Carlsberg's Global Strategy: A Case Study Analysis

Desklib offers solved assignments and past papers to help students succeed.

Report – Case Analysis and Application
of Strategy Models
The Case Study of- CARLSBERG in Emerging Markets
1

Executive Summary
The various organisation has developed the different type of strategies for effectively and
smoothly run of the organisation. The development of the different strategic model in the
organisation must constitute the strategic model or the plan in the way that it definitely helps
the organisation for improving their process and to achieve its objectives. In this study, it is to
be identified that the different features of the organisation and their strategies. The company
is Carlsberg which is a global brewer and this company is founded in the year 1847 by J. C.
Jacobsen. The headquarters is located in Copenhagen, Denmark. The main objective of the
company is to provide quality products to its customers. The basic theories of the strategic
and the development and its implementation help the organisation for achieving their target
goals by providing a series of actions for the organisation.
2

Table of Contents
Executive Summary...................................................................................................................2
Introduction................................................................................................................................4
Summary of the Case.................................................................................................................5
Identification of the Strategic Issue............................................................................................6
Strategy..................................................................................................................................6
Figure 1.2: Strategic Tools....................................................................................................6
Process of Development and Execution of a Strategy...........................................................6
International or Global Strategy.............................................................................................7
Modes of Entering in Global Market.....................................................................................8
Business strategy used by Carlsberg to gain market share in China......................................9
Steps taken by Carlsberg to enter the Russian Market...........................................................9
Theoretical Concepts................................................................................................................10
Target, positioning, and the segmentation in the marketing strategy of the Carlsberg........10
The advantage in the marketing strategy of the Carlsberg...................................................10
Distribution Strategy of the Carlsberg.................................................................................10
Brand Equity........................................................................................................................11
Competitive Analysis...........................................................................................................11
Conclusion................................................................................................................................12
References................................................................................................................................13
3

Introduction
The creation of the long term strategies that help to allow the company is for achieving or
gaining the advantage in the international level of market and in between their competitors.
The Carlsberg Company that is founded in 1847 and also it covers the 150 and more
countries worldwide. This company makes the strong market in Asia and Europe and this
company present in both the segment such as in Alcoholic and Non-alcoholic. Here in this
study, the major discussion goes on their strategic issues and various theoretical concepts
related to Carlsberg.
4

Summary of the Case
Carlsberg A/S stands fifth in the list of largest brewing companies of the World. It was
established with vision of becoming the first choice of consumers. Despite of being the 5th
largest brewing company in the world, Carlsberg has not always been on the bright side.
From the 2000s the company started losing its position in the global market. Hence, by the
year of 2008 company started to make strategies for strengthening its position in the global
market the reason behind this that the company was planning for its reconstruction. It
expanded its market from Eastern and Western Europe’s beer market, it has also emerged to
the Asian Markets. The fundamental reason for its growth in share market was the company’s
international competitive strategy. The company has also started making alliances with other
globally recognized beer brands such as Holsten and Tuborg. The company started to reap its
position in international Market through emerging in the Asian and European Markets. The
adoption of international competitive strategy helped the company to boom in the markets of
India and China (Buckley and Ghauri, 2015).
5

Identification of the Strategic Issue
Strategy
The integrated set of actions which are designed to achieve the competitive advantage is
called a strategy. A strategy is formulated to accomplish its goal and feat core competencies.
Several Strategic managing tools and technology can be used to formulate an effective
strategy to gain the competitive advantage.
Figure 1.2: Strategic Tools
Process of Development and Execution of a Strategy
The process of development and execution of the process includes of numerous steps:
 Scrutinizing the Internal and External factors of organizational environment
 Identify the vision and mission of the Organisation and frame a strategic plan to
achieve it.
 Implement and execute the formulated plan
While formulating a s strategic plan the developers must consider the parameters of the
changing landscape, such as Globalisation, Blurring Industrial Boundaries, identify the
sources of gaining the competitive advantage and changing technologies (Chesbrough, et. al.,
2018).
6
PESTEL Analysis
Input/Output Model
Five Forces Model
Generic Strategies
Resource Based View

International or Global Strategy
It is implied that the company who adopts a global strategy sacrifices the benefits of staying
in local market. Multi-domestic and global strategy are two different and contrasting
strategies as the aim of multi-domestic strategy is to trade its product in several markets
whereas, global strategy intends to gain to achieve a strong market position in the global
economies (Lasserre, 2017). But in order to expand a business globally, the companies face
several issues such as social and cultural diversity, interruptions in distribution channels, etc.
Following is the list consisting the international risk faced by a company planning for its
global expansion.
Political Risks
 Political instability in the target country
 Probable nationalisation of capitalized assets
 Downturns in the economy of the target country gets worse with protectionist
political trends
 Security instability in the East-Asian Countries
Economic Risks
 Challenges and problems in execution of treaties WTO (World Trade
Organisation)
 If the target country is in heavy debt
 Increase in trends of fabricating products
 Devaluation of currency of the target country
Although there are various risks involved but there are several benefits in adopting a global
strategy.
Market Size
There is no comparison between the size of market provided by the international
markets to the size of local markets. The size of local market is not enough to support
an efficient multiscale manufacturing services. The size of international market
facilitates the sale of products which create a worth for consumers/customers.
Economies of Scale
Expansion in the size of Market not only facilitates enhanced scope of marketing but
it also helps in achieving economical advantage by increased R&D and expansion in
distribution.
7

