Carlsberg in Emerging Markets: Challenges and Strategies

This report discusses the challenges and issues faced by Carlsberg in different emerging markets and the strategies adopted by the company to enter into new markets. The report analyzes the effectiveness of mergers and acquisitions, joint ventures, cultural barriers, ownership structure, and changes in taxation laws in different countries. The report also discusses the theoretical concept of internationalization and the application of strategic models in the international market.

Competitive strategy

Executive summary
In the report, Carlsberg in emerging markets has been discussed along with the revenue growth
of the firm in different markets. Various challenges and issues are faced by the Carlsberg in
different markets and they had adopted the strategies for entering into the new market. They had
adopted the merger and acquisition, joint ventures, cultural barriers, structure, and changes in
taxation laws of different countries affected the business and growth in different markets. For the
expansion and controlling the business globally, Carlsberg has adopted various strategies to enter
the market. Joint venture and merger & acquisitions helped the business is growing into the
market and made the investment successful in international market.

Contents
Introduction.................................................................................................................................................3
Case summary.............................................................................................................................................3
Challenges and Issues..................................................................................................................................5
1. Merger and Acquisition...................................................................................................................5
2. Market consolidation.......................................................................................................................6
3. Decreasing sales..............................................................................................................................6
4. Ownership structure........................................................................................................................6
Theoretical concept.....................................................................................................................................7
Application of the strategic model...............................................................................................................8
Conclusion.................................................................................................................................................10
Reference...................................................................................................................................................11

Introduction
In the operations of the business, every organization faces different challenges and issues in
managing the business. it is essential for a business to implement an effective plan for the growth
and profitability of the business. the adoption of effective strategies gives a competitive
advantage for the rivals. The various international strategies are available for the business for the
globalization of the business in international market. For the growth and profitability f the
business, expansion is essential in different markets. In this report, the strategies of Carlsberg
will be discussed which are adopted by the company to enter into the new market. Merger &
acquisition and joint ventures are the international strategies which are adopted by the Carlsberg
for the globalization (Hatch and Schulz, 2013). These strategies help in understanding the
behaviors of the people in other countries and their cultural dynamics and it is essential for the
business to go global and understand the different market cultures and behavior. The various
issues are faced by the Carlsberg and they had faced the various failures in different global
markets and with the help of implementations and application of strategies, Carlsberg has
overcome the issues.
Case summary
Carlsberg is the 5th largest brewery in the world and it was founded by Jacob Christian Jacobsen
in 1987. They had focused on the mature beer market of western Europe. They had grown in the
market of western China. It is analyzed that the top emerging markets of Carlsberg are Russia,
China, India, Mexico, and Turkey. Market analysis of Russia is that the beer is considered as the
second most preferable drink after vodka. The sale is increased by 30% in year 2007. After that
the government had implemented the regulation for cutting alcohol consumption in Russia. In
China, Carlsberg grew fast and is expected to grow in future. For all the firms it is high
opportunity in China but with the high potential and social barriers for entering into the market.
They had faced the major issues in the market of China and they had failed many times in the
southern and eastern markets of china. After the failure they had targeted western china for the
growth and development in the market.

Source:
In Russia, Carlsberg has 50% of BBH and accessing a good position in the market. The
consumption of vodka in Russia is very high but with the increase in taxes and decline in sale of
vodka, beer got the opportunity to enter into the market and created a huge opportunity for
capturing into new market. In Russia, competition level is very high and they find it difficult to
handle the situation. It is considered as the mature global industry and economies of scales
(Meyer and Tran, 2004). They had implemented various effective strategies for making an
effective position in the market of Russia and China. Mergers and acquisitions help the company
in understanding the global market effectively. Carlsberg had faced various challenges and issues
with the change in the environment. In this case, it is also analyzed Carlsburg had face the
various wrong partnership in the global market which is done with merger and acquisitions and
joint ventures. Carlsberg had also emerged with several small firms in different markets. In this
case study, the performance of Carlsberg is analyzed in Russia and China and the challenges
which they had faced in a different business environment. For entering into the market of China,
Carlsberg had faced various issues as the market potential of China is large but the consumption
is less (Geppert, et al., 2013).

