HI6006 Competitive Strategy Report: Carlsberg Case Study Analysis

This report provides an executive summary of Carlsberg's competitive strategy, focusing on its challenges and successes in various global markets. The analysis highlights the issues faced by Carlsberg, including market maturity, mergers and acquisitions, cultural barriers, ownership structure, market consolidation, decreasing sales, fragmented markets, and taxation. The report examines the company's use of strategies such as mergers and acquisitions and joint ventures to expand its market presence. It also delves into the theoretical concepts underpinning these strategies and applies them to the Carlsberg case, offering insights into the company's performance in different regions, including China and Russia. The report concludes with an assessment of the effectiveness of the strategies employed by Carlsberg and their implications for future growth and profitability.

Competitive Strategy

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Executive Summary
The report suggests that it is essential for bigger companies however bigger it may be to
move towards the new markets so as to ensure that revenue growth within the firm is on the
higher side. This report highlights the challenges and issues faced by the Carlsberg in
different parts of the market where it was found that maturity in the western markets, wrong
merger & acquisitions, cultural barrier, ownership structure, market consolidation, decreasing
sales, fragmented market and enhanced taxations are some of the major issues faced by the
cited firm. Merger and Acquisitions as well as Joint ventures are some of the major strategies
used by Carlsberg. It has helped them in gaining control of the market as well as helped them
in making fast expansion within the country.

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Contents
INTRODUCTION.................................................................................................................................1
Summary of the Case.............................................................................................................................1
Issues faced by Carlsberg is as follows..................................................................................................2
Theoretical concept...............................................................................................................................3
Application of strategy model...............................................................................................................4
Conclusion.............................................................................................................................................5
References.............................................................................................................................................6

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INTRODUCTION
Different companies face different kinds of challenges in managing their business operations.
In this environment it is critical for the management to make sure that they have a plan for
managing their growth and profitability. Due to this, they need to find strategies that can give
them competitive advantage over the rivals. There are different types of strategies available
with the firms and it depends on the situation that is faced by the companies that which
strategies they need to use so as to gain competitive advantage over the rivals (Hansen, et al.
2010). Most of the companies try to find the ways in which they can enhance their revenue
for which they cross borders. In this process they apply theories like merger & acquisition
and Joint ventures. These strategies helps the companies like Carlsberg in finding out the best
ways in which they can do their operations within that country especially in terms of
understanding the cultural dynamics and people’s behaviour. In this report, the issues that are
faced by Carlsberg in different markets have been highlighted. It also illustrates the ways in
which Carlsberg is dealing with the issue both in terms of implementation of strategy and
application of strategies.
Summary of the Case
In the brewery industry, there is a tough competition and it is expected to increase in the
coming years. It is seen that Carlsberg all across the globe has faced several issues and it has
become difficult for the Carlsberg to maintain its position in the global market. In order to
expand at the global levels it has become critical for the management to makes sure that they
apply best of resources and capabilities to improve their position in the market. In order to
make strong presence in the market, they have used many strategies like Mergers and
Acquisitions to make a strong positioning in the market (Gammelgaard and Hobdari, 2013).
This was also done by the company to make sure that they have an understanding of the
global market. In the changing business environment, Carlsberg had to face different set of
challenges. This case also signifies the manner in which wrong partnerships in the form of
merger & acquisition as well as Joint Ventures had influence on the growth and profits of the
company as they kept on going into debts. It is also illustrated that Carlsberg had acquired
small firms within the market. The case study also illustrates about the performance of
Carlsberg in Russia and China along with the challenges that they are facing in the business

