Eduardo Cojuangco, CEO of San Miguel Corporation, is reassessing the company's business strategy due to slower growth of their flagship beer product, San Miguel Beer, which has a large market share. Cojuangco diversified the company into non-allied industries like energy and infrastructure, but credit agencies downgraded San Miguel's rating, lowering its stock price. Cojuangco must now evaluate if the diversification strategy was correct or if he should change the company's marketing approach to boost beer sales through new flavors, improved packaging, and celebrity endorsements.

1. Contents:
• Case
• History
• Introduction
• General Problem
• Specific Problem
• Alternative courses of the action
• SWOT Analysis
• Recommendation
SAN MIGUEL CORPORATION

2. CASE
Eduardo Cojuangco, the CEO of San Miguel Corporation, is re-
assessing the company’s business strategy. The flagship product of this century-
old conglomerate, San Miguel Beer, is expected to post a slower growth rate in
its volume share because of its large market share. The company has operations
in only three product areas- food, beverage and packaging, and has a modest
international presence. In this regard, Cojuangco announced in 2007 that the
company would diversify into non-allied businesses in the Philippines such as
energy, mining, infrastructure and other utilities. With the goal of establishing
presence in industries that present fast and high-growth, it sold off its
international assets and started acquiring shares in Meralco and Petron
Corporation. The company also ventured into telecommunications and
infrastructure. Credit rating agencies were uncertain about this new business
model, and this resulted to a downgrade of San Miguel’s credit rating and lead
to a fall in the company’s stock price. As of 2009, the company’s reinvention
was far from complete and Cojuangco needs to evaluate whether or not San
Miguel’s radical diversification plans were indeed the right step for the
company.

3. OBJECTIVES
For San Miguel Corporation ( and not exclusively
as a beverage entity ), to expand the market share to
multiply their current scope, to grow their products-
services portfolio, and to increase sales. To assess
whether the current business strategy is appropriate
given the current business situation and the determine
the right business strategy; To achieve business growth
and ensure profitability of business operations.

5. HISTORY
Established in 1890 as a single-product brewery,
San Miguel Corporation (San Miguel) is the Philippines’ largest
beverage, food and packaging company. Today, the company has
over 100 facilities in the Philippines, Southeast Asia, and China.
One of the country’s premier business conglomerates, San
Miguel’s extensive product portfolio includes over 400 products
ranging from beer, hard liquor, juices, basic and processed meats,
poultry, dairy products, condiments, coffee, flour, animal feeds and
various packaging products.
For generations, the Company has generated strong consumer
loyalty through brands that are among the most formidable in the
Philippine food and beverage industry – San Miguel Pale Pilsen,
Ginebra, Monterey, Magnolia, and Purefoods. Flagship product, San
Miguel Beer, holds an over 95% share of the Philippine beer market.

6. In addition to its leadership in the Philippine food and
beverage industry, San Miguel has established a significant
presence overseas. The Company’s operations extend beyond
its home base of the Philippines to China (including Hong
Kong), Vietnam, Indonesia, Malaysia, Thailand and Australia.
Through strategic partnerships it has forged with major
international companies, San Miguel has gained access to
managerial expertise, international practices and advanced
technology, thereby enhancing its performance and establishing
itself as a world-class company.
San Miguel’s partners are world leaders in their
respective businesses. Kirin Brewery Co., Ltd. is a major
shareholder of San Miguel Brewery. The Company also has
successful joint venture relationships with US-based Hormel
Foods Corporation, Nihon Yamamura Glass and QTel, a
telecommunications company in Qatar.

7. In the Philippines, San Miguel’s corporate
strategy is at aimed capitalizing on new growth
markets through acquisitions and further enhancing its
competitive position by improving synergies across
existing operational lines.
The company has significantly expanded its
participation in both its core businesses of food,
beverage and packaging, as well as heavy industries
including power and other utilities, mining, energy,
tollways and airports.

8. INTRODUCTION
Eduardo Cojuangco, a CEO of San Miguel Corporation is
having a hard time in making his decision about the risk he will
take for his product known as the San Miguel Beer. He is
currently re-assessing his marketing strategies to know if he can
expand his plans and make it a success.
His current flagship product is well known as the ‘San
Miguel Beer’, is taking its slow growth rate because of its large
market share. Because of this he then decided to engage in
businesses not in line with his profession. These businesses are
energy, mining and infrastructure. There’s more but these are what
he chose to look real close. But we all know that San Miguel Beer
is a long-time product that was already familiar and be loved by
the Filipinos. So, what would be the best decision for Mr.
Conjuangco’s company?

9. GENERAL PROBLEM
The San Miguel Beer slow growth rate
because of its large market share . And also the
credit rating downfall of the company’s stock price.

10. SPECIFIC PROBLEM
What would be the result of the radical
diversification of the plans made by Mr. Conjuangco
to the company and what decisions and risks he
should take to make his company get in shape again.

11. ALTERNATIVE COURSES OF ACTION
Conjuangco must change his way of selling his products,
especially the San Miguel Beer to make sure it returns his investment. He
can use advising and counselling which will enable him to provide
assistance to customers through information dissemination. He can also
attend meetings and seminars for him to gain knowledge about new
products uses and trends. He should also follow the steps of the Selling
process. He can use the different approaches to get the attentions of
different customers. Finally, he must be aware about what his market
demands and meet those demands to maintain his customers.

12. SWOT ANALYSIS
• Strengths
• It is already globally and internationally known.
• It is a large group of company.
• The company is diverse into non-allied businesses.
• Weaknesses
• The company has a large market share.
• The company suffered from a credit rating downfall.
• Dynamic market environment.
• Losing its international assets.

13. • Opportunities
• New ventures for the company.
• The company can merge into non-allied businesses.
• The company can engage into more profit oriented businesses.
• Successful diversion plans.
• Threats
• Effectiveness of diversion plans.
• Large loss of money due to large market share.
• Losing of other contracts due to credit rating downfall.
• Wrong evaluation of plans.
• Other competitors

14. RECOMMENDATION
We therefore conclude, that Mr. Cojuangco should change
his marketing strategy. Especially that his business had meet its
slow growth rate. He can use ‘twists’ to make his product more
presentable. Such as, the improvement of his product packages.
Other example is to add some flavour to his current selling beers.
Making new mixes to have new and attractive flavours. He can
also use the gimmick approach to try if the response from the
projected customers will be great. He can also use advertisements
to catch the attention of people. Having celebrities on every
advertisement can catch customer’s patronization.