Holmes Institute HI6006 T2 2019: Carlsberg Competitive Strategy Report

This report provides a comprehensive analysis of Carlsberg's competitive strategy, examining its history, mission, development, and growth. It includes an internal and external environment analysis using SWOT, PESTEL, Porter’s Five Forces, and product life cycle models. The report identifies Carlsberg's strengths and weaknesses, evaluates its corporate and business-level strategies, and analyzes its position in the global beer market. Furthermore, it provides recommendations for the company's strategic development, emphasizing diversification and market penetration. The report concludes with an overview of the company's lifecycle stage and strategic implications, contributing to a deeper understanding of Carlsberg's competitive landscape and potential for future growth, with insights derived from a case study approach and referencing relevant academic sources.

Running head: COMPETITIVE STRATEGY
Competitive Strategy
Name of the Student
Name of the University
Author note

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Executive Summary
The report has assisted in understanding the strategic management and capabilities of the
company Carlsberg in the emerging markets. With the help of the SWOT, PESTEL, Porter’s
Generic Strategies along with the product life cycle approach, the different internal and
external environment analysis have been identified which is suitable for identifying the
opportunities and threats which can affect the growth of the company negatively. In addition,
it can be seen that there are different recommendations such as proper diversification
approach which can be incorporated by Carlsberg in improving their position in the
competitive business environment and gain more insights in the other countries.

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Table of Contents
Introduction................................................................................................................................3
Analysis of History, Mission, Development and Growth of Company.................................3
Identify the company's internal strengths and weaknesses........................................................4
Analysis of External Environment.............................................................................................5
PESTEL Analysis...................................................................................................................5
Porter’s Five Forces Model Analysis.....................................................................................7
Life Cycle Model of Carlsberg..............................................................................................8
Evaluation of SWOT Analysis...................................................................................................9
Analysis of corporate level strategies......................................................................................10
Analysis of Business level strategies.......................................................................................11
Analyse structure and control systems.....................................................................................12
Conclusion................................................................................................................................13
References................................................................................................................................14

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Introduction
The report throws light on analysis of the case study of Carlsberg through the
identification of the history, mission, development along with growth of the company
appropriately. There will be internal and external environment analysis of the company that
will be providing the brief overview on the opportunities and threats which can affect the
growth of the company negatively or positively. Moreover, the corporate and business-level
strategies are required to be identified which will be effective in managing the growth
prospects of the company suitably. Lastly, the recommendations are required to be provided
which will be effective in considering the issues and generate potential solutions for the
growth of the company.
Analysis of History, Mission, Development and Growth of Company
Carlsberg is considered to be the global brewer which was founded in the year 1847
by J.C. Jacobsen. The company is headquartered at Copenhagen, Denmark and the areas
served by them is worldwide. It is the fifth largest global brewer which has become the most
significant opportunity for setting stage for the different other brewing companies in
Denmark. The organization employs more than 41000 employees, which is primarily located
in Asia, Western Europe as well as Eastern Europe. In addition, the company’s emerging
market efforts had come long way and in Russian market, it is one of the fast-growing beer
markets in world. They have been successful in enjoying the market leader position through
BBH ownership in the competitive market (Carlsberg.com, 2019).
The mission of Carlsberg is to become the dynamic provider of the quality type of
beers and it is considered as the exciting brand due to the committed team members and
innovative culture of the company that has been helpful for the company in bringing people
together and it is suitable in adding more enjoyment in life as well (Carlsberg.com, 2019).

