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Heineken - Case Study Example

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Nonetheless, the consumption level of beer has been increasing along with its price (Colen & Swinnen, 2011). The diagram represented below exhibits the structure of the internationally expanded beer market as on 2005 along with highlighting the changes since 1961: Structure of the Global Beer Market Source: (Colen & Swinnen, 2011) From the above figure, the consumption level of beer in the global market can be observed and thus it can be stated that the profit ratio of beer industry is also rising with its demand and consumption in various global markets. It is worth mentioning in this regard that with the passing time, the degree of competition along with the threat of substitute products have increased considerably. In this context, wine can be regarded as a major substitute of beer in the global market (Colen & Swinnen, 2011). With reference to Porter’s Five Forces, the threat of substitute products in the global beer market can be regarded as other alcoholic drinks like wine and various other types of liquors. However, in recent phenomenon, the industry also needs to witness a strong influence from non-alcoholic substitute products such as soft drinks exhibiting a high degree of substitution threat. Threat of new entrance can also be identified as high within the current structure of the industry as the venture is considered to require only experience and expertise workers involving affordable costs for manufacturing beer. Bargaining power of buyers does not seem to have a major affect on the beer industry mostly owing to its size and diversity. From a similar point of view, the bargaining power of suppliers also has an insignificant impact over the current structure of beer industry due to the easy availability of raw materials. Nonetheless, competitive rivalry indicates the presence of multiple market players, dealing with the similar product. With the increasing threat of new entrants and substitution effects to beer products, it is quite likely that the competitive rivalry is expected to increase in the near future (Ekanayake, Getov, & Naridze, 2012). It is in this context that the degree of substitution effect can be regarded as the greater threat to the industry. Contradictorily, the bargaining power of buyers can be regarded to have a minimal effect over the industry operations. 2. What strategy does Heineken follow in the global beer market? Discuss this with respect to competitive strategy, corporate strategy, and international strategy. Concerning its competitive strategies, the company emphasized on adopting various innovative measures intended to change the traditional family-oriented marketing ideologies towards a more technology-oriented modern process. Considering the current industrial structure, it can be stated that a beer company needs to value its competitive strategies along with its corporate and international strategies so as to sustain in its competitive position for a longer period of time. With a similar concern, Heineken also adopted the corporate strategy to acquire relatively smaller market players, who were mostly identified as new entrants to the industry. Hence, the corporate strategies adopted by Heineken can be observed as highly influenced by the threat of new entrants in the international arena. Apart from acquisitions, the company also emphasized on encouraging cross-border deals in its international str ...Show more
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Heineken 1. What is the structure of the global beer industry? Perform an industry analysis using Porter’s Five Forces framework. Which of the competitive forces seem to have the greatest effect on industry attractiveness? Which of the competitive forces have the least effect on industry attractiveness?…
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