Global strategy report Essay

Global Strategy Report

Executive Summary
SAB is one of the major beverage and beer companies in the world. In 2001 SAB was the 5th largest brewery in the world and the fastest growing brewery from 1995 to 2000. In 2002 SAB become and up to now is the 2nd largest brewery in the world by volume with exposure to both developed and developing markets and operates 111 breweries. (Bruss, 2002)

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After acquiring 100% of Miller Brewing Company, the second largest brewer in the United States of America, from Altria Group, Inc. (formerly Philip Morris Companies Inc. Following this acquisition, the group changed its name to SABMiller plc.

SAB leads the beer market with Castle lager in South Africa; however its wider portfolio included various brands: SAB, SABI Asia, SAB Europe and other beverages interests such as bottling plants, Soft drinks, Juices and Sparkling water. It also runs Southern Sun Hotels Casinos throughout South Africa.

Since 1995 SAB has commenced brewing operations in a further 5 African countries, 3 Chinese provinces and 4 eastern European countries. And it intends to continue to protect and further develop its South Africa operations.  (http://www.sabmiller.com)

As mentioned above SAB has implemented many strategies which led it to being one of the largest breweries in the world, many of these strategies were implemented successfully, but that doesn’t mean that SAB hadn’t returned back and adjusted some strategies.

Generally, SAB’s strategy was based on:

·         Market expansion, which has led the firm from its origins in Africa to become one of the largest brewers in the world.

·         Focusing on countries, which it believes it, could use its expertise, which has been gained over 100 years in South Africa to develop beer markets in emerging economies.

SABMiller’s strategy is to:

Drive volume and productivity
Optimise and expand its existing positions through acquisition
Grow its brands in the international premium beer segment
Seek value-adding opportunities to enhance its position as a global brewer (http://www.sabmiller.com)
Table 1.  Geographical operating areas of SABMiller plc.

Region
No. of Breweries
Europe
14 breweries
America
9 breweries
Africa
15 breweries plus 36 commercial sorghum breweries
Asia
7 breweries
The aim of this report is to analyse the extent to which this company has built multidimensional capabilities suitable for global competition. It will discuss the company’s points of vulnerability and present recommendations for change. The purpose of this analysis is to outline the current position of SABMiller and the strategy followed by it, in the brewing industry. In order, to achieve this task an examination will be done regarding the external and internal environment of the company, its strategic direction, and its strategy implementation issues.

Analysis of Strategic Position
The strategic position that SAB has chosen to follow is to “continue to protect and further develop its South African operations, whilst investing for growth in its international beer business, where a profitable base, with critical mass in selected developing markets and regions has been achieved, incremental growth, both organic and through acquisitions is being pursued aggressively”. (Johnson ; Scholes, 2002, p.897)

South African Breweries has chosen to follow an aggressive strategic business plan in its overseas ventures, based on market expansion. SAB takes a share in a brewery with a local partner and whilst retaining the brand, transforms the business by upgrading the quality and consistency of the beer, for which people are prepared to pay more, thus giving a healthy profit margin. Once SAB has acquired an initial local strong hold they then advance into regions beyond the brewery’s original catchment area. They continue to build initial mass in the region and progress over time to a national basis.

SAB chooses to hold a portfolio of different brands of beer from different countries. International business is spreading, thus creating a portfolio effect, which can help to reduce setbacks in one or two individual countries, SAB claims, “an optimum brand portfolio gives us a better overall marketing proposition, increases total sales and delivers economies of scale in production and distribution”. (Johnson ; Scholes, 2002, p.899) Building a well-diversified portfolio works in much the same way as choosing a portfolio of shares that will ultimately create the lowest risk and the highest gains.

South African Breweries was listed on the London Stock Exchange in 2000. The group believed it would place them in a better position by giving them greater access to world capital markets and providing it with the financial resources and flexibility it needs. What SAB has to realise with its London Stock Exchange listing is the increased competition it faces. (http://www.sabmiller.com)

Breweries are stepping up their marketing and packaging efforts to make consumers more loyal. Larger consumption has dominated the beer market, accounting for around 2/3 of all beer volume. The strength that breweries hold with regards to marketing needs to be focused on by SAB if they are going to succeed, examples of key marketing tactics can be seen with sponsorship deals such as Amstel’s support of the 2004/05 UEFA Champions League, Heineken’s sponsorship of Rugby’s Heineken cup and the 2002 World Cup which counted Budweiser among its official partners.

