Global Business Management Report

This report analyzes the expansion strategy of Cheers Beers, an Australian craft beer company, into the Indian and Brazilian markets. It discusses the risks and opportunities associated with entering these emerging markets, including market conditions, competition, and regulatory challenges. The report concludes that India presents a more favorable environment for expansion compared to Brazil, due to its growing beer consumption and government support for foreign investment.

Running Head: Global Business Management
Cheers Beers
Global Business Management

Global Business Management 1
Executive Summary
Various types of beers and alcoholic drinks are famous across the whole Australia. A group of
five business graduates of Australia researched with a view to set up a business. After
researching Australian market, it was observed that craft beer is so popular and demanded
amongst the Australian public and in the tourists too. Hence, they opted this as their business
idea and with the three varieties of the craft beer they started their dream of conducting business.
They started their business from Gold Coast which is the most popular place in Brisbane,
Australia. Business graduates start up their business activities under the name "CHEERS" beers.
Their beers are being exported across the globe and with exporting, they achieved remarkable
growth. Cheers organization was started with an initial capital of $500,000 in 2010. Cheers beers
were so demanded in Brisbane and other parts of the Australia and turnover of the organization
reached to the level of $30 million by the end of the financial year 2015 from $2.5 million in the
financial year 2010-2011. Management analyzed the brewery market of Australia and found that
for achieving better growth, appropriate steps must be taken. For the same, management of the
organization decided to expand their business in the international market. India and Brazil were
the two choices for expanding the beer business. While conducting the market research program,
they obtain the good response from these two countries and then an international operations
manager was appointed to review the risks and opportunities in these two countries for the
purpose of expanding the business. For this, operational manager developed some objectives and
on that basis, appropriate techniques were adopted to review the risk and opportunity factors.

Global Business Management 2
Table of Contents
Executive Summary.........................................................................................................................1
Introduction......................................................................................................................................3
Risks and Opportunities Analysis....................................................................................................4
Opportunities in the Indian and Brazilian brewery industry........................................................4
Global market opportunity.......................................................................................................4
Currency and Exchange Rates..................................................................................................5
Types of Economies.................................................................................................................5
Emerging markets as target markets........................................................................................5
Low-cost wages........................................................................................................................5
Competition..............................................................................................................................5
Selected Destination........................................................................................................................7
Proposed Entry in India...................................................................................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................10

Global Business Management 3
Introduction
As Cheers beers are planning to expand their business in the international market for achieving
adequate growth, Indian and Brazilian brewery market is suggested by the newly appointed
operations manager to the management of the Cheers organization. They have shown their
interest and asked him to review the risks and opportunities in those countries’ brewery industry
so that appropriate steps could be taken for the expansion of the business. As Indian is one of the
emerging market and government over there is also planning to invite various multinational and
small companies to invest in their country to enhance the employment opportunities for Indians.
Expansion of the organization will be beneficial for the organization because beer consumption
is increased rapidly there. Apart from this, there are already various companies available which
are producing and delivering beer. Promotion and advertisement of alcoholic products are also
banned there. While researching for Brazil, it is observed that chances for establishing the
position in the brewery industry are a bit difficult task because since very long period, only one
company i.e. Standard Lager beer is enjoying the success. Monopoly type of situation has been
developed in Brazil as 98% of market share is being covered by this organization only. To
review the additional risk and opportunities’ factors, appropriate techniques and methods will be
discussed further in this report.

Global Business Management 4
Risks and Opportunities Analysis
There are various kinds of risks are available while expanding the business into the international
market and in terms of alcoholic and tobacco products, the same process for expanding the
business becomes the bit more complicated. Lot of legal, political, social and other factors needs
to be considered by Cheers beers before taking decision for enhancing their business. Political
risk, financial risk, cross-cultural risk and commercial risk are the types of risks that an
organization needs to suffer while expanding its business in the international market. Below
some of these risks will be analyzed in relevance with India and Brazil market conditions
(Haimes, 2015).
Apart from these risks factors, operations manager needs to evaluate certain factors such as
cultural factors, environmental conditions of the particular place, etc. Political Risk involves
various kinds of factors such as government invention in international business organizations,
imposing taxes over their activities, etc. There are some countries where alcohol consumption
and distribution is prohibited. In India, alcohol consumption is banned in some states i.e. Gujarat,
Bihar, Nagaland, etc. (Wheelen & Hunger, 2011). Apart from the ban on the consumption of
alcoholic products, advertisement and promotion of the same are also prohibited. Reviewing this
issue, Cheers organization may face some issues while entering into India brewery market due to
change in the legal and political policies while comparing Australian and Indian system.
Traditionally Indians were not used to with beer consumption, through rice, they used to
manufacture beer. But today, it is estimated that in previous year i.e. in 2016, per capita beer
composition is reached to the level of 57 liters. There is a number of beer brands are available in
Indian brewery market and amongst them, many are local and international as well. So, Indian

