Strategic Human Resource Management in Carlsberg Group

The report focuses on the HR practices used in the Carlsberg Group with special emphasis on the ‘winning behavior’ strategy. It analyzes the reasons for the under-growth in the Malaysian market and provides recommendations for the Australian market. The report also discusses the alignment of ‘winning behavior’ and HR practices, and the difficulties faced by the company in Malaysia.

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Title: Strategic Human Resource Management
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Executive Summary
The main objective of this report is to learn about the HR practices used in the Carlsberg Group
with special emphasis on the ‘winning behavior’ strategy. The Group is the fourth largest in the
alcoholic beverage industry. The position has been achieved by acquisitions, mergers, and
expanding all around the world. In order to get a better understanding of the working of the
Carlsberg group, the analysis of its HR strategies was done. Furthermore, the report focuses on
the reasons for the under-growth in the Malaysian market. Apart from that the analysis and
recommendations are made with regard to the Australian market concerning ‘winning behavior’
strategy.

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Introduction
Carlsberg group was established in 1847. The company has undergone a profound change
and became an international brand from a local brewery. At present, it is the fourth largest
brewery in the world. The HR strategy of the company is significant and in the year 2002, the
strategy called ‘must win battles’ was introduced that developed a common group culture. It
helped make the brand popular and contributed to enhancing its capabilities. It aimed at
increasing profits and become the leader of the beer market. Over time, the company developed
and adopted several cultures and strategies to achieve its objectives and it has been successful in
doing so. The change in Strategic Human Resource Management has allowed the company to
have a strong foothold not only in Denmark but also in the rest of the world. One of the well-
known strategies of the Carlsberg group is ‘winning behaviors’ and it's aligned with their global
business strategy.
Carlsberg’s Strategic HR Priorities

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According to Sorenson (2009), the Carlsberg group is one of the most expanded in the
world (Falk-Sorenson 2009). The industry needs to keep up with the technological changes and
preference of the consumers (Aggerholm, Asmuß & Thomsen, 2012). However, Carlsberg
adopts the latest changes and believes in innovation that provides it with a competitive
advantage.
The current strategy pursued by Carlsberg is that of expanding worldwide and achieving
the leader position. To make the existing strategy work, the group keeps an eye out for any
breweries they might acquire or merge with. With the help of this, they can have an increased
market share. The company took over S&N and also gained full-fledged ownership of BBH. The
acquisition of BBH established Carlsberg as one of the strongest organizations in the market of
Eastern Europe (Carlsberg’s annual report 2008:15).
Source- https://www.strategicmanagementinsight.com/tools/porters-five-forces.html

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Carlsberg uses Porter’s five forces model in managing HR strategically (Anderson,
2014). With the help of this model, it is easy to identify the threats, strength, weakness, and
substitutes. However, the main emphasis of the organization is on ‘GloCal’ strategy. It advocates
the global approach in the local context. Not every policy can be generalized for local as well as
international market, thus it allows the employees to adopt those practices which will benefit
them, in the local market. In addition, to fulfill the needs of the customers and offer them quality
products is also considered. Its strategy to go for joint ventures and acquisitions is one of the
successful tactics (Hajro, 2014).
With the emergence of globalization, the international boundaries have faded and the
company got a chance to expand. It allowed the group to offer its variety of products in different
regions and countries (Rodriguez, Johnstone & Procter, 2015). According to Wright and
McMahan, (2011) valuable and non-substitutable resources provide a competitive advantage.
Employees are the backbone of every organization and thus their satisfaction and engagement
are of great importance (Yuile, Chang, Gudmundsson & Sawang, 2012). The HR strategy
comprises of selecting and retaining the best talent. Among the strategic HR priorities of the
group, employee satisfaction is at the top (Søderberg, 2014).
In the alcoholic beverage industry, the company aims to expand and enhance its product
and pays close attention to the clients, buyers, and consumers. In fact, the Carlsberg group is