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On the other hand, the vision of the company Carlsberg is to become probably the
most leading beer company in the world as to become the first choice of the customers and
employees through understanding their needs in a full manner and proactively driving the
development of the market (Carlsberg.com, 2019).
From the mission and vision of the company Carlberg, the growth and development
prospects which have been developed by them is the SAIL22 strategy which was launched in
the year 2016 wherein the main ambition of the company was to make Carlberg professional,
attractive brewer and successful brewer in world which helped them in creating a winning
culture.
Identify the company's internal strengths and weaknesses
Carlsberg is one of the global brewing company in Europe and the products of the
company are consumed by individuals in the worldwide. In such scenario, SWOT analysis is
the helpful technique in identifying the internal strengths and weaknesses along with external
opportunities and threats that will be effective in managing the effectiveness of the company.
Strengths
Portfolio of Product- There are different well-known brands such as Tuborg,
Somersby along with Grimbergen and more than 500 local beers. The large type of portfolio
has been helpful for them in catering every customer and the different tastes. Carlsberg have
strong as well as durable brand that is utilized by them in creating international as well as
recognized kind of sponsorships that helps them in connecting with local kind of consumers
(Wamba et al., 2017). The wide range of portfolio of beers are suitable for the younger and
elderly individuals and there are different resources which is hard to imitate and substitute by
the other companies which are competitors (Li, 2018).

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Financial Aspects- The net revenue which has been earned by Carlsberg is 62.6 DKK
billion and the operating profit earned is 8.2 DKK billion as well as free cash flow of 8.6
DKK billion. The strong kind of financial aspects have helped the company in being in a
good position (Ulubeyli et al., 2019).
Campaigns of Marketing- There are different marketing techniques which have been
adapted by Carlsberg running for the brand and it makes sure that strong brand recall among
various customers and the different advertisements are worth-remembering and interesting
(Teece, 2018). There are different kinds of operational excellence program that has been used
by the company in becoming financially stable (Bull et al., 2016).
Weaknesses
New Products- It is the major weakness as the company is highly dependent on the
international brands of beer such as Tuborg as well as Carlsberg. In such scenario, the
company needs to introduce other products of their own as well (Teece, Peteraf & Leih,
2016).
Market Penetration- The company needs to increase their share in the market and
revenue from their emerging markets such as China as they are present in the developed
countries only (Salavou, 2015). The debt of Carlsberg is other weakness that is obstacle in
investment related growth and these invites few risks for organization and it has recently
affected stock price of organization.
Analysis of External Environment
PESTEL Analysis
Political Factors

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There is high level of political stability as in Denmark, the regulations are liberal
when it comes to the different ages for consumption of alcohol. In Denmark, the legal age for
buying alcohol is 16 years and it creates huge impact on the sales of the drinks in the market
of Denmark (Saebi & Foss, 2015). The other reason that Carlsberg is famous in comparison
to other drinks is due to the cheaper pricing strategy which is applied by them.
Economic Factors
The operations of Carlsberg are not affected by the fluctuations in the exchange rate
as DKK is more or less fixed against Euro (Pisano 2017). Due to the same, there will be less
amount of risk that will be incurred by Carlsberg. On the other hand, the acquisition of more
than 50% of the S&N has been burdening the economy of Carlsberg with significant level of
debt (Omsa, Abdullah & Jamali, 2017).
Social Factors
In order to analyse the social aspects of the company, Carlsberg has been successful
in involving themselves in the different kinds of sponsors concerts, football teams along with
championships which has been helpful for them in creating awareness regarding the same to
the customers (Niesten & Jolink, 2015).
Technological Factors
Carlberg try and strive to become more innovative through launching of the new
products and improved the products in a proper manner (Nambisan et al., 2017). The research
centre of the company is large with 150 employees and they have a well-established website
that is effective for them in providing the different information suitably and achieve the
company goals.
Legal Factors

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The national and European Unions laws on the mergers and acquisitions can create
possibilities in the market for Carlsberg. There is inclusion of taxes on alcohol that can affect
sales of Carlsberg and if the tax rate increases, it will be significantly impacts the sale and
profitability of the company negatively (Matt, Hess & Benlian, 2015).
Environmental Factors
There are different trends which are increasing in the last few months wherein they
prefer to consume organic food (Huq, Chowdhury and Klassen 2016). There is no exception
to organic beer and Carlsberg is capable of selling organic beer and it has increased to a large
extent and on environment front, Carlsberg is active wherein they maintain recycling system
for the bottles as well as cans in Nordic countries (Helfat & Peteraf, 2015).
Porter’s Five Forces Model Analysis
With the help of Porter’s Five Forces Model Analysis, it can be seen that there are
five major forces that needs to be analyzed in an effective manner to identify the level of
competition or barriers present in the market.
Threat of Substitute products- The level of threat is high as the beer is one such
product that is replaced in an easy manner with the other brands along with refreshments. In
such situation, the lack of the product differentiation can cause the lack of loyalty among
customers (Gürel & Tat, 2017).
Competition from Existing Type of Rivalry- The level of competition from the
existing rivalry is moderate in nature as there are two major competitors such as Heineken
and Royal Unibrew are the ones in Denmark (Galpin, Whitttington & Bell, 2015). On the
other hand, more than 63% of the beer market is being managed by Carlsberg and 50% soft
drinks within country.

