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Mie480 presentation spirits-company-j

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  • 1. Industry ReportAlcoholic Beverages & Tobacco Distillers and vinters 2   3   1   CONCENTRATION EXPECTED GRADUATIONBielick, Josh ENTREPRENEURSHIP RIGHT AFTER THISCruickshanks, Sarah ACCOUNTING – MANAGERIAL DEC 2012Krouse, Stephen ACCOUNTING – INFO SYSTEMS MAY 2013Kulik, Ksenia MARKETING/INT’L RELATIONS RIGHT AFTER THIS
  • 2. IBIS 312142a) Alcoholic Beverages & Tobacco Distillers and vintersDistilleries in the US Key Players IBIS 31214 Wine  &  Spirits   Market  Share  Major Business BROWNFORMAN   Distilleries that purchase raw materials and 19%   BEAM   40%   manufacture them into CONSTELLATION   spirits (not beer). 24%   •  is(lling   D OTHER   •  lending   B 17%   •  o0ling   B
  • 3. 2b) Strategic Challenges • Brown-Forman –  “…if we experienced a disruption in the supply of new oak barrels in which to age our whiskies, our business could suffer”1 • Beam Inc. –  Our failure to attract and retain qualified personnel could adversely affect our business.2 –  Recent Restructure from Fortune Brands • Constellation Brands –  purchases raw materials under short-term supply contracts, and is subject to substantial price fluctuations & limited group of suppliers of glass bottles.3
  • 4. 3) Employment Opportunities•  Accounting –  Bookkeeping, Accounting, and Auditing Clerks 2,300 1.4% –  Accountants and Auditors 990; .6% –  Credit Analysts 90; .05%1•  Business Management –  Sales Managers 3,370 2.05% –  General and Operations Managers 3,050; 1.86%1•  Economics –  Financial & Purchasing Managers 640; . 39% IBISWORLD.com2   –  Logisticians 60; .04%1
  • 5. 3b) Largest Employment Categories •  Transportation and Material Moving Occupations •  62,030; 37.77% •  Sales and Related Occupations •  56,310; 34.29% • Total Industry 164,210 people
  • 6. 4a) Trends in strategic and financial ratios Return on assets Return  on  Assets  06-­‐11  (BF.A,  BEAM,  STZ)   25.0%   20.0%   15.0%   BF.A   Return  on  Assets   10.0%   BEAM   5.0%   STZ   0.0%   2005   2006   2007   2008   2009   2010   2011   2012   -­‐5.0%   -­‐10.0%   Year  
  • 7. 4b) Trends in strategic and financial ratios Operational efficiency OperaIonal  Efficiency  ‘06-­‐’11  (BF.A,  BEAM,  STZ)   80.00%   75.00%   Gross  Margin  as  a  as  a  percentage  of  sales   70.00%   65.00%   60.00%   BF.A   55.00%   BEAM   50.00%   STZ   45.00%   40.00%   35.00%   30.00%   2005   2006   2007   2008   2009   2010   2011   2012   Year  
  • 8. 5) Five Forces Analysis Force   Strength   Evidence   Steady  Growth1   Compe((on   High   Industry  is  highly  concentrated1   Consumer  preference  shiWing  towards  healthier  products  such  as  wine  1   There  is  a  large  variety  of  both  alcoholic  and  non-­‐alcoholic  subs(tutes  1   Subs(tutes   High   The  beers,  ciders  &  FABs  account  for  49%  of  the  markets’  value,  Spirits  –  29%1   Capital  outlays,  startup  &  equipment  costs  and  regulatory  hurdles   New  Entrants   Weak   deter  entry1   Many  suppliers  on  the  market  operate  small  scale    (commodity   Supplier  Power   Moderate   inputs)1   Increase  in  grain  prices  which  somewhat  boosts  supplier  power.     Switching  costs  for  retailers  are  not  high  and  consumers  have  a  lot  of  influence  on   retailers’  stocking  decisions1   Buyer  Power   Moderate   There  are  not  a  lot  of  opportuni(es  for  backward  integra(on  because  generally   consumers’  preferences  are  highly  based  on  quality  and  brand  image1   Expected  profitability  is  about  equal  to  the  cost  of  capital.  
  • 9. 6) Key Success Factors Key Success Factor Description Promotion and brand positioning is essential toEffective Product Promotion1 success due to intense competition among brands. Mass production reduces average and marginalEconomies of Scale1 costs, which is important for companies that compete mainly on price. A diverse array of product offerings can reduce the impact of bad performance in a specificEconomies of Scope1 segment and appeal to a wider range of customersAbility to limit exposure to price Firm viability is dependent on procurring the necessary amount raw materials, many of whichchanges of key inputs1 can volatile changes in price. Innovative firms are better able to proactivelyProduct Innovation2 meet the needs of consumers with changing tastes and preferences.