Challenges and Issues
Carlsberg has faced various challenges in the global market and it is essential for the
management of Carlsberg to understand the challenges which they are facing in the international
market (Meyer and Tran, 2006). With the understanding of challenges, the solutions can be
analyzed for dealing with the challenges and overcome the situations. They had faced challenges
in emerging markets. The major issues are faced by the Carlsberg in entering and growing into
the market of China and Russia. They faced the issue of expanding the business in the market of
China and Russia. The issues Carlsberg had faced the issue of maturity in the western market.
The sale of Carlsberg decreased in the European and American markets because of the concerns
of health in people. The behavior of people has changed in the market because of the people's
concerns for their health and it has decreased the sale of the company. Eastern European market
is considered the fastest-growing market but the economic conditions had slowed down in the
market which had forced Carlsberg to analyze the different emerging markets and high per capita
income (Højgaard Christiansen, et al., 2013).
Source: (caixinglobal,2017)
1. Merger and Acquisition: Merger is when two companies come together and
consolidate into a new entity with new ownership structure of the management and
acquisition is when one company takeover the other. Mostly it happens with small size of
firms. In order to enter into the market and seeking for growth in the market, Carlsberg
has focused to acquire firms in that market for achieving success in the market with the
help of acquired small and big firms to understand the market effectively. It is analyzed

that the merger of Carlsberg with Norwegian Orkla was not effective in the market and it
was not successful in the market as they faced the number of disagreements during the
M&A. The company has suffered from lots of debts during the separation. It was very
difficult for the Carlsberg to manage the business with the Orkla as they had faced the
major loss in the market (Niero, et al., 2017).
2. Market consolidation: Carlsberg had faced the issue of market consolidation as they
were not able to meet the supply and demand for the financial instruments. They had
lacked in the movement and were unable to be directed in the different markets. It is
analyzed in the case study that the Carlsberg has faced the issue of cultural barriers in the
market of Russia and China (Meyer and Estrin, 2006). It is difficult for people to accept
the international product in place of existing products which they are already having in
their market. It was difficult for Carlsberg to establish the product in Asian market. In
Indian market also, they had faced the same issue as cultural barriers.
3. Decreasing sales: Sales of the Carlsberg has decreased in the different market as
because of some reasons like the change in laws and regulation, health concerns of
people, government laws for stopping consumption of alcohol. The decrease in the sales
of the company has impacted the profitability and growth of the business. In the
European and American markets, the concern related to health in people has increased
and in the market of Russia the government has implemented the law as the consumption
level of alcohol was high (Shen and Chih, 2007). In different markets, the change in
taxation impacts the sale of the company. In Russia, the government has increased taxes
on alcohol products. Change in taxation has impacted the sale of the products as it
changes the behaviors of the people towards purchasing the liquor products in the market.
For achieving the growth in the economies, the government in different markets is
increasing the taxes for achieving the economy’s growth.
4. Ownership structure: it is defined as the distribution of the equity with regards to
capital as it helps in identifying the owner of equity. Carlsberg ownership structure was
the biggest challenge which they had faced in different market (Kotabe and Helsen,
2014). In the expansion of the business, they had faced challenges in different markets. It
has also impacted the company’s business model which has impacted the international
strategies of the Carlsberg which they had adopted. In the case of globalization of the

business, it is necessary to consider the ownership structure for the growth and expansion
of the business in the international market (Grave, et al., 2012).
Source: (Annual Report, 2015)
Theoretical concept
Internationalization is the way of expansion of the organization. It includes the strategy to
expand the business beyond the domestic market. International strategy is for creating the value
of product and service in foreign market. Carlsberg has faced the various challenges and issues in
the different market but it is necessary for the company to adopt effective strategies for
internationalization. The international strategy helps in understanding, developing, and offering
various opportunities to the business as for the growth of the business it is a continuous process.
Internationalization helps in affecting the structure and competition with the help of trading and
international investment. It helps in offering the various opportunities for investment and
marketing but increases the competition intensity. An international strategy which is used by
Carlsberg can help in achieving a sustainable competitive advantage in competitive market in