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Bargaining Power of Buyers- It is moderate in nature as well as there is large
number of customers in the market, however, the number of competitors is large and it affects
the profitability aspects of company. However, there are only few substitute companies
available for beer in comparison to Carlsberg which is moderate level of threat.
Bargaining Power of Suppliers- It is low in nature as there is low power of suppliers
which is due to the minimal strength of the brand (Engert & Baumgartner, 2016). Moreover,
the switching costs of beer is low and there are highly substitute ingredients which can create
moderate impact on the company.
Threat of New Entrants- It is low as it is hard for the different small brands to enter
in the beer market wherein there is already high level of profitability gained by Carlsberg and
it is difficult for the other beer companies in differentiate beers (Bull et al., 2016). Moreover,
the strong strength of brand of Carlsberg is the most effective approach in gaining the market
share.
From the analysis of Porter’s Five Forces, it can be seen that Carlsberg has been
successful in holding strong place in market in contrast to other competitor companies. The
company holds more than 63% of the beer and 50% of the soft drinks market which has made
them capable of improving the growth of company suitably (Buckley & Ghauri, 2015).

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Life Cycle Model of Carlsberg
Figure 1: Product Life Cycle Curve
(Source: Buckley & Ghauri, 2015)
With the help of Product lifecycle model, it is the useful tool for properly
conceptualizing changes which may take place during the respective time that the product is
on market which is known as product life-cycle (Bromiley et al., 2015). In this respective
approach, Carlsberg is in the Late Stage of Maturity wherein the sales of the company
eventually are at the peak and stabilize as the saturation occurs, hastening the competitive
type of shake-out as it can be seen in the entire global beer market. In the respective situation
Carlsberg needs to adopt the effective brand building aspects which is felt acutely during the
time of maturity.

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Evaluation of SWOT Analysis
Opportunities
Emerging Kind of Markets- With the proper increase in the disposable income of the
different customers in the market, Carlsberg needs to focus on them. In such scenario,
Carlsberg needs to market as well as position themselves in the respective markets of China
and others which will be suitable in increasing their market share and revenues in the market
effectively (Braganza et al., 2017).
Mergers and Acquisitions- It is the other aspect that can be introduced by Carlsberg
for acquiring the different local brands in emerging markets and become the top seller in such
markets. It can be helpful for them in creating revenues and market share for Carlsberg.
Threats
High Level of Competition- There is high level of competition from other brands
such as Budweiser as well as whisky drinkers. There are different kinds of people trading up
Strengths
There are different various offerings of the product
which makes the brand more effective
The financial aspects of the company is strong which
affects the company positively
Weaknesses
There is lack of innovation in presenting beers to
customers in the market
The market penetration affects the growth strategies
of Carlsberg and it impacts the profitability
Opportunities
There can be introduction of ABV beers which is not
offered by them presently
Inclusion of the mergers and acquisitions which will be
helpful and effective in improving their share
Threats
High level of competition is present in terms of the
providing various beers among the competitors
Aggressiveness in the strategy of pricing in Denmark
which affects the growth of company
SWOT

