Prepare an international business report for a Namibian organization i.e. Namibia Breweries Limited (NBL). Namibia Breweries Limited is a brewery that was founded in the year 1920 and offers various alcoholic beverages in different countries.
Alcoholic beverages sector is one of the oldest sectors on the earth and this industry is divided into three types like beer, wine and spirits. In today’s environment, there are many changes in the needs and preferences of customers. Among all products, beer accounts for 50% of international alcohol consumption. In this sector, major distribution channels are wholesalers, producers, retailers and distributors. The major purpose of this report is to develop an international marketing report for the chosen organization in Namibia i.e. Namibia Breweries Limited. The product of the company that is taken into consideration here is Windhoek Light that is a light beer products. The company is planning to expand its business in new foreign market i.e. Italy. This report includes the analysis of chosen foreign market considering different aspects like political, economic, socio-cultural, legal and financial climate. Moreover, it covers the internal resources and capabilities of Namibia Breweries Limited. At the end, recommendations are given on general strategy and market entry modes which the organization can use to offer Windhoek Light in foreign country.
Namibia Breweries Limited (NBL) is a brewery firm in Namibia that was founded the year 1920 when Hermann Ohlthaver and Carl List purchased 4 small breweries with financial complexities. These breweries were united under the name South West Breweries Limited. After that, it has changed its name to Namibia Breweries Limited when this country got independence on 21 March 1990. By using effective strategies and tactics, the firm is able to manage and develop its operations (Namibia Breweries Limited, 2018). Currently, NBL offers a wide range of products and exports 60% of its manufacturing to South Africa and 22 other nations all over the world. Major products of NBL are stated below:
Brewed Under License:
Owned Products
From the company analysis, it can be stated that this organizations brews all of its beers as per the German Purity Law (Reinheitsqebot). Apart from the 4 top-selling beers, NBL also manufactures specialty beers. Additionally, Nambrew distributes other alcoholic beverage brands such as Weissbeer, Erdinger, Kilkenny, Guinness etc. Windhoek Light is one of the most profitable products of Namibia Breweries Limited that contains low alcohol (2%) and low calories. This brand of NBL is endorsed by South African Heart Foundation. It accomplishes the impossible objective of company i.e. cutting down the kilojoules and alcohol without compromising finish or flavor of drinks (Namibia Breweries Limited, 2018). This product of NBL is available on both offline and online stores.
Now, Namibia Breweries Limited is planning to expand its operations in foreign country market. Considering the advantages of expansion, it will be appropriate for the company to carry its business in Italy market. The major reason behind choosing Italy as target market is the increasing consumption of beer and other alcoholic beverages in the country. According to the statistical report, there is a significant increase in the volume of beer consumed in Italy from the year 2008 to 2017. Despite of continuous economic crisis, consumption of alcoholic beverages in Italy has developed since 2012, ending 2016 with the growth of 1.6%. In the last year, around 18.9 million hectoliters of beer were consumed (Statista, 2018). Furthermore, January 2017 experienced 3.5% growth as compared to the same month in 2016
(Source: Statista, 2018)
During this period, the chosen nation recorded a growth of 9.4% and stayed ahead of United Kingdom, Spain, Germany and Netherlands. The above-given graph shows the increase in alcoholic beverage consumption in Italy. This is the major reason that this company has selected Italy as foreign country.
Before expanding its business in Italian market, Namibia Breweries Limited will conduct an analysis so that it can evaluate different external factors which will affect its business in the country. In this international market, these external factors can be both favorable and unfavorable for NBL’s business. In Italy, it will be entering by selling Windhoek Light beer that contains low alcohol and low calories (Deresky, 2017). By specifying these two product features in Italy, the company will be able to attract more customers towards this most popular product. There are some external factors of foreign country like political, economic, cultural, legal and financial factors which may have a great impact on selling of Windhoek Light beer in Italian marketplace. The evaluation of foreign country is stated below:
Political Factors
From the political point of view, Italy is the best nation to export the products and services. The country has effective international relationships with foreign nations and other European countries. There are no restrictions on the exportation and importation of goods and capital. The beer industry generally confronts several issues which are related to the increasing taxes and regulations by government. The rules and regulations of Italian government have a great impact on breweries (Donadini, Spalla and Beone, 2008). In the country, government is engaged in different campaigns against drinking. The government officers impose penalties while people drive in drunken situation. This rule imposed by the government decreases the chances of injuries, accidents and domestic violations. It can have adverse impact on the growth of Namibia Breweries Limited in Italy. It can affect the sale of Windhoek Light in Italian market.
Economic Factors
In the Eurozone, the economy of Italy is the 3rd largest economy and 8th largest by the Gross Domestic Product in the world. The country has the biggest market for luxury products in European market and third market all over the world. There are several economic factors which will affect the revenues and sales of Namibia Breweries Limited (Gammelgaard and Dorrenbcher, 2013). One of the primary factors which can provide better opportunities for NBL is Italy’s GDP. Country’s GDP is constantly increasing so that population has higher purchasing power. Due to this, they can spend more money on leisure activities like drinking and club. Thus, it will be profitable for NBL to sell Windhoek Light in Italian market (Trading Economics, 2018).
