Guinness Presentation by James Piper_Traci Santillanes_Terrence Smith_Mark Susor_101813
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The purpose of this report was to examine Guinness, an existing business that is already intr'l., and the implications of expansion into additional intr'l. mkts; specifically the country of Nigeria (Guinness Nigeria, Plc.). The primary product “Guinness” beer was selected as the vehicle. The company originated in Ireland in 1759 and began exporting early on. However, their first independent brewery built outside of Ireland and Great Britain was in Nigeria in 1963. Research was conducted to determine how the company localized operations in Nigeria from Ireland, and created additional intr'l. mkts., whether or not it was successful, and how Team S&P would or would not do it differently. Research for this report included a review of current literature on the topic of globalization, including Government circulars and future trend reports. Additional research was conducted with the use of peer reviewed journals, professional and government organizational websites, and collegiate text. The major findings indicate that while there is a current rapid expansion toward globalization, largely through the use of modern technology, some pioneering companies proved to be forward thinking and set the initial international business model. However, before this model became viable for all international trade, some significant challenges were faced. The company used a process-driven approach and standardization in key areas. Issues such as Culture, Politics, Economics & Location were of primary consideration, and robust structures were necessary for implementation into a new market. Furthermore, research indicated that a web of companies is intricately intertwined in various locations of the globe to perform brewing and distribution, and asset holding. Research also found that the company was highly successful in branching out into multiple worldwide markets with this alcoholic beverage, in spite of varying social & religious beliefs & systems, and diverse political and economic climates. Guinness has been highly successful in sourcing capital where it is the cheapest, production where it is most cost effective & sales where they are most profitable. Each country’s competitive advantage has been useful in the production of goods & services to produce and deliver Guinness on a global scale. The information included in this report was provided by an eclectic, highly qualified Team. Contributing team members include: • Terrence Smith, Dist. Bus. Mgr., Pfizer, Inc. – 15 years Business and Mgmt. exp. in sales, training and devel. B.S. Healthcare Admin., Univ. of Ala.. • Mark Susor, VP Transp. – UPS – 35 years Op. and Eng. Mgmt., Logist's, Sup. Chain & Cust. Tech. Solut's. BBA. Fin., Toledo. • James “Mick” Piper, Dist. Bus. Mgr. – Pfizer, Inc. – 22 years Mgmt., Fin., Mktg., Sales. BA. Comm. – Minor, Mktg., St. Louis Univ. • Traci Santillanes, CFE – Sr. Internal Aud. – SBTGC – 33 years Mgmt., Acc't., Ins.,
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Guinness Presentation by James Piper_Traci Santillanes_Terrence Smith_Mark Susor_101813
- 1. GUINNESS – NIGERIA Global Business Project TEAM S&P: Mark Susor, Terrence Smith, Mick Piper, Traci Santillanes
- 2. GUINNESS – NIGERIA Global Business Project 1759 – Guinness first brewed by Arthur Guinness in Ireland – Guinness signed a 9,000 year lease 1769 – Guinness exports begin to England 1870 – 10% of all Guinness sales are overseas 1886 – Guinness becomes public company: London Stock Exchange 1960 – Guinness-Nigeria first brewery outside Britain and Ireland 1997 – Guinness, Plc. & Grand Metropolitan for Diageo, Plc. 2013 – Number 1 stout in the world
- 3. GUINNESS – NIGERIA Global Business Project The company originated in Ireland in 1759 and began exporting early on. However, their first independent brewery built outside of Ireland and Great Britain was in Nigeria in 1963. Guinness has been highly successful in sourcing capital where it is the cheapest, production where it is most cost effective and sales where they are most profitable. Each country’s competitive advantage has been useful in the production of goods and services to produce and deliver Guinness on a global scale.
