Case Study Description of Beam Suntory: Striving for Optimal Post-Acquisition Integration
In response to its shrinking domestic market, Japanese liquor company Suntory Holdings Limited acquired American liquor conglomerate Beam Inc. in 2014 to expand into the promising U.S. market. Although the acquisition price was high, executives of both companies were confident in the deal. However, as the new combined entity, Beam Suntory Inc., began the integration process, it encountered significant friction, particularly from its separate corporate cultures. By 2016, the new entity had not integrated to a satisfactory level. The high acquisition price had left the parent company with monumental debt, while the consolidated operations struggled to establish trust and efficiency. Had Suntory Holdings Limited made a wise decision in acquiring Beam Inc.? How should it cope with the monumental debt? How should the combined entity resolve conflicts and integrate to realize potential synergies? Wiboon Kittilaksanawong is affiliated with Saitama University. Kendall Marin Wyckoff is affiliated with Nagoya University of Commerce & Business.
Swot Analysis of "Beam Suntory: Striving for Optimal Post-Acquisition Integration" written by Wiboon Kittilaksanawong, Kendall Marin Wyckoff includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Suntory Beam facing as an external strategic factors. Some of the topics covered in Beam Suntory: Striving for Optimal Post-Acquisition Integration case study are - Strategic Management Strategies, Manufacturing, Mergers & acquisitions, Reorganization and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Beam Suntory: Striving for Optimal Post-Acquisition Integration casestudy better are - – banking and financial system is disrupted by Bitcoin and other crypto currencies, there is increasing trade war between United States & China, challanges to central banks by blockchain based private currencies, increasing government debt because of Covid-19 spendings, central banks are concerned over increasing inflation, talent flight as more people leaving formal jobs, digital marketing is dominated by two big players Facebook and Google,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing commodity prices, etc
Introduction to SWOT Analysis of Beam Suntory: Striving for Optimal Post-Acquisition Integration
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Beam Suntory: Striving for Optimal Post-Acquisition Integration case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Suntory Beam, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Suntory Beam 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration can be done for the following purposes –
1. Strategic planning using facts provided in Beam Suntory: Striving for Optimal Post-Acquisition Integration case study
2. Improving business portfolio management of Suntory Beam
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Suntory Beam
Strengths Beam Suntory: Striving for Optimal Post-Acquisition Integration | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Suntory Beam in Beam Suntory: Striving for Optimal Post-Acquisition Integration Harvard Business Review case study are -
Operational resilience
– The operational resilience strategy in the Beam Suntory: Striving for Optimal Post-Acquisition Integration 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.
Low bargaining power of suppliers
– Suppliers of Suntory Beam in the sector have low bargaining power. Beam Suntory: Striving for Optimal Post-Acquisition Integration has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Suntory Beam to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Leadership & Managing People segment
- digital transformation varies from industry to industry. For Suntory Beam digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Suntory Beam 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.
Cross disciplinary teams
– Horizontal connected teams at the Suntory Beam 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
– Suntory Beam 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 Wiboon Kittilaksanawong, Kendall Marin Wyckoff 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.
Ability to recruit top talent
– Suntory Beam is one of the leading recruiters in the industry. Managers in the Beam Suntory: Striving for Optimal Post-Acquisition Integration are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Training and development
– Suntory Beam has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Beam Suntory: Striving for Optimal Post-Acquisition Integration 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.
Superior customer experience
– The customer experience strategy of Suntory Beam in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Suntory Beam 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.
Innovation driven organization
– Suntory Beam is one of the most innovative firm in sector. Manager in Beam Suntory: Striving for Optimal Post-Acquisition Integration Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
High brand equity
– Suntory Beam has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Suntory Beam to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Leadership & Managing People field
– Suntory Beam 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 Suntory Beam in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses Beam Suntory: Striving for Optimal Post-Acquisition Integration | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Beam Suntory: Striving for Optimal Post-Acquisition Integration are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Suntory Beam is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Beam Suntory: Striving for Optimal Post-Acquisition Integration can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Skills based hiring
– The stress on hiring functional specialists at Suntory Beam 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.
High cash cycle compare to competitors
Suntory Beam 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.
Increasing silos among functional specialists
– The organizational structure of Suntory Beam is dominated by functional specialists. It is not different from other players in the Leadership & Managing People segment. Suntory Beam needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Suntory Beam to focus more on services rather than just following the product oriented approach.
Aligning sales with marketing
– It come across in the case study Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration can leverage the sales team experience to cultivate customer relationships as Suntory Beam is planning to shift buying processes online.
High bargaining power of channel partners
– Because of the regulatory requirements, Wiboon Kittilaksanawong, Kendall Marin Wyckoff suggests that, Suntory Beam is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
High operating costs
– Compare to the competitors, firm in the HBR case study Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Suntory Beam 's lucrative customers.
Capital Spending Reduction
– Even during the low interest decade, Suntory Beam has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Low market penetration in new markets
– Outside its home market of Suntory Beam, firm in the HBR case study Beam Suntory: Striving for Optimal Post-Acquisition Integration needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Suntory Beam supply chain. Even after few cautionary changes mentioned in the HBR case study - Beam Suntory: Striving for Optimal Post-Acquisition Integration, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Suntory Beam vulnerable to further global disruptions in South East Asia.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Suntory Beam has relatively successful track record of launching new products.
Opportunities Beam Suntory: Striving for Optimal Post-Acquisition Integration | 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration are -
Leveraging digital technologies
– Suntory Beam can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Creating value in data economy
– The success of analytics program of Suntory Beam has opened avenues for new revenue streams for the organization in the industry. This can help Suntory Beam to build a more holistic ecosystem as suggested in the Beam Suntory: Striving for Optimal Post-Acquisition Integration case study. Suntory Beam can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Developing new processes and practices
– Suntory Beam can develop new processes and procedures in Leadership & Managing People 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.
Better consumer reach
– The expansion of the 5G network will help Suntory Beam to increase its market reach. Suntory Beam 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Suntory Beam in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Suntory Beam can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Beam Suntory: Striving for Optimal Post-Acquisition Integration, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Suntory Beam 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.
Manufacturing automation
– Suntory Beam can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People 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, Suntory Beam can use these opportunities to build new business models that can help the communities that Suntory Beam operates in. Secondly it can use opportunities from government spending in Leadership & Managing People 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 Suntory Beam 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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Suntory Beam can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Loyalty marketing
– Suntory Beam 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Suntory Beam to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Suntory Beam to hire the very best people irrespective of their geographical location.
Threats Beam Suntory: Striving for Optimal Post-Acquisition Integration External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Beam Suntory: Striving for Optimal Post-Acquisition Integration are -
Shortening product life cycle
– it is one of the major threat that Suntory Beam is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Technology acceleration in Forth Industrial Revolution
– Suntory Beam has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Suntory Beam needs to keep up with the evolution of technology in the Leadership & Managing People 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.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Beam Suntory: Striving for Optimal Post-Acquisition Integration, Suntory Beam may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Leadership & Managing People .
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Suntory Beam 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration .
High dependence on third party suppliers
– Suntory Beam 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.
Stagnating economy with rate increase
– Suntory Beam 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 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. Suntory Beam needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Regulatory challenges
– Suntory Beam 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 Leadership & Managing People industry regulations.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Suntory Beam with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Environmental challenges
– Suntory Beam 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. Suntory Beam can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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 Suntory Beam.
Easy access to finance
– Easy access to finance in Leadership & Managing People field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Suntory Beam can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
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.
Weighted SWOT Analysis of Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration 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 Suntory Beam needs to make to build a sustainable competitive advantage.