Case Study Description of Carlsberg in Emerging Markets
Risking becoming the target of a hostile takeover or alternatively, being cornered as a small regional player in the global beer industry, the Danish brewery Carlsberg decided in the early 2000s to expand into the rapidly growing emerging market to pursue new arenas of growth. By 2008, this strategy had paid off, and Carlsberg was positioned amongst the five largest breweries in the world. In the Russian market - one of the fastest growing markets in the world - Carlsberg had become the market leader. In China - the world's largest beer market in terms of size and population - the company had achieved a 55 per cent market share in Western China, and operated 20 brewery plants with approximately 5,000 employees. The ambitious acquisition strategy applied in emerging markets had become essential to Carlsberg's business in relation to future growth and profit. Accordingly, the case focuses on Carlsberg's entry into China, which started as a commercial failure in the eastern part of the country, but subsequently developed successfully in the west.
Authors :: Michael W. Hansen, Torben Pedersen, Marcus Moller Larsen
Swot Analysis of "Carlsberg in Emerging Markets" written by Michael W. Hansen, Torben Pedersen, Marcus Moller Larsen includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Carlsberg Carlsberg's facing as an external strategic factors. Some of the topics covered in Carlsberg in Emerging Markets case study are - Strategic Management Strategies, Manufacturing, Marketing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Carlsberg in Emerging Markets casestudy better are - – challanges to central banks by blockchain based private currencies, increasing commodity prices, geopolitical disruptions, central banks are concerned over increasing inflation, increasing household debt because of falling income levels, cloud computing is disrupting traditional business models, customer relationship management is fast transforming because of increasing concerns over data privacy,
competitive advantages are harder to sustain because of technology dispersion, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Carlsberg in Emerging Markets
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Carlsberg in Emerging Markets case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Carlsberg Carlsberg's, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Carlsberg Carlsberg's operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Carlsberg in Emerging Markets can be done for the following purposes –
1. Strategic planning using facts provided in Carlsberg in Emerging Markets case study
2. Improving business portfolio management of Carlsberg Carlsberg's
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 Carlsberg Carlsberg's
Strengths Carlsberg in Emerging Markets | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Carlsberg Carlsberg's in Carlsberg in Emerging Markets Harvard Business Review case study are -
Highly skilled collaborators
– Carlsberg Carlsberg's has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Carlsberg in Emerging Markets HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Carlsberg Carlsberg's is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Carlsberg Carlsberg's is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Carlsberg in Emerging Markets Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Sustainable margins compare to other players in Leadership & Managing People industry
– Carlsberg in Emerging Markets firm has clearly differentiated products in the market place. This has enabled Carlsberg Carlsberg's to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Carlsberg Carlsberg's to invest into research and development (R&D) and innovation.
High switching costs
– The high switching costs that Carlsberg Carlsberg's has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Strong track record of project management
– Carlsberg Carlsberg's is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Low bargaining power of suppliers
– Suppliers of Carlsberg Carlsberg's in the sector have low bargaining power. Carlsberg in Emerging Markets has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Carlsberg Carlsberg's to manage not only supply disruptions but also source products at highly competitive prices.
Organizational Resilience of Carlsberg Carlsberg's
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Carlsberg Carlsberg's does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Innovation driven organization
– Carlsberg Carlsberg's is one of the most innovative firm in sector. Manager in Carlsberg in Emerging Markets Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to lead change in Leadership & Managing People field
– Carlsberg Carlsberg's is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Carlsberg Carlsberg's in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Effective Research and Development (R&D)
– Carlsberg Carlsberg's has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Carlsberg in Emerging Markets - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Carlsberg Carlsberg's has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Carlsberg Carlsberg's to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Analytics focus
– Carlsberg Carlsberg's 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 Michael W. Hansen, Torben Pedersen, Marcus Moller Larsen 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.