- 4. GUINNESS – NIGERIA Global Business Project Political Systems Presidential, democratic, collectivism British Commonwealth Economic Systems Mixed economy agriculture, trade, oil protectionist attitude Legal Systems Common Law Theocratic – Islam Contracts – detailed w/spelled out contingencies
- 5. GUINNESS – NIGERIA Global Business Project Culture and Social Structure 40% Christian, 50% Muslim, 10% Indigenous High poverty levels Increase in Liberalism Language & Education English – official language Low level of formal education Corruption & Moral Obligation Terrorist activities, sectarian conflicts, public mistrust High levels of corruption due to oil trade & poverty
- 6. GUINNESS – NIGERIA Global Business Project Location Major port, west Africa w/access to North & South America Absolute Comparative Advantage Large land mass Large and growing population Economies of Scale Diageo, Plc worldwide scale & experience 2nd largest Guinness market in the world Leveraging of parent company global supply chain
- 7. GUINNESS – NIGERIA Global Business Project Tariffs, Subsidies, Quotas Import substitution industrialization strategy Quantitative restrictions, high import duties Prohibition of barley Policy Implications Islam prohibits the sale and consumption of alcohol No legally binding regulations on ads, sales, placement FDI Strategy Avoidance of political & policy changes Creation of employment Abolishment of transportation costs
- 8. GUINNESS – NIGERIA Global Business Project Government Policy Blocking of barley imports Sorghum used as substitution Brewery purchases farm ground Economic Integration Opportunity Shortening of supply chain Abolition of tariffs and non-tariff restrictions Cost reduction Foreign Exchange Risk Ireland-British Pound, Nigeria-British Pound Very little exchange risk
- 9. GUINNESS – NIGERIA Global Business Project Exchange Rate Forecasting Currency fluctuations were minimal at the time of entry Currency Management Strategy Nigerian Central Bank utilizing recommended IMF reforms, fiscal and policy to enable a more stable currency environment Strategy used for Global Expansion Guinness began as an exporter, evolved to localized strategy, which has transitioned into a global standardized strategy
- 10. GUINNESS – NIGERIA Global Business Project Value Chain Strategic partnerships in sourcing Premier technology ISO Certifications in food safety and environmental standards Profiting from Global Expansion Transference of core competencies Same key ingredients since 1759 Entry Strategy The Guinness Trading Company – created demand Fully operational localized brewery/distribution
- 11. GUINNESS – NIGERIA Global Business Project Entry Mode Localization strategy Customization of goods and services Import and Export Strategy & Financing Export strategy initially allowed Guinness to protect intellectual property and quality control Production Strategy Strict protection of secret recipe No deviation from standardized ingredients Quality relationships with existing agri-business
- 12. GUINNESS – NIGERIA Global Business Project Outsourcing Decisions Hops only grow between 35° and 55° N and S of the equator Only registered farmers are allow to grow Guinness hops Market Segmentation and Strategy Offering certain brands to different economic classes Targeting the majority middle class Advertising Strategy Focusing on non-Muslim consumers Conservative ads to deter offensiveness
- 13. GUINNESS – NIGERIA Global Business Project Pricing Strategy Use of same four ingredients since 1759 Identical processing in every location Management Training & Staffing: Policies & Strategy Partners for Growth – leadership communication Diageo Academy – global learning Governance & Remuneration Committee Publically Traded Companies Policies & Internal Controls
- 14. GUINNESS – NIGERIA Global Business Project
- 15. GUINNESS – NIGERIA Global Business Project Guinness Nigeria Plc.
