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Carlsberg coursework 1


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Carlsberg coursework 1

  1. 1. SWOT-analysisStrengths:-Several strengths in Carlsberg as a company. They have a strong, durable and well known brand whichthey utilise to create international and recognised sponsorships which connects them with the localconsumers. It is important for Carlsberg in Western and Northern Europe to make sure the consumersrequest their beer in particular, as consumer awareness is important for the company’s position in themarket. This is one of the reasons they advertise as much as they do. Their commercials try to showthat their high quality beer should be associated with good and fun times. They have managed toposition themselves as a strong player in their core markets, Western & Northern Europe, EasternEurope and Asia. Carlsberg is available in restaurants, supermarkets or pubs, if not all, in the marketswhere they operate with both their mainstream and premium beer. This shows that they have a goodand efficient distribution channel as well as good deals with the distributors and that they are available.The company has a wide portfolio of beer which is suitable for both the younger and elder generation.Carlsberg is in possession of some very durable resources, which they manage to utilise in the optimalway. Most of the resources are hard to imitate and substitute. These resources include their brand andquality of the beer. This is something that they are extremely concerned about and they use time andresources on exposing the brand.Carlsberg is trying to improve efficiency and lowering costs through the Operational excellenceprogram. This was also one of the reasons why the company in April 2006, announced the set up of anew accounting department for the whole Carlsberg Group in Poland. The accounting departmentsfrom the different Western European countries were moved to Poland from 2006 through 2008(Carlsberg’s annual report 2007:23).We assume that Carlsberg is financially stable. In 2008 they had a net cash flow of 743 million DKK(Carlsberg’s annual report 2008:77). Regardless, Carlsberg has decided to try and reduce their debtfaster than was originally intended. This is done to protect their position in the market and show thatthey are a solid and stable organisation. The turbulence in the financial markets can also be consideredan important factor for why they feel the need to secure their assets and assure their investors that thecompany is a safe investment. The current ownership relations with the Carlsberg Foundation owning51 % of the voted and 25 % of the share capital, does not put Carlsberg in any danger. Takeovers arenot something they should fear as long as they keep their debt at a reasonable level.
  2. 2. 8.2 WeaknessesWhen looking at Carlsberg there are some obvious weaknesses as well. As mentioned earlier theCarlsberg Foundation can be considered a weakness in relation to future opportunities for expansionand acquisition. Seeing as Carlsberg has recently acquired parts of S&N it is not an option to makesuch a big purchase in the near future. The Foundation is an obstacle in the strategy for Carlsberg togrow through mergers as they do not have the sufficient capital required for them to buy 51 % of theshares of the new division created by the merger. The debt of Carlsberg is another weakness, which isan obstacle in terms of investments in growth. In the near future Carlsberg intends to pay off some ofthe debt and will then again be able to make large investments. The debt poses some risk for thecompany and has recently affected the stock price of the company.8.3 OpportunitiesCarlsberg’s strategy is still concerned with growth and expansion. They have the possibility to becomelarger, enter new markets and grow in their existing ones. Obviously expansion can be done bytakeovers and mergers, particularly of small, local companies that they can use to their advantage intheir existing markets. However, they cannot go out and invest as they please. They have to evaluateevery option carefully and choose the ones they find most valuable to the company.Carlsberg is now in the market for alcoholic beverages with products such as Somersby cider and EVEbeer in addition to regular beer. EVE is a beer that is mainly targeted towards women and comes in twovariants with different fruit flavours and it is only sold in Switzerland and Germany. Carlsberg sees thisproduct as a product with great potential (Carlsberg’s annual report 2008:45). Carlsberg has recentlylaunched a new variant of Somersby cider and we have yet to see if this will be a success. Since EVEand Somersby have been such a great success, Carlsberg should try to be innovative and find newproducts aimed towards different groups e.g. women.Innovation can also be used to design new packaging and new bottles, which can increase the interestsin the products. The current packaging and bottles have been the same for a long time. HoweverCarlsberg have previously tried to make new bottles, but this was not a success (Kronborg 2008). So itdepends on how they look at consumer preferences and if the consumers will stay loyal after a changeof packaging.In relation to new products from Carlsberg they have developed the organic beer Jacobsen extra pilsner.Carlsberg also reports that the sale of organic beer has increased in 2008 (Carlsberg’s annual report2008:46). Organic products have become more and more popular and the consumers are concernedwith the environment as well as additives. This is a development that is likely to continue in the future
