International Business Report: NBL's Expansion Strategy in Italy

This report provides an international business analysis for Namibia Breweries Limited (NBL), focusing on its potential expansion into the Italian market with its Windhoek Light beer. The report evaluates the external environment of Italy using the PESTLE framework, analyzing political, economic, social, legal, and financial factors. It also assesses NBL's internal resources and capabilities, including its production processes and brand reputation. The report concludes with recommendations for a general market entry strategy and specific entry modes, aiming to guide NBL in successfully introducing its product to the Italian market while considering the competitive landscape and regulatory environment. Desklib offers similar solved assignments and resources for students.

Running Head: INTERNATIONAL BUSINESS 1
International Business: Namibia
Breweries Limited

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Executive Summary
In the alcoholic beverage industry, beer is one of the most significant and profitable segment.
There are various nations, which are in the top list for the production of craft beer and beer.
Nowadays, companies prefer to select business expansion as their growth strategy. It assists the
organization to increase its revenues and profits in the industry. The major objective of this
report is to prepare an international business report for a Namibian organization i.e. Namibia
Breweries Limited (NBL). Namibia Breweries Limited is a brewery that was founded in the year
1920 and offers various alcoholic beverages in different countries. The below report focuses on
international business expansion of Namibian country into new foreign market i.e. Italy. First,
the company is planning to offer its Windhoek Light beer into Italian market. In this report, the
external environment of country is evaluated by using factors of PESTLE framework. Moreover,
internal resources and capabilities of company are analyzed. In the end section,
recommendations are given to NBL in context of general strategy and market entry modes.

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Table of Contents
Introduction.................................................................................................................................................4
Introduction about Company product and foreign Country........................................................................4
Evaluation of Foreign Country.....................................................................................................................6
Political Factors.......................................................................................................................................7
Economic Factors.....................................................................................................................................7
Social and Cultural Factors......................................................................................................................8
Legal Factors............................................................................................................................................8
Financial Climate.....................................................................................................................................8
Internal Resources and Capabilities.............................................................................................................9
Recommendations.....................................................................................................................................12
General Strategy....................................................................................................................................12
Market Entry Mode...............................................................................................................................12
Conclusion.................................................................................................................................................13
References.................................................................................................................................................14

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Introduction
Alcoholic beverages sector is one of the oldest sectors on the earth and this industry is divided
into three types like beer, wine and spirits. In today’s environment, there are many changes in the
needs and preferences of customers. Among all products, beer accounts for 50% of international
alcohol consumption. In this sector, major distribution channels are wholesalers, producers,
retailers and distributors. The major purpose of this report is to develop an international
marketing report for the chosen organization in Namibia i.e. Namibia Breweries Limited. The
product of the company that is taken into consideration here is Windhoek Light that is a light
beer products. The company is planning to expand its business in new foreign market i.e. Italy.
This report includes the analysis of chosen foreign market considering different aspects like
political, economic, socio-cultural, legal and financial climate. Moreover, it covers the internal
resources and capabilities of Namibia Breweries Limited. At the end, recommendations are given
on general strategy and market entry modes which the organization can use to offer Windhoek
Light in foreign country.
Introduction about Company product and foreign Country
Namibia Breweries Limited (NBL) is a brewery firm in Namibia that was founded the year
1920 when Hermann Ohlthaver and Carl List purchased 4 small breweries with financial
complexities. These breweries were united under the name South West Breweries Limited. After
that, it has changed its name to Namibia Breweries Limited when this country got independence
on 21 March 1990. By using effective strategies and tactics, the firm is able to manage and
develop its operations (Namibia Breweries Limited, 2018). Currently, NBL offers a wide range
of products and exports 60% of its manufacturing to South Africa and 22 other nations all over
the world. Major products of NBL are stated below:
Brewed Under License:
 Heineken
 Amstel Lite
 Amstel Lager
Owned Products

