SAB Miller in the 1990s, South Africa

¶ … SAB Miller

In the 1990s, South Africa was undergoing a major transformation. This was in response to: the sudden social, economic and political changes in the post-apartheid environment. SAB Miller was able to use this change as a way to solidify their home market and expand to other regions. This is helped the firm to become the second largest beer producer in the world. However, like many multi-national corporations, the firm has been facing tremendous challenges. In some cases, this can be from having large amounts of saturation in particular markets (i.e. The U.S. And Europe). While at the same time, there are issues affecting the ability of the company to take advantage of growth in many emerging economies (i.e. Africa, Asia and Latin America). (Jacob 2009)

To help the firm deal with these issues requires examining the challenges they are facing and how they will be addressed. This will be accomplished by focusing on: their strategic position, assessing an appropriate model to assist them in tackling various problems and the utilization of a specific framework to highlight the benefits / drawbacks of these options. Together, these elements will provide insights that will illustrate how the firm can address these issues. This is when the company will be able to increase their market share and bottom line results exponentially. (Jacob 2009)

What is SAB's strategic position as of 2007?

The strategic picture of the firm is that they are facing a number of opportunities and challenges. This is because there are varying results, for different regions of the world. In some cases, (i.e. The United States and Europe) sales have remained flat and the company is struggling to rebrand itself in saturated markets. (Jacob 2009)

Yet, at the same time there are regions that can provide SAB Miller with the ability to realize above average earnings growth. This is accomplished through working on building off of the strong reputation for the brand name in these areas. The problem is that some regions are being impacted by health conditions such as: HIV / AIDS. At the same time, there are select brands that are performing well. (Jacob 2009)

The combination of these factors is showing how the external environment has splintered the performance of SAB Miller. This is from uneven levels of execution in their various brands. The capabilities / competencies of the firm include: a large number of popular beers (which are realizing strong sales), the ability to use its organizational structure to increase market share and they have a foot print in nearly every region of the world. As a result, stakeholders are expecting the firm to be able to maximize its profit margins in these areas. The problem is with the company unable to achieve these objectives. This is troubling, as stakeholders are demanding that they increase the underlying profit margins to reflect the size of the organization. (Jacob 2009)

Use an appropriate model (Ansoff Matrix) to suggest a range of possible strategic options open to SAB.

The Ansoff Matrix is focused on a number of criteria in understanding the challenges impacting a firm and how to address them. The most notable include: market penetration, market development, product development and diversification. In the case of market penetration, the company needs to focus on introducing its premium brands inside the U.S. This is because the company has recognition for some of the lesser known beers (i.e. Miller and MGD). If the firm was able to market their premium brands in this area, they could be able to increase dominance and build off the foundation that was established by other brands. (Jacob 2009)

Under market development, there are specific areas that the company is concentrating on to expand their reach inside different regions. The most notable include:

Aggressively growing in developing markets.

Establishing distribution channels in Africa.

The're launch of the Miller brand in the U.S.

Repacking Peroni Nastro Azzurro with a global marketing focus.

The implementation of production facilities in China and Vietnam. (Jacob 2009)

These factors are showing how the company is focusing on trying to rebrand itself and expand internationally. (Jacob 2009)

Under product development, the worldwide beer market is rapidly increasing. This is providing the firm with the opportunity to be able to grow in different regions of the world. In the future, this should help the organization to effectively reach out to different stakeholders. (Jacob 2009)

Diversification is when a firm will have various segments and products focused on other areas. This designed to reduce the risks by concentrating on specific market segments. In the case of SAB Miller, they currently own a number of outside ventures away from alcohol production / distribution to include: gambling centers, hotels and a match factory. (Jacob 2009)

These elements are showing how the firm has a number of options most notably: continuing to build their brand image and selling those subsidiaries that have flat sales. Continuing with the current strategy will require the company concentrating on: how to increase its market share worldwide. This will improve profit margins, but it requires large upfront capital investments. (Jacob 2009)

Selling brands that are experiencing flat sales will help the company to leave markets that are oversaturated. This will allow the firm to focus on building their image in regions that will increase their bottom line results dramatically. However, this strategy will take time to develop as these regions could have uneven amounts of growth. These areas are showing how the firm has a number of strategic options available to them. (Jacob 2009)