(Source: Trading Economics, 2018)
Social and Cultural Factors
Demographic changes have occurred quickly in many areas all over the world with the people are getting older. There are some social and cultural issues which can affect the sale of alcoholic beverage in Italy. Problems related to health are currently a major concern like abuse of alcohol and restricted age of drinking. The people are becoming very conscious towards their heath and weight. In this market, NBL is planning to offer the product that is low in calorie and less alcoholic i.e. Windhoek Light beer that can be consumed by the health conscious people (Griffin and Weber, 2006).
Legal Factors
Beer market of Italy has a better position in the world but in recent years, it has confronted a reduction in the beer consumption. In this country, the drinking age for both purchasing and drinking alcohol is 18 years. In addition to this, there are several restrictions on import and sale of alcoholic beverages (Aykin, 2016). It can decrease the sale of Windhoek Light beer in Italy. The laws and regulations in the communication such as warnings about driving and drinking and selling alcoholic drinks to under age people can enhance the time and cost of advertising in Italy.
By conducting an analysis of the country’s climate, it can be stated that financial climate of Italy is moderate. According to the statistics, the value share of alcoholic drink sales in Italy by category of alcoholic beverages. In this country, Wine covers a largest share in Italian market and accounts for 48.2% of beverage sales. It is estimated that revenues in beer sector accounts for US$3,665 million in 2018. The market is expecting to grow yearly by 2% CAGR. Political improbability, combined with the massive public debt of Italy and large fiscal deficit executes a shadow over the nation’s outlook. Downcast inflation will assist the consumer spending this year and improve the situations in banking system.
By conducting above analysis of market, the company will be able to analyze the appropriateness of targeted foreign market (Griffin and Pustay, 2012). Considering the above aspects of international market research, Namibia Breweries Limited will expand its business operations in Italian marketplace.
Understanding a business deeply is the objective of internal analysis. This analysis is conducted on the basis of internal resources and capabilities of an organization. Resources are the important sources which are used to develop the processes and attain organizational objectives. There are different types of resources like human resources, tangible resources and intangible resources. Tangible resources are very easy to recognize and analyze like financial resources and physical assets. Moreover, intangible resources are invisible and these are more important than tangible resources as they are major source of competitive advantage (Guesalaga, et al 2018). These intangible resources include brand image, technology know how, intellectual property rights etc. Apart from resources, the capabilities of an organization are used to refer the capacity of firm for pursuing a specific productive process. Ultimately, the strategy of a firm includes enhancing competitive advantage built from these capabilities and resources which exclusively fit the competitive position of firm.
Under this business expansion to Italian marketplace, Namibia Breweries Limited needs to leverage its internal resources and capabilities so that it can gain sustainable competitive advantage in international beer industry. These resources and capabilities will assist the organization to produce and introduce Windhoek Light beer in Italian market successfully. There are various resources and capabilities which the organization needs to leverage in Italy so that it can determine its attractiveness (Hill, 2008). Some resources and capabilities of Namibia Breweries Limited are stated below:
Production and manufacturing are two important capabilities of Namibia Breweries Limited. All the brands of NBL including Windhoek Light beer are brewed under the strict compliance with the Reinheitsgebot i.e. a German Purity Law of 1516. This law prohibits the utilization of ingredients other than hops, water and malted barleys. Thus, the products of NBL will be natural and they are free of stabilizers, chemical additives, preservatives and colorants. In Italian market, NBL will use the same manufacturing technique for Windhoek Light beer that will differentiate NBL from other Italian brewers (Helfat, 2017). All the elements used are certified by Genetically Modified Organisms. However, there are unfavorable conditions in Namibia so it cannot grow the raw material in that country. To ensure the higher quality of products, all the raw materials at NBL is imported from Germany. The company has established two facilities for production, major plant in Windhoek and smaller in Swakopmund. The total brewing capacity of NBL is 1.7 million hectoliters. In Italian market, company can increase this capacity to 2 million with a capital investment. It will enable the company to enhance its operations in chosen foreign market.
Marketing strategies will play a significant role in promoting Windhoek Light Beer in Italy. Currently, this company is using effective strategies in the domestic market. In the future, it will make efforts to improve and implement more impactful strategy so that it can position itself and its products among targeted population in Italy. It will focus on 4Ps of marketing mix strategies i.e. product, price, place and promotion (Helms and Nixon, 2010). Under product strategy, the organization will focus that Windhoek Light Beer is manufactured by using different quality processes and standards. The company will ensure that there will be low calories and low alcohol so that it can attract more people.
