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Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
Pp glob bus11_abinbev_brewing
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Pp glob bus11_abinbev_brewing

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  • If you cannot win, just get along with them! It means that if you cannot grow or expand in your market, you must have the strategy of controlling volume, since this is the only way you’ll be able to also control price and consequently demand!
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    • 1. MScIB 2011-2012Principles and Practices of Global Business Home Assignment The Impacts of Globalization on Company’s Strategy and Structure By Lucas Pederzini Budapest, December 2011
    • 2. AgendaCompany OverviewGlobal StrategyMarket AnalysisConclusion & Final Considerations 2
    • 3. Timeline and Company Consolidation 1999 2008 2004 3
    • 4. Global Market Information Leading global brewer - consolidation; One of the top 5 consumer productscompanies in the world; Has 4 of the top 10 selling beers; Six operational zones; 116 000 employees in 23 countries; 4Source: ABInbev business at a glance webpage - http://www.ab-inbev.com/go/about_abinbev/our_business_at_a_glance
    • 5. Regional Market Share Breakdown Asia C&E EU 13% 7% North America NA 35% W EU  High Unemployment; 8%  Weakness offset by organic expansion. LatAm 37% Latin America  New brewery in Brazil – 2012; • Slow down in GDP growth. Central-Eastern Europe • Inflation rate nearing minimum wage.  Consumption increasing in Argentina;  Projected growth of 10% in 2012. • Revenue growth remain strong. Western Europe Asia  Minor growth in 2011 and expected for 2012;  Annual Growth of 10%;  High Competition – Low margins.Source: ABinbev 3rd Q 2011 Results Presentation 5
    • 6. Global Financial Information ABInbev General Key Results (Million US dollar) 2011 2010 Revenue 18,955.00 17,501.00 Cost of sales (8,231.00) (7,830.00) Gross profit 10,724.00 9,671.00 Distribution expenses (1,620.00) (1,375.00) Sales and marketing expenses (2,540.00) (2,300.00) Administrative expenses (990.00) (994.00) Other operating income/(expenses) 239.00 208.00 Normalized profit from operations (Normalized EBIT) 5,813.00 5,210.00 Non-recurring items (104.00) (182.00) Profit from operations (EBIT) 5,709.00 5,028.00 Depreciation, amortization and impairment 1,375.00 1,295.00 Normalized EBITDA 7,155.00 6,440.00 EBITDA 7,084.00 6,323.00 6Source: ABInbev 2011 Report – Period ended 30 June 2011
    • 7. Financial Information – NA and LatAm Key Results - North America 2010 2011Volumes (hl) 65,180.00 63,462.00Revenue 7,662.00 7,706.00Cost of sales (3,535.00) (3,419.00)Gross profit 4,127.00 4,287.00Distribution expenses (387.00) (399.00)Sales & marketing expenses (774.00) (834.00)Administrative expenses (285.00) (268.00)Other operating income/(expenses) 27.00 (31.70)Normalized EBIT 2,709.00 2,805.00Normalized EBITDA 3,155.00 3,233.00Normalized EBITDA margin 41.20% 42.00% Key Results Latin America - North & South 2010 2011 Volumes (hl) 72,329.00 71,917.00 Revenue 5,524.00 6,558.00 Cost of sales (1,877.00) (2,271.00) Gross profit 3,647.00 4,287.00 Distribution expenses (585.00) (740.00) Sales & marketing expenses (682.00) (766.00) Administrative expenses (299.00) (278.00) Other operating income/(expenses) 115.00 177.00 Normalized EBIT 2,195.00 2,680.00 Normalized EBITDA 2,526.00 3,101.00 Normalized EBITDA margin 45.90% 46.50%Source: ABInbev 2011 Report – Period ended 30 June 2011 Amounts in USD Millions, except the ones in hectoliters. 7
    • 8. Share Price – 5 Year Progression  Share Price: 5 years activity. • 24/11/2008 price reached rocky bottom: EUR 12.88; • Actual trading price at EUR 44.90. 8Source: ABInbev online share monitor system - http://www.ab-inbev.com/go/investors/share_information/share_monitor.cfm
    • 9. Strategic Pillars Strong Growth Brand relationship Cost Of Strengthening with Efficiency Revenues Consumers INOVATION PEOPLE & ORGANIZATIONAL CULTURE FINANCIAL DISCIPLINE 9Source: Author (2011) and ABInbev Mission and Strategy - http://www.ab-inbev.com/go/about_abinbev/dream_people_culture/mission_and_strategy.cfm
    • 10. Chain Value Procurement Purchasing of Raw Material, Supplies and Fixed Assets Technological R&D, Product Design and Processes Design Development Human Recruiting, Hiring, Training, Developing and Compensating Resources Infra Increase on General Management, Finance, Accounting and IT Structure Gross Profit & Inbound Outbound Marketing Operations Service Cost Saving Logistics Logistics & Sales initiatives • Call-of to • Conversion; • Warehousing; • Channels to • Installations; Suppliers; • Assembling; • Order Market; • Repairs; • Material • Packing; Processing; • 5 P’s; • Training. Handling; • Maintenance. • Picking; • Customer • Warehousing; • Shipment; Value, Cost to • Inventory • Delivery. Consumer, Conve Control. nience, Communic ation; • Sales Force Effectiveness. 10Source: Author (2011) and ABInbev Mission and Strategy - http://www.ab-inbev.com/go/about_abinbev/dream_people_culture/mission_and_strategy.cfm