Many believe that for a Brewery the size of South African Breweries and with such international presence the company needs to have a major brand in the developed markets. Whilst in South Africa there is a strong presence of the Beer, Castle lager and of other such alcoholic fruit juices, there is little brand recognition in countries such as Europe or China. (Ewing ; Weber, 2004)   SAB has attempted in the past to acquire a leading brand but has failed. They had attempted to acquire Bass Brewers but this was taken by Interbrew of Belgium, Kronenbourg had been acquired by Scottish ; Newcastle. The directors of SAB believed that the listing of south African Breweries on the London Stock Exchange would “put SAB in a strong position to pursue its strategy of growth by giving the group greater access to world capital markets and providing it with the financial resources and flexibility to pursue this strategy in an effective and competitive manner.” (Johnson ; Scholes, 2002, p.898)

High-risk countries are to be treated with caution, there is a strong possibility for increased profit in the coming years but for case examples such as Eastern Europe where markets are developing from state-run economies to market economies, there has been a severe lack of capital investment in plants and distribution systems, and many of the working practices were in-efficient and out dated. (The Economist, 2004) There is a good opportunity for SAB to thrive in such economies but steady growth needs to take place rather then a fast and hard targeted approach. (Grant, 2002)

External Analysis
In order, to formulate an analysis of the external environment in which SABMiller is operating, an evaluation will be made in terms of industrial and competitive context. Both, the competitive context and the macro environment factors of the company can be evaluated by using the PESTEL analysis. (Grant, 2002) Although the factors which are most identified from the case are political, economical and social, however it must be mentioned that SAB (the previous company name) was targeting towards various markets which were in the developmental stage. Furthermore, recently core differences has been occurred in terms of the target market and the core strategies particularly after achieving the most desirable aim which is entering the developed market in the USA. (Appendix 2 illustrates the above factors regarding the different markets being targeted by SAB in more specific details). However, some broad conclusions can be drawn. (McGee, Thomas ; Wilson, 2005)

Politically, SAB’s strategy demands a great political sensitivity in dealing with governments, partners, local communities and the workforce. Both South Africa and the European countries have been going through an instable condition. For example most of the east European countries have been through a transition period from communism to democratic state introducing higher competition in the economy.

Economically, in most emerging markets, consumption of beer is directly related to the level of disposable income at consumer level. Although, The markets in which SAB is operating have been growing there have been occasions of depression. For example, Romania experienced high inflation, which in turn made SAB’s products not to capture the market share. (www.sabmiller.com) While, political and economical factors have affected the performance of SAB.

Social Conditions have also played a major role in the development of SAB’s products across these markets. For example, the outburst of AIDS in South Africa has declined the demand for SAB’s products as people are spending more of their disposable income on medication.

Moreover, the competitive context of the macro environment should also be examined. (Barney, 2002) It can be seen that there are two major trends in the brewing industry:

§  Globalisation: companies operating in such an industry usually tend to establish strong presence worldwide. This in turn, helps them to reduce the impact of setbacks occurred in one or more countries of its operations. Companies with strong domestic strategic situation usually try to invade attractive markets world widely. (McGee, Thomas ; Wilson, 2005, Ch. 11)

§  Mergers and acquisitions: mergers and acquisitions are of the most important tools which organizations use in order to achieve globalisation. (McGee, Thomas ; Wilson, 2005, Ch. 10) This is done by one firm conglomerating with other firms in the industry. This in turn not only helps the companies to achieve economies of scale, but also to penetrate into new market segments and exploit them taking in consideration the high risk which might be encountered.

Other factors, which could also be used to understand the behaviour of competition in the market of operations, are (McGee, Thomas ; Wilson, 2005, Ch. 8):

o      Demand: Although the brewing industry is considered to be a mature industry, one cannot say that it has stable demand. Therefore, different markets need to be examined in order to know the fluctuations in the demand levels relating to different customer groups. (Grant, 2002)

o      Competitive Behaviour: Even though much information in the case is not available regarding the behaviour of the competitors in the brewing industry, it is mentioned in the case that, among SAB other major firms also follow the practice of merges and acquisitions. This itself can create competitive pressure on SAB.

Briefly, there is a considerable increase in the competition due to the political changes, democracy, economic change, emerging market and globalisation.

The fierce international brewer competitor in front of SABmiller has become Heineken however, Forresters could be considered as a Microbrewer competitor for SABmiller. The (Economist, 2004)

The SABMiller Competitive position could be considered in near monopoly that has been achieved due to competitive advantages SABMiller has, these competitive advantages mainly are: economies of scale, low prices, efficient distribution. (Johnson ; Scholes, 2002, p.898)

Internal Analysis

To further investigate the strategic position of SAB, a better look into its internal environment can be explored by using SWOT analysis furthermore to analyse SAB`s different resources and how these resources form its distinctive capabilities.

