AB InBev: Brewing an Innovation Strategy SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Innovation & Entrepreneurship
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of AB InBev: Brewing an Innovation Strategy
AB InBev, the world's largest beer company, faced serious challenges in 2017. First, large food and beverage companies were under-pressure due to shifting consumer preferences towards healthier products and increasing price pressure from retailers. The beer category, in particular, showed signs of stagnation in developed markets, such as the United States and Europe. Moreover, several major trends - e.g. localization of consumption and rise of craft beers- were quickly transforming the industry. Finally, technological innovations, such as e-commerce platforms and deep data-analysis enabled new players and emptied the effects of mass-marketing. The strategy designed by the owner of legendary brands like Budweiser, Stella Artois and Michelob Ultra, was multifaceted. On the one hand, the importance of renovating the core business was undeniable, especially via improvements to the portfolio and modernization of sales capabilities. On the other hand, the company needed to catch up on the new trends and become a disruptor itself; craft beers, e-commerce, home-brewing, and innovative business models were some of those. All while preserving its powerful internal culture and keeping its shareholders satisfied.
Swot Analysis of "AB InBev: Brewing an Innovation Strategy" written by Robert Siegel, Amadeus Orleans includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Inbev Beers facing as an external strategic factors. Some of the topics covered in AB InBev: Brewing an Innovation Strategy case study are - Strategic Management Strategies, and Innovation & Entrepreneurship.
Some of the macro environment factors that can be used to understand the AB InBev: Brewing an Innovation Strategy casestudy better are - – there is backlash against globalization, challanges to central banks by blockchain based private currencies, talent flight as more people leaving formal jobs, wage bills are increasing, central banks are concerned over increasing inflation, supply chains are disrupted by pandemic , technology disruption,
increasing energy prices, increasing commodity prices, etc
Introduction to SWOT Analysis of AB InBev: Brewing an Innovation Strategy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in AB InBev: Brewing an Innovation Strategy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Inbev Beers, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Inbev Beers 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 AB InBev: Brewing an Innovation Strategy can be done for the following purposes –
1. Strategic planning using facts provided in AB InBev: Brewing an Innovation Strategy case study
2. Improving business portfolio management of Inbev Beers
3. Assessing feasibility of the new initiative in Innovation & Entrepreneurship field.
4. Making a Innovation & Entrepreneurship topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Inbev Beers
Strengths AB InBev: Brewing an Innovation Strategy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Inbev Beers in AB InBev: Brewing an Innovation Strategy Harvard Business Review case study are -
Diverse revenue streams
– Inbev Beers is present in almost all the verticals within the industry. This has provided firm in AB InBev: Brewing an Innovation Strategy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Innovation driven organization
– Inbev Beers is one of the most innovative firm in sector. Manager in AB InBev: Brewing an Innovation Strategy Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Cross disciplinary teams
– Horizontal connected teams at the Inbev Beers 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.
Analytics focus
– Inbev Beers 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 Robert Siegel, Amadeus Orleans 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.
Low bargaining power of suppliers
– Suppliers of Inbev Beers in the sector have low bargaining power. AB InBev: Brewing an Innovation Strategy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Inbev Beers to manage not only supply disruptions but also source products at highly competitive prices.
High brand equity
– Inbev Beers has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Inbev Beers to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Digital Transformation in Innovation & Entrepreneurship segment
- digital transformation varies from industry to industry. For Inbev Beers digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Inbev Beers 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.
Operational resilience
– The operational resilience strategy in the AB InBev: Brewing an Innovation Strategy 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.
Sustainable margins compare to other players in Innovation & Entrepreneurship industry
– AB InBev: Brewing an Innovation Strategy firm has clearly differentiated products in the market place. This has enabled Inbev Beers to fetch slight price premium compare to the competitors in the Innovation & Entrepreneurship industry. The sustainable margins have also helped Inbev Beers to invest into research and development (R&D) and innovation.
Organizational Resilience of Inbev Beers
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Inbev Beers does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Highly skilled collaborators
– Inbev Beers 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 AB InBev: Brewing an Innovation Strategy HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Inbev Beers 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 Inbev Beers is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in AB InBev: Brewing an Innovation Strategy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Weaknesses AB InBev: Brewing an Innovation Strategy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of AB InBev: Brewing an Innovation Strategy are -
High dependence on star products
– The top 2 products and services of the firm as mentioned in the AB InBev: Brewing an Innovation 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 Inbev Beers has relatively successful track record of launching new products.
