Fundamental Issues In Foreign Market Analysis And Heineken’s Global Sales Strategy

Body

a. Describe the fundamental issues in foreign market analysis for a firm like Heineken.

b. Discuss the advantages or disadvantages for Heineken of exporting its beer from one country to another.

c. Why is Heineken so focused on expanding its global sales? (To answer this question, you might wish to research the actions of the two biggest global brewers, Anheuser-Busch InBev and SABMiller.)

d. Why is Heineken so focused on expanding its global sales? (To answer this question, you might wish to research the actions of the two biggest global brewers, Anheuser-Busch InBev and SABMiller.)

e. Which markets offer Heineken the best prospects for revenue and profit growth? Are there any markets you would recommend that Heineken abandon? If so, why?

Thesis: The Business marketing strategy for Heineken NV to capture the world’s market.

The purpose of the Paper: This paper will critically analyze the market scenario of Heineken, a world’s famous beer producer since 1864 (Torres, 2013). This paper will describe the fundamental issues in the foreign market while a company is expanding its sales in the global market.

Overview of the paper:  After SABMiller and Anheuser-Busch, Heineken NV is one of the world’s largest beer producers. It was founded in Amsterdam by Gerald Heineken in 1864. It sells out more beer outside of the US more. In all total Heineken sells beer to 170 countries of the European country, North and South America, Asia, Africa (Vargas-Hernandez, 2015). They also started to exports beer after the foundation of the company to Italy, France, Germany and France. Heineken continued to grow steadily and breweries over almost 50 countries. Also, Heineken merged his business with internet-based technology to manage all information about sales, promotions and distribution details. Even when they faced a drop in their sell Heineken made a strategy to establish his market again in US market.

Fundamental issues in the foreign market that are faced by Heineken while they are expanding largely are; increased cost of expenditure and religion based strategy (Crucini et al. 2011). The firm was very flourishing within a very few years after beginning because of its quality of product and right way of marketplace positioning and promotion of retailing initially in  Europe, Far East and later on United States. Previous to World War-II in spite of Heineken success, it come to an end and its US operations during prohibition in 1933, it reestablished those operations, again surrendering Van MUNCHING. & Company exclusive rights to introduce Heineken goods into the United States.  Heineken has continued to grow gradually. It has breweries in over 50 countries. Some of the leading are in Canada and France.

Fundamental issues in foreign market analysis

Its joint business enterprise with a leading Japanese brewer, Kirin, gives it a muscular presence in that key market.  Heineken forcefully expanded in European market in 1980 considering the EU’s rivalry of its common beer market and empower heavily in new internet based technology. Heineken has prepared one recent significant strategic decision to modify the Van Munching & company to Heineken USA which has helped reduced costs and added additional profit. Heineken has made another significant investment for Muslim consumers by producing non alcoholic beer which has brought 1.3 billion Muslims consumers in the world to get pleasure from the Heineken Beer.

Advantage and Disadvantage of Heineken’s exporting strategy:

Advantage:

Almost immediately after the foundation of Heineken in 1864, it started to export beer to Italy, France, and Germany and up to the extreme East countries. Heineken brought the factory to make beer in France, Italy, Greece, and Ireland and to make bigger its product quantity and smooth the path of progress throughout the US (Ramamurti, 2012).

1920 the company ceased its export to USA due to ban, under which the sale, manufacture, and transportation of alcohol for consumption were banned nationally

Heineken setup breweries in over 50 countries including Canada, Australia, New Guinea, France and Brazil. It got into Japanese market through joint venture with a leading Japanese brewer Kirin.

Heineken Company got into Japanese market through joint business enterprise with a leading Japanese brewer Kirin. Heineken aggressively extended its market in Europe in 1980s to set up itself with overpowering market governance. Subsequently, it bought breweries in Greece, Italy, Ireland, and Spain and thereby stretched its product lines and services of distribution throughout Europe.

But interestingly Heineken did not setup any brewery in USA, taking lessons from Miller, a distributor of Lowenbrau in US market, importing from Germany In 2002 Heineken bought Egypt’s brewery, Al Ahram Beverage Co. after that, in 2003 onward it started selling abroad nonalcoholic beer in Muslim World, a accepted product of Al Ahram and captured the large unexploited market.

Disadvantage:

Heineken has courageously endeavored into international marketplaces and up to now has been a huge success. It has ended with right assessments and has gone on to position to be the third largest company as beer producer. Not simply it is a big product seller in Europe, but also in Northern and Southern part of America, Asia, and Africa also.

