Case Study Description of The Beer Cases (B): Groupo Modelo
The Beer Cases present a means to explore industry evolution in a rapidly globalizing industry. In 2011, the beer industry had elements of sub-national, national and global competition. Giants, such as AB Inbev, as well as national champions, such as Tiger Breweries and Tsingtao, which were aspiring to become major regional and global players, populated the industry. Further, industry players used alternative models (strategic approaches) to meet their objectives for national, regional and global expansion. By focusing on presentations of the strategies of five major beer companies (AB InBev, Groupo Modelo, Tiger Breweries, Tsingtao and San Miguel), this set of cases helps to illustrate these points. The format used for the cases involves in-class presentations of each case, alongside rigorous questioning from the instructor to not only explore the logic of the analysis and strategy proposed in the presentation for each company, but to also nudge the class toward an understanding of the major trends in the growth of the beer industry and key success factors for companies that operate in the beer industry. The class can be pushed further to connect the implications of one's assumptions about what drives success in beer sales, alongside their understanding of industry growth trends and drivers, to understand models of global competition in this industry, and forecast anticipated outcomes and strategies for the major beer companies considered in this set of presentations. Ultimately, the observations from the beer industry, which is a fairly easy product and industry to understand, can be extrapolated to other industries, to see how closely they fit the development of the beer industry. Further, lessons can also be drawn about how industry pressures influence the four key components of an international expansion strategy: product choice for expansion, market choice for geographic expansion, timing of entry and mode of entry.
Swot Analysis of "The Beer Cases (B): Groupo Modelo" written by Donna Jimenez, Andrew Delios includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Beer Industry facing as an external strategic factors. Some of the topics covered in The Beer Cases (B): Groupo Modelo case study are - Strategic Management Strategies, Joint ventures, Marketing and Strategy & Execution.
Some of the macro environment factors that can be used to understand the The Beer Cases (B): Groupo Modelo casestudy better are - – wage bills are increasing, challanges to central banks by blockchain based private currencies, cloud computing is disrupting traditional business models, competitive advantages are harder to sustain because of technology dispersion, customer relationship management is fast transforming because of increasing concerns over data privacy, central banks are concerned over increasing inflation, there is increasing trade war between United States & China,
increasing transportation and logistics costs, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of The Beer Cases (B): Groupo Modelo
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in The Beer Cases (B): Groupo Modelo case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Beer Industry, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Beer Industry 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 The Beer Cases (B): Groupo Modelo can be done for the following purposes –
1. Strategic planning using facts provided in The Beer Cases (B): Groupo Modelo case study
2. Improving business portfolio management of Beer Industry
3. Assessing feasibility of the new initiative in Strategy & Execution field.
4. Making a Strategy & Execution topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Beer Industry
Strengths The Beer Cases (B): Groupo Modelo | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Beer Industry in The Beer Cases (B): Groupo Modelo Harvard Business Review case study are -
Strong track record of project management
– Beer Industry is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Digital Transformation in Strategy & Execution segment
- digital transformation varies from industry to industry. For Beer Industry digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Beer Industry 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.
Training and development
– Beer Industry has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in The Beer Cases (B): Groupo Modelo Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Cross disciplinary teams
– Horizontal connected teams at the Beer Industry are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Beer Industry 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 The Beer Cases (B): Groupo Modelo HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
High brand equity
– Beer Industry has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Beer Industry to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Beer Industry in the sector have low bargaining power. The Beer Cases (B): Groupo Modelo has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Beer Industry to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Beer Industry is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Donna Jimenez, Andrew Delios can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Organizational Resilience of Beer Industry
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Beer Industry does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Operational resilience
– The operational resilience strategy in the The Beer Cases (B): Groupo Modelo Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Innovation driven organization
– Beer Industry is one of the most innovative firm in sector. Manager in The Beer Cases (B): Groupo Modelo Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Sustainable margins compare to other players in Strategy & Execution industry
– The Beer Cases (B): Groupo Modelo firm has clearly differentiated products in the market place. This has enabled Beer Industry to fetch slight price premium compare to the competitors in the Strategy & Execution industry. The sustainable margins have also helped Beer Industry to invest into research and development (R&D) and innovation.