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active in terms of Corporate Social Responsibility (CSR), and innovations. The company culture
reflects the work-life balance and commitment of employees (Beer, 2015).
Wan (2002) investigated the relationship between strategic human resource management
practices, motivation, and performance (Wan, Ong & Kok, 2002).
Porter’s five forces model has helped the organization to identify the new entrants in the
market. The buyers have high power. It means that they have several options like prices, taste,
calories, brands, etc. Furthermore, the identification of threats is also done that offer a substitute
product for Carlsberg products. Moreover, the buying power of suppliers can also be estimated
as the industry is concentrated. The HR policy of the group can be put as happy worker-happy
client (Gertsen, Søderberg & Zølner, 2012).
Implementation of ‘winning behavior’ strategy
The report focuses on the ‘winning behaviors’ concept of the Carlsberg group. It helped
the company in global integration and becoming a multinational corporation. It was observed by
Ferris (1990) that organizations that adopted formal strategic planning performed way better than
the organizations that did not. The main idea behind Carlsberg’s ‘winning behavior’ was to be
innovative, responsible, ambitious, and honest with the customers. It is not just a concept, but a
training program in the organization (Gobind, 2014). According to Marchington and Kynighou
(2012), the adoption of best human resource practices and strategies will help enhance
organizational performance. The company implemented this strategy to attain competitive
advantage and get the leadership position in the alcohol beverage industry. With the help of this

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concept, Carlsberg was able to understand the needs of the customers as well as employees better
and therefore worked towards fulfilling them. Moreover, the organizational growth was achieved
with the utilization of this strategy (Carlsberg’s annual report 2008:15). An organization that
wants to rule the market needs to be in the hearts of the people. Using the ‘winning behavior’
strategy, the Carlsberg group portrayed the attention they paid over social responsibility.
According to Carlsberg CSR policy, the company has to keep a check on the interest of the
internal as well as external stakeholders (Carlsberg CSR Policy, Companies Act 2013). The
organizations that are socially responsible are preferred by suppliers as well as the customers and
this, in turn, enhances the profitability.
The winning behavior is a wide concept that covers aspects like strength, winning,
priority to customers, engagement in a society which are depicted in slogans like ‘together we
are stronger’, ‘we want to win’, and more. Kehoe and Wright (2010) identified that the models of
strategic human resource management are impacted by individual behavior, team and
organizational performance. Oladipo and Abdulkadir (2011) investigated the impact of
ownership in strategic human resource practices.
The implementation of ‘winning behavior’ strategy has worked in favor of the company
and increased its revenues as well as a customer base.
Alignment of ‘winning behavior’ and HR practices

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At Carlsberg, the focus is on ‘winning behavior’ concept which is a strategy of the group.
It includes fostering a sense of ownership, following up on delivering results, ensuring high
performance, and emphasizing on team-based culture (Makhecha, 2015). This strategy will result
in increased shareholder value. As per Wright, Gardner, and Allen (2005), the alignment of HR
policies with business strategy is vital to gain a competitive advantage (Wright, Gardner,
Moynihan & Allen, 2005).
The company culture is simple and enhanced that enables the employees to deliver a high
level of performances (Bagga & Srivastava, 2014). The diversity in the company helps in gaining
better insights on different employee expectations. Singh (2004) stated that there exists a
profound relationship between HR practices like training and compensation and organizational
performance (Singh, 2004).
Corporate social responsibility (CSR) is vital for an organization’s success and helps in
gaining competitive advantage. The ‘winning behavior’ strategy has a focus on CSR because of
the survival of the business and the profits it provides in the long term. The organization
emphasizes on reducing costs, reducing carbon-dioxide emissions, and use of water (Lee, Batt &
Moynihan, 2018). Basically, CSR is the responsibility of the company towards the society.
Carlsberg believes in promoting productive work-life balance and that life cannot be only about
work. The work culture at the company is amazing and they value methods of open idea sharing
(Youngkyun Chang, 2018).
Performance appraisal is also one of the established strategies to achieve enhanced
organizational performance. At Carlsberg, employees are given enough priority to help them
identify as one of their own. The concepts like’ together we are stronger’, ‘we want to win’ can

