Holmes Institute: HI6006 Carlsberg Strategy Case Analysis Report

This report provides a comprehensive analysis of Carlsberg's competitive strategy, focusing on its expansion in international markets, particularly Russia and China. The report begins with an executive summary and introduction, outlining Carlsberg's background and its position as a global brewer....Read More

Running Head: MANAGEMENT 0
CarlsBerg Strategy

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Executive Summary
Carlsberg has developed as due to a cooperation capacity with the diverse components and
this is the min strategy to create monopoly in the market and dominating the Brewer
Association. This report outlines about various business strategies of Carlsberg in relation
with management framework such as SWOT Framework, PESTEL Framework and Porter
Five forces analysis. Further strategy of the company also being derived in terms of
internationalisation and diversification. The internal environment of Carlsberg is also being
analysed with core competencies and VRIO analysis. Ultimately, a short conclusion is also
being summarised being outlined the whole report.

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Table of Contents
Introduction and Background of Carlsberg................................................................................3
Summary of Case...................................................................................................................3
Mission, Values and Goals.........................................................................................................3
External Environment Analysis.................................................................................................4
Internal Environment Analysis..................................................................................................7
Future Strategy...........................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction and Background of Carlsberg
Globally, Carlsberg Group is one of the world top five brewers founded in 1847, operating on
b2b and b2c market. As of 2018, the Carlsberg Group had a market share of 95 % and based
on the production value, the Carlsberg Group belonged to the world top ten brewing groups
in 2017 (statista.com, 2019).
Summary of Case
This case concerns about the company success in China and Russia where growth in
emerging markets in China and Russia present several opportunities to the firm. From the
future perspectives, the company must improve their capabilities in the extent of international
management as their stable EU holdings make a solid basis for moderate performance,
however, it is not likely that company global activities will prosper.
While examining the case, the most promising market perceived for the company is India as
there is presence of various brewers in China and Russia and political uncertainty is also not
in favour of Carlsberg. The current strategy of Carlsberg considering the Russian marketplace
is to progress organically with achieving new market share and the company is achieving this
strategy through acquisition of various breweries in the country. On the other hand, Carlsberg
is adopting merger and acquisition as the strategy to hold greater share in the Chinese market.
From future scenario, the company can adopt differentiation strategy and internalisation
strategy with focusing specifically on Green Field Investment.
Carlsberg in Australia
In Australia, Carlsberg has been brewed by Coopers since 2012 with its old recipe in relation
to its flagship beer in markets. In terms of packaging, Carlsberg is introducing new labelling
and bottle caps for its products in the marketplace of Australia so as to improve company
environmental footprint together with long-lasting and fresher taste (Prodanovic, 2019).

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Mission, Values and Goals
In relation with Carlsberg mission and vision, the company mission is to be a dynamic
provider of quality beers and it also brings its innovative culture, exciting brand and
committed teams which will bring individuals collectively and increase greater enjoyment in
life. Considering the vision statement, it is “possibly the leading beer company among the
world” so as to become the first selection of the customer and employees while steering
market development in advance (carlsberggroup.com, 2019). The company have nearly
40000 plus employees and each member of the company understand and follow the mission,
vision and goals of the company by streamlining their individual direction with the company
strategic plans (carlsberggroup.com, 2014). This identified mission, vision and goals of
Carlsberg help the company to be recognised in top 5 brewers businesses over the world.
External Environment Analysis
Opportunities and Threats
Using SWOT analysis, we can identify various significant threats and opportunities
surrounded in the business environment of the company. In relation with future opportunities,
Carlsberg has an opportunity to support its digital transformation while applying agile ways
of working in cross functional teams so as to develop and test new products and services in
an agile and minimal way. Carlsberg also has an opportunity to expand and develop more in
India after steeping its footprint into Russia and China. In 2010, the CEO of company also
stated that India will be bigger and bigger market for the company as at that time, the
consumption is barely one litre and from future scenario, it is going to increase with 10 or 15
litres in 10 years’ time as with more than a billion people, it is extremely important for the
company to have a strong presence there (indiatimes.com, 2010). Considering threats, it is
related to the intense competition from Budweiser and whisky drinkers and with people
trading up from beer as of higher disposable income drink less beer and more of wine and
whiskey. Furthermore, government laws in relation with the drinkers also create various
challenges for the brand. Taking an example, in 2017, High Court in India, order in Carlsberg