In the initial stage, NBL will use effective pricing strategy for this product. After successful positioning in Italian market, it would increase the prices of light beer. It will assist the organization to increase its customer base and revenues as well. Moreover, NBL will develop an extensive distribution network and different channels so that it can deliver the products to targeted population (Ashenfelter, Hosken and Weinberg, 2015). The company will offer the products both online and offline. In addition to above marketing strategies, NBL in Italy will use more attractive advertising and promotion techniques. However, some governments do not allow promoting alcoholic beverages, but NBL can promote Windhoek as light beer. This firm will be using both offline and online modes to approach its targeted audiences.
Supply chain and logistics are the important processes which NBL can use to increase its business performance in Italian market. NBL has six depots in domestic market from where it supplies the informal and formal market, with rest being direct shipments to range of customers. Primary transport is outsourced to its partner Imperial Managed Logistics Namibia Limited, while secondary distribution is done by NBL employees and trucks. In Italian market, the company will establish strategic partnership with any logistics company and distribute the light beer (Paula and Silva, 2017). As secondary distribution partners, the company will use liquor stores, supermarkets, hospitality outlets, pubs and shebeens. NBL will make efforts to develop direct interaction and relationship with customers.
About NBL, it can be stated that the growth and success of NBL lies in purity. Customer demand purity and they are increasingly looking for more healthy drinks. As mentioned above, the company is complying with the Purity Law of Germany and using only healthy ingredients in its beer. In the Italian market, NBL will have the ability to introduce new products to fulfill the demands of specific targeted customers (Sankrusme, 2011). It will assist the organization to increase its brand presence in international markets.
NBL treats its human resources and experts as one of the major resources. Online development and training of staff provides continuous updating of knowledge and skills that is critical in the changing business environment in which NBL runs its business. The part of firm’s objective is to support its human capital with basic requirements of the sector. Every year, company conducts training programs for its employees in different nations (Schmitt, 2011). In Italian market, NBL see its human resources as key differentiators and aim to improve and develop their competencies. It will assist the organization to enhance its corporate efficiency.
In this way, Namibia Breweries Limited will leverage its resources and capabilities in Italian market so that it can establish its business of Windhoek Light beer in Italy. These resources and capabilities will assist the organization to make its operations smoother and enhance brand awareness in the market (Savastano, 2011).
There are some recommendations which are given to Namibia Breweries Limited while it expands its business operations in Italian market place. It includes the strategy and market entry mode that can be used by NBL while entering into Italy. Recommendations are given below:
In order to expand its business operations in Italy, NBL should adopt internationalization strategy. Internationalization is an expansion strategy for a business from its domestic market into foreign market. A company makes a strategic decision to internationalize that have an impact on firm and its external and internal operations. NBL should use this strategy to enter into Italian market that will allow the organization to increase the sales of its product offering i.e. Windhoek Light beer (Conick, 2016). Under this business expansion, the company has the global ambition to become a leading player in beer industry. So, it should adopt internationalization strategy to expand its business in foreign market. The company should make efforts to differentiate its beer products based on price, quality and product attributes. Consumers compare the products offered by the beer companies and their prices. If the customers prefer the products of NBL over local beer in Italy, then demands for NBL’s light beer will exist in Italian market. Firstly, the company should export its beer products to Italian market. It should analyze the response of Italian population towards its light beer product then it should establish its premises and manufacturing facilities in the country (Dodgson, 2018). This general strategy to enter into Italian market will be profitable to capture a significant market share in Italian beer industry. Under internationalization, the company should use different market entry modes which will support NBL to enter into Italian beer market.
Market entry modes are the strategies which can be used by an organization while entering into new and emerging market. There are various market entry modes like joint ventures, strategic alliances and partnerships, merger and acquisition etc. In order to enter into Italian market, Namibia Breweries Limited should adopt effective and beneficial market entering modes. It is recommended that NBL organization should use joint venture to enter in Italy. The company should establish joint venture with the already established brands so that it can avail the funds and resources (Dunning, 2013). Furthermore, the company can develop strategic partnership with Heineken Italia in the country so that it can enhance its international business. It will assist NBL to increase its brewing capacity in Italian market. Apart from this, the company should open its franchise in Italy and sell its Windhoek Light beer. Firstly, these outlets will supply the light beer and then it will increase its product range in the country. To operate alcoholic beverage business in any country, it is very essential to take license from Italian government and related bodies (Gubik and Karajz, 2014). Licensing will assist the organization to run its business operations and develop an effective brand image among targeted population. Thus, Namibia Breweries Limited should use these market entry modes to successfully enter into Italian marketplace.
Conclusion
From the above analysis, it can be concluded that business expansion is one of the most significant strategies when a company plans to enhance its market presence all over the world. The above report analyzes that Namibia Breweries Limited is planning to expand its business in Italy. The company is planning to sell its Windhoek Light beer in Italian market as it is very unique and innovative product. The foreign country evaluation of Italy shows that company provides an attractive environment where it will be beneficial to provide this light beer. The people are very much concerned towards health so they will prefer to drink this low calorie and less alcoholic beer rather than simply alcoholic beverages. It is found that NBL should adopt effective market entry mode and strategies to enter and operate business in Italian market.
References
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