Weaknesses Carlsberg in Emerging Markets | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Carlsberg in Emerging Markets are -
Interest costs
– Compare to the competition, Carlsberg Carlsberg's 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 Carlsberg Carlsberg's has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Carlsberg in Emerging Markets, in the dynamic environment Carlsberg Carlsberg's has struggled to respond to the nimble upstart competition. Carlsberg Carlsberg's has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
High operating costs
– Compare to the competitors, firm in the HBR case study Carlsberg in Emerging Markets 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 Carlsberg Carlsberg's 's lucrative customers.
High bargaining power of channel partners
– Because of the regulatory requirements, Michael W. Hansen, Torben Pedersen, Marcus Moller Larsen suggests that, Carlsberg Carlsberg's 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.
No frontier risks strategy
– After analyzing the HBR case study Carlsberg in Emerging Markets, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Carlsberg in Emerging Markets, it seems that the employees of Carlsberg Carlsberg's don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Need for greater diversity
– Carlsberg Carlsberg's 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.
Low market penetration in new markets
– Outside its home market of Carlsberg Carlsberg's, firm in the HBR case study Carlsberg in Emerging Markets needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Slow to strategic competitive environment developments
– As Carlsberg in Emerging Markets HBR case study mentions - Carlsberg Carlsberg's takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the segment, Carlsberg Carlsberg's 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.
Opportunities Carlsberg in Emerging Markets | 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 Carlsberg in Emerging Markets are -
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 Carlsberg Carlsberg's in the consumer business. Now Carlsberg Carlsberg's can target international markets with far fewer capital restrictions requirements than the existing system.
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. Carlsberg Carlsberg's can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Developing new processes and practices
– Carlsberg Carlsberg's 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.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Carlsberg Carlsberg's in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the 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, Carlsberg Carlsberg's 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, Carlsberg in Emerging Markets, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Leveraging digital technologies
– Carlsberg Carlsberg's 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.
Low interest rates
– Even though inflation is raising its head in most developed economies, Carlsberg Carlsberg's 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
– Carlsberg Carlsberg's 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.
Loyalty marketing
– Carlsberg Carlsberg's has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Learning at scale
– Online learning technologies has now opened space for Carlsberg Carlsberg's 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.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Leadership & Managing People industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Carlsberg Carlsberg's can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Carlsberg Carlsberg's can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Carlsberg Carlsberg's is facing challenges because of the dominance of functional experts in the organization. Carlsberg in Emerging Markets 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.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Carlsberg Carlsberg's 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 Carlsberg Carlsberg's to hire the very best people irrespective of their geographical location.
Threats Carlsberg in Emerging Markets External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Carlsberg in Emerging Markets are -
Regulatory challenges
– Carlsberg Carlsberg's needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Leadership & Managing People industry regulations.
Technology acceleration in Forth Industrial Revolution
– Carlsberg Carlsberg's has witnessed rapid integration of technology during Covid-19 in the Leadership & Managing People industry. As one of the leading players in the industry, Carlsberg Carlsberg's 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.
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. Carlsberg Carlsberg's needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
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 Carlsberg Carlsberg's.
Stagnating economy with rate increase
– Carlsberg Carlsberg's can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Carlsberg Carlsberg's can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Carlsberg in Emerging Markets .
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.
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 Carlsberg Carlsberg's business can come under increasing regulations regarding data privacy, data security, etc.
Environmental challenges
– Carlsberg Carlsberg's 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. Carlsberg Carlsberg's can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
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. Carlsberg Carlsberg's 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.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Carlsberg Carlsberg's in the Leadership & Managing People industry. The Leadership & Managing People 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.
Consumer confidence and its impact on Carlsberg Carlsberg's 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. Carlsberg Carlsberg's 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 Carlsberg in Emerging Markets 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 Carlsberg in Emerging Markets 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 Carlsberg in Emerging Markets 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 Carlsberg in Emerging Markets 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 Carlsberg in Emerging Markets 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 Carlsberg Carlsberg's needs to make to build a sustainable competitive advantage.