- 16. GUINNESS – NIGERIA Global Business Project Was Guinness successful: Currently in over 150 countries, brewed in over 60 10,000,000 glasses poured every day 40% of all Guinness global sales come from Guinness Nigeria Guinness provides DRINKiQ education – powerful Community Partner Funds scholarships for “Water of Life” initiatives Donates to a variety of engineering scholarships, community projects Practices a balanced cross-culture literacy business model Ethically promotes & produces How: sourcing capital where it is cheapest producing where it is most cost effective selling where it is most profitable standardization of recipe, operations, price, placement and promotion
- 17. GUINNESS – NIGERIA Global Business Project References Adeyemi College of Education (2013). Electronic source retrieved from: http://www.aceondo- ng.com/ Bashasha, B., Dannson, A., Ezedinma, C., Kirsten, J., Reuben, T., & Satorius, K. (2004). Strengthening farm-agribusiness linkages in Africa. FAO Corporate Document Repository. Rome: Food and Agricultural Organization of the United Nations. Electronic source retrieved from http://www.fao.org/docrep/008/y5785e/y5785e0c.htm Buillion. Central Bank of Nigeria. Board of Governors. (2013). Overview of exchange rate management in Nigeria from 1986 to date. S. Okugbue (Ed). (Bullion ISSN – 0331 – 7919). (Volume 30, No. 3). Retrieved from http://www.cenback.org/OUT/PUBLICATIONS/BULLION/GOV/2007?2007?BULL% 20JUL-SEP06.PDF Central Bank of Nigeria. (2013). Currency Management. Retrieved from http://www.cenbank.org/Currency/legaltender.asp
- 18. GUINNESS – NIGERIA Global Business Project Corporate Nigeria (2011), The Business, Trade and Investment Guide – Beer Industry. Electronic source retrieved from http://www.corporate- nigeria.com/index/industry/beer- industry.html Dannson, A., Ezedinma, C., Wambua, T., Bashasha, B., Kirsten, J. (2004). Strengthening Farm- Agribusiness Linkages in Africa. Summary results of five country studies: Ghana, Nigeria, Kenya, Uganda, and South Africa. Agricultural Marketing, Management and Financial Services (AGSF). Agricultural Support Systems Division. Food and Agricultural Organization of the United Nations Rome 2004. AGSF Occasional Paper 6. Embassy of the Federal Republic of Nigeria (2013). Nigeria: Past, Present and Future. Electronic source retrieved from: http://www.nigeriaembassyusa.org/index.php?page=nigeria-past- present-and-future Global Integrity Report (2010), Global Integrity Report: Nigeria – 2010. Electronic source retrieved from: http://www.globalintegrity.org/report/Nigeria/2010
- 19. GUINNESS – NIGERIA Global Business Project References Guinness Nigeria Plc. (2013). About Guinness Nigeria. Electronic source retrieved from http://www.guinness-nigeria.com/AboutUs/Default.aspx Guinness Nigeria Plc. (2012). Annual report. Electronic source retrieved from http://www.guinness- nigeria.com/Investors/ Guinness Storehouse. (2013). Genealogy. Hanson, S. (2007). Electronic source retrieved from: http://www.guinness.com Hill, C. W. L. (2011). Global Business Today. In J. Gordan & J. Weimeister. 7th. Ed. p. 52. New York, NY: McGraw-Hill/Irwin. Nigeria’s Creaky Political System, Council on Foreign Relations. Electronic source retrieved from http://www.cfr.org/nigeria/nigerias-creaky-political-system/p13079 Nigeria. (2013). The Heritage Foundation. Electronic source retrieved from: http://www.heritage.org/index/country/nigeria#rule-of-law
- 20. GUINNESS – NIGERIA Global Business Project Nzeka, U. & Rondon, M. (2011). Exporter Guide for Nigeria. Global Agricultural Information Network. Electronic source retrieved from: http://photos.state.gov/libraries/nigeria/487468/pdfs/E_Guide.pdf Osuntuyi, K. (2013). Alcohol in Nigeria. Ojay Says: Social and Political. 2013: July 29. Electronic source retrieved from: http://ojaysays.wordpress.com/2013/07/29/alcohol-in-nigeria/ Razaq, A. (2010). Nigerian Brewing Sector: Brewing Growth; Malting Value. Vetiva Capital Management Limited. Electronic source retrieved from: http://www.naijalowa.com/wp- content/uploads/downloads/2010/11/Vetiva-Research-Brewery-Sector-2010.pdf Stoddard, E., Ohuocha, C. (2012). Africa Beer Sales Surge Despite Church and Mosque. Reuters. Johannesburg/Lagos: Fri Aug 31, 2012, 6:57pm EDT. Electronic source retrieved from: http://www.reuters.com/article/2012/08/31/us-africa-money-idUSBRE87U0Q720120831 U.S. Department of State (2013). U.S. Relations with Nigeria. Electronic source retrieved from http://www.state.gov/r/pa/ei/bgn/2836.htm
Editor's Notes
- The Guinness business model began in 1759 and through various acquisitions and mergers, has developed into the current parent company, Diageo, Ltd. The Guinness brand is recognizable in nearly every country, and has been gaining momentum internationally since the late 1800’s. The first exportation of Guinness occurred in 1769 when six and a half barrels left Dublin, Ireland, bound for England. By 1870, exports had branched out to Guernsey, Barbados, Trinidad, Sierra Leone, Lisbon, New York City and New Zealand, and all of Guinness sales are 10 percent overseas. In 1886 the Guinness brewery became the first major brewery to be incorporated as a public company on the London Stock Exchange, and was now, the largest brewery in the world.
