors Brewing Company

Iain Napier

Chairman

Imperial Tobacco Group plc

David P. OHYPERLINK “http://www.molsoncoors.com/about-us/leadership/david-p-obrien/269″‘HYPERLINK “http://www.molsoncoors.com/about-us/leadership/david-p-obrien/269″Brien

Chairman

EnCana Corporation

Melissa Coors Osborn

Director, Organizational Development

MillerCoors 

H. Sanford Riley

President and Chief Executive Office

Richardson Financial Group

(Coors Brewing Company, 2010)

Through reviewing the links the website does not show each person individual job or duty all it shows is there credentials, experience, and position so I am unable to state whether they are suit the needs of the company but through the numbers they are doing a good job but there is definitely room for improvement. But management is preserving the survival of the organization.

B.) Organization Structure

For the current structure Coors has a list of respectable people in leadership. They have many individuals from different fields of experience providing a variety of point of views, and choices. They’re CEO fosters and applies the mission statement and has made a splash in the industry with many current trends in the industry. There is a team culture that fosters the community embodiment

“The Molson Coors Brewing Company (NYSE: TAP) has a dual-class ownership structure. The majority of Class A shares are held directly and indirectly by the Molson and Coors families, and Class B shares are held by institutions and the general public. Class A shares hold the majority of voting rights, although Class B shareholders are entitled to elect three members of the Board of Directors as well as to vote on extraordinary transactions such as the sale or merger of the company or of a significant business unit.

Our bylaws grant the Board power to fix the number of directors, and it has currently set the number at 15. Class A shareholders elect 12 of the 15 members of the Board of Directors, with the remaining three directors elected by Class B shareholders. At this time, the Board has resolved to maintain one Class A director vacancy, which it does not currently plan to fill.

Because more than 50% of the voting power of Molson Coors is controlled by the Coors and Molson families, Molson Coors is defined as a “controlled company” under the NYSE listing standards. The listing standard permits controlled companies to rely on exemptions from certain corporate governance-related requirements, including the requirement that the board have a nominating committee composed entirely of independent directors with a written charter addressing matters specified by the NYSE. Molson Coors has elected to rely on this exemption. Accordingly, nominees for election to the Board are selected by the full Board, and by a Nominating Committee and nominating subcommittees established pursuant to the Molson Coors certificate of incorporation. The chart below illustrates how our directors are nominated and who is entitled to elect them” (Coors Brewing Company, 2010).

4P’s

Product-Coors offers the ten segments available throughout the market imports, domestic specialties, super-premium, premium regular, light, ice, malt alternatives, malt liquor, popular regular, and others. Coors does well in light, import, domestic specialties, and super-premium.

Pricing-is pretty similar along the lines of the other competitors so price is appropriate.

Place- It’s headquarters are in Colorado but Coors products are pretty much available throughout the entire U.S.

Promotion- To ensure this success, Coors is placing regional directors and regional marketing managers in Sacramento, Atlanta, East Rutherford, NJ, and Chicago. They will lead sales and marketing efforts for the Western, Southern, Eastern and Central regions, respectively (Gale Group, 2004). They continue to also be key players in other sporting fields and entertainment of high interest (refer back to management).

E.) Operations/Production

I see that Coors has made some nice strides and additions to the market. They bring a unique style and blend to the market.

“Coors uses a unique filtering and sterile-fill process that allows it to deliver to the consumer a stabilized, non-heated, non-pasteurized more “natural” beer product….a down side to this is that Coors takes about twice as much time to brew, age and process its beer as compared to its major competitors. The net result is a beer that is naturally aged and therefore more smooth, stable and balanced in taste. Coors takes great care in bringing its beer to market. The beer is kept cold throughout the brewing, packaging, and distribution process. Unlike most beer brands, Coors beer is shipped cold in insulated or refrigerated railcars and trucks. Coors also codes each bottle and can with a freshness code that tells you the date by which unsold beer should be removed from retailer shelves. The freshness period for bottle/can beer is 112 days (16 weeks)” (Gale Group, 2004).

So if Coors can continue to distinguish itself from the market and add innovations they can increase productivity and continue to market share and profits. These innovations shows that Coors main focus is product development although some interest is put on diverisfication with the different segments prodcut development and differenation are the main focuses. President Leo Kiely states that, “Yes, building our brands and growing the top line are clearly job one – no doubt about it,” he continued. “But you need fuel to grow. So the other critical piece of our strategy is to make more money and generate more cash by reducing our costs” (Coors Brewing Company, 2010).

4. Research and Development

As stated in the operations/production section of paper Coors is active in innovations, research, and developing something that the market hasn’t seen. On top of keeping is taste, company, and values the same Coors remains active in putting these out force that can change the market and even force other companies to adjust.

Coors focuses not only on profitable innovations but also environmental safe innovations that back the mission statement of fostering a community environment. “Molson Coors has set the global target to improve water efficiency year over year by 4% (2008 – 2012).  In 2008, the company reduced its overall water use by 4%” (Coors Brewing Company, 2010).

