BPL - Case Study #2 - Case studies vary from subjects and topics PDF

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Heineken Case Study #2 Dutch brewer Heineken has maintained a leading position in Africa, Asia, Latin America, Europe, etc. through means of acquisitions and capacity control. Not only has Heineken moved its way up the ladder by becoming one of the world’s largest brewer, but Heineken has also developed a global presence by competing against their rivals. At first, Heineken had limited itself to acquiring small national breweries, such as Italy’s Moretti and Spain’s Cruzcampo, which provided Heineken with small but profitable growth. Despite that, aggressive rivals were reaching out to make acquisitions all over the world; thus, Heineken needed to break out of its “play-it-safe” corporate culture and start making impacting acquisitions that will benefit them as a firm and consumers in general. Changes in the market had even occurred at a certain point, such as sales of beer being stagnated in the United States and Europe; however, demand for beer in other developing countries was growing. This assisted Heineken in making a global presence because while other rivals were not particularly paying attention to countries such as Belarus, Panama, Egypt, Kazakhstan, etc., Heineken was able to purchase a majority stake in nonalcoholic breweries as an access into other Muslim countries. As Heineken stepped up and made major acquisitions of other breweries across the world, a form of global strategy that also occurred within the firm was the changes within the management team. “Fit 2 Fight” was part of Heineken’s phase of growth plan and this plan cut the firm’s executive board down from five members to the CEO and the CFO. Heineken also created management positions which would be responsible for five different operating regions and this provided incentives for people to be held accountable for their performances. Other changes included Heineken’s Executive Committee being cut down from 36 members to 12 members, in order to speed up the decision-making process and all of the firm’s activities were overseen by a supervisory board, which consisted of 10 members. By the late 1990s, the Heineken brand was at risk of being obsolete by many young drinkers, due to the brand not

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being as exciting as it was before. Group Modello’s Corona even became a leading brand of imported beers because it was a new and enriching product which reached out to Hispanic Americans, as they were the fastest-growing segment of beer drinkers. Therefore, Heineken worked hard to increase its brand awareness to young drinkers by introducing a light beer named: Heineken Premium Light. Heineken’s diverse portfolio of brands in which the firm had acquired were strong local brands and they came with loyal consumers which promoted the Heineken brand even more. Heineken eventually got the support of Hispanic Americans as well by targeting their segment and adding popular Mexican beers such as, Tecate and Dos Equis to the market. Nevertheless, the firm wanted to sustain its premium-beer industry primarily because it represented the most profitable segment of the beer business. Heineken could charge a higher price for their premium-beers because the beers had richer quality to their taste and had a slightly higher alcohol content, compared to standard beers. Within this segment, Heineken faced many rivals such as Anheuser’s Budweiser Select domestic beer and InBev’s Stella Artois imported beer. Thus, Heineken’s acquisitions of other breweries led to many brand name beers under Heineken’s belt and dominance in certain areas such as Western Europe, but most of all Russia as it became Heineken’s largest market volume. This is due to Heineken’s global strategies of minimizing its firm’s management team to speed up the decision-making process, promoting the premium-beer industry as much as they can and branching out its acquisitions to different parts of the world to consumer demands. Putting to use of these acquisition beer brands is what makes Heineken most significant from the other beer brands. Heineken’s international expansion enhanced its very own value chain and its growth rate of its products that is set in its maturity stage. Since Heineken is in its maturity stage, it has already dealt with changes in the market and how the firm proceeded to implement strategies against these changes. On top of that, Heineken’s international expansion occurred because there was greater demand outside of

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its home country; thus, the firm reinvigorated its product life cycle. While there are some risks that come with expanding internationally, such as economic risk and management risk, the overall benefit of expanding outweighs these risks. Heineken has uniform standards of quality around the world, due to their consistent global strategy and this would have not occurred if Heineken did not expand their brand internationally. The current chairman and CEO of Heineken, Jean-Francois van Boxmeer, stated that he would have to work on the company’s culture, in order to speed up the decision-making process. As van Boxmeer has already set a change within the firm by having an executive role in the management team and by not being a part of the Heineken family name, he was sure to set a notion that he is not trying to change the family’s style of running the company. Rather, by working his way up to the role he has today, he has a vision for the company which will coincide with what the family values. Van Boxmeer should consider developing the Heineken brand more as other competitors will emerge within the market and Heineken should definitely expand within the U.S. Nevertheless, Heineken is operating more than 190 breweries in over 70 countries, claiming about 10% of the global market for beer. Heineken’s buildup to a powerful global competitor came with nothing but hard work and a rather tasty beer.

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