Stacey (2000) maintains that the environmental opportunities are only potential opportunities unless the firm can employ resources to take advantage of them. Hence it is crucial to evaluate environmental opportunities in relation to the organisations strengths and weaknesses in terms of resources, culture and the environment in which it operates (Finlay 2000). Strengths and weaknesses are factors internal the organisation, whereas opportunities and threats are the future possibilities that are firm must address. (Appendix 3) Thorough internal analysis of is put in Appendices 3-4

Strategic Options Available to SAB

Nature/Type of Strategy

The capabilities mentioned above, help SAB to maintain its generic strategy. SAB according to Michael Porters’(1998) generic strategies has been able to sustain a cost leadership strategy. This is evident in the analysis carried out in (Appendix 5). SAB is able to follow its generic strategy, by the implementing, corporate, business level and functional strategies. In order to understand these strategies, an analysis is drawn up. (See Appendix 5)

The core competencies SABMiller had, were geared toward: emerging market economies, understanding the developing world conditions, understanding how to utilize world conditions, cost management and high quality low cost product. (Johnson ; Scholes, 2002, p.899)

Until 1990 the world was watching south Africa as not appropriate to enter the first world market, and the skills learnt in southern Africa would serve them better in emerging markets, during this period there was two core challenges facing SAB to implement its international strategic options that are: (1) the incremental operational improvement; (2) the balancing demand. (http://www.sabmiller.com)

Graham Mackay said: “SAB is seeking expansion into first world, uur long term strategy is basically to participate in consolidation and growth opportunities in the first world as well as the emerging markets” (The Economist, 2004)

There are three considered options for SAB’s international growth strategy (Bartlett, Ghoshal ; Birkinshaw, 2004):

1)      Merger with major developed country brewer

2)      Acquisition in emerging markets

3)      Continue to focus on organic growth in emerging markets

SAB chose the merger strategy since it bought 100% of miller brewing through an agreement with Phillip Morris Company Inc. consequently their name changed to SABMiller then it became the second largest brewer in the world by volume with over 69000 employees.

The merger has given SAB access to the brewing industries most important market, the US.  This transaction has given a lot of benefits to SABMiller. On the distant range, these benefits are the most important ones. (http://www.sabmiller.com)

Strategy Implementation Issues

In order to know if the generic strategies are implemented and will not arise any problematic issues, we will have to see if it is coherent with the organizational structure and the organizational culture. We would also have to check if the existing recourses (as already mentioned) are appropriate for this strategy. (McGee, Thomas ; Wilson, 2005)

Organisation structure. According to Mintzberg’s (2003) structural types of configurations, SAB is a diversified/divisionalised organisation. SAB is operating in 23 different countries within the brewing industry. Although SAB has a core product that is Castle beer it has a highly diversified product portfolio. It can be assumed, that managers are appointed by the headquarters to coordinate the various activities being carried out in different countries.

It can also be assumed, that not only in the entire national but also in all the international product divisions, moderate amount of capital is invested in order to have standardized production procedures. This in turn assists SAB’s factories to achieve high economies of scale and scope, due to their size and cost efficient production procedures. This structure allows some synergies among the different business units. However it must be mentioned that SAB’s produces portfolio of drinks according to the country of its operation.

The decentralization of SAB, gives flexibility to its structure, enabling it to have immediate responses to changes in the demand level in different market areas. However it must be noted, this helps into spread the risk when experiencing a downturn in the demand of its products in a single geographical area, for example, adverse climate conditions in Tanzania and economic problems in Romania, were easily offset by the spectacular growth in Poland and China. (Business Week, 2004)

Of course this delayering in the structure of the SAB, incorporates danger regarding the efficient control of the separate business units. Although it can be thought, in order to reduce this risk SAB has established regular meetings between managers from the headquarters and the diversified units, thus sustaining strong information flows.

Furthermore, it might have and should have invested in network systems that are appropriate for the coordination of every business unit around the Globe. Therefore, all the above characteristics concerning the organizational structure help SAB in implementing its group generic strategies. (McGee, Thomas ; Wilson, 2005, Ch.13)

Organizational Culture. The organizational culture should also be examined in order to check the suitability of the strategy pursued by SAB. This culture of SAB can be characterized by 3 main words: communication, motivation, and teamwork. We conclude that the organizational culture, when effectively transmitted to the acquired companies, is in consonance with the strategy.