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 Urbock
 Club Shandy
 Tafel Lager
 Tafel Lite
 Windhoek Lager
 Windhoek Light
 Vigo
 Mckane: soda water
From the company analysis, it can be stated that this organizations brews all of its beers as per
the German Purity Law (Reinheitsqebot). Apart from the 4 top-selling beers, NBL also
manufactures specialty beers. Additionally, Nambrew distributes other alcoholic beverage brands
such as Weissbeer, Erdinger, Kilkenny, Guinness etc. Windhoek Light is one of the most
profitable products of Namibia Breweries Limited that contains low alcohol (2%) and low
calories. This brand of NBL is endorsed by South African Heart Foundation. It accomplishes the
impossible objective of company i.e. cutting down the kilojoules and alcohol without
compromising finish or flavor of drinks (Namibia Breweries Limited, 2018). This product of
NBL is available on both offline and online stores.

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Now, Namibia Breweries Limited is planning to expand its operations in foreign country market.
Considering the advantages of expansion, it will be appropriate for the company to carry its
business in Italy market. The major reason behind choosing Italy as target market is the
increasing consumption of beer and other alcoholic beverages in the country. According to the
statistical report, there is a significant increase in the volume of beer consumed in Italy from the
year 2008 to 2017. Despite of continuous economic crisis, consumption of alcoholic beverages in
Italy has developed since 2012, ending 2016 with the growth of 1.6%. In the last year, around
18.9 million hectoliters of beer were consumed (Statista, 2018). Furthermore, January 2017
experienced 3.5% growth as compared to the same month in 2016.
(Source: Statista, 2018)
During this period, the chosen nation recorded a growth of 9.4% and stayed ahead of United
Kingdom, Spain, Germany and Netherlands. The above-given graph shows the increase in
alcoholic beverage consumption in Italy. This is the major reason that this company has selected
Italy as foreign country.
Evaluation of Foreign Country
Before expanding its business in Italian market, Namibia Breweries Limited will conduct an
analysis so that it can evaluate different external factors which will affect its business in the

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country. In this international market, these external factors can be both favorable and
unfavorable for NBL’s business. In Italy, it will be entering by selling Windhoek Light beer that
contains low alcohol and low calories (Deresky, 2017). By specifying these two product features
in Italy, the company will be able to attract more customers towards this most popular product.
There are some external factors of foreign country like political, economic, cultural, legal and
financial factors which may have a great impact on selling of Windhoek Light beer in Italian
marketplace. The evaluation of foreign country is stated below:
Political Factors
From the political point of view, Italy is the best nation to export the products and services. The
country has effective international relationships with foreign nations and other European
countries. There are no restrictions on the exportation and importation of goods and capital. The
beer industry generally confronts several issues which are related to the increasing taxes and
regulations by government. The rules and regulations of Italian government have a great impact
on breweries (Donadini, Spalla and Beone, 2008). In the country, government is engaged in
different campaigns against drinking. The government officers impose penalties while people
drive in drunken situation. This rule imposed by the government decreases the chances of
injuries, accidents and domestic violations. It can have adverse impact on the growth of Namibia
Breweries Limited in Italy. It can affect the sale of Windhoek Light in Italian market.
Economic Factors
In the Eurozone, the economy of Italy is the 3rd largest economy and 8th largest by the Gross
Domestic Product in the world. The country has the biggest market for luxury products in
European market and third market all over the world. There are several economic factors which
will affect the revenues and sales of Namibia Breweries Limited (Gammelgaard and
Dorrenbcher, 2013). One of the primary factors which can provide better opportunities for NBL
is Italy’s GDP. Country’s GDP is constantly increasing so that population has higher purchasing
power. Due to this, they can spend more money on leisure activities like drinking and club. Thus,
it will be profitable for NBL to sell Windhoek Light in Italian market (Trading Economics,
2018).