Global Business Management 5
brewery market would be a challenging market for Cheers beer to set up their distinctive place
(Taylor, et. al., 2010).
While estimating the risks factors for Brazil, it was found that the whole market share is being
covered by only one beer brand since a very long period i.e. Standard Lager Beer. Many
companies have tried to enter the Brazilian brewery market but they were not able to survive in
front of Standard Lager beer brand. Apart from this, a consumption of alcohol is at its peak and
various issues have been occurred due to consumption of alcohol. Many times, unique
campaigns have been conducted to spread the awareness in Brazil in relevance with the
objectives of do not drink and drive, etc. because this is the major reason for accidents occurring
in Brazil (Shield, et. al., 2013). Due to these issues, Cheers beers may need to develop some
strong techniques to settle down in the aggressive competitive environment of Brazilian brewery
market. As major accident’s reason is consumption of alcohol so, a government of Brazil may
take some severe steps to stop this such as the ban on consumption of alcohol or impose huge
taxes over the alcoholic drinks, etc. These decisions may create the situation where an
organization needs to shut down their business and face losses (Kim & Mauborgne, 2014).
Opportunities in the Indian and Brazilian brewery industry
Global market opportunity
Apart from risks and uncertainties, these two countries are selected with a view to analyzing the
opportunities which could help the Cheers organization to increase their growth factor. The
operational manager has performed some methods through which opportunities could be
determined. Indian market is an emerging market at the huge rate (Pietrobelli & Rabellotti,
2011). Recently, various MNC’s and other corporations from all over the world is in any kind of

Global Business Management 6
industry have set up their business outlets in India. The government of India has taken various
step for inviting MNC’s from across the globe with a view to getting involved in the developed
countries and apart from this, investment from abroad organizations in the country will also
generate various employment opportunities (Holden, 2011).
Currency and Exchange Rates
This is the major source of evaluating the opportunities of particular industry or country. Under
this approach, a difference is found in the prices of sellers and buyers when cross border
transactions are involved. 150 types of currencies are being used across the globe. The decrease
in the price of the currency of India and Brazil will lead to losing situation and vice versa (Lane
& Shambaugh, 2010).
Types of Economies
The world has been segregated in three types of economies i.e. advanced economy, developing
an economy and emerging economy. 35 countries including Japan, US, and the UK are included
in the advanced economies, 120 countries are still struggling for converting them into developed
countries such as Bangladesh, Nigeria, Zaire, etc. (Kiss, Danis & Cavusgil, 2012). Apart from
these economies, India, China, Brazil and other 37 countries are included in the emerging
economies. From the perceptive of investment, these markets are chosen to be the best as ROI is
huge in these places. Cheers beer has the opportunity to setup its place in the selected countries
because both these are the part of emerging economy (Successive, et. al., 2014).
Emerging markets as target markets
Australia is trading with many Asian countries since 2003 and China are on the peak place in
trading relevance with goods and services. For manufacturing purpose, Brazil is the location

Global Business Management 7
where most of the natural resources are available (Somdaka, 2014). Large reserves of raw
materials are available in the lands of Brazil and Cheers beer could take the advantage of this
resource. Import of raw materials used in the production of beer will consume more cost then
utilization of available resources locally (Sheth, 2011).
Low-cost wages
Labour cost in the emerging market is quite less in comparison to the labor cost incurred in the
advanced economies. Indian and Brazilian markets are filled with this advantage. Except this,
India is the third most emerging markets across the globe. China and Indonesia are in the first
and second position respectively whereas; Brazil stands very below (Li, 2011).
Competition
Competition is involved in every industry and in every country. While reviewing the competition
in India, it is found that various brands already exist in the Indian brewery market. This could be
taken as the advantage because Cheers beer is selling craft beer which is not much famous in the
Indian market. Apart from being famous, adequate competitive strategies could be adopted to
survive and to develop an effective position in the competitive brewery Indian market. While
reviewing the Brazilian market, a number of organizations available in the brewery industry are
quite less. But Standard Lager beer is the most popular beer brand in the whole Brazil and
neither company is able to set up their image as their competitor since a very long time
(Ramamurti, 2012). Cheers beers have the opportunity to create its image in the Brazilian market
through adopting unique techniques. Below is the analysis of competition available in Indian and
Brazilian brewery market through Porter’s five forces:

