Value Chain

7 July 2016

QUESTION 1:
Identify factors in the Microenvironment (PESTEL) which are relevant to SABMILLER.

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ANSWER:
SABMiller’s activities are heavily influenced by the political, social and legislative environmental factors within which it operates; meaning this has made the company proactive when dealing with macro factors. SABMILLER operates in developing as well as matured markets. These markets include very challenging aspects which in the past has limited the threat of new entrants. These markets includes very tough competition; as rivalry in the Brewing industry is increasingly high.

SABMILLER tend to own multiple brands with different market positions. In this market, it is much easier for competitors to launch rival products that compete directly on price and thus eroding market share. After analyzing the company’s competition, SABMiller has and still is experiencing this problem; for example in North America; especially recently where InBev has bought Anhevser-Busch; this has helped the dominant Brewer to enlarge a further space between themselves and SABMiller; which has affected the company’s market share future plans deeply, SABMiller now has to come up with new innovative ideas to try and close the gap between them and A-B InBev.

The American Industry is the largest brewing market by value as rivalry is now more intense than ever, meaning more competitors, are entering into a price war with SABMiller. This has become a huge threat for SABMiller, but it does also hold opportunities to weaken this threat down. For example the company has the opportunity to acquire more stakes in the Brazilian market, or become the owner of China resources which is the largest brewer in China.

SAB’s acquisition of Miller was largely due to the pressure from the London
Stock Exchange. It is felt that SAB was at risk due to its over reliance of soft currencies in certain market. Even though their core competences were elsewhere, SAB went on with the takeover to please the stakeholders.

SABMiller’s South African Culture has shaped the strategic development of the company. It is this culture, which makes their distinct capability of entering emerging markets less imitable. As highlighted in the case study, SABMiller strategy represents a synthesis of learning based on the historical developments of the company.

In conclusion, in order to identify the company’s position. It is important to carry out its business external analysis. If is also essential to identify its core competences and capabilities as well as stakeholder expectations in order to successfully identify the company’s strategic position.

QUESTION 2:
Which force in the external environment is exerting grater pressure? How should the organization react?

ANSWER:
The forces in the external environment is exerting greater pressure is the emergence of competitors in its prime markets.

In future, SABMiller will have to face tough competition from its rival.

How should the organization react?
a) SABMiller has to come up with new innovative ideas to try and close the gap between them and the competitors. b) SABMiller had to make some strategic choices to please its key players. c) SABMiller to acquired local brewing business to enable them to grow and overcome certain business restriction through acquisition. d) By adding quality and consistency to the beer.

e) By bringing its own operating practices and management skills. f) By introducing brand management and its brand portfolio.

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