- Guinness’s decision to establish brewing operations coincided with Nigeria being granted Independence from Great Britain in 1960. Nigeria offered Guinness a unique opportunity to transition international operations from a purely export driven model to a localization model. Nigeria, a British colony since the late 1800’s provided an English speaking consumer market with abundant agricultural and human resources. Guinness was able to take a low risk approach and experiment with brewing outside of the British Isles for the first time in company history. There was no currency risk at the time as the Nigerian pound issued by the Nigerian Central Bank was on par with the British pound.
- During the time in which Guinness began to import their product from Ireland into Nigeria, Nigeria was a British Commonwealth. Ireland had been entirely under British rule, and also a Commonwealth. Both Governmental structures, though democratic in nature, operated under more of a collectivism theory. Starting in 1960, at the time Nigeria was granted independence from Great Britain, the Nigerian economy entered into what is described as a mixed economy. “In a mixed economy, certain sectors of the economy are left to private ownership and free market mechanisms while other sectors have significant state ownership and government planning” As a result of its colonial origins and the resulting exploitation of its human and natural resources, the Nigerian government invested over $100B in public institutions across all sectors of the economy between 1975 -1995 (Nzeka & Rondon, 2011, photos.state.gov). This protectionist attitude resulted in a period between 1960-1990… One sector of the economy that remained predominately private was the agricultural sector. This is a critical variable that has enabled Guinness Nigeria to operate and grow for over fifty years. During the transition from a colony economy to a mixed economy, Guinness made a strategic decision in 1960 to grow its market in Nigeria. “Guinness® & Co. (Company) and Unilever (UAC) set up a fifty-fifty arrangement to brew and distribute in Nigeria. Opening in 1963, it is the first Guinness® brewery outside of Britain and Ireland,” (Guinness, 2013, Guinness-nigeria.com). Nigeria has a common law legal structure, but succumbs to a highly enforced Theocratic Law system as well, due to the influence of Islam. Because common law tends to be relatively ill specified, contracts drafted under a common law framework tend to be very detailed with all contingencies spelled out (Hill, 2014, p. 47).
- The Nigerian culture and social structure continues to evolve in a very diverse society. There are many forces that lead to differences in a social culture. Guinness Nigeria, from its inception in 1962, demonstrated its ability to guard against ethnocentric behavior in order to become successful in the host country of Nigeria. Guinness’ ability to embrace the Nigerian culture by understanding the values and norms that are shared among the group of people that constitute their society was critical to their overall success. Beer turnover in Nigeria is growing faster than its economy; the market grew by 21.8 percent in 2009, and its projected annual growth between 2011 and 2014 is estimated to be around 23.45 percent. The increase in liberalism and a drastic reduction in religious fanatics among the youths are responsible for the boom of the alcohol beverage industry. Nigeria has a clear competitive disadvantage when it comes to education. Most secondary schools are very high priced and the majority of citizens are moderately or highly impoverished. However, Guinness acts with social responsibility concerning education in the community. In regards to education, Guinness Nigeria has continued to support and sponsor beneficiaries from host communities in Lagos, Edo and Albia states, under the Guinness Scholarship Scheme through degree and diploma courses in Engineering. In spite of a corrupt climate, Guinness Nigeria, Plc. Has been able to maintain an ethical environment within its organization. Nigeria Guinness Plc. adheres to the parent company Diageo, Plc. Code of Business Conduct: “Breaching the Code or Diageo policies can have serious consequences for the company and for each of us as individuals.”
