International Business: Coopers Brewery's Expansion Strategy in India

This report critically examines Coopers Brewery's potential expansion into the Indian market. It analyzes the political, economic, social, legal, financial, and cultural factors influencing the Indian market, assessing the internal resources and capabilities of Coopers Brewery, including its manufacturing, research and development, marketing strategies, and capital financing. The report identifies a global strategy as the most suitable approach for Coopers' international expansion and suggests acquisition as a beneficial entry mode. Ultimately, the report provides a comprehensive overview of Coopers Brewery's global market strategy and its potential for success in India, considering both opportunities and challenges within the Indian market environment.

Running head: INTERNATIONAL BUSINESS
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Name of the Student
Name of the University
Author note

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Executive summary
The aim of this report is to critically examine the expansion of an organization in
Australia into a foreign market and its strategies for expansion. Coopers Brewery has been
analyzed for this report and further discussed on the probable factors of the foreign market
that is appropriate for expansion of business. The internal capabilities and resources of
Coopers have been discussed to determine its attractiveness. The strategy adopted by Coopers
for international expansion is global strategy. The entry mode for penetration can be
acquisition, which would be beneficial for initial foreign expansion. Therefore, the global
market strategy of Coopers has been critically discussed in this paper.

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Table of Contents
Introduction................................................................................................................................3
Discussion..................................................................................................................................3
Political..................................................................................................................................4
Economic................................................................................................................................4
Social......................................................................................................................................4
Legal.......................................................................................................................................5
Financial.................................................................................................................................5
Cultural...................................................................................................................................5
Internal resources...................................................................................................................5
Strategy for expansion..........................................................................................................10
Entry mode for expansion....................................................................................................11
Conclusion................................................................................................................................12

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Introduction
Market penetration is just the right next step to stay competitive in the market when the
business is at its maximum production. It helps the business to grow in the long term and
diversify in the global market. For this report, Sparkling Ale of Coopers Brewery, the largest
brewery of Australia, is chosen, its expansion in the foreign market is discussed, and the
foreign country chosen is India. Coopers Brewery, being a very successful brand has
diversified varieties of beer, which produces homebrew kits globally. It sold in the year 2013
69.7 million litres of beer (Harris and Johns 2015). The home brew products of Coopers
provide the starting position for other home brewing business across the globe. It is the
largest owned brewer of Australia following invasion of Foster’s SABMiller of South Africa.
(https://coopers.com.au/ [Accessed 22 Mar. 2019]). The reason behind choosing this
organization is that the wine industry is a significant contributor to the world. Australia has
become the global leader in terms of quality and quantity in producing wine. It is widely
available in Australia and should try to expand in India, according to a report; there will be a
further rise of premium and craft beers in India (Steele 2013). The demand for craft beers is
rapidly increasing by the young and affluent population. Therefore, in this report, a detailed
market analysis has been done on Coopers Brewery, its appropriateness for penetration in
India is discussed, and the strategies adopted.
Discussion
To expand into a foreign market, the external environment of the market needs to be
analyzed which could have an impact on the organization. It is necessary to identify the key
strategies to survive in the foreign market i.e., India. Therefore, the following factors are
mentioned in the below paragraphs to evaluate the market.

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Political
India is one of the influential countries in the world and has a moderately steady
political environment with the largest democracy in the world. Democratic will of the people
is respected and accepted by the political parties and the common people (Karunakaran
2018). This political culture of tolerance contributes to maintain a steady political climate,
which is an important factor to attract foreign direct investment (FDI). Therefore, it is a
favorable chance for Coopers as FDI has been growing at a faster rate, which gives an
opportunity to start manufacturing and opening retail stores in India.
Economic
India’s economy has shown a constant improvement after the introduction of certain
policies in 1991. The GDP growth rate improved to 5% from 4.53% (Broadberry, Custodis
and Gupta 2015). Decrease in industrial licensing and constructive development of foreign
capital led to rise of economy of this country. It is world’s seventh largest economy. The key
export products are petroleum, jewelry, transport, machinery, alcohol, garments and so on.
India is a major emerging country has its GDP has risen to 8.4% which a great opportunity
for Coopers to invest because development and economic growth is high including the luxury
brands. The economic growth increases the purchasing power of the buyers leading to rise in
sales and revenue.
Social
India has a huge population of 1.2 billion approximately with many opportunities for
business and multinational companies and also favorable opportunity for Coopers. (Cassen
2016). No wonder that so many multinational companies are operating in India and the labor
cost offered is cheap. This has been beneficiary for many companies to outsource their