Recommended Global Strategies:

Obviously, SABMiller has implemented many of the common strategic options, which have been available for it since it has been established.

In terms of Market strategic based its the time for acquisitions and mergers as so many multinational organizations are doing. The experience and skills SAB has can lower the high risk of implementing these strategies. This allows SABMiller to fully consolidate its position in both the developed and developing economies, while gearing itself up for the number one position.

To consolidate its position in the developed countries SAB should focus into acquiring the main competitors in Western Europe and the USA, that doesn’t mean this operation is simple. But SAB still need the time to have enough experience in the developed markets because as shown in the annual reports since 2002 some ratios have been decreasing. (http://www.sabmiller.com)

Assets reduction strategy can be followed by SAB as what happened in 1997 when SAB sold and closed non-core operations, which will generate a cash flow for SAB when insufficient capital experienced. (The Economist, 2004) Doing so will make SAB able to concentrate in acquiring and operating in its main business which is breweries.

Revising the existing strategy: the financial review shows a steady decrease in the turnover of Hotels and gaming, moreover some revising for the existing strategy should be done to get higher results. That can be done by implementing a marketing strategy, selling assets or merging with another major hotels company.

SAB needs to revise it strategy in terms of the brand specially after entering the developed markets. Otherwise this would be considered as a potential weakness.

Nothing mentioned about non-alcoholic beer either in the case study or in the other resources. SAB follow a product development strategy and to target a huge segment who demands this product in some countries, which prohibit purchasing the alcoholic drinks.

Cost based strategy is needed to consolidate the new markets SABMiller has entered in order to defend its strategic position.

Generally, the acquisition choice is adopted by so many multinational organisation, and recently this phenomenon has appeared more clearly adoption of such strategy is due to many advantages it has for instance:

·         Can be relatively fast

·         May reduce competition from a rival, although such a move usually has to be sanctioned by government competition authorities.

·         Cost savings from economies of scale or saving in shared overheads

·         Maintenance of company exclusively in technical expertise

·         Extend into new geographical area

·         Buy market size and share

·         Financial reasons associated with purchase of undervalued assets that may then be resold

SABMiller has many core competencies allow her to overcome many obstacles in terms of this choice.

Appendices

Appendix 1

History of SAB

I will divide the history of SAB to three periods, The growth period, The diversification period and the core period which SAB has experienced and faced

The growth period:

The growth period of SAB contains several important dates which gave SAB a strong thrust towards success.

In 1895 SAB was founded in Southern Africa,

1898 Castle lager was launched.

1949 Massive expansion program involving breweries, small hotels and pubs .

1955 Taxes on beers results in decreased demand for beer.

1956 SAB responds by consolidating with Ohlsson’s and United breweries.

SAB Diversification Period.

1960 SAB acquired control of Stellenbosch Farmer’s Winery.

1962 Restriction of the drinking of alcohol by  black South Africans was lifted.

1967 SAB expands into the food sector, taking control of Hinds Brothers and international.

1974 Acquisition of OK Bazaars and sets up joint venture with Schweppes and then acquires bottling business of Pepsi-Cola.

1979 SAB moves into the Fruit-juice market, taking up a 49% interest in Appeltiser.

1982 More aggressive move into retail clothing signalled by acquisition of Edgars.

1987 The leading Safety Match manufacturer, the Lion Match company, was acquired by SAB.

1989 Da Gama textiles company, one of the largest textile manufacturers, joins the SAB fold.

SAB Core period

1994 S.A’s first fully democratic election.

1997 SAB returns to its core beverage business by selling off or closing non-core operations.

1999 Graham Mackay becomes CEO. SAB moves its primary stockmarket listing to London.

2002 SABMiller PLC is formed.

Appendix 2.                                                                PEST Analysis

Factors
Political
Economical
Social
Region
Previously unstable situation, End of apartheid  now stabilised
The proportion of disposable income which the average South African spends on beverages and tobacco has fallen steadily since 1992.

The increasingly stable macroeconomic environment which has encouraged many of these trends provides a significant opportunity for SAB to grow volumes over the long term. Sound economic policies, which create wealth and higher employment, also result in increased consumer expenditure.

By 2001 there were concerns that costs of raw materials would rise.

Consumer spending on beer being diverted into other products such as lottery and mobile phones.
Life style changes, AIDS:4.2 million people were infected with HIV or full blown AIDS.