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Breweries v Som Distilleries and Breweries Limited for infringement of its registered design
bearing no. 244246 (lexology.com, 2017).
PESTEL Analysis
 In relation with political factors, it defines the level of governance interference
influence the company strategic business decision and plans. Considering the case, the
government in Russia has executed various laws to lessen down the alcohol
consumption level and they also uplifted the tax rate while directly influences
individual behaviour to purchase of liquor products in the marketplace. Due to the
change in taxation, Carlsberg business is negatively been affected.
 Considering economic factors, it also has a greater influence on the company business
like the economic situation of Eastern European market was also negative regardless
of its fastest growing marketplace and this indicates Carlsberg to discover many
emerging market having the attributes of more per capita income.
 The social factors include various behavioural patterns and cultural characteristics of
different market segment like the northern part of India is completely different from
the southern part. Moreover, the young India millennials in the metro cities mirroring
global trends and trading up towards premium and craft beer offerings from around
the globe.
 In relation with technological factors, importing beer from different countries result in
high taxes from the government and therefore, to expand positively in India,
Carlsberg setup plant in India itself like with joint venture with South Asia Breweries,
EconomicPolitical
Social Technological
LegalEnvironmental

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Carlsberg has setup four breweries in Rajasthan (business-standard.com, 2013). As
per the company reports, Carlsberg is using advanced technology so as to ensure the
Beer to be of great quality and taste.
 Considering environmental factors, many brewer organisations suppliers emphasis on
improvement of the beer packaging that leads to increase of the recycling rate of
waste plastic, glass, aluminium and cardboard that are used to manufacture and in
packaging of beer bottles.
 Legal issues can impact beer industry in terms of advertising, labelling and packaging
and like it is important for Carlsberg, to analyse the respective market segments where
advertising and selling of beer products are banned while following the standard rules
and laws of the country.
Porter Five Forces
Rivalry is high
Treat of new entrants
Threat of substitute
Buyer’s powerSupplier’s power

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In relation with threat of new entrants, it is low for Carlsberg as the company is strong brand
with culture and excellent advertisement with having 95 % market share globally
(statista.com, 2019). Considering threat of substitute, one of the most powerful substitute for
beer is soda although it does not contain alcohol. It is considered as a casual drink and in case
of Carlsberg, the switching cost of using the substitute product is high while the customers
cannot derive the same utility from substitute products as they derive from the company in
emerging markets product. In terms of bargaining power of buyers, it is high due to presence
of local beers shops in the respective market domains and also due to low switching cost. The
competitive rivalry is medium as Carlsberg stands out in top 5 positions globally and there
are only limited numbers of top players in the market, however, Carlsberg is a clear market
leader. Ultimately, in relation with bargaining power of suppliers, it is low as due to its big
brand image and market position. In every country, the company draw and add up more
suppliers like with expansion in India, Carlsberg ties up with 2 more manufacturers to expand
in India in 2017 (indiatimes.com, 2017).
Internal Environment Analysis
Strengths and Weakness
In relation with strengths, the organization Carlsberg is present in the list of top five brewers
working in the worldwide environment that is its biggest strength. Good brand image helps in
attracting people in the environment to purchase goods and services. The company has
become successful because of its market expansion strategies. The resources of the company
are different and they also make use of unique recipe to produce the beer in the environment
that acts as a competitive advantage for the organization. Strong alliance (collaboration) with
several profitable companies also helps the organization to promote its brand image in the
international markets like Russia and China. High profitability on the goods helped the
organization to promote the brand using right type of strategies in the international market.
Thus, it can be said that the company had all the resources they required that would help them
to become successfully in the worldwide market.
In terms of weakness, increasing debt ratio of the organization is their biggest weakness
because it reduces their financial competency. Lack of information about the interest of
regional people and their background information about made the organization to face
difficulties. Also, the company wanted to target the premium segment in the market,

