Brazil Beer Industry Essay

Introduction This report aims to document the Alcohol Industry, specifically Beer, within the South American country of Brazil, with the possibility of a business from another country or even continent contemplating entering the country’s market. Here, it is specifically examining a company originating from Scotland. Detailed is the environment within the country and the market within which the industry has thrived into at least the 4th largest Beer market in the world. 1. 1Report Objectives: To determine the background of the Beer Industry within Brazil and the attributes that display how successful it has been over the years.

Uncover the possible pros and cons for entering the South American country and pursuing operations internationally. Detail the various Strategies that are available for a UK company, specifically Scottish, to enter and thrive within the Brazilian market. Analyse the organisations potential investments and ongoing objectives within the country. Beer Industry in Brazil 2. 1Timeline of Industry [pic] (CabecaDeCuia, 2012) According to the National Union of Brewing, Brazil ranks fourth in the ranking of world production of Beer, with 10. 34 billion gallons per year, second only in volume to China (35 billion litres per year), U.

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S. A. (23. 6 billion litres per year) and Germany (10. 7 billion litres / year). Brazilian Beer consumption expanded by a thumping 11% in 2010 Brazil is the world’s fourth largest market for Beer, with over 85 million barrels produced and distributed in 2010 alone. The annual consumption per capita is 54 litres. [pic] (Brazilian Bubble, 2012) The tradition of brewing in Brazil dates back to German immigration in the early 1800’s. The first breweries date from the 1830’s. The brand Bohemia is claimed to be the first Brazilian beer, with production starting in 1853 in the city of Petropolis, Rio de Janeiro.

Bohemia is the oldest Brazilian beer which is now owned by Anheuser–Busch InBev. Two important brands, Antarctica and Brahma, started production in the 1880’s. Over the past 15 years Brazil has imported brands of beer from Europe (for example, The Netherlands and Belgium). These imports are more expensive than locally brewed rivals. There are a growing number of bars and beer shops dedicating themselves to selling a large range of craft and imported. International brands are produced in Brazil, such as Stella Artois and Heineken, but are dedicated to the premium market with small market share.

Pilsener Beers are the most consumed in Brazil (98% of the market share), with only a small number of rivals. Majority of the market belongs to AmBev, the owner of the Brahma, Antarctica, Bohemia and Skol brands. Brazil’s largest brewer was formed in 1999 from the merger of the two biggest brands, Brahma and Antarctica. In 2004, AmBev merged with Belgium’s Interbrew to form the world’s largest brewer, now known as InBev. After the merger, Grupo Schincariol became the largest Brazilian owned brewery in the country. In 2002, Molson Coors bought Brazil’s second largest brewery Kaiser.

In 2006, the Mexican FEMSA Cerveza acquired 68% of Kaiser Brewery from Molson Coors. Molson Coors still holds 15% of Kaiser brewery shares, and Heineken holds the remaining 17%. In 2006, FEMSA Cerveza released the Mexican brand Sol in the Brazilian market to compete to the biggest Inbev brands with poor results. In 2010, Heineken bought all FEMSA’s brewery including the Brazilian unit. AmBev is the leading beer brewer in Latin America and the largest producer of beer in Brazil. It was formed after a merger of the two largest beer producers of Brazil: Brahma and Antarctica.

In the company’s product mix there are various brands of beer, soft drinks, bottled water, iced tea and isotonic beverages. AmBev has a very good distribution structure. In 2004 there was a merger between AmBev and Interbrew. This merger created InBev, which was later acquired by Anheuser-Busch and is now its subsidiary. The four largest breweries by market share (Fens, Ambev, Cervejaria Petropolis and Schincariol Group) in 2008 collectively produced 95% of the beer sold in Brazil Beer is the most competitive sector of the alcoholic market in Brazil, and global beer companies InBev and FEMSA predominantly compete for market share.

The top five participants in the market (by estimated share of the Brazilian beer market): Ambev (Inbev) (70%) Grupo Schincariol (11. 6%) Petropolis brewery (9. 8%) Heineken (6. 9%) Others (1. 73%) [pic] (Brazilian Bubble, 2012) Most Popular Brands in 2005: Skol (32. 6%) Brahma (20. 4%) Antarctica (13. 6%) Nova Schin (10. 2%) Kaiser (8. 9%) [pic] (Brazilian Bubble, 2012) There are a number of microbreweries in Brazil, the emergence of which are a relatively recent phenomenon (Brazilian Bubble, 2012). Some of the better renowned microbreweries include:

Baden Baden (Recognised as the first microbrewery in Brazil) Eisenbahn Wals Colorado DaDo Bier Mass produced, mainstream beer labels still dominate in Brazil, but small breweries are increasing in number, and have trebled their market share to just under 10% in recent years (Deutsche Welle, 2012). Despite the quality beer offered by micro-breweries, a mass-produced, light, watery version of a Pilsner still dominates the Brazilian market. But brewing instructor Ligia Marcondes believes the market for high-quality beer is continuously growing in the country of nearly 190 million, especially among the middle class.

