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Heineken Strategy Analysis and Discussion

A brief description of the strategy of the Heineken Group and the challenges ahead.

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Heineken Strategy Analysis and Discussion

  1. 1. Heineken Strategy and Value Creation The Lisbon MBA Groups 2 and 7 Ana Santos Bruno Oliveira Caspar Guggenbühl James Shannon Jide Famuyiwa Leonor Martins Marixcela Victoria Pedro Henriques Rui Barata
  2. 2. Agenda STRATEGIC ANALYSIS • PEST Analysis • Segmentation • Attractiveness • Key Success Factors • Strategic Groups • Resources • Core Competencies • Strategic Fit STRATEGIC FORMULATION • Vision & Mission • Objectives • Products-Market Evolution • Vertical Integration • Internationalization • Organizational Development • Organizational Structure RECOMMENDATIONS • New SWOT Analysis • Strategic Initiatives
  3. 3. We are Heineken
  4. 4. STRATEGIC ANALYSIS
  5. 5. PEST ANALYSIS
  6. 6. Pest Analysis •Heavy Regulations •Restrictions on drinking ages •Taxes •Government anti-alcohol campaigns Political - Legal •Economic slowdown / recession •Middle income growing •Raw materials price fluctuation and scarcity •Infrastructure developments Economic •Awareness of alcohol negative effect •Healthy lifestyle •Cultural and social side of drinking •Premium and craft Social - Cultural •Innovative techniques in the production •Digital interaction with customers •Environmental regulations •Eco-friendly packaging Technological - Ecological S
  7. 7. SEGMENTATION
  8. 8. Product Beer Spirits Wine Cider/Perry RTDs/High- Strength Premixes Geography North America Europe Asia Pacific Rest of the World (RoW) Demography Adult Men Adult Women Minors Price Super Premium Premium Regular Packaging Can Glass Bottle Draught Psychographic Premium Consumers Price sensitive Consumers Social consumers Engaged new comers Brand loyalists Segmentation
  9. 9. ATTRACTIVENESS
  10. 10. Attractiveness
  11. 11. KEY SUCCESS FACTORS
  12. 12. Key Success Factors
  13. 13. STRATEGIC GROUPS
  14. 14. Strategic Groups Price/PerceivedQuality Geographic Market Scope Global Brewers Regional Brewers Local Micro-Brewers
  15. 15. RESOURCES
  16. 16. Resources
  17. 17. CORE COMPETENCIES
  18. 18. Core Competencies COMPETENCIES VALUE RARENESS IMITABILITY ORGANIZATION VRIO Brand / Image Global Presence Technology / Innovation Product Portfolio Customer Loyalty Partnerships Marketing and Sales Culture Manufacturing Skills Operational efficiency / Distribution Channels Customer Orientation Flexibility
  19. 19. STRATEGIC FIT
  20. 20. Strategic Fit Heineken has core competencies that allows the company to perform well in most segments, by impacting positively on the different key success factors. Differentiation Marketing DistributionChannels EconomiesofScale CustomerExperience Cost Quality BrandValue Availability Consistency Marketing Brand / Image 4 4 5 4 4 3 3 4 3 2 4 Product Portfolio 5 5 4 5 4 3 - 3 4 - 3 Marketing and Sales 4 5 5 4 4 5 4 4 4 3 5 Manufacturing Skills 3 4 3 4 3 5 3 - - - - Operational Efficiency / Distribution Channels 3 4 5 4 4 4 - 3 5 3 3 4.0 4.5 4.3 4.3 3.8 4.0 3.3 3.7 3.7 2.5 4.0 CORE COMPETENCIES BEER WINE AVERAGE FIT 4.1 3.4 Quality Differentiation BrandValue Marketing CustomerExperience Differentiation Quality CustomerExperience DistributionChannels Quality EconomiesofScale Cost Differentiation BrandValue DistributionChannels Brand / Image 4 3 5 3 4 5 4 4 3 4 - 3 4 5 - Product Portfolio 4 4 4 4 3 4 5 4 4 5 4 - 5 5 4 Marketing and Sales 3 3 3 5 4 4 4 4 4 4 - - - 4 - Manufacturing Skills 3 - 2 - - 3 3 - - 3 4 4 3 4 3 Operational Efficiency / Distribution Channels - 3 3 - 3 3 - - 4 - 4 4 3 3 5 3.5 3.3 3.4 4.0 3.5 3.8 4.0 4.0 3.8 4.0 4.0 3.7 3.8 4.2 4.0 3.5 AVERAGE FIT 3.9 CIDER / PERRY RTDs / HIGH STRENGTH PREMIXES 3.9 CORE COMPETENCIES SPIRITS
  21. 21. Strategic Fit Heineken has core competencies that allows the company to perform well in most segments, by impacting positively on the different key success factors. CORE COMPETENCIES BEER WINE Differentiation Marketing Distribution Channels Economiesof Scale Customer Experience Cost Quality BrandValue Availability Consistency Marketing Brand / Image 4 4 5 4 4 3 3 4 3 2 4 Product Portfolio 5 5 4 5 4 3 - 3 4 - 3 Marketing and Sales 4 5 5 4 4 5 4 4 4 3 5 Manufacturing Skills 3 4 3 4 3 5 3 - - - - Operational Efficiency / Distribution Channels 3 4 5 4 4 4 - 3 5 3 3 AVERAGE FIT 4.0 4.5 4.3 4.3 3.8 4.0 3.3 3.7 3.7 2.5 4.0 4.1 3.4 CORE COMPETENCIES SPIRITS CIDER / PERRY RTDs / HIGH STRENGTH PREMIXES Quality Differentiation BrandValue Marketing Customer Experience Differentiation Quality Customer Experience Distribution Channels Quality EconomiesofScale Cost Differentiation BrandValue Distribution Channels Brand / Image 4 3 5 3 4 5 4 4 3 4 - 3 4 5 - Product Portfolio 4 4 4 4 3 4 5 4 4 5 4 - 5 5 4 Marketing and Sales 3 3 3 5 4 4 4 4 4 4 - - - 4 - Manufacturing Skills 3 - 2 - - 3 3 - - 3 4 4 3 4 3 Operational Efficiency / Distribution Channels - 3 3 - 3 3 - - 4 - 4 4 3 3 5 AVERAGE FIT 3.5 3.3 3.4 4.0 3.5 3.8 4.0 4.0 3.8 4.0 4.0 3.7 3.8 4.2 4.0 3.5 3.9 3.9