different countries (Raym et al., 2008). In American and European markets, the company has
achieved maturity and they will not be able to generate the revenues if they don’t implement the
new strategy for increasing the sales for the profitability and growth of the company. for the
globalization of the business, Carlsberg adopts the various effective international strategy for
creating the position and improving the performance of the business in international market
(Hatch and Schulz, 2017). With the help of different partnerships and strategies, it helps in
ensuring the business moves inappropriate manner. Carlsberg has followed the process of
making the business global. The primary strategy of the Carlsberg for internationalization is
mergers and acquisitions. Carlsberg is focusing on acquiring small as well as big brewery in the
market to make the awareness of the brand in international market and controlling the market
situation. With the help of acquisition, company is able to make a new management structure
according to the culture and requirements of the market. By acquiring small firms, Carlsberg is
able to understand the trend in market (Stewart, et al., 2018). It helps in impacting on the market
condition and position. Carlsberg tries to acquire small firms as big firms' acquisitions required
huge investment. In case of Joint venture, the resources are shared by the firms with each other
and it also helps in overcoming the challenges which Carlsberg is facing in the international
market. The implementation of the effective strategies in international market helps in
understanding the market conditions and customers preferences. It is necessary for Carlsberg to
understand the market position and for the competitive advantage; Carlsberg can understand the
market condition.
Application of the strategic model
Different applications are involved with the different strategy model. It is essential for
understanding the need of the company and the market which requires the implementation of the
strategy. In the market, it is necessary to adopt the strategic model for the growth and
development of the business in international market. The international strategy helps the business
in understanding the market and information of the market can be analyzed with the help of the
existing firm in the market, it can be small or big. Mergers and acquisitions are used by the
company as an effective strategy. It has helped the Carlsberg in managing the resources in
international market and achieves success. It helped in facing the globalization challenges which
may affect the company performance. It helps in developing the company fast in the market

(Verde, 2015). In international market, it is difficult to analyze the customers preferences and
cultural barrier may be faced by the company in the new market by when the two companies
come together to run their business as one company with the resources who want to enter into the
new market and other who already exist in the market and has all the information related to the
market and customer. The challenges can be reduced with the help of mergers and acquisitions.
It also helps in enhancing the market position in the market (Dawar and Chattopadhyay, 2002).
With the help of acquisition, Carlsberg was able to understand the market conditions and
understanding the competition in the market. It is necessary for the Carlsberg in emerging
markets as the chance of failure is more in local markets. It also helps in increasing the brand
awareness of the products in customers. Carlsberg has adopted the strategy but they had faced
the many failures with this strategy as they had not decided the structure of the M&A. The
various issues are faced by the stakeholders of the company.
Source: (Carlsberg group, 2015)
Carlsberg has also adopted the strategy of Joint ventures in which they were able to understand
the skills and techniques of the other companies in the market. In international market, it is
necessary to understand the needs of the customers and motive is to enhance the position of the
company in the market. In order to face the challenges in international market, the company will
able to understand the skills required in the market. For making effective decisions for the

company in international market, joint ventures have helped Carlsberg in understanding the
market. It is essential for the success of the company to have an understanding of the market
(Buckley and Ghauri, 2015). It has improved the position of the company in international
market. The various cultural barriers are faced by the company in international market, it is
necessary for the company to understand the culture of the market to enter into the market
effectively and achieve success. The joint venture has helped the company in understanding the
operations in the market and strategies which are required to attract the customers towards
products. The various strategic models helps the company in entering into the market and
achieve success in the future. Analysis of the market is necessary before entering the market to
understand the market requirements and its benefits for the business (Hansen, et al., 2010).
Conclusion
In order to conclude the report, effective international strategies help the business in
globalization. Carlsberg has faced various issues in different markets and faced the failures also
in market. Carlsberg is analysis the emerging markets for the growth and success of the business
in international market. They had used various international strategies for making the business
global and successful. In new market, they adopted the merger & acquisition and joint venture
strategy to enter into the market for gaining success. It has helped the company in understanding
the market conditions and competition in new market. They had adopted various strategies for
gaining competitive advantage in different markets. It is analyzed that it is necessary for the
company to understand the culture in the market for the success and growth of the business in
international market.

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