AnheuserBusch in China

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Anheuser-Busch in China
Case 4 Anheuser-Busch and Harbin Brewery Group
of ChinaGroup 2 Andrea Jones, Corey Gunn,
Jasmine Hardiman, and Amy Wilson
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Company Overview
Malt beverages
Amusement Parks
Aluminum packaging products
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General Environment

• High level of government involvement
  (political/legal)
• Chinese consumers preference for Chinese
  domestic brands and taste preferences (based on
  sociocultural and demographic factors)
• Price is primary driver in purchasing decisions
  for the majority of Chinese market (economic)
• China is a critical global market for beer
  brewers and offers many opportunities for a
  company to extend its reach and potential
  (global)
• New product innovations will be needed as
  consumer preference change (technological)

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5 Forces Model
Threat of new entrants MODERATE Bargaining
power of suppliers HIGH Bargaining power of
buyers MODERATE Threat of substitute products
INCREASING Rivalry among competing firm
HIGH
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Competitive Environment in China

• Powerful regional breweries
• Beijing Yanjing Beer
• Tsingtao
• China Resources Enterprises (CRE)
• Other multinational companies operating in China

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RESOURCES

• Minority interest in Tsingtao
• Physical resources
• Ex brewery plants and equipment
• Brewery formulas and brand name
• Capacity to innovate
• Access to raw materials

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CAPABILITIES

• Ability to enhance customer satisfaction and
  minimize cost structure because of a strong
  network of breweries.
• Strong product development skills

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COMPETITIVE ADVANTAGES

• Distribution network
• Strong brand names
• Ability to launch innovative products quickly

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SWOT Analysis
Strengths
Weaknesses

• Leading position in the beer market
• Extensive network of breweries
• Strong brands
• Expertise in product development

• Declining operating performance
• Falling beer volume sales

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SWOT Analysis
Opportunities
Threats

• Growing demand for beer in Mexico and China
• Expanding Russian beer market
• Growth in energy drinks

• Changing consumer preferences in the U.S.
• Rising raw material prices
• Industry consolidation

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MAIN PROBLEM
Overcoming the challenge of cultural differences
and political restraints in order to establish
and maintain a dominating presence in the Chinese
beer industry
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3 POTENTIAL STRATEGIC SOLUTIONS

• Build larger breweries in China
• Acquire Harbin Brewery
• Acquire a higher percentage interest in Tsingtao

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RECOMMENDED SOLUTION
FOR SHORT TERM IMPLEMENTATION
Acquire a greater percentage of interest in
Tsingtao, Chinas most widely recognized beer
brand
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IMPLEMENTATION PLAN

• Observe how Tsingtao operates in the Chinese
  market
• Take advantage of the political connections
  Tsingtao possesses
• Learn about the companys marketing practices
  with the Chinese consumers
• Establish an association between Anheuser-Busch
  and Tsingtao in the minds of consumers

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QUESTIONS??