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business operations in India. India is a democratic country with diverse culture and religion.
Although, people in India still suffer from poverty, the living standard is increasing gradually.
Legal
As stated above, India is most suitable for foreign direct investment. Foreign investors
depending upon the business opportunity can invest in India. Companies Act, 2013, governs
the organizations in India (Dharmapala and Khanna 2018). To govern the employment
relations, there are a number of acts such as Industrial Disputes Act 1947, Employees’ State
Insurance Act 1948 and the Payment of Bonus Act 1965. Coopers can favorably invest in
India as it does not require prior or government approval where approaches can be made to
the board of Foreign Direct Investment Promotion.
Financial
Developing countries like India have appeared to be the fastest rising economy in the
world. India is trending to grow into an open market economy. Certain economic measures
taken earlier such as industrial deregulation, privatization of enterprises and control on
foreign trade, has shown growth (Agarwal et al. 2015). However, corruption, poor financial
budget and underdeveloped infrastructure have continued to demoralize overall growth.
Therefore, Coopers has a favorable opportunity to invest as the profit and revenue graph has
seen a massive growth, which attracts foreign multinationals and luxury brands and strong
demand for alcohols.
Cultural
India has a vast culture with more than 122 languages spoken by 10,000 people at
least (Pollock 2018). India is one of the most diverse countries in the world. Religious
practices in India are an important part of day-to-day life. Apart from the Hindu religion,
there are three major ones: Buddhism, Sikhism and Jainism. Hinduism teaches the people to

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promote unity, harmony and self-discipline. Therefore, it will be worth for Coopers to invest
for a country of huge population and diverse culture and developing substantial firm with
potential geographical base.
Internal resources
Resources are considered the assets of any organization. Capabilities are the
organization’s ability to make use of them effectively. The competitive advantage of any
organization depends on its resources and capabilities (Li and Wu 2014). If an organization
fails to evaluate and identify its resources, little advantage can be obtained from its
throttlehold in the market place. Internal resources and capabilities of Coopers are discussed
in the paragraphs below.
Manufacturing
Coopers Brewery is the largest manufacturer and exporter of home brewing
equipment kits and craft beers around the world. It has a market share of approximately 4%
of beer volume in Australia (Sammartino 2018). It is the home brewing business that kept on
going through these tough years. Home brew kits have always been a core product to
maintain the position and business in the market. This home brewing business has been so
good that people wanted to make their own craft beers. There are many breweries but
Coopers is the original. Coopers has launched the new brewing system that uses wifi,
temperature control and end of fermentation process at the push of a button. Coopers has
invested in the expansion and up gradation of the brewery plant, which includes capturing of
water and energy, use of saline water and use of a natural gas. Coopers introduced a new

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bottle, new filler and industrial robots and to increase the capacity of brewing, it was installed
with a mash for the second time. Craft beers constitute for one-fifth of beer market. In India,
the industry of home breweries is gradually rising and people are promoting this culture.
Some people in Bangalore, Pune and Mumbai run their own home brewing and fermentation
process (Garofalo et al. 2015). Therefore, it would be easier for Coopers to manufacture its
products because the home brewing business prevails in India and Coopers uses advanced
technology to produce beer.
Research and development
Coopers conduct a daily research to improve the quality of their products. The
following activities are conducted:
 Filtration methodologies
 Preservative chemicals
 Bottling and brewing equipment
 Processing techniques of the ingredients
 Canning and bottling processes
 Developing of the fermentation process
The research and development tax credit could lead to tax savings and aims at improving the
quality of products and developing new goods and services time to time. To maintain this
research, Coopers should maintain proper paper documentation or electronically. The
research activities include developing new and improving bottle designs, canning processes,
improving fermentation process, improving filling process, improving product ingredients
and formulation method, improving design to ensure longevity and ingredients combination
to enhance new flavors (Gibson et al. 2017). The research industry in India provides
significant opportunities for multinational companies across the globe. They help to generate

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and develop new products across the world and serve the local market as well. Therefore, it
can prevent future problems and maximize business opportunities in India, as labor costs are
minimal in India
Marketing strategies
It is one of the major players in brewing industry with other segments of malts extract
and home brew kits. It uses various marketing tools to fulfill its aim of developing beer
experience with people who believe to appreciate to discover beer with character. Its strategy
is to take advantage of its existing locations and reputation and to add value to its home
brewing business, to achieve a greater margin and to bring a new range of customers
worldwide and additionally increase overall business through the new customers. It publishes
through articles and magazines focusing mainly ob lifestyle and entertainment (Madsen and
Wu, 2016). Pubs also run ads in journals and puts up billboard advertisements. Radio is also a
helpful marketing tool for this kind of industry as management plans to run only those local
radio stations, which are mostly listened by the young people. Articles and ads are supposed
to begin one month after the operation of Coopers begins. Beer is sold in India through two
main channels depending on customer segments, purpose of buying and brand sensitivity. On
premise channel accounts for sales of beers in bars and restaurants and small bars in the
southern states (Gammelgaard and Dörrenbächer 2013). Of premise, include retail brick and
mortal stores and premium shops. Most brewing brands come up with exciting commercials,
campaigns and online contests that define their brand. Therefore, the above strategies will
help Coopers to identify the target customers and marketing their products.
Capital financing
Coopers had become an investor in Exchange for change, as it wanted to run the
deposit scheme efficiently, to minimize the cost of beer. The financial plan of Coopers