    • 11. Double Diamond Analysis Brewering Industrial Structure Resources, suppliers, and NA Customers & Distribution Channels Diamond Market Conditions Market Consolidation Resources, suppliers, and LatAm Customers & Distribution Channels Diamond Market Conditions Brewering Industrial Structure 11Source: the Author (2011)
    • 12. SWOT Analysis INTERNAL Strengths Weaknesses  Strong Governance;  Organizational Culture;  Lean Value Chain;  Leading Brands;  Possibilities for Price and Brand-Mix;  Market Share;  Relationship with Retailers and Consumers. Opportunities Threats  Business Development on Emerging  Special Crafted Premium Brands – Markets – such as Brazil, China, Eastern strengthening on classes A and B; of Europe.  “Big 4” competition;  Brand-mix.  NGO’s campaigns and pressure against alcohol consumption;  Financial and economical crises.  Price of commodities. EXTERNAL 12Source: Author (2011)
    • 13. Global Competitiveness Analysis  Resources Availability; CSA  Industrial Facilities and Distribution Setup;  Emerging Market (LatAm).  Market leading brand; FSA  Largest market share;  High Competitiveness. 13Source: Author (2011)
    • 14. Global Competitiveness Analysis Firm Specific Advantages Weak Strong 1 3 Strong Country Specific Advantages 2 4 Weak 14Source: Author (2011)
    • 15. Market Analysis – Porter’s 5 Forces • High Capital Requirements; • Distribution Channels; • Economies of Scale; Low • Taxation and Regulations. Low New Entries • Global purchasing • Drinking based in management with local occasions; Competition • Distribution connected suppliers; Supplier • High Consolidation; Buyer • Hedge strategies may to Retailers. Power • Increase with Power reduce market volatility higher globalization. • Variable customers for beer companies. segments on emerging economies. Substitute Products High • Low switching costs – leisure activities; Med • Growing substitute industry – wine, cider, spirits and 15Source: Author (2011) liquors.
    • 16. PEST Evaluation of Brewery Industry Political Economical Social Technological 1. Exchange rate 1. Changes on fluctuation; consumption patters; 1. Market 2. Slow down of developed 1. New Products; 2. Development of liberalization; countries economies; 2. Development of classes B and C; 2. Legal Policies. 3. Development of Techniques. 3. Increasing trend of emerging countries urbanism. economies. Changes on global Focus on economy of Changes on global consumption Market prospection strategy scale by applying consumption behavior, opening moving towards emerging leverage of the global behavior, increasing beer new markets for economies. scale sales and consumption. global companies. operations. 16Source: Author (2011)
    • 17. Conclusion Market consolidation done with correct and proper timing; • Good evaluation of Countries and Firms advantages in NA and LatAm; • Focus on organizational culture; • Lean and objective Value Chain; • Healthy financial stability. Company focusing on Geographical Expansion in Emerging Markets: • Brazil; • China; • Central-Eastern Europe. 17
    • 18. Final Considerations – Revenues and EBITDA North America Organic Growth Total Volumes -3.10% Own Beer Volumes -3.20% Revenue -0.30% EBITDA 3.00% Asia Organic Growth Total Volumes 4.70% Own Beer Volumes 4.70% Revenue 17.00% EBITDA 3.70% Latin America Organic Growth Total Volumes 5.70% Own Beer Volumes 2.60% Revenue 23.60% EBITDA 25.20% 18Source: ABinbev 1st Semester 2011 Results Report
    • 19. Final Considerations – Geographical Expansion Brazil  Launching of Budweiser in 2011-2012: • Initial distribution and seeding in Sao Paulo and Rio de Janeiro in 2011; • Full launch campaign and national availability in 2012. 19Source: ABinbev 3rd Q 2011 Results Presentation
    • 20. Final Considerations – Emerging Markets China  Growth of focus brands;  Best practices on revenue management; • Revenue per hl +11.7% 3Q2011 – mainly driven by brand mix and price increase.  Lead the premium segment;  M&A. • 2 closed acquisitions – Liaoning Dalian Daxue and Henan Weixue Beew Group. • Greenfields: 1 opening – Sichuan. 20Source: ABinbev 3rd Q 2011 Results Presentation
    • 21. Thank You! Lucas PederziniMSc International Business IBS – Budapestlucasabrantes@gmail.com 21

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