So successful have some micro-breweries been that they have forced some larger Brazilian breweries to rethink their production, leading to an improvement in the quality of some mass-produced labels. Beer Industry Case Study, week 3 2. 2Environment Licensing Consumer Buying Attitudes Brazil compared (Europe, America, Asia) leading to specific focus on UK and Scotland AmBev Merger The Organisational Environment can be defines as “all elements existing outside the organisation’s boundaries that have the potential to affect the organisation” (Daft, 2006: 82).

The general environment is the layer of the external environment that affects the organisation indirectly and the task environment is the layer of the external environment that directly influences the organisation’s operations and performance. Johnson, Whittington and Scholes (2011: 49) show the many layers of environments that can be replicated in the case of the Beer Industry in Brazil: [pic] Johnson, Whittington and Scholes (2011: 50) and Buchanan and Huczynski (2010: 13) list the six components commonly regarded as the main environmental influences, known as PESTEL:

Political Economic Social Technological Environmental Legal Additionally, the internal environment is described as “the environment that includes the elements within the organisation’s boundaries” which is imperative to understand when considering embarking on entering new markets, especially internationally. This international dimension is a “portion of the external environment that represents events originating in foreign countries as well as opportunities for companies in other countries” (Daft, 2006: 84).

(Deutsche Welle, 2012) German ministers are increasingly in Brazil to build business ties ahead of the 2014 World Cup and 2016 Olympics, but a mutual love of something very German is already connecting the countries: Beer. Master brewer Claudio Jose Gonzales de Matos claims Brazilians have taken up Beer making with the passion seen with Germans who brought their unique recipes to the country decades ago. Similarly, Brewer Pedro Paulo Moretzohn believes these past German methods are underpinning the resurgence of micro-breweries in Brazil.

Globalisation, a key concept here, being “the intensification of world-wide social and business relationships which link localities in such a way that local conditions are shaped by distant events” (Buchanan and Huczynski, 2010: 38). Japan’s Kirin Holdings has recently announced the purchase of a controlling stake in Brazil’s second biggest brewer, family-held Schincariol. It just shows what many in the market already know: that Brazil is one of the few countries in the world with major growth potential for brewers P49 ANSOFF TYPOLOGY OF ENVIRONMENTS P122 Hofstede.

Daft (2006: 83) gives a mental picture of an organisation taking into account the factors that are influential towards the success or failure of their business activities. [pic] Daft’s Internal and External Organisational Environment Model (2006) Like in most emerging country, little attention is paid to environmental issues in terms of protecting the environment and prevents pollution in order to stimulate trade. Responsible alcohol use, responsible drinking programs? Climate? Marketing at events like Brazilian carnival? | |Scotland |Brazil | | |[pic] |[pic] | |Population |5.

3 million |194 million | |Drinking Age of Consent |18 |18 | |Average Consumption | | | |Male: Female Gender Ratio (18 – |0. 94 : 1 |0. 98 : 1 | |65) | | | |Alcohol Related deaths per year |2. 5 million per year world wide |2. 5 million per year world wide | |(2011) | | | |Healthcare Costs |? 6bn in UK | | |Average Cost of Beer in Pounds |? 2. 15 |? 1. 50 | |Sterling | | | 2. 3Economic Analysis Relevant Brazil facts Scotland facts Metric analysis of Emerging Economies Benefits of the emerging economies GDP Brazil is the largest country in Latin America in terms of the size of the economy, population and geographic area.

Nearly 50 million Brazilians have joined the middle class as incomes and living standards rise. Brazilian economy grew by 4. 4% and a comfortable GDP growth of 5. 7% ,Trade balance (2011) stands at $20 billion surplus Today brazil is seventh largest economy in the world by nominal GDP and eighth largest by purchasing power parity Having a large agricultural, service, manufacturing and mining sectors, the economy of brazil ranks highest among all the South American countries. Agriculture produce such as soybeans, coffee, sugarcane, cocoa, rice, livestock, corn, oranges, cotton, wheat, and tobacco contribute 6% of GDP.

The EU is Mercosur’s number one trading partner and Mercosur signed agreement with the EU to establish a free trade area Brazil has only few regulations concerning alcohol consumption making it easy to do business in. There was a recent increase on taxes on Beer to 26%. Therefore the prices on Beers are expected to rise to cover for the lost profit margin Brazil ranks 126 on World Bank “Ease of Doing Business” Rank with China at 91, Russia at 124 and India at 132. Ranking based on factors such as Starting a business,Protecting Investors,paying taxes,Trading across borders and enforcing contracts Corruption Index Rank.