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only be achieved if employees align their individual goals with that of the organization. Other
than that, proper training and development facilities at Carlsberg are also available to train the
employees with the latest and innovative technologies.
The company strives for employee growth and development. It provides security to the
employees and as a result, the level of organizational performance is higher (Carlsberg Group,
2018). Also, it is known to have zero accident cultures. For achieving the desired business goals
it is important that HR strategy aligns with the business strategy; in this case ‘winning behavior’.
Difficulties Faced by the Company in Malaysia
Ekhsan and Othman (2009) study SHRM practices of organizations and investigated
integrating HRM strategies with business strategies (Ekhsan Abang Othman, 2009). The major
issues faced by Carlsberg while implementing ‘winning behavior’ in Malaysia were unsuitable
strategy, ethical and social issues, and global management information systems and risks The
major product of Carlsberg group is green label and they pushed the same product in Malaysian
market as well. However, using the same strategy for a long period did not work in favor. This
made the company fall from first to second place (Todd & Binns, 2011). Dimba and K’Obonyo
(2010) researched the impact of HR practices on organizational performance directly or
indirectly. The management at Carlsberg realized that a single brand will not be able to get the
back as leader of the market (Akong'o Dimba, 2010). Therefore, the company opted for imported

Strategic Human Resource Management 9
beer, but the market in Malaysia is not huge and earning profits is rather difficult. Then the
company decided to invest in a country other than Malaysia.
According to the managing director at Carlsberg, a higher level of the expected
performance of premium brands is the main reason that it failed in Malaysia. Also, there was an
increase in excise duty and operational costs. During the year, 2006, the company paid
RM754mil in excise duty for the brewed products that were sold in Malaysia and Singapore
(Kana, 2017). The increase in taxes was a hard blow on the group. Because of high taxes, the
prices of the beer were not cheap and as a result, the market was impacted.
Analysis and Recommendations
The top five emerging markets of Carlsberg are Russia, China, India, Mexico, and
Turkey. The group is filled with diverse brands, people, and markets. The organization aims at
gaining a competitive advantage in these three areas. The company formulates strategies to
become the fastest growing beer selling company.
Every region is different in terms of market structure, people, and brands. Therefore, it is
essential to identify the local regions and their existing marketing practices of the country
(Sikora & Ferris, 2014). In the Australian context as well, the company identifies the five key
competencies, namely, people, customers, efficiency, structure and society and products and
innovation. The Carlsberg brewery partnered up with the Coopers brewery in Australia and they
became the distributors in the country. The collaboration took place in 2012 and the Coopers
brewery became the largest Australian-owned brewery (Mitchell, Obeidat & Bray, 2013).

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The drinking culture in Australia is high and risky. It is a big part of Australian culture
(Room, Mugavin, Pennay & Livingston, 2016). If applied in Australia the ‘winning behavior’
strategy would have worked quite successfully. It is because the people in Australia are finding
of Alcohol and they are from every stratum of society. People want cheap as well as premium
products. Moreover, diversified culture would also be of great significance. Working together,
winning, as the concept of ‘winning behavior’ suggests would have flourished in Australia
considering its demographics and culture with regard to alcoholism. In addition, the CSR point
of view also counts when entering a market (Pourkiani, 2013).
It is recommended that the organization makes the best use of the diversity in the
Australian culture. The best strategy is to motivate the employees to align their individual goals
with that of the organization. Another recommendation includes learning from past failures. As
in the case of Malaysia, the proper research of the Australian market should be done before
investing (Hatch & Schultz, 2013).
As it is seen that Australia is a country that has a culture of alcoholism, therefore, the
focus of the organization should be on quality delivery. Most importantly, the ‘Glocal’ would
prove effective in such a scenario. The next recommendation includes applying ‘winning
behavior’ socially responsible aspect. The company, which is socially responsible is valued by

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both suppliers as well as consumers. Another addition to the recommendations is to research the
market and customer needs as much a possible just to gain a competitive advantage.
The concept of ‘winning behavior’ emphasizes on each member making a difference. It
can make a lot of difference when the company works towards achieving the specific goals. The
contribution as an individual as well as a team is recommended to get better results (Killing,
2010).
Conclusion
The vision and the preparation towards achieving that vision can be termed a strategy.
Carlsberg’s ‘winning behavior’ elaborates the company’s way of operations. The organization
believes in ‘together we are stronger’, ‘we want to win’, etc. In addition, the main focus of the
group is on customer satisfaction. The company is also responsible for society and emerged as a
leader in the alcoholic beverage industry. The company’s ‘winning behavior’ is also
implemented in the training and development programs.

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