Strategic Management and Change Analysis: Heineken and Brewing Sector

This report provides a comprehensive strategic analysis of Heineken and the European brewing sector. It begins with an introduction to the industry and Heineken's position, followed by a PESTLE analysis to examine the political, economic, social, technological, legal, and environmental factors influencing the sector. The report then applies Porter's Five Forces framework to assess the competitive dynamics, including the threats of new entrants and substitutes, the bargaining power of suppliers and customers, and the intensity of competitive rivalry. Furthermore, Kotter's eight-step change management model is applied to propose strategies for adapting to the changing market conditions. The analysis includes recommendations for navigating challenges and capitalizing on opportunities within the European brewing industry, making this a valuable resource for understanding strategic management principles and their application in a real-world business context.

Strategic Management
and Change

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY................................................................................................................................1
Section 1.............................................................................................................................1
Section 2.................................................................................................................................4
Section 3.............................................................................................................................6
Section 4.................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
European Brewery industries are the highly essential and among the
most growing industry within the global market. These kinds of industries
are representing technical and scientific interests of the brewing sector of
the Europe (David, 2011). Among all the individual brewers, EBC is the one of
the best regarding the best known for measuring out the beer and wort
colour along with the units for quantifying the turbidity within beer. One of
the most effective company among European brewing sector is Heineken
whom traces can be found back in year 1864. There are various factors
which will be discussed within this report like PESTLE analysis for brewing
industry along with the analysation of micro environment. Besides this change management
framework will be applied and thus, recommendations will be made.
MAIN BODY
Section 1
Below is the described PESTLE analysis of the European brewing
sector:
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Illustration 1: PESTLE Analysis