Country World ranking Score(1-10) |Netherlands |7 |8. 9 | |Brazil |73 |3. 8 | |Russia |143 |2. 4 | |India |95 |3. 1 | |China |75 |3. 6 | Brazil is the largest country in Latin America in terms of the size of the economy, population and geographic area. There is fast growth expected during the next few years as the country becomes a major economic power. Experts predict that Brazil will be a key player in global trade in the future. The economic dimension of the general environment “represents the overall economic health of the country or region in which the organisation operates” (Daft, 2006: 86).

Johnson, Whittington and Scholes (2011) detail numerous Economic Factors as business cycles, interest rates, exchange rates, personal disposable income, unemployment rates, GDP trends. Over the last 8 years the GNI (Gross National Income) of Brazil has grown at an average annual rate of 4% (stabilising Brazil’s economy). Nearly 50 million Brazilians have joined the middle class as incomes and living standards rise. Therefore more organisations are now doing business in Brazil because of the growing potential of the market. Brazil belongs to the middle income countries. During the last few years Brazil’s currency was stable.

The last time it was devalued was in 1995 and again in 1999. In 2009 China surpassed the United States as Brazil’s top trading Partner. There was a recent increase on taxes on Beer to 26%. Therefore the prices on Beer are expected to rise (Forbes, 2012). In the middle of the 20th century, Brazil developed a rampant inflation, due to the government decisions to print money to fund the new capital Brasilia which lead to inflation running out of control. The citizens lost trust in the Government after several unsuccessful attempts to freeze prices, control interest rates and even freeze bank accounts.

(Cardoso, 2010). Projects were not financed out of taxes or borrowing funds but by simply creating money. Due to this, Brazil experienced hyperinflation that peaked out to 5000% a year (Brazil, 2011). The Real Collor plan was implemented in 1994 with three key elements: The fiscal strategy Opening of the Economy New foreign policy and monetary reform. The Collor plan proved to be successful and inflation was eliminated completely. By the year 2000, the Brazilian economy grew by 4. 4% and a comfortable GDP growth of 5. 7%. The economic growth carried on throughout the years.

In 2008 the world slipped into recession and many expected the brazil’s economy to slow down and even decline but the reality was the opposite, it continued to grow at a high rate hitting 7. 5% in year 2010. (Cardoso, 2010) Today brazil is seventh largest economy in the world by nominal GDP and eighth largest by purchasing power parity. Brazil is one of the fastest growing emerging economies in the world ranked among emerging economic powers as India, china, South Africa and Russia. Having a large agricultural, service, manufacturing and mining sectors, the economy of brazil ranks highest among all the South American countries.

The emerging markets such as Brazil provide expanding economic conditions with reduced risk and also provide the greatest potential to investors. The GDP stands at $2. 5 trillion (nominal exchange rate) and GDP (purchasing power parity) at $2. 3 trillion moving towards India and China’s GDP (purchasing power parity) at Four Thrilion and Ten Trilion respectively. As estimated in 2011, annual real growth was 3. 5%. which was far better that the developed world GDP (nominal exchange rate) per capital stands at $12,917. GDP (purchasing power parity) per capital stands at $11,845.

Brazil is one of a few Countries in the world sitting on a fortune of metals and minerals. It has Iron ore, manganese, bauxite, nickel, uranium, gemstones, oil, wood, aluminium and 14% of the world’s renewable fresh water. Agriculture produce such as soybeans, coffee, sugarcane, cocoa, rice, livestock, corn, oranges, cotton, wheat, and tobacco contribute 6% of GDP. 28% of GDP comes from steel, commercial aircraft, chemicals, petrochemicals, footwear, machinery, motors, vehicles, auto parts, consumer durables, cement, and lumber industries.

Services contribute 66% of GDP namely mail, telecommunications, banking, energy, commerce, and computing. As of 2011: | | |Trade balance (2011): $20 billion surplus. | |Major markets: China up 15%, United States up 10%, Argentina up 9%. | |Imports: $182 billion. | |Exports: $202 billion. | |Major suppliers: United States 15%, China 14%, and Argentina 8%. | |Exchange rate (October 3, 2011): U. S. A. $1 = 1. 75 Brazilian Real. | |(KPMG, 2012) | | | 2. 4Government IN BRAZIL AND SCOTLAND REGION Legal Implications Tax quotas Trade agreements Exchange rates Inflation Import and exports.