Weaknesses The Beer Cases (B): Groupo Modelo | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of The Beer Cases (B): Groupo Modelo are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the The Beer Cases (B): Groupo Modelo 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 Beer Industry has relatively successful track record of launching new products.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study The Beer Cases (B): Groupo Modelo, is just above the industry average. Beer Industry 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.
Interest costs
– Compare to the competition, Beer Industry has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring
– The stress on hiring functional specialists at Beer Industry 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.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study The Beer Cases (B): Groupo Modelo, in the dynamic environment Beer Industry has struggled to respond to the nimble upstart competition. Beer Industry has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Beer Industry is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study The Beer Cases (B): Groupo Modelo can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Lack of clear differentiation of Beer Industry products
– To increase the profitability and margins on the products, Beer Industry needs to provide more differentiated products than what it is currently offering in the marketplace.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study The Beer Cases (B): Groupo Modelo, it seems that the employees of Beer Industry 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.
Workers concerns about automation
– As automation is fast increasing in the segment, Beer Industry needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, firm in the HBR case study The Beer Cases (B): Groupo Modelo has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Beer Industry 's lucrative customers.
High cash cycle compare to competitors
Beer Industry 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 The Beer Cases (B): Groupo Modelo | 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 The Beer Cases (B): Groupo Modelo are -
Building a culture of innovation
– managers at Beer Industry can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Strategy & Execution segment.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Beer Industry can use these opportunities to build new business models that can help the communities that Beer Industry operates in. Secondly it can use opportunities from government spending in Strategy & Execution sector.
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. Beer Industry can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Beer Industry can develop new processes and procedures in Strategy & Execution industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Beer Industry is facing challenges because of the dominance of functional experts in the organization. The Beer Cases (B): Groupo Modelo 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Beer Industry can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Buying journey improvements
– Beer Industry can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. The Beer Cases (B): Groupo Modelo suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Strategy & Execution industry, but it has also influenced the consumer preferences. Beer Industry can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
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 Beer Industry 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
– Beer Industry 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.
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 Beer Industry in the consumer business. Now Beer Industry can target international markets with far fewer capital restrictions requirements than the existing system.
Learning at scale
– Online learning technologies has now opened space for Beer Industry to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Beer Industry can use the latest technology developments to improve its manufacturing and designing process in Strategy & Execution 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.
Threats The Beer Cases (B): Groupo Modelo External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study The Beer Cases (B): Groupo Modelo 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. Beer Industry needs to understand the core reasons impacting the Strategy & Execution industry. This will help it in building a better workplace.
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 The Beer Cases (B): Groupo Modelo, Beer Industry may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Strategy & Execution .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Beer Industry 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 The Beer Cases (B): Groupo Modelo .
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.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Beer Industry.
Shortening product life cycle
– it is one of the major threat that Beer Industry is facing in Strategy & Execution sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Beer Industry
– 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 Beer Industry.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Beer Industry in the Strategy & Execution industry. The Strategy & Execution industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Technology acceleration in Forth Industrial Revolution
– Beer Industry has witnessed rapid integration of technology during Covid-19 in the Strategy & Execution industry. As one of the leading players in the industry, Beer Industry needs to keep up with the evolution of technology in the Strategy & Execution sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Consumer confidence and its impact on Beer Industry demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Beer Industry will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Easy access to finance
– Easy access to finance in Strategy & Execution field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Beer Industry can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Weighted SWOT Analysis of The Beer Cases (B): Groupo Modelo 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 The Beer Cases (B): Groupo Modelo 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 The Beer Cases (B): Groupo Modelo 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 The Beer Cases (B): Groupo Modelo 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 The Beer Cases (B): Groupo Modelo 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 Beer Industry needs to make to build a sustainable competitive advantage.