Proportion of discretionary expenditure moves from immediate gratification to self improvement.

As home ownership is encouraged, townships are electrified and more schools are opened, so money is earmarked for mortgages, rents, consumer durables and education. Mobile phones have also become very popular with the potential to divert spending further from beer.
South Africa
Rest of Africa
Relatively stable situation problems in Zimbabwe, Angola
Rise in expenditure, steady economic progress, rise in employment

SABIA experienced relative steady economic progress and favourable agriculture conditions, these factors have served to support most domestic currencies and disposable income.

In 2000 Botswana had experienced a GDP growth of 10 percent as both diamonds and other industrial areas had performed well
Increase in consumption of beer

growth of employment in Botswana and a consequent increase in consumption of beer

East

Euro.
Ex communist countries
Polish economy had been growing fast , Romania is experiencing high inflation, in Slovakia limited consumer spending and the compound annual growth rate of beer consumption from 1995 to 1999 was 9 percent .

Romania had experienced economic difficulties, with inflation running at over 40 percent in 1999 The economic conditions there had limited consumer spending
Increase in consumerism, Change in life style , In Poland: rapidly increasing popularity of beer In Hungary :switch away from alcoholic drinks and a consequent decline in beer consumption
Asia
Stable, communist regime
Fast growing economy, increase in consumption

The Chinese economy has been growing at 6-7 per cent a year for some time. Beer in China is among the cheapest in the world.
Increase of population, beer plays an important role in Chinese social life. Switch to beer and other beverages.  in Russia is a country where the beer is becoming increasingly popular.
Devel. Markets:

USA,

W.Europe
Stable .democratic
In Europe there are some countries where economies are developing from state- economies, which typically leads to increased consumer demand.
formerly lagged well behind spirits such as vodka, had overtaken that of spirits by 1999, a trend which augurs well for SAB in the years ahead.-

SAB’s competitors before the acquisition of Miller

                                                     1994                2000                2001

Anheuser Busch                    104                  142                  146

Miller                                     63                    47                    46

Heineken                               48                    81                    81

Kirin                                      36                    33                    38

SAB                                       32                    62                    80

Fosters                                   31                    18                    17

Carlsberg                                26                    50                    67

Interbrew                               18                    76                    97

Ambev/Brahma                     31                    59                    58

S;N                                       4                      35                    58

Appendix 3

SWOT ANALYSIS

Strengths:

Market dominance: SABMiller is the second largest brewer in the world by volume and dominate more than 90 per cent of its domestic market in South Africa.

Competitive advantages: SAB has a competitive advantage which is the ability to sustain and improve in 4 areas:

Value adding capability
Cost leadership
Economies of scale
Efficient distribution
Cost leadership: Every year for the past two decades, SAB has reduced its prices in real terms: since the late 1970s, the real price of beer has fallen by half. The firm thus avoided charges of abusing its monopoly, and wooed poor, price-sensitive customers, which is to say most South Africans. (economist)

To break SAB’s hold over the mass market, a new entrant would have to build big enough breweries and lean enough distribution channels to match its prices. SAB would certainly cut its prices still further to defend its territory. Leadership and management skills: SAB’s strength derives from its abnormal skill at coping with the demands of a highly abnormal market. (economist)

SAB is using its expertise which has been gained over 100 years in south Africa .

Product or service quality:  undoubtedly the proved high quality SABMiller products has is of the main strengths .

Weaknesses:

The trouble is, with brewers merging worldwide, whenever a company comes up for sale, there are several bidders—and firms already established in the same market can afford to offer a premium for the chance to swallow a competitor. SAB, as an outsider, cannot.

SAB is not yet developed in the majority developed countries or created international brands

SABMiller needs to create an international brand after the several mergers and acquisitions it has done.The African heritage could be considered as a weakness or SABMiller.

Opportunities

New market segments: SAB may face very little threat at home, but it also has little room to expand. That is why it has been buying up ailing breweries in other African countries, in Central and Eastern Europe and in China. Its experience in South Africa equips it well for tackling other emerging markets

But, although SABMiller is now the world’s second largest brewer by volume, it has yet to continue establishing itself in rich countries, or to turn any of its products into global brands. Due to many social, political and cultural factors changes globally. The Beer consumption is growing fast, which certainly SABMiller will exploit. SABMiller still has several Diversification opportunities world wide

Threats

-SABMiller is still Vulnerable to take over and other market forces.

-Sufficient capital might be a threat towered SABMiller.

-SABMiller is moving quickly to internationalise its earnings.

