Case Write Up
Prepared by: Claire Liao
Case: Heineken, Marketing Management Course
Heineken is one of the world’s leading brands over 130 years. It is the number 2 imported beer in the U.S and it is number 1 in Europe. Its’s global network of distributors and 115 breweries in more than 65 countries. Premier brands are Heineken are Amstel Light. Heineken aims for sustainable growth as a broad market leader and segment leadership while expanding and optimizing product portfolio. It embraced innovation as a key component of their strategy in the areas of production, marketing, communication and packaging. Heineken’s goal is to grow the business in a sustainable and ...view middle of the document...
We can see the market for premium beer will expand 84% by 2012.
Overall business strategy of the industry is to 1) grow externally to strengthen the position of the company in developed markets as well as maximizing potential for profit in high-growth markets. 2) Basically do whatever is necessary to get your company represented around the world. 3) Heineken was the pioneer of this strategy, becoming the first brewer to cut deals to distribute worldwide.
Value Chain Analysis (Secondary Activities)
1) General Administration: Heineken was the leading premium brand of beer for decades. I was the bestselling imported beer in the U.S until Corona took over. Therefore at the same time Heineken pushed on other brands that would reduce its reliance on its core brand. Introducing Amstel Light, which has become the leading imported light beer in the U.S.
2) Human Resource Management: Heineken created management positions that be responsible for five different operating taking a boosted the level of energy within the firm.
3) Technology development: Heineken uses their technology to keep detailed documents of shipping, in their warehouse to make veer more efficiently and for shipping purposes.
Porter’s 5 forces of competition
1) Thread of new entry: $250 million needed to build 4 million barrel brewery; entry is risky since not many alternative uses for breweries; no new entrant in beer industry has cracked the top 3 sellers since WWII.
2) Threats of substitutes: very little technical composition of beers; growing appreciation for wine.
3) Bargaining power of suppliers: fewer brewers and larger plats; 170 horizontal mergers between 1950-1983; rising cost of key commodities like grain, glass and aluminum; many buying supplier of inputs.
4) Bargaining power of buyers: no loyalty to any particular brand, demand “beer” is inelastic (E=-0.7); Demand of “Budweiser” is elastic (E=-5);
5) Rivalry between established competitors: 1947 there are top 5 firms which takes 19% of market in the U.S; 2001 top 5 generates 87% of the market in the U.S; highly competitive industry, many brewers leave the industry and losing money;...