Applying International Strategy To Carlsberg: A Case Study

Background

There is rapid transition in globalization across the world today. Various prospects often appear and vanish instantaneously therefore it is vital for tech firms to be prepared and get hold of such chances at the quickest time possible. Based on the paper every company should have a strategy in order for it to achieve its target goals. Every firm must formulate its strategies in order to inform its employees on what they are to achieve at the end of every fiscal year. Due to the drastic changes in data sharing and technology change it is essential for each company to adjust immediately on their strategies. It is the core reason why this paper has deepened its focus on companies’ strategies. In this report, our company of choice is Carlsberg Industry, which is a Danish firm that has exhibited fruitful results and has gained traffic all over the world markets (Levine, 2014). Initially, it was a small company with a relative small size with data that is within reach.

The Danish communities have acknowledged Carlsberg to be the leading exporters of its brands in the oversea markets. The company has a great opportunity to be exploited in the near future which is why they need to employ effective strategies for them to meet such opportunities. The paper’s focus is on Carlsberg international strategies in  its aim to reaching the international markets (Western and Northern European markets) since the current market it is in will diminish in due time. The Western and the Northern markets are Carlsberg biggest market which draws more profits for the Carlsberg Industry (Mandel and Humphrey, 2002). It is advisable the company should uphold the current international strategies due to the high level of competition with other companies offering the same products. The 3 great rivals of Carlsberg are all in the market making it hard for Carlsberg as a company.

The company was established in 1847 by Jacobsen. Its main operational headquarters are in Copenhagen, Denmark. Upon the death of Jacobsen the company was preceded by the Carlsberg Foundation which currently is in control of every activity done the Carlsberg employees. Carlsberg is the company’s brand name which was depicted from Jacobsen’s son who was known as Carl. It employee are about 41,000 in number mostly positioned around Eastern, Western Europe and Asia. The company’s portfolio is estimated to be around 500 brands which significantly vary in terms of geographic penetration, target audience, price and volume of its products. It is the fourth largest brewery industries in the world. The main distinction that differentiates the company’s products and its rivals is its traditions, markets, and trademark. As a result of the fluctuation of the market there has been great emphasis by managers on growth, and development in order achieve long-term objectives (Dzikevi?ius and Šaranda, 2011). In remote places where the company has not established its brewery industry the group often markets its products via exportation and various licensing conformity. According to Thorsøe and Noe (2015), the main objective of the company’s managers is to institute and expand the market through employing international strategies appropriately which will create strong partnership worldwide.

Strategy and Prospective Partners

A brilliant international strategy has been employed by the company which entails that the beer is first manufactured for the company’s local markets and therefore it trades the beer internationally consideration minimum domestic modification. This exhibits that the beer that the company produces is of high quality thus meeting international standards (Chin et al., 2010). Therefore they do not encounter significant number of rivals which shows that there if reduced pressure making its cost structure become constant.  Carlsberg intends to consolidate the process of making beer through conducting of extensive research in its country while introducing production and promotion roles in any country it works in. The main reasons why the Carlsberg Company selected an international strategy is due to:

1. In order to enhance profit and sale increase through trying different markets and promoting in the local markets (Ghani, Kerr and O’Connell, 2011).

Since the company’s exports are distributed to countries in South America since there is no brewery industry there while in many occasions by the licensing concurrence such as Charrington and Tetley in the UK being granted the permission of brewing and bottling Carlsberg brand beer and on the other hand the country acquires some royalty payment. Additionally, the company formed cooperation with the Scottish and the Newcastle together with the brewery industry in Hong Kong which is now owned by Carlsberg. Carlsberg merged with the Ruborg, Orkla, and the Danish rival of Norway which currently are Carlsberg property (Moretto, 2008).

According to Lai and Chen (2014), a company involves itself in competitive markets cautiously through relying on its potential partners who reduces additional data, perils, and some fears such as some hindrance to trade which is linked to distant involvement. The company is in a position of studying the distant marketplace through joint ventures thus being in a position of overruling the other companies.

1. Carlsberg domestic markets share fortification

Since the company will be operating in foreign markets, it will be in a position of drawing away other rivals business through providing customers different selections thus making competitors realize that they will encounter the same challenges if they ought to attack Carlsberg home marketplace. Moreover this is a strategy that Carlsberg can employ in eradicating various malpractices in within their home country (Stubbs, 2011). It shows that working within other country’s territories minimizes the impact of economic swing for example the downturn within the domestic home country. In spite of Carlsberg apparent rapacious intuition of total governance and possession, other potential stakeholders merge with Carlsberg due to:

