Anheuser Busch & Harbin: Caso China

Mission, objectives and strategies.

Vision: Through all of our products, services and relationships, we will add to life’s enjoyment.

Mission:

• Be the world’s beer company (Products and services; Self-concept)

• Enrich and entertain a global audience (Customers; Markets)

• Deliver superior returns to our shareholders (Concern for survival, growth and profitability)

Value: We believe in…

• Quality in everything we do. (Self-concept)

• Exceeding customer expectations.

• Trust, respect and integrity in all our relationships. (Philosophy)

• Continuous improvement, innovation and embracing change. (Philosophy)

• Teamwork and open, honest communication

• Each employee’s responsibility for contributing to the company’s success

• Creating a safe, productive and rewarding work environment. (Concern for employees)

• Building a high-performing, diverse workforce.

• Promoting the responsible consumption of our products.

• Preserving and protecting the environment and supporting communities where we do business. (Concern for public image)

Strategic objectives:

• Expansion production into China through acquisition of Chinese major beer companies

• reposition its brand by catering to elite and create perception of being a premium brand

• increase ownership by 27% by year 2009

• expand there operation up to there central province in order to expand there market share

• In order to sustain growth and stability it needs to acquire smaller brands which would enable it to enhance its brand portfolio and expand its business under the umbrella of company name

Industry Analysis

The China beer industry is the world’s largest by volume. Total domestic volume in 2005 was 307 million hectoliters, up 10.2% vs. 2004. Excellent growth has continued in 2006 with officially reported domestic volume increasing 13% through September vs. the same period, prior year.

China’s per capita beer consumption in 2005 was 23.4 liters, which was slightly lower than the estimated global average of 24.8 liters. However, China’s per capita consumption already surpasses that of Hong Kong (21.5) and Taiwan (21.1). China beer industry volume growth will slow.

The China beer market remains highly regionalized. Shares of national beer output, YoY growth, and per capita consumption by official China region in 2005 were as follows:

The chart below shows China’s Top 10 brewers by output in the first half of 2006 and it specifies the foreign ownership of each Top 10 brewer, if any:

Foreign companies tend to face problem as provincial regulation are there to protect local companies and furthermore to keep the tax revenues within province. Regulatory roadblocks were designed to keep tax revenues at home. Many recognized global brands were unable to make there mark because they didn’t understand the customer taste and preference which is clearly visible as they hold 0.5 percent of Chinese market.

PEST ANALYSIS

Political and legal

• Decentralized power structure

• Unstated hierarchy of power

• High tax on transportation

• Big power of the local and provincial authorities

• Logistics laws

Economical

• Important growth of China economy

• Huge and fragmented market

• Increase of urbanization rate

Social

• Low income and standard of living

Technological

• Poor level of infrastructure

Environmental

• Development of urban areas

• Reduce emissions of carbon dioxide

• Recyclage of bottles

• Obligation to share technology and knowledge for foreign firms

Global Market

STRATEGIC GROUPS:

Porter’s Five Forces

• Threats of new entrants:

 High barriers to entry:

 Fragmented market

 Distribution networks

 Government Regulations

 Economies of scale in marketing, production and distribution.

• Rivalry (price competition has been decreasing):

 Increasing competition from imported beers (however, national brewers own part of these breweries).

 2,200 wholesalers and 560,000 retail establishments.

 Creative and enticing advertising by majors.

 Growing popularity of micro-breweries and other craft-beers.

 Alternative: expansion to super-premium beers and other segments with lower demand elasticity.

• Substitutes:

 Growth in:

 Premixed drinks

 Alternative

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