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environment. In the case study it is illustrated in China has less consumption of beer still the
potential of the market is large.
Issues faced by Carlsberg is as follows
There are different set of challenges that are faced by a company and it is critical for the
management to have an understanding about the challenges that can reduce their scope in the
international markets. Both in emerging and mature markets they are facing challenges. This
can also be understood in terms of the examples of China and Russia where Carlsberg
expanded and they faced challenges. Some of these issues are:
 Maturity in the western markets: Markets that were known for beer like the European
market and American market were seeing a decline due to the health related concerns.
People in these markets are moving towards the health conscious behaviour which is
decreasing their sales. Apart from this in the developed markets, there is a slowdown
in the economic condition (Hansen, Petersen and Wad, 2011). This has forced the
firms to make sure that they find different markets that are emerging and has higher
per capita income.
 Wrong merger & acquisitions: In order seek fast growth Carlsberg focused on
acquiring small and big firm within markets so as to be leaders in these markets. For
example Norwegian Orkla merger with Carlsberg did not proved out to be good for
Carlsberg when they both separated from each other after numbers of disagreements
(Herstein, Berger and D. Jaffe, 2014). This is because this company had to lose lot of
money when they separate from each other. For instance in the case of their
separation with Chang and Orkla they had to face severe debts.
 Cultural Barrier: The emerging markets of beer is highly sensitive especially in terms
of the fact that in China and Russia, this company had faced challenges in terms fact
that acceptance of international items that too the ones that are alcoholic is not easily
acceptable in the Asian culture. These cultural barriers are even bigger in the Indian
market (Buckley and Ghauri, 2015).
 Ownership structure: The ownership structure of Carlsberg in different markets is one
of the biggest challenges that are confronting the financial expansion of the company
in different markets. The ownership structure also has impact on the business model
of the company hence has impact on the internationalisation of Carlsberg (Hoenen
and Hansen, 2013).

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 Market consolidation: In many parts of the world, the brewing industry is facing the
challenges related to intense consolidation. This market consolidation has an impact
on the ways in which all the firms are performing in different markets (Casswell,
2013).
 Decreasing sales: There is continuous decrease in the sales of the beer product all
across the globe. There are various factors contributing towards it which can be
understood in terms of the fact that in European and American market there is
increase in the health conscious behaviour of the people. This has led to decrease in
the sales of the company (Gammelgaard and Dörrenbächer, 2013).
 Fragmented market: The countries like China which has higher potential in the Asian
region is becoming a fragmented market as there is no truly national brewery and
most of the company are regionalised (Howard, 2014).
 Enhanced taxations: In many of the markets including Russia there is tremendous
increase of taxes on the alcoholic product. This enhanced taxation has impact on the
way liquor products are sold and purchase as the taxes has impact on the prices of the
products (Kjeldgaard, Askegaard and Eckhardt, 2015). With the increasing burden on
the national economies for achieving growth, the chance that taxes will increase is
higher.
Theoretical concept
There are different set of challenges faced by the companies like Carlsberg and in order to
deal with these along with the fact that they will have to continue its process of
internationalisation. There are certain strategies that are being used by Carlsberg so as to
make sure that they achieve sustainable competitive advantage over the rivals. This also goes
true in terms of the fact that American and European markets have already achieved maturity
and if the company is not able to find new revenue sources then there might be greater chance
that there growth and profitability is challenged (Chang and Park, 2012).
Carlsberg is following aggressive globalisation strategy where they are using different kinds
of partnerships as a strategy to improve their positioning in the market and for ensuring that
they will be able to move forward in an appropriate manner. However this company still
focused on merger and acquisitions as their primary strategy where they are merging with the
big firms like Carl while they acquire the small brewery in the market so as to ensure that
they have the control in the market (Carlsberg Group. 2019).

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In the merger two firms consolidates in the new entity with a new management structure and
ownership. In mergers individual partners reduces and they are becoming a bigger power in
the industry. On the other in the case of acquisitions, companies like Carlsberg which is a
greater power in the market acquires smaller firm. In acquisition, large amount cash is
required. Since a legal contract is signed by both the companies hence in the case of
disagreements companies had to separate from each other which may lead to loss to the
companies as they had to pay for the compensations (Carol, Federico and Thomas, 2015). On
the other hand in the case of Joint Ventures companies share each other’s resources with each
other so as to overcome the challenges that they might face in the market.
Carlsberg got involved in some of the partnerships. They have acquired BBH in Russia and
Orkla in Norway. Along with this they have also acquired many small firms at domestic
levels including Scottish and Newcastle. They got into the Joint Venture with the Thai
brewery firm Chang Beverages Pvt. Ltd. In China they have done Joint ventures with the
companies in China especially with the local partners. They have used Danish
Internationalisation funds for the local authorities in developing nations. Since the beer
industry in China is not so developed and there are many regions where there is lesser
presence of beer companies hence first mover strategy can be very useful for the company
(Larimo, Marinov and Marinova, 2011). In order to make their internationalisation process
faster, they are using multi-domestic partnerships for achieving greater space in the local
markets. However not all partnerships become as successful for the company as it needed to
be. In spite of the initial success, this firm is facing challenges in financial terms in terms of
the fact that they were going into debts when they had to pay for going out of the contract.
Application of strategy model
Different strategy model has different applications. It depends on the need of the company in
that particular market along with the market dynamics that which strategy model this
company aims to choose in that particular market. Some of the applications include:
Merger and acquisitions had been used by the company in order to make sure that they have
larger numbers of resources that can help them in facing the challenges they might not be
able to face alone. This is done by the company so as to make sure that their development
remains fast. Since two companies come to a mutual consent hence it becomes easier for the
management to make sure that they do not face challenges which they might face in the