-2000: Zimbabwe’s political instability, SA Rand decreased against the US Dollar and the High political risk and volatility there might be a threat.

Appendix 4.

Resources, Capabilities ; Competitive Advantage

Tangible Resources

Financial Resources: The firm’s borrowing capacity to, and its internal funds generation determine its resilience and capacity for investment.

SAB has been following the acquisition strategy for many of years, to be able to expand geographically and also diversify its operations in different sectors. Although, we are assuming that SAB has been able to generate a high rate of ‘retained earnings’ and/or access to debt agreements with financial institutions, the ability to improve the marketing and distribution channels of its acquired businesses, underline the financial power of SAB. For example, in 2000, SAB, acquired Pilsner Urquell a major brewer in Czech Republic. This also helped them acquire 44% share of the Czech Republic beer market.

Physical Resources: Physical resources constrain the firm’s set of production possibilities and impact its cost position. Key characteristics include:

Although SAB’s physical resources are mainly located in Africa, it does have a strong presence in Eastern Europe and Asia. Its facilities include many factories, which are mainly attained through acquisition. These acquired breweries are renovated with modern technology which not only helps the firm to meet the changes in demand level, but also provide its customers with high quality end product. For example, SAB, completed renovation and construction of its brewery at Kalougra/Russia, and launched its own brand Golden Barrel that was a great success. Due to high quality beer and increase in demand, led SAB to expand its operations from producing 1.4 to 2.0 million hectoliters.(www.sabmiller.com)

Intangible Resources
In the case study there is no specific information regarding patents, copyrights and trade secrets that the SAB might cherish.

Reputation: One of the major goals of the SAB is to establish a brand identity among its stakeholders in order to create customer loyalty and credibility. Through its competence of marketing and sales groups SAB ‘integrates’ the products into the culture of every country, strengthening the relationship with its stakeholders. This can be seen in practice, in Poland, where SAB successfully merged two Polish beer companies and created a unified brand portfolio. This in turn led to an increase in the reputation of the products supplied by SAB and an increase of 33% in the sales volume and a great improvement in the market share.

Human Resources
o   The education, training and experience of employees determine the skills available to the firm.

o   The adaptability of employees contributes to the strategic flexibility of the firm.

o   The social and collaborative skills of employees determine the capacity of the firm to transform human resources into organizational capabilities.

o   The commitment and loyalty of employees determine the capacity of the firm to attain and maintain competitive advantage.

One of the most important characteristics of the SAB is its investment in human resources. Although it is a capital-intensive corporation, SAB maintains a large number of employees (69000), who are well trained and motivated to work effectively and efficiently.(www.sabmiller.com) The top management of the SAB is a combination of committed, well-organized, intelligent and experienced people that have a strong entrepreneurial character and are collaborative.

Although SAB is expanding, and its vision is to be in the top of the brewers in the world, (source, website) it makes sure that training and other measures are taken to develop a very skillful workforce around the globe. For those employees that did not adapt easily, further attempts were made to infuse them into this system of values. Achieving the above, many innovative ideas and plans were promoted, something that is important for the survival of the firm in this mature market.

A right combination of all the above resources not only helps SABMiller to have distinctive capabilities but also to acquire various businesses around the globe and enjoy great economies of scale. This also helps the organization to complement its global strategy.

Appendix 5

FEATURES OF CORPORATE, BUSINESS AND FUNCTIONAL LEVEL STRATEGIES

CORPORATE STRATEGY:

It is drawn by the head managers of SAB. Their responsibilities include activities like the following:

The set of the long-term goals and objectives of the firm that comprises the culture of the firm. The decision upon the corporate portfolio, which includes, financing of projects, the management of human resources, of the different business units as well as the financial and organizational integration of the acquired brewers. Finally they co-ordinate the performance of strategy formation of different divisions.

BUSINESS STRATEGY:

Corporate and divisional managers draw this strategy. The latter implement the strategy while being responsible for issues like: Co-ordination of performance of different breweries; its production; sales and marketing groups. They also examine the dynamics of potential markets, implement and monitor research and development policies and make sure that the competitive advantages of the firm are sustainable.

FUNCTIONAL STRATEGY:

Divisional and functional managers draw up this strategy. However, the managers of each individual functional unit put the strategy in practice. They are responsible for:

The efficient and effective use of financial and technical resources in each functional unit. Another issue is total quality management. They make suggestions for better production procedures and development of the product portfolio. Other occupations are inventory controls, logistics and internal marketing policies.

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