Carlsberg’s Expansion in Emerging Markets: Strategic Issues and Entrepreneurship Model

This presentation discusses Carlsberg's expansion in emerging markets, including mature beer markets of Western Europe, growth markets of Eastern Europe, and emerging markets of Asia. It highlights strategic issues faced by the organization, such as ownership of BBH, competition from Heineken and SABMillar, and disagreements with Chang Beverages. The presentation also covers the strategic entrepreneurship model, SWOT assessment, Porter's five forces, and generic strategies such as cost leadership and differentiation.

Carlsberg
Emerging markets

Carlsberg’s expansion in the
emerging markets
• The concerned organization, Carlsberg A/S, was established in the
year 1847 and mainly focused on proposing brewery
• The organization was initially located in Copenhagen, Denmark
• The venture employed around 33000 staff while holding a portfolio of
75 breweries around the world and selling approximately 115
hectolitres of beer
• Markets: the mature beer markets of Western Europe, the growth
markets of Eastern Europe and the emerging markets of Asia

Strategic issues in Carlsberg’s
case
• The ownership of Carlsberg over BBH provided them with an
opportunity of holding the position of a market leader in Russia
• The ownership of BBH restricted the capability of Carlsberg in forming
new mode of acquisitions in Russia
• The Russian brewery markets also attracted the attention of the other
companies like Heineken and SABMillar
• The involvement of competitors like Heineken with increasing volume
and diverse propositions has taken a significant amount of the Russian
markets

Strategic issues in Carlsberg’s
case
• it has been noted that the Western Chinese regions covered around
100 million population with lower standard of living
• Capability of the organization in drawing the attention of the target
customers towards their product offerings
• The report portrayed the consumption per capita of western province
of Yunnan, which was 4 litres as compared to 70- 90 litres of other big
eastern cities
• The disagreements between the concerned organization and the
Chang Beverages resulted to law suit and penalty against the venture
which strained the same of their financial capabilities

Strategic Entrepreneurship model
• The R&D operations of the same contributing to the innovativeness of the propositions
• The increased innovativeness of an organization enables the same in improving the
customer base and the markets of the venture
• The organization has been taking steps to strengthen the R&D operations from its initiation
in 1847 which provided the venture with a competitive edge over the other players in the
market
• The lack of efficient risk assessment practices affected their capability of sustaining the
strategic partnership with Chang Beverages
• The organization offered diverse range of products in different prices which expanded their
scope of targeting the customers in Western Chinese Provinces
• Lack of affordability among the customers restricted the capabilities of the organization in
retaining a good margin for the operations while increasing their sales volume in the regions

SWOT assessment
Strengths
 Strong leadership and corporate governance operations in the organization
 High customer loyalty
 Market leader in Russia and holds a good percent of market share in Western China
Weaknesses
 Lack of product diversity under their own brand
 Lack of efficient market penetration in the emerging Asian economies
 Decreasing source of revenue from the Western Chinese provinces
Opportunities
 Expansion in the emerging Asian markets
 Developing low carbohydrate beers with crafted taste and added flavours through
increased range of product innovation
 Price considerations for drawing the attention of customers from all segments
Threats
 Changing taste and preferences of health conscious customers in the western and
northern Europe from beer consumption to wine and spirited drinks
 Increased competition in the markets from Heineken and SABMillar
 Lack of affordability among most of the customers which again affected the rate of
revenue streams of the organization

Porter’s five forces
Competitive rivalry
(High)
Threat of
substitutes
(High)
Bargaining power
of buyers
(High)
Bargaining power
of suppliers
(Low)
Threat of new
entrants
(Moderate)
The organization
face a high threat of
competitive rivalry
due to the active
functioning of
Heineken and
SABMillar
The organization
face heightened
threat of substitutes
from the local
substitute brands
The organization
faces a high
bargaining power of
the buyers due to
the existence of
huge amount of
similar brands
offering similar
products
The presence of
huge amount of
suppliers in the
market has
minimized the
bargaining power of
the same enabling
the organization to
negotiate with the
suppliers
The industry
requires high
amount of capital
expenditures for a
new entrant

Porter’s generic strategies
Cost leadership
• The organization might take steps to develop focused cost leadership strategies through
minimization of the price of the offerings as per the affordability of the western Chinese customers,
being the niche market
• Competitive pricing models through Cost leadership while operating in Northern, Eastern and
Western Europe with the objective of increasing the rate of revenue streams from sales in the
regions
Differentiation
• The organization must take steps to develop unique propositions for the health conscious customers
of Northern and Western Europe with the objective of retaining their market share in the economies
and gain a competitive edge over the wine and spirit manufacturers
• The organization might take steps to develop focused differentiation based on the assessment of the
culture and local preferences of the western Chinese customers with the objective of encouraging
higher sales volume