- Nigeria is in West Africa, along the eastern coast of the Gulf of Guinea, and just north of the equator. It is bordered on the west by Benin, on the north by Niger and Chad, and on the east by Cameroon. Nigeria covers an area of 356,669 square miles (923,768 square kilometers), or about twice the size of California (Advameg, 2013). Since 1963 and opening the first Guinness brewery outside of Britain and Ireland, Guinness has built a brewery in both Benin City and Ogba. Realizing a great portion of its market share was in Africa, Guinness positioned itself in Nigeria to gain advantages in particular activities of running its business wherein they can be performed most efficiently. Building breweries over time and distributing allowed them to continue these efficiencies at determined lower costs. The absolute comparative advantage within the Continent and Nigeria internally, are the oil and gas reserves they hold. The large, youthful, more liberal population who held less stringently to their religious belief systems becomes a comparative advantage for marketing and sales. Nigeria has the luxury of continued GDP growth, in particular with target consumers and people of legal drinking age that allow a competitive advantage (Guinness-Nigeria.com, 2013). Beer turnover in Nigeria is growing faster than its economy. The current brewery industry within Nigeria has become a duopoly with the two key players owing an estimated 80 percent of the beer market. “The ‘two giants’ (Nigerian Breweries and Guinness) have long operated in Nigeria, controlling about 90 percent of the market, Guinness with its niche Stout brand and Nigerian Breweries with its prime Star Lager Beer. Nigeria Guinness has benefited from its parent company’s (Diageo) worldwide scale, technology, brewing and managerial expertise.
- During the first decade of independence Nigeria pursued an import substitution industrialization strategy. This involved the use of trade policy to provide effective protection to local manufacturing industries, through such measures as quantitative restrictions and high import duties. Many items were placed on import prohibition. In 1960, Guinness had transported 90,000 barrels into Nigeria. The demand was apparent, but import prohibitions, changes in government, discovery of crude oil, and economic turmoil threatened the imports. Rather than lose the opportunity of foreign business, or perpetuate the trading company, Guinness formed an alliance with Ikeaji in Lagos, Nigeria, determined to undertake foreign direct investment, and built their first brewery in Nigeria, therefore alleviating and avoiding any tariffs, subsidy or quota restrictions on beer. Beer is still on the list of prohibited imports in Nigeria (Nigeria Customs Services, 2013). The importing of bottled beer is prohibited in trade in Nigeria. Within the Islamic faith, the sale and consumption of alcohol is also prohibited. Despite the religious barriers which exist, the production and distribution has been on the rise. Policies pertaining to regulation of alcohol taxes and prices are mechanisms that control the availability and use of alcohol. Efforts to limit the physical availability of alcoholic beverages are another strong component of policy in Nigeria. There are no legally binding regulations on alcohol advertising, product placement, sponsorships or sales promotion. Early on, Guinness favored FDI as an early entry strategy when trade barriers, exporting, and transportation costs were deemed unfavorable. Guinness Nigeria also wanted to control its technological know-how, within its operations, strategy, and firm’s capabilities versus simply licensing. This is no surprise based on its rich history and being such a proud organization. Guinness Nigeria has provided Nigerians many benefits over time. The boost in economic growth continues to increase. The positive contribution to technology leading to innovation in its community has been a focus of Guinness Nigeria.
- Guinness has been impacted by Nigerian government policy, but due to their first mover advantage gained by entering the market in 1950 they have been able to increase capacity, gain market share, and develop local resources and relationships with both government and agribusiness industry leaders. “Sorghum is a very important staple crop produced mostly by small farmers and consumed as food in northern Nigeria. In 1984, the crop suddenly became an industrial raw material for breweries. The government imposed a policy of backward integration in which agro-industries including breweries were required to source their raw materials within the country. In 1984, the brewery acquired a 3000 ha farm in Mokwa for the production of maize. Between 1995 and 1998, the company had established an out grower scheme primarily for the promotion of ICSV 400, a particular sorghum variety among farmers in Nigeria. The variety made it cheaper to process sorghum for malting than other varieties. The decision to build breweries within Nigeria proved to be very successful for Guinness. By developing local capacity and employing local resources in the brewing and distribution process, Guinness has been able to manage and avoid many of the barriers importers encounter when doing business with Nigeria. This success has come in spite of problems with Nigeria’s legal system and trade regulations. It created an abolition of tariffs and non-tariff restrictions on trade. Also, by shortening the supply chain, it results in combined economic productivity by reducing costs for both distributors and consumers. Upon entry into the Nigerian market, both Nigeria and Ireland were operating under the rule of British Pounds. Because both countries had been dominated by Great Britain for many years, there was little risk in foreign exchange at the time of entry. The currency devaluation in Nigeria occurred twenty-five years after Guinness established operations in the country. The company then mitigated the currency fluctuations that started in 1985 with the localization strategy it started with in 1960, by producing and resourcing within Nigeria and avoiding the negative impacts that a depreciating naira had on Nigerian imports.