The key problems facing Heineken on the subject of international licensing, it is the fact that people may not get the Heineken beer as it was prior to the new product. People’s observation can be a significant factor in the success or collapse of globally manufactured goods that is brewed locally (Samiee, 2013).

Advantages and disadvantages of Heineken’s exporting strategy

Another key issue Heineken sooner or later face is that the innovative essence of the brew might be assorted with a taste from the area, thus, trailing it’s original and newly introduced tang. It’s not the observation but can really occur because the locality may really influence the tang of the locally created beer.

Heineken is that it must be astute sufficient to choose the business associate that has the minimum demand (Dong et al. 2013). The licensee must concur on a high value of fees the close relative company would claim on every bottle of beer it could trade.

Heineken was focused on Expanding global sales:

Heineken was so focused on expanding its global sales because they want to establish a strong dominance over Europe more precisely over the Anheuser-Busch. They implemented breweries in over 50 countries including Canada, France, Australia, and Brazil. They continue the joint business enterprise with leading companies of Japan, Kirin, who provides a strong market key to succeeding in the business market all over the world (Westjohn, 2015). After world war-II, selling abroad became a main priority for Heineken. Soon after the World War II African countries were top selling overseas targets for Heineken beer.

Best prospect of revenue:

Heineken was a unique company in the international business history of the global business that immediately after its establishment the firm started exporting in the foreign market successfully. The Heineken from its very first beginning became very money-making firm except a few miseries in the US market. After that the firm grew and became the 3^rd largest beer company in the world. The market of the United States and Netherlands has shown the greatest prospect of revenue for the Heineken NV in its global reach. When Heineken was facing a certain decrease in profit from another region they get back to the US market to regain their status. They made some important strategy regarding the issue that, they bought the Van Munching & company and change the name to Heineken USA to gain the reliability that this company is now owned by US and to get support from the State. Also to easily coordinate with US marketing they cut the cost of beer and added additional profit to every bottle of beer (Özsomer, 2012). Even they received 14percent of their profit only from the Netherlands. Heineken faced an abandon in the market of Egypt because; initially all Muslim were love to take alcohol but when prohibition is extra added in Islam community regarding the consumption of alcohol, the market of Heineken face a sudden fall in the market.

Conclusion and Recommendation:

As Heineken is the largest growing beer company and trying to expand their business throughout the world. From the very first year of their journey, they are likely to expand their business within the country as well as outside the country (Samiee, 2013). The key success factor of success of the company was the perfect Vision and strategic objectives setting and maintaining value chain in all the company actions to uphold its best cost Brand image (Casson, 2013).

Reference list:

Crucini, M. J., Kose, M. A., & Otrok, C. (2011). What are the driving forces of international business cycles?. Review of Economic Dynamics, 14(1), 156-175.

Torres, M. (2013). Heineken Reverse Innovation: Innovating for and from emerging markets. Revealing market opportunities in developed countries(Doctoral dissertation, TU Delft, Delft University of Technology).

Vargas-Hernandez, J. G. (2015). Sale of the Crown of Beer: A Study Based on The Strategy Tripod of Mike Peng. Business and Economics Journal, 2015.

Sluyterman, K., & Bouwens, B. (2015). From colonial empires to developing countries and on to emerging economies: the international expansion of the Dutch brewery Heineken, 1930–2010. Management & Organizational History,10(2), 103-118.

Westjohn, S. A., Magnusson, P., & Zhou, J. X. (2015). Does the Value of Global Brands Apply to Both Foreign and Domestic-Based Global Brands?. InEntrepreneurship in International Marketing (pp. 267-286). Emerald Group Publishing Limited.

Özsomer, A. (2012). The interplay between global and local brands: A closer look at perceived brand globalness and local iconness. Journal of International Marketing, 20(2), 72-95.

Casson, M. (Ed.). (2013). The Growth of International Business (RLE International Business). Routledge.

Ramamurti, R. (2012). What is really different about emerging market multinationals?. Global Strategy Journal, 2(1), 41-47.

Samiee, S. (2013). International market-entry mode decisions: Cultural distance’s role in classifying partnerships versus sole ownership. Journal of Business Research, 66(5), 659-661.

Dong, J., Li, T. H., Shao, J. Y., Xie, M., Xia, L., Yin, W. J., & Zhang, B. (2013). U.S. Patent No. 8,458,008. Washington, DC: U.S. Patent and Trademark Office.