  3. 3. and Carlsberg has to keep an eye out for this and always know what the consumers want.Carlsberg should consider a product mix which means mixing different products and sell them in apackage together. By offering for example a package of six different products at a certain price, likemainstream beer, premium beer and cider, the consumers can get different products at a lower pricethan by buying all six products separately. Hopefully this will familiarise the consumers with moreproducts than they already know and increase the knowledge of Carlsberg’s product portfolio. When itcomes to the Scandinavian countries, one might hope that the consumers will like the premium beerand buy it on other occasions, and not in a package. This can increase sales of premium beer in theScandinavian countries, and make the Scandinavian population more familiar with it.It is important for such a global and large brewery as Carlsberg to know what their consumers prefer.When looking outside the Western and Northern European market, Russian consumers especially the“nouveau riche”, might want exclusive beer, something that is not a common good for everyone. Theyare interested in luxury goods and want something unique such as the super-premium beer Carlsbergcan supply. Carlsberg could also consider making bottles that would fit the preferences of this market tomake sure that it fits the consumers.After the acquisition of part of S&N, Carlsberg acquired full ownership of BBH (Carlsberg’s annualreport 2008:34). This strengthened their position in this market and we consider this as one ofCarlsberg’s strengths as this is an important growing market. The Eastern European market is a veryvulnerable market at the moment for Carlsberg, as the exchange rate fluctuations and the devaluation ofthe RUB has decreased the earnings of Carlsberg considerably. However this market has greatprospects and potential due to the large populations and the upper class of the societies.Carlsberg is already present on the Asian market, but it is still an emerging market with plenty ofopportunities. The beer culture in Asia is not the same as the one that exist in Europe and the Asianpopulation does not consume as much alcohol in general and especially not beer, as the Westernpopulation. This is partly due to their culture and religion. Carlsberg currently sells 10 % of theirvolume of beer on the Asian market and with the fast growing Asian economy this is a market withpotential to grow (Carlsberg’s annual report 2008:3). Carlsberg is facing a large task in beinginnovative and finding out, which products the Asian population want and in this market it would besmart to look at the local competitors and find out the key to their success. They have to familiarisethemselves with consumer preferences and make products that the consumers will like and buy.
  4. 4. 8.4 ThreatsOne of the most serious threats that Carlsberg face in the market today is the stagnation in the Westernand Northern European market. As Carlsberg does not operate in a wide variety of markets, it is vitalfor them to maintain their position in this market. The Western and Northern European market is themarket where Carlsberg has the highest revenue, but it is also the market where they have the highestcosts. This means that Carlsberg needs to set high prices on their products to cover all their expenses inthis market. The Western and Northern European market is not as profitable on the operating profitbefore special items as e.g. the Eastern European market. However the Western and Northern Europeanmarket is still vital for Carlsberg as it is an established and less risky market (Carlsberg’s annual report2008:84).The unstable world economy cannot be ignored and it has already had a great effect on Carlsberg interms of fluctuating exchange rates. This is mostly seen in relation to the British and the Russianmarkets, where Carlsberg has suffered losses on sales. This is a factor that Carlsberg cannot change oraffect. They just have to keep supplying to their markets and try to reduce internal costs to increase theprofit margin of the products.Increases in the unemployment rate and insecurity among the consumers have affected the sales ofpremium beer. Consumers are more likely to replace their premium beer with more mainstream beer,which is cheaper. Carlsberg could use this as an opportunity to promote and increase sales of theirmainstream beer.In the Western and Northern European market there is intense competition. Carlsberg’s largestcompetitor in this market is Heineken, but there are also several local players that have a good positionin the local communities. There are also other international players as this market is the market whereall the large breweries are present. Carlsberg has a good position in this market as they are the secondlargest supplier here.As parts of the world are becoming more health conscious, people might choose to substitute beer foralcoholic products they find healthier. However this is a threat that has become an opportunity forCarlsberg as they have launched a light beer with fewer calories. This creates the opportunity toincrease profits by selling both types of beer. By broadening the portfolio the company will be able totarget a larger group of segments. In relation to the health consciousness, several countries have passedlaws on non-smoking in bars and restaurants. This will possibly affect the consumption of beer in theseplaces, as people will spend less time there.