Slow decision making process
– As mentioned earlier in the report, Inbev Beers 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. Inbev Beers 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.
Aligning sales with marketing
– It come across in the case study AB InBev: Brewing an Innovation Strategy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case AB InBev: Brewing an Innovation Strategy can leverage the sales team experience to cultivate customer relationships as Inbev Beers is planning to shift buying processes online.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study AB InBev: Brewing an Innovation Strategy, in the dynamic environment Inbev Beers has struggled to respond to the nimble upstart competition. Inbev Beers has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Slow to strategic competitive environment developments
– As AB InBev: Brewing an Innovation Strategy HBR case study mentions - Inbev Beers 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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study AB InBev: Brewing an Innovation Strategy, it seems that the employees of Inbev Beers 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.
Need for greater diversity
– Inbev Beers has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High operating costs
– Compare to the competitors, firm in the HBR case study AB InBev: Brewing an Innovation Strategy 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 Inbev Beers 's lucrative customers.
Skills based hiring
– The stress on hiring functional specialists at Inbev Beers 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.
Products dominated business model
– Even though Inbev Beers 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 - AB InBev: Brewing an Innovation Strategy should strive to include more intangible value offerings along with its core products and services.
Increasing silos among functional specialists
– The organizational structure of Inbev Beers is dominated by functional specialists. It is not different from other players in the Innovation & Entrepreneurship segment. Inbev Beers needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Inbev Beers to focus more on services rather than just following the product oriented approach.
Opportunities AB InBev: Brewing an Innovation 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 AB InBev: Brewing an Innovation Strategy are -
Low interest rates
– Even though inflation is raising its head in most developed economies, Inbev Beers can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Using analytics as competitive advantage
– Inbev Beers 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 AB InBev: Brewing an Innovation Strategy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Inbev Beers 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 Inbev Beers in the consumer business. Now Inbev Beers can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Inbev Beers can develop new processes and procedures in Innovation & Entrepreneurship 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.
Loyalty marketing
– Inbev Beers 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.
Better consumer reach
– The expansion of the 5G network will help Inbev Beers to increase its market reach. Inbev Beers 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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Inbev Beers is facing challenges because of the dominance of functional experts in the organization. AB InBev: Brewing an Innovation 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.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Innovation & Entrepreneurship industry, but it has also influenced the consumer preferences. Inbev Beers can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Learning at scale
– Online learning technologies has now opened space for Inbev Beers 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
– Inbev Beers can use the latest technology developments to improve its manufacturing and designing process in Innovation & Entrepreneurship 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.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Inbev Beers can use these opportunities to build new business models that can help the communities that Inbev Beers operates in. Secondly it can use opportunities from government spending in Innovation & Entrepreneurship sector.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Innovation & Entrepreneurship industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Inbev Beers 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. Inbev Beers 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.
Building a culture of innovation
– managers at Inbev Beers 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 Innovation & Entrepreneurship segment.
Threats AB InBev: Brewing an Innovation Strategy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study AB InBev: Brewing an Innovation Strategy are -
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.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Inbev Beers with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
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. Inbev Beers 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.
Stagnating economy with rate increase
– Inbev Beers 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.
High dependence on third party suppliers
– Inbev Beers 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.
Environmental challenges
– Inbev Beers needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Inbev Beers can take advantage of this fund but it will also bring new competitors in the Innovation & Entrepreneurship industry.
Shortening product life cycle
– it is one of the major threat that Inbev Beers is facing in Innovation & Entrepreneurship sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Increasing wage structure of Inbev Beers
– 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 Inbev Beers.
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 Inbev Beers business can come under increasing regulations regarding data privacy, data security, etc.
Consumer confidence and its impact on Inbev Beers 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.
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 Inbev Beers in the Innovation & Entrepreneurship sector and impact the bottomline of the organization.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Inbev Beers in the Innovation & Entrepreneurship industry. The Innovation & Entrepreneurship 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study AB InBev: Brewing an Innovation Strategy, Inbev Beers may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Innovation & Entrepreneurship .
Weighted SWOT Analysis of AB InBev: Brewing an Innovation 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 AB InBev: Brewing an Innovation 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 AB InBev: Brewing an Innovation 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 AB InBev: Brewing an Innovation 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 AB InBev: Brewing an Innovation 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 Inbev Beers needs to make to build a sustainable competitive advantage.