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international market. Merger and acquisition is also used by the firm to make sure that they
have greater knowledge that can enhance their position in the market (Beaumont, 2018). This
is highly effective in the emerging markets as there is larger chance that company might fail
in the local markets. More mergers and acquisitions have helped the company to improve
their positioning in the market. Some of the mergers and acquisitions done by the firm have
failed due to the fact that there was no proper structure defined for these partnerships. It is
critical that firms define a proper structure for the mergers and acquisitions so that no
stakeholders face challenges.
Joint Ventures also help the company to have an understanding of skills that other companies
have and can help them in enhancing their position in the international markets. This would
help the company to make sure that they have a better understanding of the skills which
would help to make sure that they do not face any challenges due to lack of knowledge
(Buckley and Ghauri, 2015). Joint Ventures allow a company to improve their positioning
within the market which is critical for the success. It is also seen that companies had to face
challenges related to the cultural understanding when they enter into new markets. For
instance Joint ventures allows companies to strengthen their particular business operations
such as supply chain management. This might also help the company in improving their
overall efficiency especially in terms of reducing the complexity in the business process. The
major benefit of this kind of strategic model is that it improves the weaknesses of the
individual companies which give them competitive advantage over the rivals.
Conclusion
From the above based report it can be concluded that international strategies are made by
various companies. Carlsberg which is facing several issues at the global markets are looking
at the emerging markets for enhancing their growth. This is done by the company to ensure
that they do not fail to achieve the growth they demand for. Carlsberg used merger and
acquisitions and joint ventures to gain success in the new markets. Merger and acquisitions
and Joint ventures allows the company to make sure that they have enough of resources and
knowledge that can help them in reducing their weaknesses and accordingly they can make
their strategies so as to gain competitive advantage over the rivals.

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References
Beaumont, S. 2018. How the global beer category will face the growth challenges of the
future [Online]. Available from: https://www.just-drinks.com/comment/how-the-global-beer-
category-will-face-the-growth-challenges-of-the-future-comment_id127295.aspx [Accessed
on 16th sep 19]
Buckley, P. and Ghauri, P., 2015. Case study I: Internationalization of brewery companies:
the case of Carlsberg. In International Business Strategy (pp. 122-128). Routledge.
Buckley, P.J. and Ghauri, P., 2015. Case study I: Internationalization of brewery companies:
the case of Carlsberg. In International Business Strategy (pp. 122-128). Routledge.
Carlsberg Group. 2019. SAIL ’22 The Carlsberg group strategy [Online]. Available from:
https://carlsberggroup.com/who-we-are/about-the-carlsberg-group/our-strategy/ [Accessed on
16th sep 19]
Carol, Y.Z., Federico, G. and Thomas, M.B., 2015. Competitiveness in a saturated market. A
case study of the Scottish craft beer industry. International Journal of Business and Social
Science, 6(8).
Casswell, S., 2013. Vested interests in addiction research and policy. Why do we not see the
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industry?. Addiction, 108(4), pp.680-685.
Chang, S.J. and Park, S.H., 2012. Winning strategies in China: Competitive dynamics
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Elgar Publishing.
Gammelgaard, J. and Hobdari, B., 2013. ‘Subsidiary strategic responsibilities and autonomy
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emerging markets: A case book on Danish multinational corporations in China and India.
Copenhagen Business School Press DK.

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Hansen, M.W., Petersen, B. and Wad, P., 2011. Change of subsidiary mandates in emerging
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