Global Business Management 8
The threat of New Comers: This threat will be faced the existing firms of the particular
country. Especially the local brands because they are still selling beers in Indian market without
upgrading their techniques and methods for producing beers. Cheers organization needs to face
big competition in India but as India and Brazil both are emerging markets and India is one of
the favorite locations for international brands. As Cheers beer brand is very famous across the
whole Australia and it is a favorable choice of tourists also (Hoenen & Hansen, 2013).
The threat of Substitutes: Various substitutes are available in the Indian as well as in Brazilian
market in relevance with beer. As per recent survey report, consumption of whiskey and other
alcoholic drinks is much more in comparison to the consumption of beer. In Brazilian market,
beer consumption is much high in relevance with other alcoholic drinks (Swinnen, 2011).
Consumers’ bargaining Power: This act could be faced by the Cheers organization in the
Indian market because there are a number of beer brands and other alcoholic drinks
manufacturing and distributing organizations exist. The consumer will get the choice of selecting
the beer of one brand amongst the huge choices available whereas, this option will not be
available for consumers in Brazil as one or two beer brands are selling their beer in the Brazil.
Suppliers' Bargaining Power: The same scenario will be developed in the suppliers’ bargaining
power because Indian market has a variety of suppliers involved in the distribution of raw
materials required for producing beer (David, 2011).
Industrial Rivalry: This approach involves that Cheers beer will be able to promote its products
in Brazil without any restriction whereas, a government of India has banned the alcoholic

Global Business Management 9
products promotion across the country, as well as some states of India, are prohibited to consume
alcoholic drinks.

Global Business Management 10
Selected Destination
Indian market would be the best for Cheers beer in comparison to the Brazilian brewery market.
This is due to the factors involved in the Indian market such as invitation from the Indian
government for making a foreign investment to increase the employment opportunities, low-cost
labor available, etc. Apart from these factors, Indian industry is the most emerging markets
across the globe and it is standing on the third highest emerging country across the globe after
China and Indonesia. It means Cheers beer will get the more opportunities to settle their brand’s
goodwill in comparison to the Brazilian market. The major reason for dropping the idea of the
Brazilian market for business expansion is the market share of Standard Lager beer
(Seidenstricker, Linder & Schmitz, 2014).

Global Business Management 11
Proposed Entry in India
While developing the proposed entry strategy for Cheers beer in India, various factors need to be
evaluated which could help the organization to build an effective market entry strategy. The
crucial factors which should be discussed are primary competitors, trade barriers, legal policies,
political considerations, etc. Common market entry strategies are fulfilling the legal and political
considerations and developed an outlet and start performing their activities whereas, effective
market entry strategy includes the analyzing the appropriate place across the whole country
which will help the organization to develop its distinctive image in the competitive environment.
Cheers beer needs to start their activities from Mumbai which is the most favorite places across
the globe as well as in India and it is also known as the financial capital of India. This city is
situated in the state of Maharashtra and most of the celebrities used to live in this city
(Sukumaran, 2012).
Other states and cities of India adopt the style being practiced in Mumbai. This is the major
reason for making an entry from this city. Most of the international organizations start their
business in India from this city only and later on, they have achieved the separate place in all
over the country. Operational manager of the organization has suggested the Cheers organization
to conduct some activities i.e. market research, demand analysis, supply chain analysis,
competitors’ analysis, etc. All these factors will help the organization to develop its distinctive
image in the country. Apart from this, an organization has adopted the pricing strategy by
reviewing the price of the most popular beer brands in India. As India as the market for every
type of consumer hence; a price of the product should remain at the constant rate which could
attract more number of consumers from all mediums. United Breweries is the biggest brand