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 - – wage bills are increasing, increasing energy prices, banking and financial system is disrupted by Bitcoin and other crypto currencies, competitive advantages are harder to sustain because of technology dispersion, technology disruption, talent flight as more people leaving formal jobs, supply chains are disrupted by pandemic ,
there is increasing trade war between United States & China, there is backlash against globalization, 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 -
Diverse revenue streams
– Suntory Beam is present in almost all the verticals within the industry. This has provided firm in Beam Suntory: Striving for Optimal Post-Acquisition Integration 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.
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.
Sustainable margins compare to other players in Leadership & Managing People industry
– Beam Suntory: Striving for Optimal Post-Acquisition Integration firm has clearly differentiated products in the market place. This has enabled Suntory Beam to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Suntory Beam to invest into research and development (R&D) and innovation.
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.
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.
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.
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.
Learning organization
- Suntory Beam 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 Suntory Beam is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Beam Suntory: Striving for Optimal Post-Acquisition Integration Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Highly skilled collaborators
– Suntory Beam 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 Beam Suntory: Striving for Optimal Post-Acquisition Integration HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
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.
Strong track record of project management
– Suntory Beam is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
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 -
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.
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.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Beam Suntory: Striving for Optimal Post-Acquisition Integration, it seems that the employees of Suntory Beam 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.
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.
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.
Lack of clear differentiation of Suntory Beam products
– To increase the profitability and margins on the products, Suntory Beam needs to provide more differentiated products than what it is currently offering in the marketplace.
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.
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.
Workers concerns about automation
– As automation is fast increasing in the segment, Suntory Beam 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.
Interest costs
– Compare to the competition, Suntory Beam 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.
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.
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.
Buying journey improvements
– Suntory Beam can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Beam Suntory: Striving for Optimal Post-Acquisition Integration 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.
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.
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 Suntory Beam in the consumer business. Now Suntory Beam can target international markets with far fewer capital restrictions requirements than the existing system.
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.
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.
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.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Suntory Beam is facing challenges because of the dominance of functional experts in the organization. Beam Suntory: Striving for Optimal Post-Acquisition Integration 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.
Building a culture of innovation
– managers at Suntory Beam 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 Leadership & Managing People segment.
Learning at scale
– Online learning technologies has now opened space for Suntory Beam 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.
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 -
Consumer confidence and its impact on Suntory Beam 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.
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.
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 .
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.
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.
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 wage structure of Suntory Beam
– 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 Suntory Beam.
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 Suntory Beam.
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. Suntory Beam 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.
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 Suntory Beam in the Leadership & Managing People sector and impact the bottomline of the organization.
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.
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.