- Based on the Nigerian currency history, Guinness Nigeria experienced little to no currency fluctuations as it established brewing operations in the early 1960’s. The company did not have to begin forecasting the exchange rate impact until 1986, when the naira began to float on the open market. The naira went through a currency devaluation period 1985 to 2004 in which it depreciated by 99.5 percent mainly due to a weak production base, undiversified nature of the economy, import-dependent production structure, fragile export base, weak non-oil export earnings, fiscal imbalances and expansionary fiscal and monetary policies. The naira has traded in a fairly stable range between N130 – N160 since 2004. Nigeria’s Central Bank continues to work on reforms recommended by the IMF (International Monetary Fund) and maintain fiscal and monetary policies “aimed at the achievement of certain structural transformation objectives, such as export diversification, less import dependence and medium/long-term BOP [Balance of Payments] equilibrium enabling a more stable currency environment (Bullion, 2013). Guinness moved aggressively into Nigeria, in an international strategy format. The product they produced was first produced for their domestic market, and then exported and sold internationally, en masse, with very little, if any, local customization. Guinness Nigeria has evolved its global strategy into a successful global standardized strategy. The production, marketing and R&D activities are located in a few favorable locations, but brewing, distribution and sales take place globally.
- Guinness Nigeria is able to source all of its ingredients: water, hops, yeast and a cereal such as barley, maize, sorghum or wheat from the Nigerian agribusiness. Guinness uses heavily roasted maize or sorghum which is locally sourced and in its own distinct yeast. The production process which consists of milling, mashing, wort separation, boiling, and fermentation is conducted locally within the Guinness Nigerian breweries. Guinness Nigeria continues to develop its own technical expertise and was the first Nigerian manufacturing company to become ISO 22000 certified for food safety standards. The company also became ISO 14000 certified in 2004 – the highest certification available for environmental standards. When new breweries are erected on foreign soil the company relies not only on leveraging products and selling them in foreign markets, but also on the transfer of core competencies to foreign markets where indigenous competitors lack them (Hill, 2014, p. 345). When new breweries are erected, the specific seed of barley used, the quality of hops, the filtered water, and the special strain of yeast, all used in the original process are then also used to insure consistency. Guinness Ireland proved to be very thorough in its analysis of potential competitors, brand potential, and its brand entry strategies moving into Nigeria in 1960. They already had established brand awareness and increasing market share by exporting Guinness beer into Nigeria as early as 1950. There were several advantages associated with entering the national market early, before other alcohol beverage businesses had established themselves. These advantages balanced against the pioneering costs that early entrants often have to bear, including the greater risk of business failure. Large-scale entry into Nigeria constituted a major strategic commitment that changed the nature of competition in the market, and also limited the other entrant’s future strategic flexibility.