(Source: PESTLE Analysis, 2017)
 Political: As per the case study it can be clearly noticed that the
respective Govt. of country makes political intervention which in turn
has made strict prosecutions regarding the drink and drive along
with alcohol abuse through conducting effective campaigns with the
motive of creating awareness regarding the alcohol effect on the
health (PESTLE Analysis 2017). There are some other cautions which are
being taken like stopping and making prohibition on the selling up of
alcoholic drinks within the public places. This kind of initiative has
been taken up by the Govt. with the motive of changing up the
buying behaviour of the European market and thus beer sales can go
down within these countries. There are various laws which are
enforced which are directly or indirectly affecting the market of the
brewing sector.
 Economical: There are number of factors which have effect the
economy of the brewing sector as there are different patterns of the
company which they follow across the globe and this all is because of
the various economic advantages which they are availing like cheap
labour along with the quality of raw materials. During the time of
acquisition alliances like licensing and strategies came into act.
Finally there was low growth within the consumption of beer which
in turn affected the sales and thus it had massive downfall in
particular European countries. Example can be taken up of 2002 and
2003 between which sales of beer went very low (Hitt, Ireland and
Hoskisson, 2012). Now, the German companies has been accessing the
same rate due to the EMU lowering down of interests rate and thus
now as compared to four years back which were 4.5 % more for
German countries.
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 Social: There were number of campaigns which are being conducted
by the Govt. which has created growing the concerns regarding the
health and drinking issues and that is why the sales of the beers has
been falling down within the European countries. There was an
increase in the acceptance of low alcoholic drinks and this the main
reason switching from beer to wine has been done in order to reduce
the consumption of alcohol even in pubs and clubs (Hill, Jones and
Schilling, 2014). Along with this many of the supermarkets has turned
down their focus on giving own labelled beers instead of brewed
ones and this has made accept this fact across the globe.
 Technological: As per the case study, it can be clearly understood
that there is high effect of technology and , it has brought effectiveness and
thus has improved production. It has provide assistance in gathering
up the data for the various departments. Effective production has
helped companies to gain production and this has actually turned
players and has given them the boost for search the market.
Increased effectiveness within the production from the latest
technologies has brought down cots of unit, giving large
manufactures large economical scale. There is a high need of
successful companies to maintain the strike balance among the
forces of the globalisation and maintaining within the market.
 Environmental: The major impact of European Brewing Industry is
that due to the pressure on Europe and Australia, it has reduced the
subsidies of agriculture which can in turn give the result of for
modifications in the raw materials supply base will increase cost of
raw materials.
 Legal: The legal context for lot of Mergers and Actuations which are
happening and thus shows that the restrictions are low in nature
regarding the consolidation of the European Brewery (Peppard and
Ward, 2016). Suitable example which can be taken of the United
Kingdom's Govt. who has established the legislation of competition
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like 1989 Monopolies and Merger Commission for controlling over
the mergers and take-overs within the United Kingdom.
Section 2
As per Porter, whether an industry is manufacturing products or
services of they are globally working in other ways. These kind of forces are
being described below:
Threat to the New Entrants: Due to the new entry of the companies
which can raise the competition level, it can reduce the attractiveness. The
large the entry is, more will be the threat. In various industries, there are
high entry barriers while making entry is easy for some of the companies.
High profit within the markets can provide high level of return can in turn
draw the companies (Wheelen and Hunger, 2011). By the new entry which can in
turn will decrease the profitability. There is a factor and among those on is
much more attractive and thus entry barriers are high and exit barriers are
low in nature. Besides this, there are new firms which can enter for non
performing firms can exit only. There are other elements which have direct
impact and they are described below:
▪ Brand equity
▪ Switching costs or sunk costs
▪ Capital requirements
▪ Access to distribution
Threat of Substitute Products: Presence of substitute products which can
lower down the attractiveness along with the profitability because they can
create limits within level of price. There are some of the regulations which
are being passed by the Govt. regarding the drinking alcohol and due to
that, many of the people have switched over other drinks like Coca-Cola
which can directly replace the beer product (Hair and et.al., 2012). When the
campaign were being launched on the topic of effective the health of people
regarding drinking and due to that other leisure jogging. Presence of the
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products regarding the realm for the common products boundaries which
can in turn increase the tendency of the customers for the substitutes:
▪ Behaviour regarding the substitute products
▪ Relative performance of price for the substitutes.
▪ Buyer switching cost
▪ Amount of products which can replace other ones in market.
Bargaining Power of Suppliers: Suppliers can be stated as essential
factors of the business as they are the one who mainly supply raw materials
and other various kind of products. Suppliers have essential impact on the
production and profit ratios of the company. Bargaining power of suppliers
which can also be described as the input of market. Power source of the
firm are basically all about supplying the raw materials, elements, labour
along with the services to the company (Hodgkinson and Healey, 2011). There can
be situation in which the suppliers can refuse to work with the company and
thus mainly charges high level of prices for unique resources. There can be
various other reasons like:
 Supplier regulating up the cost which is related to the firm
switching cost.
 Scale of distinguishing of inputs.
 Presence of the substitute inputs.
 Worker Commonality.
Bargaining powers of Customers: This kind of factor can be stated as
power of the customers which can also be called as output of the market.
Besides this, there are abilities of the customers for putting the company
under pressure which in turn can directly affect the sensitivity of the
customers regarding the price changes. Apart from this, there are number
of ratios which are being involved like the concentration of the company for
the concentration ratio. There are certain channels of distribution for the
company by degree of dependency can be checked (Ackermann and Eden, 2011).
There are various other factors which are being involved in this kind of sector like Buyer
volume, Buyer switching costs relative to firm switching costs, Buyer information availability,
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Ability to backward integrate, Availability of existing substitute products and Buyer price
sensitivity.
Competitive Rivalry within Companies: For the European Brewing
sector, competitive rivalry and its intensity can be stated as one of the
major determinant for the competitiveness of the industry. Along with this,
there is sustainable competitive advantage which can be taken by the help
of innovation. There is high competition among the online and offline
organisation. In order to make the European Brewing sector attain
competitive advantage then it is highly needed to promote their product and
conduct the high level of advertisement.
Section 3
Kotter's Theory can be stated as first one to draw the focus on less
changing on itself and there are number of people who are behind it. This
kind of theory can be utilised for adapting the business for the current
climate as this will allow to inspire the changing sense of Urgency and thus
momentum can be maintained which in turn can be utilised by the business
within the existing climate.
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(Source: 8 Steps Model, 2017)
 Creating a sense of urgency: It is highly essential for creating the sense of urgency for
the modifications within the European Brewing sector as in turn this will provide starting
grip to assemble the team and thus motivate them to adopt factors. Once the core group
has been established then the gate of expansion should be opened so that same level of
thinking can be put into act. European Brewing sector is facing large number of
competitors so a deep analysation should be done regarding the market and activities of
competitor and thus start the discussions regarding the effects on the company and its
solutions.
 Building a core coalition: When the issues have been determined, there is need of
making the key stakeholder come into act and thus provide them the data through
presentation and convince them for modifications. This kind of step is simple but highly
needs qualified workers, experienced and abilities (Keupp, Palmié and Gassmann, 2012).
Having good span of people within company will allow them to conduct the operations in
better and effective manner and thus promotion can be done.
 Forming a strategic vision: In this kind of approach the main aim should be on defining
the modifications and the objectives. Every single detail should be noted down regarding
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Illustration 2: Kotter's 8 Step Model