  • 10. 7) Calculation for KSF Measurement Key  Success  Factor   Selected  Measure   Example:  Beam  Inc.     Net  Revenues   2,203  ÷  333.2  =                                                                   Effec(ve  Product  Promo(on    Marke(ng  Expense   6.61   (Net  Revenues  -­‐  Net  Income)     (2,203  -­‐  699.5)  ÷  10,082.9  =                                               Economies  of  Scale   Total  Assets   0.149   Economies  of  Scope   (                  )   Total  Costs   Net  Revenues   [(2,203  -­‐  699.5)    ÷  2,203]    ÷  70  =                                       0.87%   Product  Line  Breadth   Limited  Exposure  to  Price   Variance  of     Changes  of  Key  Inputs   0.000194   (Cost  of  Goods  ÷  Sold  Revenue)                                                                                                                                           3  year  period   Deprecia(on  Expense     90.9    ÷  (2,203  -­‐  699.5)  =                                                     Product  Innova(on   Total    Costs   6.49%  
  • 11. 8) Raw-Data Quantitative KSF Calculation Comparison ConstellaIon   Brown-­‐Forman   Key  Success  Factor   Beam  Inc.   Brands   CorporaIon   Effec(ve  Product  Promo(on   25.65   9.26   6.61   Economies  of  Scale   0.421   0.791   0.149   Economies  of  Scope   1.16   2.38   0.87   Limited  Exposure  to  Price  Changes  of  Key   0.000916   0.000098   0.000194   Inputs   Product  Innova(on   4.30%   1.98%   6.49%  
  • 12. 9a) Strength Assessment ScoresKey  Success  Factor   Weight   ConstellaIon  Brands   Brown-­‐Forman  Corp   Beam,  Inc.   Strength   Weighte Strength   Weighted   Strength   Weighted   Raw  Score   Score   d  Score   Raw  Score   Score   Score   Raw  Score   Score   Score  Effec(ve  Product  Promo(on   0.2   25.648   5   1   9.260   3   0.6   6.613   1   0.2  Economies  of  Scale   0.2   0.421   3   0.6   0.791   1   0.2   0.149   5   1  Economies  of  Scope   0.2   0.012   3   0.6   0.024   1   0.2   0.009   5   1  Limited  Exposure  to  Price  Changes   0.2   0.001   1   0.2   0.000   5   1   0.000   3   0.6  of  Key  Inputs  Product  Innova(on   0.2   0.043   3   0.6   0.020   1   0.2   0.065   5   1  Total   1   3   2.2   3.8  
  • 13. 9b) Low-Cost Leadership Strategy CompetitiveAssessment Key  Success  Factor   Weight   ConstellaIon  Brands   Brown-­‐Forman  Corp   Beam,  Inc.     Strength  Score   Weighted   Strength  Score   Weighted  Score   Strength  Score   Weighted  Score     Score  EffecIve  Product   0.1   5   0.5   3   0.3   1   0.1  PromoIon  Economies  of  Scale   0.4   3   1.2   1   0.4   5   2  Economies  of   0.15   3   0.45   1   0.15   5   0.75  Scope  Limited  Exposure  to  Price  Changes  of   0.3   1   0.3   5   1.5   3   0.9  Key  Inputs  Product  InnovaIon   0.05   3   0.15   1   0.05   5   0.25  Total   1     2.6     2.4     4      
  • 14. 9c) Differentiation Strategy CompetitiveAssessment Key  Success  Factor   Weight   ConstellaIon  Brands   Brown-­‐Forman  Corp   Beam,  Inc.     Strength  Score   Weighted   Strength  Score   Weighted  Score   Strength  Score   Weighted  Score     Score  EffecIve  Product   0.3   5   1.5   3   0.9   1   0.3  PromoIon  Economies  of  Scale   0.05   3   0.15   1   0.05   5   0.25  Economies  of   0.2   3   0.6   1   0.2   5   1  Scope  Limited  Exposure  to  Price  Changes  of   0.2   1   0.2   5   1   3   0.6  Key  Inputs  Product  InnovaIon   0.25   3   0.75   1   0.25   5   1.25  Total   1     3.2     2.4     3.4    
  • 15. Works Cited • Beam, Inc. (2011). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml • Beam, Inc. (2009). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml • Beam, Inc. (2007). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/edgar.shtml • Brown Forman Corp. (2011). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/ edgar.shtml • Brown Forman Corp. (2009). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/ edgar.shtml • Brown Forman Corp. (2007). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/ edgar.shtml • Constellation Brands, Inc. (2011). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/ edgar.shtml • Constellation Brands, Inc. (2009). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/ edgar.shtml • Constellation Brands, Inc. (2007). 10-K Annual Report 2011. Retrieved from SEC EDGAR website http://www.sec.gov/ edgar.shtml • (2012). Hoover’s Industry Overview. Distilleries in the United States. Retrieved June 17, 2012 from Hoover’s. • (2011). IBISWorld Industry Report 31214. Distilleries in the US. Retrieved June 15, 2012 from IBISWorld database. • (2012). MarketLine Industry Profile. Alcoholic Drinks in the United States. Retrieved June 14, 2012 from MarketLine.   • Kell, J. (2012, Feb 12). Corporate news: Upbeat beam sees glass as half-full. The Wall Street Journal. Retrieved from http:// search.proquest.com/docview/919736621?accountid=12725 • May 2011 national industry-specific occupational employment and wage estimates. (2012, March 27). Retrieved from http://www.bls.gov/oes/current/naics4_424800.htm • Standard & Poors. (2011, August 9). Industry surveys: Advertising. Retrieved from November 21, 2011http://80- www.netadvantage.standardandpoors.com.library.uor.edu/NASApp/NetAdvantage/index.do

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