- When Guinness first started in Nigeria it began by exporting its product from Ireland to Nigeria, and distributing through local breweries. This initial entry mode quickly changed to a localization strategy when government policies began to change. By establishing operations within Nigeria the company was able to customize the firm’s goods so that they matched the tastes and preferences of a very diverse culture. These strategies have worked well for Guinness in that they benefited from a first-mover position and they now operate in a duopoly. Today, Guinness Nigeria is an integral part of a Diageo’s transnational strategy as they and many other companies/industries face “both strong cost pressures and strong pressures for local responsiveness” (Hill, 2011, pp. 403-404). As aforementioned, Guinness began in Ireland in 1759. By 1769, just ten years later, exportation began from Ireland to England. Approximately 120 years later, 10 percent of all Guinness sales were overseas. The export strategy began by sourcing, producing and marketing from Ireland, but a fleet of ships were purchased and used to export casks filled with Guinness to neighboring countries. Guinness continued to export, leveraging the location of the Dublin Harbor, to a variety of countries. Trading companies were implemented in countries receiving the exports, so Guinness could maintain quality control, and the integrity of the company. As demand increased, exporting became too expensive and full entry into foreign markets for sourcing, production and sales became a necessity. Guinness’s production strategy started with leveraging economies of scale through its brewery’s located within Ireland and Britain. The initial export strategy allowed Guinness to control production and the quality of its beer, and also protect the secret recipe that is still highly guarded today. Nigeria proved to be a great test tube environment for Guinness; with a production strategy designed around brewing capacity that could meet local demand and also resource brewing ingredients form the local farming community. Guinness’s decision also proved beneficial as Guinness Nigeria had established its operations and also relationships within Nigeria’s agribusiness. The local production strategy has allowed Guinness to control unit costs, and still enjoy economies of scale by building and expanding its brewing capacity to meet local demand conditions.
- Guinness owns hops farms in England, but still sources hops from Canada, the United States, and New Zealand. Only registered farmers are allowed to grow the quality hops required (Guinness.com, 2013). Some outsourcing of logistics is also used in areas of the global operation where transportation costs exceed efficient operation strategies. Guinness Nigeria marketing segmentation revolves around all consumers of the legal drinking age. In Nigeria, drinking is seen as a festive social event and based on the affordable pricing strategy, targets all classes of earners. The company had poured millions of dollars (naira) into advertising, all focused on increasing business in the middle class. Guinness has also employed entertainers to support advertising and marketing campaign as well as sponsored local football teams. As mentioned earlier in the culture section of this paper, Guinness had to reach the Nigerian people with differing religious beliefs in the north by displaying empathy and sensitivity. Guinness Nigeria has catered to the southern Christian population that already proved to drink a large portion of its market share in beer. Over time it has reached out to the non – alcoholic community with its popular brand Malta Guinness, a leader in its own right. Guinness Nigeria was able to connect with the population through the benefits of global standardized advertising while fully recognizing differences in culture and legal environments. Ads premiering scantily clad women are commonly replaced by men in suits and ties, or adults drinking in a conservative social setting. In Nigeria where fifty percent of the population is reportedly Muslim, advertising is targeted only at the consuming fifty percent.
- Guinness Nigeria has not been subject to significant cost pressures during the companies first fifty plus years; thus allowing the company to customize products for local consumers and at the same time use a premium pricing strategy. Additionally, use of the exact same four ingredients, and identical processing in every location, allows a highly standardized pricing strategy in all areas of global expansion. Guinness’ guiding purpose is “to celebrate life every day, everywhere, which permeates our work. We want our people to thrive and are committed to their professional and personal development and to simply ensuring that this is a great place to work,” (Diageo.com, 2013). Creating employee value strategies require Management to seek and maintain a diverse workforce in which the different contributions made by all employees, through the variety of their personalities, experiences and perspectives, creates a stimulating and rewarding working environment (Guinness-Nigeria.com, 2013). Partners for Growth: encouraging great performance through regular conversations. Essentially, it's a two-way performance dialogue – one that requires leaders to know their people, to keep them focused on strategic priorities and to value them as individuals. Diageo Academy: home for global learning and development resources. From classroom training events and e-learning courses to self-development materials and virtual classes, the Academy offers both functional and leadership development to enable a truly modern career. The Governance and Remuneration Committee is in charge of evolving a continuing education program to ensure existing Directors stay current with the Company’s business and objectives as well as relevant industry information and other external factors such as corporate governance requirements and best practices. Policies are also in place regarding separation of position and duties for Directors, internal controls, remuneration, communication, capital contracts, delegation of authority and corporate governance (Guinness-Nigeria.com, 2013).
- The Guinness Journey: 1759 - 2013
- Where does Nigeria Guinness fit in the Diageo Global Structure?