• Outstanding profits from intangible assets – For example based on the licensing process the licensee always possess the permission over Carlsberg assets which include its trademarks, exclusive rights, and processes. This correlates to other co operations since the prospective ally gets down to be acquainted of every process concerning the business (Aribarg and Arora, 2008).
• Carlsberg will provides its allies a vast variety of products and services – This aspect is shown where Carlsberg Company provides privileges such as logical properties, through the cooperation the partner is in a position of exploiting more businesses opportunities because not only will be put on the market their individual products but also Carlsberg Company’s products, thus showing that their prospective buyers will have a wide range of products to select.
• Chance to be sanctioned to Carlsberg promotional processes – During the processes of Carlsberg advertising the partnered company’s products may be shown in situations where there is merging.
• Equality sharing of financial risks and fixed costs – this means that from the partnership that company can strive hard solving problems that may lead to failure of the business until the company meets certain  standards (Geppert et al., 2012). This often occurs where there is a joint scheme.
• Pooling ideas which creates alternative resolutions through cooperate partnership with Carlsberg – It happens when different partners forms cooperation with Carlsberg (Birdsall, Kelly and Moteetee, 2007). Therefore, every customer will be enthusiastic since their problems would have been handled easily which will thus develop consumer service practice.

According to the data in chart 1 below, it is evidenced that Carlsberg internationally owned about 7.5% by volume. It is the 4^th leading brew manufacturing industry after Heineken. It has an average capital of over 80 billion (Danish Kroner). During 2009, the company acquired about 15.8% profit margin of its total operations worldwide.

Acquisitions Targets and Strategic Responses

Chart 1: Shows global share by volume of the largest brewing corporation in the world

According to the chart it shows the possible upcoming achievements for other partnered breweries for example AB Inbev will be based on the below factors:

1. The largest brew manufacture industry in the market will aim at amplifying the company’s sales in the market which will instantly lead to uplift in the pricing ability. A firm that lacks great pricing aptitude in that case a rise in price of the subsequent product will decrease the need for the product being offered.
2. Since Carlsberg industry has been in the market for so long it has gained vast knowledge of the local markets where it has established its own brewery industries, therefore, other groups would love to access the same entry mode in these markets (Dunne et al., 2009).
3. Carlsberg is considered as a precious brand; therefore larger groups will be focused in attaining intellectual property for example, exclusive rights, research and development of laboratories with an aim of product development, trademarks, databases which are hard to create, and production processes.
4. Since Carlsberg is the fourth largest brewery group around the world there in order to minimize competitors from other markets then other smaller groups such as AB Inbev can be purchased in order to minimize the level of competition.
5. Besides it is often hard to acquire various consumers and make them adjust to other brands since they are always trustworthy and love the brands. Therefore the best way to go about that is by purchasing the brewery industry itself. For instance, in some regions where Carlsberg dominates with the absence of the larger brew groups, they acquire the markets trust by buying the whole brewery firm since all consumers are used to products produced by Carlsberg.
6. The competitive groups might desire to gain special rights to Carlsberg sales and its supply channels. Through its possession it can be used for the supply of its own products. Various sales techniques employed can be used in profiting the telemarketing industries.

A greater turnover rate brought about by conflicts that would have resulted due to Carlsberg employees being in odds with the obtaining assembly’s methods of operation thus ought to abandon the firm. In the long run, it will negatively affect the operation of the brewery industry since the management and professionalism would have vanished and with Carlsberg will discard during the event of being sold (Homburg, Scha?fer and Schneider, 2012).  Amalgamation with other firms is hard because of the outstanding disparities within the management and the company’s cultural norms. It is will result to slow decrease through the assimilation of such operations. A factor that could severely affect this is national culture which should be considered in advance.

For instance, disparities in the languages being used can be factor that would result in the rejection of contracts between Carlsberg and AB Inbev which will negatively affect the business. 

Additionally, Carlsberg is a large company, therefore is may refuse any efforts to be sold which will make it lose its brand name. These companies may go an extra mile of placing bids based on buying other breweries and a way of defense against other larger companies. Therefore this will enable it acquire many shares which makes it hard for other companies to purchase it without ant-trust; a policy that protects every enterprise from any unusual practices which makes it very hard for any other company to access it (Harrington, Rayner and Warren, 2012).

Carlsberg has employed an international strategy that is very accommodative with over 500 brands which is probably right since it will generate more profits thus being in a position of harvesting cost reductions which would have come from various learning influence and economies of scale which will have a low cost approach based on a global standard (Ceria, Saxena and Stubbs, 2011).  This means that this type of international strategy being deployed will be accommodated in places where burly pressure for minimization of cost and the stipulation of local responsiveness in minimum. Generally, Carlsberg comprises of about 500 brands and they always modify their products in small scale in order to achieve certain local conditions and the modification always entails duplication of functions, and shorter production runs which is purposed to increase expenditure (Omoto, 2012).

Conclusion

Conclusively, there has been great progress over the past years at Carlsberg Company based on its rapid expansion both internally and externally. Using the international strategy Carlsberg has been able to grow and expand to the outside marketplace. Due to the expansion and growth of the company it will be easy adjusting the international strategy which will boost its financial situation and enable it perform highly in the international marketplace. To conclude, I strongly believe that Carlsberg ought to uphold their current international strategy with their objective to pursue both the Western and the Northern European markets. Although it is a risky market but it comprises conditions where Carlsberg Industry can be established.  Therefore, there international strategy should be considered as a long term strategy in order to attain maximum profits.

Reference

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