The company has focused on the needs of the consumers and environment by preserving clean water and warranting it as a sustainable resource. They created some advances in the fields and with great research have found a way to make the beer fresher than all the competitors and have been able to foster a positive environment around their communities.

D.)Finance

Yes I think Coors is trying to maximize shareholders wealth, because in doing that they only help themselves and their appeal and back their mission statement. It helps the community, business, and consumers. This can be seen with how Coors administers their leadership, and ownership structure. The shareholders have a voice (see organization structure.)

F. Management Information Systems

(This section is not applicable)

IV. Critical Success Factors

Building Brand- Coors has made a focus of making branding its priority. With the merger with Molson that has helped in the process. Coors remains very active in the media and the culture whether in the U.S. or Globally. Their leader own professional teams, and are even major sponsors of main events. They are involved in the entertainment field and even collegiate sports. With some much emphasis put on branding, and awareness this has to be key to Coors success.

Growing the Top line- This is also important because it appeals to the business, and shareholders and that’s who Coors aims to reach. Also with this Coors can be more effective in helping the environment. The organization is looking for their teams to build on the sales momentum and revenue-generating potential of the brands, by continuing to improve costs, and further strengthen the fundamentals of our business worldwide (Coors Brewing Company, 2010). It’s simply put like this, make more money, and generate more cash by reducing costs.

Strengthening Base- focused on strengthening our base in the belief that a strong core business is the key to all future opportunities. By keeping the same taste and values Coors feels it can foster brand loyalty and that is what they wish to do keep these people happy. By establishing a rapport with customers, the community, and shareholders they will only improve relations and better retain its base. Although they are making innovations in the field they still keep its taste the same dating back to 1873 which is why they use the promotion, legendary.

V. Strategic Problem

Management has failed to ensure the long‐term survival of Coors because they have not diversified into other segments or markets. Coors mainly focuses on just beer and that segment unlike their competitors Anheuser-Busch who is involved in other alcoholic beverages, water, energy drinks and more.

VI. Strategic Alternatives

Diversify

Pros- by diversifying into other segments outside of beer they can broadening their target and can appeal to different segments, increase money and not solely rely on one product to pay for the entire organization.

Cons- They may not be the specialty company that they are not; startup cost to produce other products could be steep. It also may be hard to compete with other companies who more experienced because Coors may have that stigma associated as just good in beer and not other segments.

Technology decisions

Pros- Coors uses a unique filtering and sterile-fill process that allows it to deliver the consumer a stabilized, non-heated, non-pasteurized more “natural” beer product. This creates a smoother, better tasting beer. They also focus on environmental issues reducing water usage and energy by the company.

Cons- a down side to this is that Coors takes about twice as much time to brew age and process its beer as compared to its major competitors. This means that competitors can reach the market quicker, more efficiently, and at a smaller cost. Seeing that Coors is third in market this may not too much of a concern to consumers. Also being economically friendly can be expensive at times and hurt a company’s productivity. Coors must limit so of these technology issues or it will be impossible to have growth in such a competitive market.

Making Changes

Pros- Reaching out to existing customers is important but it’s also important to reach new customers. This will create other markets, it is important for them to evaluate their choices as to whether significant changes need made. Coors is content on keeping many of their things the same and appealing through history and stability. An alternative approach would be to keep this though but also create things that may appeal to other markets.

Cons- This could create a stir in why customers like you. It also could attract people who aren’t brand loyal which is not what Coors is striving for. It will also cost money and research and development to come up with these changes and implement them.

VII. Recommendation

I recommend the 1st recommendation because this will allow Coors to catch up with and compete with the rest of the market. By diversifying into other segments outside of beer they can broadening their target and can appeal to different segments, increase money and not solely rely on one product to pay for the entire organization. This will allow them to gain ground on Anheuser-Busch and could be critical to the future success of the company. This could start with being present in the other alcoholic fields outside of beer, and also beverages such as water, energy drinks, and tea which is emerging as popular segments.

I understand that there will be some initial start up cost but the research and development is already present and they could use other companies as the blueprint. These costs will be overlooked as the value associated with other segments show a lot of potential.

Prognosis

Overall the company is in decent shape and is doing pretty well, but there is potential for growth. The company is active in marketing and is able to differentiate itself from the market. It has diversified itself into different beer segments and could benefit them by diversifying into other fields outside of the beer segment.

The Coors case I will compare to in class is the Video Games rivalry in class. Like Coors the Video Game industry is dominated by three companies, Sony, XBOX, and Nintendo. As I described the Coors industry earlier throughout the paper I will focus on just the video game industry. Like the industry the a some companies diversifying into other fields, as Sony is involved with many other segments outside of video games as is Microsoft. The industry is shows wide potential for growth and could definitely improve within the market with technological advancements, advertisements, and more.

The industry is growing and has similar barriers to entry as they are high barriers because of the high start up cost and the amount of effort and energy that would be required to compete with these already stable and existing companies. The video game rivalry is high between the key players like the Brewing industry but there isn’t really much competition outside of those companies yet. Although the video game industry must consider the fact that Microsoft could be a huge threat and hand held advices also. The key players in the video game industry like the Brewing Industry are trying to appeal to the different types of segments available.