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strategy case for cambridge group 2005
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2. Content
3. I. Industry Analysis
4. 1. Competitive Domestic Market Losing domestic beer market share from domestics and imports 5. Maturing Domestic Beer Industry Introduction Emergence Maturity Decline Demand (units/year) Time 6. 2. Xxxxx Industry overview
7. 3 . Environmental Analysis:
POLITICAL ECONOMICAL SOCIAL TECHNOLOGICAL ENVIRONMENTAL LEGAL 8. 4. Segmentation of the industry 9. 5. Competive Forces
S ubstitutes E ntry 10. Competive Forces (contd)
Buyer Power Supplier Power 11. Competitive Forces (contd) Rivalry
12. 6. Key Success FactorsKey Factor of Success What do customers want?How does the firm survive competition?
13.
Key Success Factors(contd) 14. 7. Strategic Groups (contd)National Wide Product Range Geographical Scope Regional Narrow xxxxEntreprises xxxxx Xxxx Group xxx xxxx Group 15.
Strategic Groups(contd) 16.
Strategic Groups(contd) 17. II. Strategy Formulation
18. The industry life cycle Introduction Emergence Maturity Decline Demand (units/year) Time 19. Evolution of the life cycle over the life cycleEnd of Growth / Beginning of Maturity Demand - Mass market - Increasing demand Technology - Improvement of product composition Products - Commoditization - New products Manufacturing - Harbin achieved 90% capacity utilization - Consolidation Trade - Increasing demand imported brewing barley Competition - Bloody competition - Profits fall Key Factors of Success - Brand local presence - Price & Cost Management - Foreign Direct Investment 20. The market 20012002200320042005 21. A fragmented market 20012002200320042005 22. Drawing scenarios Buyer power
Threat ofnew entry
Looking for market leadership 23. Drawing scenarios(contd) Threat of substitution
Threat ofnew entry
Supplier power Become a leader in a niche market 24. Drawing scenarios(contd) Threat of substitution
Supplier power Adaptation / Reconversion Buyer power
25. Optimal scenarioRewardProfile Risk Profile H H L Scenario 1 * Scenario 2 * Scenario 3 * Poor Optimal 26. III. Phase I Strategy
27. 1.Scope & strategic objectives National Wide Product Range Geographical Scope Regional Narrow xxxxxxxxxxxxxEntreprises Xxxxxxc xxxxxxxxxx Xxxxxxxxxxxx Group Xxxxxx xxx xxxxxxxGroup 28. Scope & strategic objectives (contd)
Looking for market leadership Reminder 29. Scope & strategic objectives (contd)
30. 2. Unique resources
31. Unique capabilities
32. 3. Sources of competitive advantage
33. 4. Functional strategies
34. Cost Strategy for the Economic Segment Not high quality of bottles and packaging Defect free products.No wide variety.Produce cheaper than competitors.Use of xxxxdistributionnetwork Marketing on know-how, no creation effort, keep the same sales service as the standard segment No Service 35. Using the Value Chain to Identify Differentiation Potential on the Supply Side High quality of components & materials Defect free products.High quality of the beer Use the distributionNetwork ofxxxxxxx Effort on advertising.Building brand reputation on quality.Sales department management.Invest in marketing department Customer technology support.Enhance cultural advantage 36. 5. Development Mode for the Economic Segment
37. Development Mode for the Premium Segment
38. 6. Internal strategic factor analysis summary (IFAS) 3.45 1 Total Weighted Score 0.05 1 0.05 Lack of social responsibilities 0.05 1 0.05 Dependent on regulatory and legislation changes 0.05 1 0.05 Vulnerable to currenct exchange rate fluctuations 0.45 3 0.15 Weaknesses Multiple ownership changes since 2001 - Target 0.8 4 0.2 Gets raw materials from internall sources 0.6 4 0.15 Packaging operations allows cost advantage 1 4 0.25 Vast resuources to take risks 0.45 3 0.15 Strengths Industry leader with dominant market share Weighted Rating Weight Internal Strategic Factors 39. 6. External factor analysis summary (EFAS) 2.8 1 Total Weighted Score 0.025 1 0.025 Shortage of malt 0.075 1 0.075 Foreign investors have to follow some restrictions 0.3 2 0.1 No loyalty to any brand 1 4 0.25 Loss of Competitors Threats 0.3 2 0.15 Rapidly growing population 0.05 1 0.05 No loyalty to any brand 0.45 3 0.15 Gain of market share of foreign brands 0.6 3 0.2 Premium Market Growing Opportunities Weighted Score Rating Weight External Strategic Factors 40. 6. SWOT Matrix * To adjust policies and procedures regarding derivatives and hedging in the event of potentially negative foreign currency exchange * To continue dominating market share thanks to competitiveadvantages and extensive advertising WT Strategies ST Strategies Threats * To reinvest in core business to improve the performance of AB * To adjust prices to offset taxes * To develop our product on 2segments: premium + economy * To increase equity investment on China market WO Strategies SO Strategies Opportunities EFAS Weaknesses Strengths IFAS 41. 7. Risk factors 1 3 2 Total Risks The company has to make moreefforts to understand Chinesecustomers and encourage them tofind habit in xxxxxxxx beers X * No brand attachment for the customer Customer Relationship Risks X * Increase in beer excise taxes or other taxes will impact demand andfinancial return The company's top managers have tocare about the authorities to avoid high taxes and restrictions X * Influences of authorities Tax Risks The company has to be sensitive to the local people and outsiders.They willco-cummunicate X * Obligation to make alliances to work with local people: it could create conflicts or misunderstanding Development Risks X * Increased competitive pressures may reduce revenues andincrease costs The company's staff has to make moreefforts to maintain sustainability of the activity X X *Many Competitors Market Risks Strategic Objectives L M H Risk Factors 42. 8. Phase I xxxxxx Recommendation