ALCOHOLES DE CENTROAMERICA S.A.

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ALCOHOLES DE CENTROAMERICA S.A.

• Analysis for Applied Business Strategy
• June 24, 2001
• Bernadette Lonzanida Mina Vaughn
• Diego Piedra
  Keith Yackeyonny

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ALDECA Alcoholes de Centro America
S.A.
Grupo Coban
LICORERA DE BOACO
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Liquor Industry

• Product Aguardiente
• Companies
• Honduras-8, Nicaragua-1,Guatemala-1
• Sales/ProfitsDeclining-due to market shift
• Operations Continent-wide CentralAmerica
• Stage of product life Mature

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Five Forces Model

• Intensity of Rivalry High
• Suppliers High
• Buyers High
• New entrants Low to Moderate
• Substitutes Low

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Five Forces Attractiveness

• The AGUARDIANTE market in Centro America is
  attractive
• Well established firms
• Firms with supply of raw materials
• Firms with continent-wide reach

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Opportunities

• High population growth
• Improve market with smaller bottles
• Unrelated diversification

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Threats

• Grupo Cobans expansion to Honduras
• Shortage of supply of molasses
• Political instability

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Organization

• Honduras biggest Aguardiente company
• Founded in 1967 by Emin Barjum
• Products Aguardiente, vodka and wine, cosmetics
• Employs 90 people
• Mission To produce quality and affordable liquor

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Company Strategies

• Past Multi-brand
• Corporate Diversified to cosmetics
• Generic
• Low-cost leadership
• Focus strategy
• Alternative
• Prospect Merger
• Defend Maintain, increase market share

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Sales Profits (in millions of Dollars)
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Finances 1990 to 1994 (RATIOS)
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Finances 1990 to 1994 (RATIOS)
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Company Strengths

• Superior process technology
• Adequate labor supply
• Diversified cosmetics line

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Company Weaknesses

• Limited distribution channels
• Marketing difficulties
• Inadequate molasses supply

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Recommendation No.1

• Prospect - Vertical integration of manufacturing
  plastic containers instead of using glass bottles
• Justification Lower cost, speed up manufacturing
  process, available in different sizes
• Implementation Purchase of new machinery, train
  labor force

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Recommendation No.2

• Defend Better market initiatives
• Justification Population growth, continent- wide
  expansion
• Implementation Target younger people, aggressive
  and effective advertising

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Recommendation No.3

• Prospect Defend Merger with Licorera de Boaco
• Justification Control over raw materials,
  increase in production and market, cost
  reduction, ward off competitors, chance of
  diversification
• Implementation draft merger and consolidation
  agreements, sign contract

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Summary

• ALDECA needs to join forces with Licorera de
  Boaco to
• Guarantee market survival
• To compete with Grupo Coban
• To improve process technology

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ALDECA Alcoholes de Centro America
S.A.
Grupo Coban
LICORERA DE BOACO