Analysis of Business Strategy of Carlsberg

This report analyses the business strategy of Carlsberg, including its corporate strategy, SWOT analysis, Ansoff Matrix analysis, and acquisitions made by the company. The report also discusses the challenges faced by Carlsberg in the Russian and Chinese markets and suggests ways to maintain profitability in international operations.

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ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
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1ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Executive Summary
This report is based on the analysis of the strategies that have implemented by an
organization named Carlsberg in its domestic and international operations. The case study
which taken into consideration is based on the lack of profitability of the organization in
Russia and China. The overall performance of the company is also analysed in the report. The
analysis is mainly based on the business level strategies, the corporate level strategies and the
strategies of the organization related to acquisition. The various steps that have been taken by
the company in the course of its operations is also analysed in the report in detail. The ways
by which the company will be able to maintain its profitability in the various international
operations.

2ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Table of Contents
Introduction....................................................................................................................3
Business Strategy of Carlsberg......................................................................................3
Corporate Strategy of Carlsberg.....................................................................................6
SWOT Analysis of Carlsberg.....................................................................................7
Ansoff Matrix analysis of Carlsberg..........................................................................8
Acquisition made by Carlsberg......................................................................................8
Porter’s Five Forces Analysis of Carlsberg.............................................................10
Conclusion....................................................................................................................11
References....................................................................................................................12

3ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Introduction
Carlsberg A/S is a global brewing brand which employs more than 40,000 people and
is located primarily in Eastern Europe, Western Europe and Asia. The company was founded
in the year 1847 by J.C. Jacobsen and the headquarter of Carlsberg is situated in Copenhagen,
Denmark. The majority of the organization has been taken over by the Carlsberg foundation
after the death of Jacobsen in the year 1887. The flagship brand of the company has been
Carlsberg Beer. The other products brewed by the company include, Kronenbourg, Tuborg,
Somerby Cider and many more (Carlsberg Group 2018). Carlsberg has its operations in
Eastern Europe under the name of Baltic Beverages Holding which is owned by the company
presently. The company had previously entered this area by collaborating with this
organization which was later taken over by Carlsberg itself. The company acquired Aldaris
Brewery to enter the market of Western and Northern Europe in the year 2008. The products
of Carlsberg group are distributed in the United States by St. Killian Import Co. The
company also exports its products to the Asian countries like, China and Hong Kong
(Carlsberg Group 2018).
The report will be based on the analysis of the business strategy that has been
employed by Carlsberg to enter the various foreign markets and the ways by which Carlsberg
has acquired other organizations to increase its operations and presence globally.
Business Strategy of Carlsberg
The major purpose of the company has been to pursue perfection and they strive to
brew better quality beers. The product that is manufactured by the company stands at the
heart of the celebrations and at times when people come together. The organization further
aims towards creating a better tomorrow for the employees and the customers as well.

4ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Carlsberg has also been delivering all round sustainable growth to the employees and the
shareholders of the company and provided them with the value that has been expected. The
newly devised strategy of Carlsberg is focussed towards four major priorities which are,
strengthening the position of the brand in the industry, deriving growth in the segments and
the areas where they see long-term opportunities and to create a winning culture in the
company (Ahammad et al. 2016).
Beer has become one of the most consumed drinks in the world and it has become the
most popular drink in the world after tea and water. The Carlsberg Group has acquired the
fourth position in the world among the different brewery groups. The activities of the group
are mainly centred in the areas where it has strong sales and growth related opportunities. The
company exports the products to the countries where the breweries are not present. The beer
portfolio of the organization contains greater than 500 brands (Rahdari and Rostamy 2015).
The business strategy of Carlsberg mainly implies that the beer is produced in the
domestic market and then it is supplied to the international locations with low amounts of
customization. The development functions of beer are centralised in the home country of the
organization and the manufacturing and the marketing related functions are situated in the
different countries where it operates. This international business strategy of Carlsberg was
chosen due to the following reasons (Angwin and Meadows 2015).
To increase the growth of sales and profit of the company by entering the new
markets and further selling the products in the existing markets. The company
achieves this objective by exporting its products to areas like South America
where breweries of the organization are absent.
Another reason behind the implementation of this strategy is to protect the
market share that the organization in its home country and the company

5ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
understands that entering the foreign areas will reduce the business of its
competitors (Baumgartner 2014).
The organization further aims to diversify its functions to reduce the
uncertainties and the risks that are related to the domestic business
environment. Carlsberg thereby tries to reduce the negative consequences of
the economic issues that can occur in its home country.
The middle level and the second level business strategy of Carlsberg is mainly based
on the diversification related goals of the company in the domestic and the international
markets. The company has always maintained the strategy of brewing the products in its
domestic market and then distributing to the international areas. This strategy of the company
has been a success for its operations in Europe (Brewster 2017).
The strategy of the company has however caused huge failure for Carlsberg in China.
The social and the political barriers have been the major issues for the organization in the
Chinese market. The company has failed to maintain its profitability in the highly developed
market of Eastern and Southern China. The next target of the organization is thereby to enter
the market of Western China where the beer consumption levels are quite low. The company
however needs to apply their partnership based strategies to increase its sales volume and
revenues in China and build up their brewery as well (Shields et al. 2015).
Carlsberg has not been successful in the Russian market due to the high levels of
competition from the other brands in the country. The political threats that are being faced by
Carlsberg in Russia have also been a major reason behind the decline of sales. The
organization thereby needs to implement the strategy of exporting the products from its
domestic market to Russia. This will further involve levels of risk for the operations of the
company in Russia (Dunlap et al. 2016).

6ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Corporate Strategy of Carlsberg
The new corporate strategy that has been formulated by Carlsberg is named SAIL’22
which was announced by the company in the year 2016. The main aim of this strategy is to
make the organization a professional, successful and attractive brewer in market where it has
its operations. The success of the company is mainly measured with the help of the
sustainable and organic top and bottom line growth. The growth is related to the suppliers,
the customers and the shareholders of the company. The SAIL’22 strategy of Carlsberg has
been implemented in the year 2016 in the Asian operations of the company. The local
priorities of the company have been decided in a strategic manner by the senior team of
leadership. The position for growth, the care and value that is delivered to the shareholders
are all related to the new corporate strategy of Carlsberg (Galloway et al. 2017). The seven
strategic priorities of Carlsberg are as follows,
 The growth of the company in the mainstream with the help of brands like,
Carlsberg Smoot Drought and Carlsberg Green Label.
 The concept of “Win in Store” was implemented for improving the execution
of stores.
 The concept of “Fund the journey” is implemented for the delivery of
efficiencies in the important areas like, Operating Expenses, Supply Chain
efficiency and value management.
 The next priority is based on the premium brands of the company making it
big in marketing these brands which include, Kronenbourg 1664 Blanc, Asahi
Super Dry, Connor’s Stout Porter and Somerby cider.

7ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
 Building the new streams of revenue with the innovative approaches and
innovations (Carlsberg Group 2018).
 Achieving the organic growth in the operating profits (Hesping and Schiele
2015).
 Delivering stable and high dividend yield for the shareholders.
These priorities were developed as a part of the SAIL’22 strategic plan within the
month of November 2016 and the employees were also communicated about the same. The
priorities were further communicated to the various distributors of the company in Asia.
The new corporate strategy that has been formulated by the company has been
executed in the operations of Carlsberg in Singapore and Malaysia. However, this strategy of
the company can be suitable for the successful operations in Russia and China as well. The
SAIL’22 corporate strategy of Carlsberg can be successfully implemented in these two
countries to achieve the highest levels of growth and further increase the revenues of the
company (Hickman and Silva 2018).

8ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
SWOT Analysis of Carlsberg
Figure 1 – Source - (Hickman and Silva 2018)

9ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Ansoff Matrix analysis of Carlsberg
Figure 2 – Source - (Carlsberg Group 2018)
Acquisition made by Carlsberg
The business operations of the Carlsberg Group are divided into three major areas of
the market which are, Western and Northern Europe, Asia and Eastern Europe. Carlsberg has
acquired the Baltic Beverages Group in Russia to distribute its products in the market. The
company had entered the market with the joint venture with this Group. However, the
company was acquired later on by Carlsberg Group. Carlsberg is considered to be one of the
significant brewers in the Ukraine, Russia and the other Baltic countries. The majority of the
shares of the Baltika Breweries are held by Carlsberg and the company had formed the
largest brewery in Eastern Europe (Hill, Jones and Schilling 2014). The organization however

10ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
had to face major issues in Uzbekistan due to the unreported revenues and the illegal
production of beer. Carlsberg thereby had to withdraw its operations from the country and
employees were sent on an unpaid leave. In Western and Northern Europe Carlsberg acquired
the Aldaris Brewery in Riga, Latvia. The brewery was responsible for the distribution of the
products of Carlsberg in the market. The subsidiary of Carlsberg in Poland is known as the
Carlsberg Polska. The company further acquired 100% of the shares of the Okocim brewery
in Poland and now owns four brewing plants of Okocim. The Falon Brewery is also owned
by Carlsberg in Falkenberg. The brands of the company in Norway include, Dahls, Arendals,
Frydenlund, Ringnes, Nordlands and Tou (Jarzabkowski and Kaplan 2015). The products of
Carlsberg are distributed in the United States by the St. Killian Impor Co. which has its base
in Everett, M.A. and imports the beer of the company directly from Denmark itself. Carlsberg
started its operations in Europe by exporting its beer to China in the year 1876. The
organization owned two major breweries in the country in Shanghai and Huizhou. The
Huizhou Brewery was acquired by Carlsberg in the year 1995. The beer manufactured in this
brewery was supplied to the areas like, Hong Kong and the Chinese market as well. The
organization had to sell its brewery in Shanghai to Tsingtao Brewery. The brewery of
Carlsberg in Hong Kong was also closed due to the high costs that were incurred by the
company (Klettner, Clarke and Boersma 2014). The organization thereby acquired the
Kunming Brewery and Dali brewery in the Yunnan province. The organization became a
major stakeholder in the Lhasa Brewery in the year 2004. This brewery is considered to the
highest brewery of the Carlsberg group in the whole world. Carlsberg Group further
announced a joint venture with Chongqing Light Textile Holding and Chongqing Brewery in
the year 2011. The headquarters of Carlsberg in India named Carlsberg India Pvt. Ltd. is
located in Gurgaon. The company has entered the Indian market with the help of the foreign
direct investment based policy and the products are brewed and marketed in the country

11ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
itself. The new brands that have been introduced by Carlsberg in India are Palone and Tuborg
(Mirabeau and Maguire 2014). The products of the company are available in most of the
states of India. The organization has its operations in Malaysia and has become one of the
leading brands in the country within a short span of time.
Carlsberg had to face issues in the Russian and the Chinese markets due to the legal
and the political conditions of the countries. The company has however been able to sustain
its operations in the country with the help of the acquisitions and the joint ventures that have
been planned in these areas. The revenues of the company however need to improve in these
areas and this is possible with the help of opening more breweries and acquiring the existing
breweries in the local areas (Purce 2014).
Porter’s Five Forces Analysis of Carlsberg
Figure 3 – Source - (Mirabeau and Maguire 2014)

12ANALYSIS OF BUSINESS STRATEGY OF CARLSBERG
Competition from the existing rivals – The force that is provided by the rivals of
Carlsberg is moderate in nature as there are small number of organizations in this field.
Threat of the substitute products – The threats that are posed towards the company
from the substitute products are high.
Bargaining power of the buyers – The power of the buyers related to the bargaining
for products of Carlsberg is low as the organization has a pre-decided price for the various
products.
Bargaining power of the suppliers – The power of the suppliers of bargaining with
the organization related to various products is quite low as the organization has a huge
number of suppliers in the market.
Threats related to the new entrants – The threats that are faced by Carlsberg in the
market related to the new entry of organizations is low as there are many barriers to the entry
of new or small organizations.
Conclusion
The report can be concluded by stating that the Carlsberg group has formulated
effective business level and corporate level strategies for the improvement of their operations
in the domestic and the regional markets. However, the company has failed to sustain its
profitable operations in some of the major areas of its operations. The countries like China
and Russia have been problematic for the revenues of the company and its future growth as
well. The strategies of the organization need to be changed and improved to create a
profitable position in these markets.

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References
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cross-border acquisition performance: The impact of cultural distance and employee
retention. International Business Review, 25(1), pp.66-75.
Angwin, D.N. and Meadows, M., 2015. New integration strategies for post-acquisition
management. Long Range Planning, 48(4), pp.235-251.
Baumgartner, R.J., 2014. Managing corporate sustainability and CSR: A conceptual
framework combining values, strategies and instruments contributing to sustainable
development. Corporate Social Responsibility and Environmental Management, 21(5),
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Brewster, C., 2017. The integration of human resource management and corporate strategy.
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[Accessed 27 Apr. 2018].
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knowledge acquisition strategies and the nature of new product innovation. Journal of
Product Innovation Management, 33(4), pp.472-491.
Galloway, T.L., Miller, D.R., Sahaym, A. and Arthurs, J.D., 2017. Exploring the innovation
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Hesping, F.H. and Schiele, H., 2015. Purchasing strategy development: A multi-level
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Hickman, C.R. and Silva, M.A., 2018. Creating excellence: Managing corporate culture,
strategy, and change in the new age. Routledge.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an
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Klettner, A., Clarke, T. and Boersma, M., 2014. The governance of corporate sustainability:
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business strategy. Journal of Business Ethics, 122(1), pp.145-165.
Mirabeau, L. and Maguire, S., 2014. From autonomous strategic behavior to emergent
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Johns, R., O'Leary, P., Robinson, J. and Plimmer, G., 2015. Managing Employee
Performance & Reward: Concepts, Practices, Strategies. Cambridge University Press.

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