South African Breweries International: Devising a China Market Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of South African Breweries International: Devising a China Market Strategy
South African Breweries (SAB) was the only profitable international brewer in the crowded and hyper-competitive beer market in China. SAB's keen understanding of emerging market environments allowed it to develop a unique strategy for the Chinese market that resulted in large market shares in each of the provinces in which it was present. However, it served only 5% of China's immense population. The managing director was faced with decisions: how to expand to other markets where SAB's approach would be replicated, how SAB could expand its successful business model to new markets, and what would happen when it ran head-to-head with a global giant or a well-positioned local competitor.
Swot Analysis of "South African Breweries International: Devising a China Market Strategy" written by Niraj Dawar, Donna Everatt includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Sab Sab's facing as an external strategic factors. Some of the topics covered in South African Breweries International: Devising a China Market Strategy case study are - Strategic Management Strategies, Competitive strategy, Emerging markets and Sales & Marketing.
Some of the macro environment factors that can be used to understand the South African Breweries International: Devising a China Market Strategy casestudy better are - – there is increasing trade war between United States & China, increasing inequality as vast percentage of new income is going to the top 1%, increasing energy prices, increasing household debt because of falling income levels, geopolitical disruptions, there is backlash against globalization, challanges to central banks by blockchain based private currencies,
increasing government debt because of Covid-19 spendings, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of South African Breweries International: Devising a China Market Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in South African Breweries International: Devising a China Market Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Sab Sab's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Sab Sab's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of South African Breweries International: Devising a China Market Strategy can be done for the following purposes –
1. Strategic planning using facts provided in South African Breweries International: Devising a China Market Strategy case study
2. Improving business portfolio management of Sab Sab's
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Sab Sab's
Strengths South African Breweries International: Devising a China Market Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Sab Sab's in South African Breweries International: Devising a China Market Strategy Harvard Business Review case study are -
Successful track record of launching new products
– Sab Sab's has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Sab Sab's has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Learning organization
- Sab Sab's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Sab Sab's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in South African Breweries International: Devising a China Market Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Sab Sab's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in South African Breweries International: Devising a China Market Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High switching costs
– The high switching costs that Sab Sab's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Effective Research and Development (R&D)
– Sab Sab's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study South African Breweries International: Devising a China Market Strategy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Sustainable margins compare to other players in Sales & Marketing industry
– South African Breweries International: Devising a China Market Strategy firm has clearly differentiated products in the market place. This has enabled Sab Sab's to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Sab Sab's to invest into research and development (R&D) and innovation.
Ability to lead change in Sales & Marketing field
– Sab Sab's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Sab Sab's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Organizational Resilience of Sab Sab's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Sab Sab's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Sab Sab's digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Sab Sab's has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– Sab Sab's is one of the leading recruiters in the industry. Managers in the South African Breweries International: Devising a China Market Strategy are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Low bargaining power of suppliers
– Suppliers of Sab Sab's in the sector have low bargaining power. South African Breweries International: Devising a China Market Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Sab Sab's to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Sab Sab's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Sab Sab's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Weaknesses South African Breweries International: Devising a China Market Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of South African Breweries International: Devising a China Market Strategy are -
Products dominated business model
– Even though Sab Sab's has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - South African Breweries International: Devising a China Market Strategy should strive to include more intangible value offerings along with its core products and services.
Low market penetration in new markets
– Outside its home market of Sab Sab's, firm in the HBR case study South African Breweries International: Devising a China Market Strategy needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow decision making process
– As mentioned earlier in the report, Sab Sab's has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Sab Sab's even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Skills based hiring
– The stress on hiring functional specialists at Sab Sab's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Slow to strategic competitive environment developments
– As South African Breweries International: Devising a China Market Strategy HBR case study mentions - Sab Sab's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Increasing silos among functional specialists
– The organizational structure of Sab Sab's is dominated by functional specialists. It is not different from other players in the Sales & Marketing segment. Sab Sab's needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Sab Sab's to focus more on services rather than just following the product oriented approach.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study South African Breweries International: Devising a China Market Strategy, it seems that the employees of Sab Sab's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study South African Breweries International: Devising a China Market Strategy, is just above the industry average. Sab Sab's needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Sab Sab's is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study South African Breweries International: Devising a China Market Strategy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the South African Breweries International: Devising a China Market Strategy HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Sab Sab's has relatively successful track record of launching new products.
High cash cycle compare to competitors
Sab Sab's has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Opportunities South African Breweries International: Devising a China Market Strategy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study South African Breweries International: Devising a China Market Strategy are -
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Sab Sab's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Sab Sab's is facing challenges because of the dominance of functional experts in the organization. South African Breweries International: Devising a China Market Strategy case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Manufacturing automation
– Sab Sab's can use the latest technology developments to improve its manufacturing and designing process in Sales & Marketing segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Sab Sab's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Using analytics as competitive advantage
– Sab Sab's has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study South African Breweries International: Devising a China Market Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Sab Sab's to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Sab Sab's in the consumer business. Now Sab Sab's can target international markets with far fewer capital restrictions requirements than the existing system.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Sab Sab's can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Better consumer reach
– The expansion of the 5G network will help Sab Sab's to increase its market reach. Sab Sab's will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Creating value in data economy
– The success of analytics program of Sab Sab's has opened avenues for new revenue streams for the organization in the industry. This can help Sab Sab's to build a more holistic ecosystem as suggested in the South African Breweries International: Devising a China Market Strategy case study. Sab Sab's can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Sab Sab's can use these opportunities to build new business models that can help the communities that Sab Sab's operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Sab Sab's to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Loyalty marketing
– Sab Sab's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Sales & Marketing industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Sab Sab's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Sab Sab's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats South African Breweries International: Devising a China Market Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study South African Breweries International: Devising a China Market Strategy are -
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Sab Sab's needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Stagnating economy with rate increase
– Sab Sab's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Sab Sab's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Sab Sab's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study South African Breweries International: Devising a China Market Strategy .
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Sab Sab's with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Sab Sab's in the Sales & Marketing sector and impact the bottomline of the organization.
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Sab Sab's can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Sab Sab's business can come under increasing regulations regarding data privacy, data security, etc.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study South African Breweries International: Devising a China Market Strategy, Sab Sab's may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
High dependence on third party suppliers
– Sab Sab's high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Increasing wage structure of Sab Sab's
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Sab Sab's.
Weighted SWOT Analysis of South African Breweries International: Devising a China Market Strategy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study South African Breweries International: Devising a China Market Strategy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study South African Breweries International: Devising a China Market Strategy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study South African Breweries International: Devising a China Market Strategy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of South African Breweries International: Devising a China Market Strategy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Sab Sab's needs to make to build a sustainable competitive advantage.