  5. 5. Strategic Planning ProcessSet Objective:-Initiate local production and community water management activities at high-risk sites. Carlsberg hasadded an idea to its Eco-friendly nature as they decided to reduce water consumptions by 9% to3.2hl/hl* within and outside their brewery as water wastage may cause a lots of issues in the future andgiving a kick-start to this project hoping that other companies will also support in saving the mothernature and leaving our future generation with a better environment to stay in.Formulated:-This idea has been formulated since early 2008 as they have participated in the Designing WatersFuture in 2009 with INDEX and AIGA. Since then we can see the continuous effort from this breweryto reduce the usage of water in their daily efforts to produce one of the finest beers. Although its achallenging task, Carlsberg did some research on this matter and came out with an excellent idea ofproducing higher end barleys which are more resistant to climate change and also last longer withfresher taste. With this discovery they have a clear picture and speculations that will assist them fortheir 2013 project with the Russians Baltika Breweries to conserve water in their breweries.Implementation:-Implementation of this significant idea will begin early 2013 in collaboration with the United NationsIndustrial Development Organization (UNIDO) where they will later have an oppurtunity to furtherstrengthen one of their core values of engaging with society through dedicated community activitiesfocused at improving the environment and implementing sustainable practices in agro-projects. Certaininformation about the progress of the Group in the 8 key CSR directions: “Environment”, “Responsibledrinking”, “Community engagement”, “Marketing communications”, “Labour and human rights”,“Health & safety”, “Business ethics”, and “Responsible sourcing”. The online document also includesthe targets of Carlsberg Group concerning CSR for 2012-2013. The report is based on data provided bythe companies of the Group including Carlsberg Ukraine.Evaluation:-This projects seems to be beneficial for the both the breweries and also for the brewing industry as ittakes them them to the next level considering the mother nature and making our living environment asafer place to be. Taking risk to improve our surrounding is never a harm as Carlsberg may regain itsinvestments once people starts to realize the difference and the effort put in by this company to make adifference for our future generation.
  6. 6. Generic StrategyCarlsberg has a very different sort of strategy where it depends on the locals and their customers to bemore precise on their market. They learn as they mature in this business, in the sense of when they set abase in certain markets they offer their global product and also adapt to local strong beers to worktogether and tries to cover the entire market. Within this process itself they tend to learn theircompetitors and partners marketing strategy up till their brewing skills in order to improve their ownquality in almost everything with this they gain more and more experience in order to understand theircustomers base. This information will then be processed and presented during the Annual Meetingamong all the global Carlsberg Leaders. This is not only a very unique but a very beneficial techniquewhich will keep them on the track as they mature in this line of business. Another marketting strategythat is strongly being imposed by Carlsberg is that they do heavy advertising job from a banner till theextend to sponsor a famous football club and even collaborating with charity and human rightsassociation. This sort of activities may not only lead fame to the company but will also provide a highreturn and within few years almost everyone shall be aware of this amazing brand.