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depends on the key factors such as plenty access to capital, steady economy with no recession
and no severe customer changes. According to the annual report, Cooper’s beer volume
dropped first in twenty years as small breweries made an entry into the market. In the
financial year of 17-18, the net profit was $23.9 million and it decided to spend 20 percent on
marketing and advertising (Lanis, McClure and Zirnsak 2017). The organizational functions
and supervision of the finance including:
 Contract development
 Management and financial reporting
 Risk management
 Financier and treasury management
 Audit, tax and compliance management
 Administrative services like payroll and forecasting
. In 2001-02, total profits of 1million dollars only were paid to stakeholders. The annual
report of Coopers discloses a peculiar share structure opening between the founder’s two
wives and their descendants that helped to keep their family owned for more than 150 years,
ignoring some of the family fights, leading to so many family businesses into the hands of the
outside buyers or the corporate chains. Coopers’ family share capital foundation includes
15,553 ''class A'' that are exclusively owned only by the family members who outline their
ancestry to Anne, Mr Cooper's first wife, with 15,953 ''class B'' shares owned only by
children born to Sarah, his second wife (Gibb and Sangster 2015). Over the past few years,
microbreweries in India have increased from 12 to 120. The craft beer segment is growing at
a faster pace with super demand for lagers and craft beers. Therefore, there are huge market
opportunities in India and high chances of more than average annual return.
Logistics

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Distributions costs can be controlled by effective logistics strategy as lot of costs are
drawn towards transportation in a brewery industry. Coopers must find a reliable way and
right time to deliver its products to the customers. It should decide the options available to
deliver the goods such as ships or flights or by road (Juga, Juntunen and Paananen 2018). It is
necessary to analyze which transportation medium will cost minimum. An effective and
proper documentation and for record keeping of transportation must be kept for monitoring
costs. An effective system of warehouse must be developed to ensure management of
logistics. For enhancing quick transportation, warehouses must be located near the channels
of marketing (Cabras and Higgins 2016). An effective management would be properly
package the beer bottles for proper consumption of space and distribution of the products.
Coopers must be experienced in advanced computerized vehicle map-reading technology and
development system. The main threat in the foreign market can be weak customer base and
market opportunities. Therefore, to overcome this problem Coopers need to improve their
customer service and convenience for their customers through efficiency in management and
proper routing. However, a proper research and survey must be done before deciding the
transportation system for distribution of the beers to ensure to reach the target customer base.
Supply chain distribution
Supply chain is the key factor to the success of the organization in the global market.
According to a recent study, supply chain is asset of the company and drive in customer
satisfaction and operational efficiency. Cooper’s business analysis is dependent on three
factors including service, price and selection. The supply chain is significant to deliver all
these components (Danson et al. 2015). Without a proper supply chain, the company will fail
to deliver its business goals and profitability in the end. Cooper says that special bonding
with the wholesalers, importers; producers have led to substantial savings, which constitutes
to healthy customer relationship. Alcohol distribution includes a three-step system: producers

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wholesalers and retailers. Therefore, proper planning must be enhanced for Coopers as the
market is at its peak with sophisticated customer base and competitors in the market. Coopers
require a proper market positioning and segmentation as there is a huge demand for craft
beers, it needs to make its products broadly available in the foreign market. An
underproduction in beers can lead to loss of business and customers, as they tend to value
those, which are easily available in the market.
Strategy for expansion
There are three main strategies for expansion into an international market for an
organization: global, transnational and multi domestic. Each one of the strategies has a
different outlook to build and grow their business across the world. Coopers Brewery should
adopt a global strategy to expand in India. It is a short term used for all the three areas:
global, international and multinational strategies (Banalieva and Dhanaraj 2013). It focuses
on emphasizing efficiency in the market and give up receptiveness to local requirements of
the market. It aims at providing the same products everywhere in the market however, some
small changes can be made to introduction of products and services in various markets. For
instance, Coopers can offer its same products including craft beer, stout or homebrew kits
across India (Cuervo 2016). The premium beers can range to five star hotels and pubs and
bars in India. However, its premium craft beers Pale Ale and Sparkling Ale can be distributed
to Indian metros as the demand for craft beers is rising especially in the scorching summer
season. Some local brewers have launched craft beers and new flavors. People in Delhi,
Bangalore and Mumbai appeal to beers, lagers and stouts more than other people. As Indians
tend to travel abroad, they would like to try new, fresh and flavored beers and enjoy their
flight. Global strategy aims at expanding and maintaining the business presence in the
country. It must be a long-term plan to enter into the market and should not be reactive rather