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however, in China, the population was crowded with lower and middle income level
customers that reduced their customer based. The company also faced difficulty in entering in
the market and attaining adequate level of profitability as well. Domination of local brands in
both the new markets made it difficult to attain a reputable position in the initial years. Loss
of power through joint venture and other alliance reduced the competitiveness of the
organization to conduct money making activities within time. Reducing interest of
stakeholders from the functions of the company became its one of the biggest weakness
because it shifted their focus from expansion to satisfying the customers through their
actions.
Core competencies
The resources of Carlsberg are the biggest advantage for them as they increase the core
competencies of the company. The company was able to come in joint venture with several
organization and acquire many because they had vast resources to perform such actions and
maintain authority in the market. The company attained access to growing market by aligning
with BBH with 50% ownership. Further, below mentioned is the analysis of effectiveness of
the resources of the company Carlsberg.
VRIO Analysis
Resources Valuab
le
Rare Imitable Organizatio
n
Advantage
Financial
Resources
Yes Yes Costly to
imitate by
competitors
Yes Highly crucial
factor
Employees Yes No Yes Yes Can be used to
optimum
extent
Diversification Yes No Yes No Wide potential
Research
Development
No Yes No Yes Wide potential
Cost Structure No Yes Costly to
imitate by
competitors
Yes Permanent
Supply Chain
Integration
Yes Yes No Yes Permanent
competitive
advantage
Intellectual
Property Rights
Yes Yes No No, as so far the
company has
Has Potential

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and Patent not utilized the
full extent of IPR
and other
properties
Local and
Regional
Products
Yes No Costly to
imitate by
competitors
Yes Average
advantage
Future Strategy
It is recommended to the organization that they should make use of international as well as
differentiation business strategy in the business to as to successfully expand their scope of
business in the market of Russia and China. The international strategy will help the
organization to become comfortable in the environment Russia and China with facing high
losses. In terms of international strategy, the company should make use Greenfield
investment in both the markets. This strategy would help the organization to eliminate the
control of other parties from their business and serve to the customers in the ways they want.
The company has adequate financial resources to setup their business in the international
environment.
Along with the international strategy, the company should combine the differentiation
business strategy as well. This strategy refers to the strategy that helps the business to
differentiate the products and services to attain sustainable competitive advantage in the
external environment. The company already produce beer with innovative recipe that changes
the taste and attracts the customers. Thus, the company should make use of product
differentiation strategy in the market so as to attract the Russian and Chinese people to
initiate sales for the organization.

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Conclusion
In the limelight of above discussion, the Carlsberg Group endures to develop its footprints
into various emerging countries in relation with a holistic approach and in practice of future,
the company needs to plans for embedding sustainability in existing corporate strategy and
business processes, collaborating with partners to achieve scale and setting measurable
targets to track progress both year on year in the long run.

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References
business-standard.com. (2013) Carlsberg may manufacture beer in Rajasthan [ONLINE]
Available from: https://www.business-standard.com/article/companies/carlsberg-may-
manufacture-beer-in-rajasthan-106050301093_1.html [Accessed 31/01/2020].
carlsberggroup.com. (2014) Annual Report for 2014 [ONLINE] Available from:
https://www.carlsberggroup.com/media/5268/cbg-annual-report-27032015.pdf [Accessed
31/12/2019].
carlsberggroup.com. (2019) SAIL'22 The Carlsberg Group strategy [ONLINE] Available
from: https://www.carlsberggroup.com/who-we-are/about-the-carlsberg-group/our-strategy/
[Accessed 31/01/2020].
indiatimes.com. (2010) India to be one of beer's biggest markets: Carlsberg CEO [ONLINE]
Available from: https://economictimes.indiatimes.com/opinion/interviews/india-to-be-one-of-
beers-biggest-markets-carlsberg-ceo/articleshow/6694654.cms [Accessed 31/01/2020].
indiatimes.com. (2017) Carlsberg ties up with 2 more manufacturers to expand in India
[ONLINE] Available from:
https://economictimes.indiatimes.com/industry/cons-products/liquor/carlsberg-ties-up-with-2-
more-manufacturers-to-expand-in-india/articleshow/57135522.cms?from=mdr [Accessed
31/01/2020].
lexology.com. (2017) The Delhi High Court’s Order in Carlsberg Breweries v Som
Distilleries and Breweries Limited [ONLINE] Available from:
https://www.lexology.com/library/detail.aspx?g=69f14738-797f-4b5d-964d-7e5e9b5f7a28
[Accessed 31/01/2020].
Prodanovic, D. (2019) Carlsberg rolls out greener labels, new caps in Australia [ONLINE]
Available from: https://www.abc.net.au/news/2018-08-10/ekka-explainer-what-you-need-to-
know-royal-queensland-show/10090736 [Accessed 31/02/2020].
statista.com. (2019) Market share of the Carlsberg Group in Asia in 2018, by country
[ONLINE] Available from: https://www.statista.com/statistics/781249/market-share-of-the-
carlsberg-group-in-asia-by-country/ [Accessed 31/01/2020].