the changes and the forecasting the outcomes. It is necessary that all the changes should
be in organised manner and that should not be in complicated manner.
 Enlist Voluntary Army: In this kind of step, adopted ideas should be spread for the
modifications including the front line employees. This kind of part will mainly include
the regular basis meetings and there will be need of promoting the factors for the outside
meetings. In this sector, one should be open to the conversation and feedbacks. In simple
words, they main focus is on convincing the company for adopting the needed
modifications.
 Removing barriers and reducing friction: After implementation of the changes it is
necessary to look out for the factors which may block up the process of changing
progress. Suitable example like an individual may not possess the skills and abilities by
utilising latest technology for applying the tasks. This can be done by structure
analysation and seeking out for the solution.
 Generating short-term wins: In this kind of stage, implementation of modifications is
very close and so the starting motivation will not help out. Thus, it needs to be made sure
that association of short term win is done with the changes which can in turn motivate the
employees as well (Priem and Carr, 2012). This provides sense of accomplishment and
states that changing process is in action. Impact of the modifications should be measured
which can present the data and monitor the level of performance.
 Sustaining acceleration: This kind of stage is all about momentum sustaining which is
being generated for the modifications. There should be a report made in the performance
level of employees and thus when everything is being attained then the records can be
analysed and the areas which they lack in can be improvised for the future betterment.
 Institutional Changes: At last, it needs to be made sure that the modifications which are
being adopted needs to be set on the stone like both in documents and culture of the
company (Killen and et.al., 2012). Besides updating any formal processes which needs to
be reflected as new change, it is highly essential to promote the success of alterations and
aid them to support going forwards.
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Section 4
A) External opportunities and threats facing Heineken
Opportunities  Acquisition done by Heineken's on
other breweries and brands.
 Production line is being expanded
regarding the new areas and thus
accommodates as per the new taste.
 Within the top-line growth main
contribution is being done by the
innovation. This will strengthens up the
brand image.
 Integration is being done in forward
manner.
 Driving best line development by
winning clients at the purpose of
procurement has been the key method
of reasoning behind the take-off of
Heineken's additional Cold program.
 Falling trade and regulations of the
ownership in foreign countries.
Threats  There is Tax Regulation within the beer
industry.
 There is a negative perception within
the society regarding the alcohol which
in turn can prompt legislators for
restrictive measures.
 Growth rate has been slowing down for
this company.
 They have to deal with the legal issues
like underage drinking and due to that
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