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(Source: Trading Economics, 2018)
Social and Cultural Factors
Demographic changes have occurred quickly in many areas all over the world with the people
are getting older. There are some social and cultural issues which can affect the sale of alcoholic
beverage in Italy. Problems related to health are currently a major concern like abuse of alcohol
and restricted age of drinking. The people are becoming very conscious towards their heath and
weight. In this market, NBL is planning to offer the product that is low in calorie and less
alcoholic i.e. Windhoek Light beer that can be consumed by the health conscious people (Griffin
and Weber, 2006).
Legal Factors
Beer market of Italy has a better position in the world but in recent years, it has confronted a
reduction in the beer consumption. In this country, the drinking age for both purchasing and
drinking alcohol is 18 years. In addition to this, there are several restrictions on import and sale
of alcoholic beverages (Aykin, 2016). It can decrease the sale of Windhoek Light beer in Italy.
The laws and regulations in the communication such as warnings about driving and drinking and
selling alcoholic drinks to under age people can enhance the time and cost of advertising in Italy.

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Financial Climate
By conducting an analysis of the country’s climate, it can be stated that financial climate of Italy
is moderate. According to the statistics, the value share of alcoholic drink sales in Italy by
category of alcoholic beverages. In this country, Wine covers a largest share in Italian market
and accounts for 48.2% of beverage sales. It is estimated that revenues in beer sector accounts
for US$3,665 million in 2018. The market is expecting to grow yearly by 2% CAGR. Political
improbability, combined with the massive public debt of Italy and large fiscal deficit executes a
shadow over the nation’s outlook. Downcast inflation will assist the consumer spending this year
and improve the situations in banking system.
By conducting above analysis of market, the company will be able to analyze the appropriateness
of targeted foreign market (Griffin and Pustay, 2012). Considering the above aspects of
international market research, Namibia Breweries Limited will expand its business operations in
Italian marketplace.
Internal Resources and Capabilities
Understanding a business deeply is the objective of internal analysis. This analysis is conducted
on the basis of internal resources and capabilities of an organization. Resources are the important
sources which are used to develop the processes and attain organizational objectives. There are
different types of resources like human resources, tangible resources and intangible resources.
Tangible resources are very easy to recognize and analyze like financial resources and physical
assets. Moreover, intangible resources are invisible and these are more important than tangible
resources as they are major source of competitive advantage (Guesalaga, et al 2018). These
intangible resources include brand image, technology know how, intellectual property rights etc.
Apart from resources, the capabilities of an organization are used to refer the capacity of firm for
pursuing a specific productive process. Ultimately, the strategy of a firm includes enhancing
competitive advantage built from these capabilities and resources which exclusively fit the
competitive position of firm.
Under this business expansion to Italian marketplace, Namibia Breweries Limited needs to
leverage its internal resources and capabilities so that it can gain sustainable competitive
advantage in international beer industry. These resources and capabilities will assist the

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organization to produce and introduce Windhoek Light beer in Italian market successfully. There
are various resources and capabilities which the organization needs to leverage in Italy so that it
can determine its attractiveness (Hill, 2008). Some resources and capabilities of Namibia
Breweries Limited are stated below:
Production and Manufacturing Process
Production and manufacturing are two important capabilities of Namibia Breweries Limited. All
the brands of NBL including Windhoek Light beer are brewed under the strict compliance with
the Reinheitsgebot i.e. a German Purity Law of 1516. This law prohibits the utilization of
ingredients other than hops, water and malted barleys. Thus, the products of NBL will be natural
and they are free of stabilizers, chemical additives, preservatives and colorants. In Italian market,
NBL will use the same manufacturing technique for Windhoek Light beer that will differentiate
NBL from other Italian brewers (Helfat, 2017). All the elements used are certified by Genetically
Modified Organisms. However, there are unfavorable conditions in Namibia so it cannot grow
the raw material in that country. To ensure the higher quality of products, all the raw materials at
NBL is imported from Germany. The company has established two facilities for production,
major plant in Windhoek and smaller in Swakopmund. The total brewing capacity of NBL is 1.7
million hectoliters. In Italian market, company can increase this capacity to 2 million with a
capital investment. It will enable the company to enhance its operations in chosen foreign
market.
Marketing Strategies
Marketing strategies will play a significant role in promoting Windhoek Light Beer in Italy.
Currently, this company is using effective strategies in the domestic market. In the future, it will
make efforts to improve and implement more impactful strategy so that it can position itself and
its products among targeted population in Italy. It will focus on 4Ps of marketing mix strategies
i.e. product, price, place and promotion (Helms and Nixon, 2010). Under product strategy, the
organization will focus that Windhoek Light Beer is manufactured by using different quality
processes and standards. The company will ensure that there will be low calories and low alcohol
so that it can attract more people.