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from beer to wine and whisky and it is happening due to the high level of disposable income
(Braganza et al., 2017).
Strict Government Laws and Legislations- There are different new and strict laws
and regulations for drinkers that can cause huge trouble for the brand and it affects the brand
in a negative manner (Braganza et al., 2017).
Analysis of corporate level strategies
In case of the Corporate-level strategies, it mainly focuses on obtaining mix of the
different business units that will allow the organization to succeed as a whole. In case of
Carlsberg, there are two major corporate level strategies which has been incorporated by
them as to expand their business operations and improve their performance in comparison to
the other competitor companies which are present.
Firstly, the expansion strategy is the main aspect adopted by Carlsberg for expanding
their business in emerging or growing economies. Carlsberg enjoys proper level of
unqualified success in the Denmark market, however, in order to improve their growth
prospects in then other international markets, there can be high level of sales along with feet
up to set their operations in the respective markets successfully (Bergh et al., 2016).
Moreover, there is inclusion of vertical integration as it is the suitable way in cutting
costs through providing their ways of inputs, backward kind of vertical integration as well as
create own channels of distribution along with selling outputs by forward integration
(Aguinis, Edwards & Bradley, 2017).
In addition, there is inclusion of adaption strategy which needs to be incorporated by
Carlsberg as it will be providing them with different opportunities that can be acting as the
growth prospect which will enhance their effectiveness. Due to the different rules and

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regulations in different foreign countries, the organization cannot follow the standard type of
policies which impact their effectiveness. For instance- The rules and legislations of
consumption of beer or any alcoholic drinks is different in Denmark and in other countries
which can vary (Aguinis, Edwards & Bradley, 2017). Therefore, in the respective case, there
should be proper way of following rules and regulations that will be effective in maintaining
uniformity and the growth can be controlled effectively.
Analysis of Business level strategies
In the aspect of business-level strategies, there are different kinds of aspects which
needs to be managed for managing their growth in the competitive market and become
different from the other competitor companies. In case of Carlsberg, it can be seen that for
gaining competitive advantage, the two aspects which are being selected by them are as
follows:
 Cost Leadership- The cost leadership type of strategy suits if Carlsberg will be able to
develop the different capabilities for reducing the cost which will be below the
industry average along with achieving the economies of the scale. There will be
proper requirement of the collaboration among the various functional areas that will
be effective in managing their strong position in the market. Moreover, there should
be proper development of the effective distribution channels which will be including
proper access to different technological tools for setting the competitiveness in the
cost leadership approach (Aguinis, Edwards & Bradley, 2017). Differentiation- On the other hand, the strategy of differentiation mainly focuses on
the development of the brand loyalty through offering of premium kind of products.
The respective company named Carlsberg can find the various techniques in
developing differentiation type of leadership through focusing on durability, usability

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along with analysing the distinctive features of product (Bromiley et al., 2015).
Carlsberg can achieve the differentiation approach related competitive advantage
through adapting the product, quality, image or the innovative kind of differentiation.
Analyse structure and control systems
From the analysis of the business and corporate level strategies of Carlsberg, it can be
seen that there are few recommendations which can be incorporated by Carlsberg in
managing their position effectively and gain competitive advantage in future in comparison to
competitors. There are different strategic initiatives which are required to be incorporated by
Carlsberg that will be suitable in improving their growth are as follows:
Firstly, there can be inclusion of diversification and expansion of the brand in the
international markets which will be effective in increasing their revenues in the competitive
business environment. Carlsberg needs to pay attention to stagnate their position in Western
and Eastern Europe and they should make sure that they maintain their position. The largest
competitor is Heineken and, in such situation, Carlsberg have to maintain position which will
help them in financing their operations in new market (Bull et al., 2016).
Although, the vertical integration or merger backwards may not seem obvious for
Carlsberg, it can be taken as the option as it would be providing them with suitable
opportunities and gain more control backwards in supply chain. There can be merger with a
manufacturer of cans, bottles along with packaging which could provide them exclusive
rights to the suppliers as it would decrease costs (Bull et al., 2015).
Conclusion
Therefore, it can be concluded that with the help of the external and internal
environment analysis, it can be seen that in terms of the competitors as well as current

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financial position, it is crucial for Carlsberg in adapting and developing strategy which will
enable them in performing well in market. In the long-run, it can be seen that Carlsberg needs
to try to utilise their strong as well as profitable position in current markets for growing and
introduce the different other new products, it will be helping them for the growth and the
financial condition will be stable in next few years.

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