Advantages of Location
There are certain countries in world like India, China, Mexico etc. which provide cost
efficient labours, low cost raw-materials, energy suppliers and significant customers.
Although, geographical distances may incur more cost in the supply but the cultural
influences ought to provide vital increase in the business transactions (Stack, et. al.,
2015).
Modes of Entering in Global Market
When Carlsberg was facing issues related to its position in the market, the company
reformulated its global strategies. It adopted the global competitive marketing strategy and
executed it by entering into the markets of Eastern and Western European Market, Asian
Markets. There are several modes through which a company can enter into global market
(Holmes, et. al., 2018).
Figure 1.3: Modes of entering in the global market
8
New Wholly Owned Subsidary
Licensing
Startegic Alliance
Acquisition
Export

Export: A company exports its products to other countries or to international markets.
In order to export the products to another country that the subject country has an
agreement with the target country. The company has to incur huge transportation
expenses excluding tariffs/taxes. Also, the company may fail to monitor distribution
and marketing of its products.
Licensing: A company can produce and sale the products of a foreign country in the
host country after seeking permission from the foreign country through a convention
or agreement. There is higher risk involved in this mode and the producer of host
country has to pay royalties to the alien company.
Strategic Alliance: It is a mode under which the foreign country collaborates with
recognised local brands to enter in the international market. The risk involved in the
business is shared but the disadvantage of this mode is that there be issues related to
trust and incompatibility. And it also becomes difficult for both the host and foreign
companies to manage the operations.
Acquisition: A company may also enter into a foreign market by the process of cross-
border acquisition. The foreign company buys the stake of the host company in order
to access international market. The complexities in negotiations and integration
difficulties are few of the issues which the companies may face during the process of
acquisition.
Wholly Owned Subsidiary: When a foreign country directly invests in venture of
another country, it establishes newly owned subsidiary. This venture is costly and a
complex process is involved. Although, there is high risk involved in the process but
it allows control to foreign country and affirms high probable returns.
Business strategy used by Carlsberg to gain market share in China
Carlsberg expected major returns from the markets of Asia, specifically China. The company
has started making huge investments. In order to achieve huge market share in China,
Carlsberg focused on forming a Capitalising strategy on developing markets. The Carlsberg
started producing beer in China (Søderberg, 2015). After some major setbacks, Carlsberg
focused on gaining markets of Western China.
Steps taken by Carlsberg to enter the Russian Market
For gaining access in the Eastern European Market, specifically, Russia, Carlsberg applied
the strategy of acquisition and alliance. Carlsberg invested major amount in BBH and became
9

50% stake holders of BBH. The strategy of Carlsberg was to grow traditionally by capturing
shares in the market. But the company was unsure whether the people of Russia would allow
more acquisitions (Verde, 2015). But with time it was found that Carlsberg was able to attract
more market share of Russian. Carlsberg merger with Heineken and SBA Miller has also
benefited the company.
Thus, international competitive strategy has been beneficial to Carlsberg in achieving global
market position. According to the reports, the CEO of Carlsberg has claimed that Western
Europe is a strengthened market whereas, markets of China and Russia are the emerging
ones.
Theoretical Concepts
The Carlsberg Company is founded in the year of 1847 and cover more than 150 countries
worldwide. The company Carlsberg have successfully made a strong market in the great
market of Asia and Europe. In Asia, the total beer consumptions are about 45% of the world
and also it gives 28% of the profit in the business of Carlsberg. The Carlsberg operates
currently two segments of the business that is named as craft and specialty and also non-
alcoholic brands.
Target, positioning, and the segmentation in the marketing strategy of the
Carlsberg
This company present in both the segment alcoholic and non-alcoholic segment of the
beverage. Because this company is the beverage company it uses the psychographics and also
in the geographic segmentation of the strategies. The company uses differentiated strategies
for targeting customers and also offers for different customers groups (Garavaglia, et. al.,
2018).
The advantage in the marketing strategy of the Carlsberg
Product: Carlsberg group has a strong portfolio which has more than 500 brands in the
alcoholic and also in the non-alcoholic beverage and this is the ruling market in the world.
There are some of the famous brands of Carlsberg are Tuborg, Beerlao, Baltika these three
holds the no. 1, 2, and 3 positions in the market.
10

Strong research and development: for developing the consumer and benefits by drove the
portfolio approach that helps the company to stand first in the market. There continuous
striving of the consumer may help the company for generating the world-class abilities in the
areas like Barley, and the developing science and the different FIT model.
Focus on the developed economies: giving more attention to the portfolio brand in the nation
which are developing may help the company for generating the 74% and more of the total
sales from the 24 markets in the Asia and also in Europe (Sarkar, 2015).
Distribution Strategy of the Carlsberg
The Carlsberg distributes their various brands around the world with the different mediums
such as the different distribution partners with subsidiaries, strategic partners, competitors,
local distributors, retailers and through e-commerce websites and many more. There multi-
level model for the delivery helped the company in making the products that are available
150 countries and more.
Brand Equity
The 787th rank of the Carlsberg is for the most valuable brand and in the list of Forbes
magazine. The Carlsberg ha valued at $142.1 billion on the May 2017. The Tuborg and the
Carlsberg is the largest selling brand of beer which is known for its taste and also an
association with the festival and the music.
Competitive Analysis
The Carlsberg is working in the industry that is in the developing nations and this company
has a disadvantage of the government regulations and also the presence of the competitors.
Because of their strong portfolio, it supports the deep perception through the world which
makes the Carlsberg stand forward from the competitors. Carlsberg's main competitors in the
market are Budweiser, Corona, and Heineken.
11

Conclusion
The various strategies help the company for their growth in many sectors, it supports new
technologies and plans to be implemented according to the market and their demands. The
Carlsberg Company that is founded in 1847 has covered the 150 and more countries
worldwide, this is because of their quality products and the strategies that help to stand at the
top from the competitors. Also, there are some strategic issues was discussed and theoretical
concepts
12