strategy case for cambridge group 2005

1. XXXXXXX xxxxxxxx xxxxxxxxx xxxxxxxxxxxxxxxSTRATEGY : Strategic Growth Executive Summary

4. 1. Competitive Domestic Market Losing domestic beer market share from domestics and imports

5. Maturing Domestic Beer Industry Introduction Emergence Maturity Decline Demand (units/year) Time

8. 4. Segmentation of the industry

14. 7. Strategic Groups (cont’d) National Wide Product Range Geographical Scope Regional Narrow xxxxEntreprises xxxxx Xxxx Group xxx xxxx Group

18. The industry life cycle Introduction Emergence Maturity Decline Demand (units/year) Time

19. Evolution of the life cycle over the life cycle End of Growth / Beginning of Maturity Demand - Mass market - Increasing demand Technology - Improvement of product composition Products - Commoditization - New products Manufacturing - Harbin achieved 90% capacity utilization - Consolidation Trade - Increasing demand imported brewing barley Competition - Bloody competition - Profits fall Key Factors of Success - Brand local presence - Price & Cost Management - Foreign Direct Investment

20. The market 2001 2002 2003 2004 2005

21. A fragmented market 2001 2002 2003 2004 2005

25. Optimal scenario Reward Profile Risk Profile H H L Scenario 1 * Scenario 2 * Scenario 3 * Poor Optimal

27. 1. Scope & strategic objectives National Wide Product Range Geographical Scope Regional Narrow xxxxxxxxxxxxxEntreprises Xxxxxxc xxxxxxxxxx Xxxxxxxxxxxx Group Xxxxxx xxx xxxxxxxGroup

34. Cost Strategy for the Economic Segment Not high quality of bottles and packaging Defect free products. No wide variety. Produce cheaper than competitors. Use of xxxx distribution network Marketing on know-how, no creation effort, keep the same sales service as the standard segment No Service

35. Using the Value Chain to Identify Differentiation Potential on the Supply Side High quality of components & materials Defect free products. High quality of the beer Use the distribution Network of xxxxxxx Effort on advertising. Building brand reputation on quality. Sales department management. Invest in marketing department Customer technology support. Enhance cultural advantage

38. 6. Internal strategic factor analysis summary (IFAS) 3.45 1 Total Weighted Score 0.05 1 0.05 Lack of social responsibilities 0.05 1 0.05 Dependent on regulatory and legislation changes 0.05 1 0.05 Vulnerable to currenct exchange rate fluctuations 0.45 3 0.15 Weaknesses Multiple ownership changes since 2001 - Target 0.8 4 0.2 Gets raw materials from internall sources 0.6 4 0.15 Packaging operations allows cost advantage 1 4 0.25 Vast resuources to take risks 0.45 3 0.15 Strengths Industry leader with dominant market share Weighted Rating Weight Internal Strategic Factors

39. 6. External factor analysis summary (EFAS) 2.8 1 Total Weighted Score 0.025 1 0.025 Shortage of malt 0.075 1 0.075 Foreign investors have to follow some restrictions 0.3 2 0.1 No loyalty to any brand 1 4 0.25 Loss of Competitors Threats 0.3 2 0.15 Rapidly growing population 0.05 1 0.05 No loyalty to any brand 0.45 3 0.15 Gain of market share of foreign brands 0.6 3 0.2 Premium Market Growing Opportunities Weighted Score Rating Weight External Strategic Factors

40. 6. SWOT Matrix * To adjust policies and procedures regarding derivatives and hedging in the event of potentially negative foreign currency exchange * To continue dominating market share thanks to competitive advantages and extensive advertising WT Strategies ST Strategies Threats * To reinvest in core business to improve the performance of AB * To adjust prices to offset taxes * To develop our product on 2 segments: premium + economy * To increase equity investment on China market WO Strategies SO Strategies Opportunities EFAS Weaknesses Strengths IFAS

41. 7. Risk factors 1 3 2 Total Risks The company has to make more efforts to understand Chinese customers and encourage them to find habit in xxxxxxxx beers X * No brand attachment for the customer Customer Relationship Risks X * Increase in beer excise taxes or other taxes will impact demand and financial return The company's top managers have to care about the authorities to avoid high taxes and restrictions X * Influences of authorities Tax Risks The company has to be sensitive to the local people and outsiders. They will co-cummunicate X * Obligation to make alliances to work with local people: it could create conflicts or misunderstanding Development Risks X * Increased competitive pressures may reduce revenues and increase costs The company's staff has to make more efforts to maintain sustainability of the activity X X *Many Competitors Market Risks Strategic Objectives L M H Risk Factors