  22. 22. STRATEGIC FORMULATION
  23. 23. VISION & MISSION
  24. 24. Vision & Mission Vision • “To win in all markets with Heineken®, and with a full brand portfolio in markets where we choose.” Mission • A proud, independent, global brewer committed to surprising and exciting consumers everywhere.” ”A passion for quality, enjoyment of life, respect for people and respect for our planet.”
  25. 25. OBJECTIVES
  26. 26. Objectives Financial Other - Non Financial o Lead by Innovation o Opportunities in the emerging markets Shape the Cider market o “Brewing a Better World” o Global Business Services o Lead by Cool Marketing SMART SMART SMART SMART
  27. 27. PRODUCTS- MARKETS STRATEGY
  28. 28. Products-Market Matrix
  29. 29. • Market Penetration • Increasing market share in current markets (North America and Europe) • Market Extension • Expansion into emerging markets in South America, Asia and MEA • Product Development • Innovations with development of Radler variants in 2014 • Diversification • Introduction of innovative products to new markets in Asia and MEA Products-Market Evolution
  30. 30. Cost Leadership • Size and scale through major acquisitions in Mexico, Southern Africa and other regions • High bargaining power with suppliers and economies of scale Differentiation • Strong brand established for products across geographies • Industry leader in sustainability efforts. • Top 5 globally Competitive Advantage COST LEADERSHIP Low High DIFFERENTIATION High Pure differentiation Differentiation with cost leadership Low No advantage Pure cost leadership
  31. 31. Heineken embraces “moment marketing”  Your best moments  Your most premium moments  Your most irreverent moments  Your good moments Key Product Differentiation Elements
  32. 32. Evolution of Products-Market Strategy
  33. 33. VERTICAL INTEGRATION
  34. 34. Vertical Integration Integratedby Heineken Forward IntegrationBackward Integration • Eat or be Eaten • Smallholder farmers • Three tier system
  35. 35. INTERNATIONALIZATION
  36. 36. Internationalization *Only Product extension so far has been Heineken Light for the US market Local Adaptation Low High Global Integration High Low Culture/Habits Design Language Size/Package Technical System Concept Standardized Standardized Standardized Standardized Standardized Marketing Adapted Standardized Adapted Standardized Standardized Technology Standardized Standardized Standardized Standardized Standardized Product Standardized Standardized Standardized Standardized Standardized Culture/Habits Design Language Size/Package Technical System Concept Adapted Adapted Adapted Adapted Standardized Marketing Adapted Adapted Adapted Adapted Standardized Technology Standardized Standardized Adapted Adapted Adapted Product Adapted Adapted Adapted Adapted Adapted Portfolio Heineken
  37. 37. Internationalization Attractiveness Factors Weight (%) Asia Pacific Americas Africa Middle East and East Europe West Europe Market evaluation 35% 2,51 2,43 1,93 2,34 Operational evaluation 35% 1,95 2,15 1,95 1,95 Risk evaluation 30% 1,64 1,9 1,64 2,3 Overall attractiveness 100% 6,1 6,48 5,52 6,59 Competitive Strength Low Medium High Country Attractiveness High W. Europe/Pacific Asia Medium US/Canada/Africa Low Middle East
  38. 38. Organizational Development Products- Markets Heineken Light / Draught Experience Buy Strongbow Vertical Integration Efficiency / Distribution Breweries Channels International. Partnerships / Exports Buy Breweries Related Diversification Low/no alcohol / Radler / Desperados Cider / Craft Beer Internal External
  39. 39. ORGANIZATIONAL STRUCTURE
  40. 40. Organizational Structure
  41. 41. Simple Structure Functional Structure Divisional structure or by strategic business units International structure by strat. b. units or network Divisional Structure International structure by strat. b. units, matrix or networks Functional Structure International functional or divisional structure Expansion of the products-markets matrix Related Diversification Internationalization Related Diversification Related Diversification Internationalization Non - Related Diversification Internationalization Activities Recentering Activities Recentering STRATEGY AND STRUCTURE Organizational Structure
  42. 42. NEW SWOT ANALYSIS
  43. 43. WEAKNESSES STRENGTHS TIME PREMIUM BRANDS CONSOLIDATE PRESENCE IN ASIA, AFRICA AND LATIN AMERICA LOW / NON- ALCOHOLIC FEMALE CONSUMERS LEGISLATION INCREASE READY-MIXED AND FLAVOURED DRINKS New SWOT STRENGHTS •Brand Portfolio •Strong Breweries Network •Excellent Brand Image •International Development •Product Differentiation •Brand Marketing WEAKNESSES •Difficulties to penetrate some countries •Lack of young consumers •Average higher prices compared to competition •Premium Prices •Lack of female consumers
  44. 44. STRATEGIC INITIATIVES
  45. 45. Strategic Initiatives Diversification and Expansion Consolidate presence in certain markets Anticipate regulation increase
  46. 46. “Brewing a better future”

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