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In the initial stage, NBL will use effective pricing strategy for this product. After successful
positioning in Italian market, it would increase the prices of light beer. It will assist the
organization to increase its customer base and revenues as well. Moreover, NBL will develop an
extensive distribution network and different channels so that it can deliver the products to
targeted population (Ashenfelter, Hosken and Weinberg, 2015). The company will offer the
products both online and offline. In addition to above marketing strategies, NBL in Italy will use
more attractive advertising and promotion techniques. However, some governments do not allow
promoting alcoholic beverages, but NBL can promote Windhoek as light beer. This firm will be
using both offline and online modes to approach its targeted audiences.
Supply Chain and Logistics
Supply chain and logistics are the important processes which NBL can use to increase its
business performance in Italian market. NBL has six depots in domestic market from where it
supplies the informal and formal market, with rest being direct shipments to range of customers.
Primary transport is outsourced to its partner Imperial Managed Logistics Namibia Limited,
while secondary distribution is done by NBL employees and trucks. In Italian market, the
company will establish strategic partnership with any logistics company and distribute the light
beer (Paula and Silva, 2017). As secondary distribution partners, the company will use liquor
stores, supermarkets, hospitality outlets, pubs and shebeens. NBL will make efforts to develop
direct interaction and relationship with customers.
Core Competencies
About NBL, it can be stated that the growth and success of NBL lies in purity. Customer demand
purity and they are increasingly looking for more healthy drinks. As mentioned above, the
company is complying with the Purity Law of Germany and using only healthy ingredients in its
beer. In the Italian market, NBL will have the ability to introduce new products to fulfill the
demands of specific targeted customers (Sankrusme, 2011). It will assist the organization to
increase its brand presence in international markets.
Human Resources

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NBL treats its human resources and experts as one of the major resources. Online development
and training of staff provides continuous updating of knowledge and skills that is critical in the
changing business environment in which NBL runs its business. The part of firm’s objective is to
support its human capital with basic requirements of the sector. Every year, company conducts
training programs for its employees in different nations (Schmitt, 2011). In Italian market, NBL
see its human resources as key differentiators and aim to improve and develop their
competencies. It will assist the organization to enhance its corporate efficiency.
In this way, Namibia Breweries Limited will leverage its resources and capabilities in Italian
market so that it can establish its business of Windhoek Light beer in Italy. These resources and
capabilities will assist the organization to make its operations smoother and enhance brand
awareness in the market (Savastano, 2011).
Recommendations
There are some recommendations which are given to Namibia Breweries Limited while it
expands its business operations in Italian market place. It includes the strategy and market entry
mode that can be used by NBL while entering into Italy. Recommendations are given below:
General Strategy
In order to expand its business operations in Italy, NBL should adopt internationalization
strategy. Internationalization is an expansion strategy for a business from its domestic market
into foreign market. A company makes a strategic decision to internationalize that have an
impact on firm and its external and internal operations. NBL should use this strategy to enter into
Italian market that will allow the organization to increase the sales of its product offering i.e.
Windhoek Light beer (Conick, 2016). Under this business expansion, the company has the global
ambition to become a leading player in beer industry. So, it should adopt internationalization
strategy to expand its business in foreign market. The company should make efforts to
differentiate its beer products based on price, quality and product attributes. Consumers compare
the products offered by the beer companies and their prices. If the customers prefer the products
of NBL over local beer in Italy, then demands for NBL’s light beer will exist in Italian market.
Firstly, the company should export its beer products to Italian market. It should analyze the
response of Italian population towards its light beer product then it should establish its premises