Johnson, Whittington and Scholes (2011) describe the political factors as Government policies, taxation changes, foreign trade regulations, political risk in foreign markets, changes in trade blocks (EU) and many legal factors: For example, competition laws, health and safety laws, employment laws, licensing laws, IPR laws. Daft defines the legal-political dimension as including the “federal, state, and local government regulations and political activities designed to influence company behaviour” (2006: 87). Argentina, Brazil, Paraguay and Uruguay form the Common market of the south (Mercado Comun del Sur or Mercosur).

The EU is Mercosur’s number one trading partner and Mercosur signed agreement with the EU to establish a free trade area( Keegan p. 102). Brazil has only few regulations concerning alcohol consumption. The small number of laws that already exists (for example, it is illegal to sell alcohol to minors, to people already visibly intoxicated, in outlets located next to roadways) is rarely enforced. There are no regulations concerning some vital aspects of alcohol availability, such as hours and days of sale, density of alcohol outlets and specific alcohol licenses.

In addition, most alcoholic beverages are extremely cheap and promotions, like “happy hours”, are frequent (IAS, 2012). There are some alcohol control policies in public health care that are aimed to decrease the consumption in order to minimise alcohol related problems. Good ethics In Brazil there is a federal law that regulates alcohol advertising. Among other things, alcohol beverages may only advertise before 6 am and after 9pm. However, alcohol beverages, in the definition of the law, means those beverages with an alcohol content that is higher than 13ABV, that means beer and wine are not included in that law (IAS, 2012).

In Brazil the legal drinking age is 18 years. World Bank “Ease of Doing Business” Ranking Regulations Netherlands Brazil Russia India China |Starting a business |79 |120 |111 |166 |151 | |Dealing with construction |99 |127 |178 |181 |179 | |permits | | | | | | |Registering a property |48 |114 |45 |97 |40 | |Getting Credit |48 |98 |98 |40 |67 | |Protecting Investors |111 |179 |111 |46 |97 | |Paying Taxes |43 |150 |105 |147 |122 | |Trading across borders |13 |121 |160 |109 |60 | |Enforcing contracts |28 |118 |13 |182 |16 | World rank 31 126 124 132 91.

(KPMG Investing in Brazil, 2012) Corruption Index Rank Country World ranking Score(1-10) |Netherlands |7 |8. 9 | |Brazil |73 |3. 8 | |Russia |143 |2. 4 | |India |95 |3. 1 | |China |75 |3. 6 | (KPMG Investing in Brazil, 2012) 2. 5The Infrastructure and Technology available Transportation system Availability of natural resources Land and buildings Supply chain Communication and the internet IN BRAZIL AND SCOTLAND REGION Technological Dimension “the dimension of the general environment that includes scientific and technological advancements in the industry and society at large”.

Due to significant differences in climate and landscape, there is no hop production in Brazil, or significant barley or wheat production. (http://brazil. angloinfo. com/lifestyle/food-and-drink/beer/) The physical infrastructure in Brazil is difficult because it is not sufficient and partly controlled by government or single firms that do not allow everybody to use it in emerging markets Brazil. Over 60% of freight in Brazil is going by road and only 20% by rail. Brazil’s ports are the gateways to approximately 80% of the imported and exported goods.

The failure to build sufficient infrastructure could lead to problems in terms of Brazilians growing economy. Technological Factors that may arise for example include new discoveries and technology developments, ICT innovations, rates of obsolescence, increased spending on R&D (Johnson, Whittington and Scholes, 2011). At the end of 2009, Brazil invested nearly $224 billion in infrastructure, transport and energy. $98 billion was invested in sanitation projects, water treatment facilities, electric utilities, irrigation and housing.

Almost $30 billion was invested in 50,000 miles of road construction projects and 3000 miles of railway and prorts. [pic] Land proves to be a significant natural resource for Brazil. The country produces many different types of crops and livestock. Brazil has a vast land the size of Western Europe and 40% of Brazil’s land is classified as farm land and full of natural resources. The country to many is seen as a technically-advanced country with its sophisticated telecommunications, internet and broadcasting facilities.

As it stands at the moment it has the tenth largest number of internet users in the world and growing (Cardoso, 2010). 2. 6Social and Cultural dynamics Hofstede’s cultural dimensions theory Culture and sub culture issues Historical Analysis Health Risks During the Annual Brazilian Carnival there is a noticeable hike in consumption. In these 4 days, 400 million litres (5% of yearly production) Beer is consumed. In November with the approach of summer, the manufacture and investment in marketing triples. International tourists find that domestic and local beers are much less expensive than imported brands.

In Brazil there is an extreme tolerance of the society regarding the consumtion of alcohol and even the abuse. Alcoholic beverages are represented at the majority of gatherings like festivals, parties and similar events (IAS, 2012) Beer is drunk by all age groups, but it is the most frequently used alcoholic beverage among young students. Consumption of alcohol was growing in the last decade. A reason for the increased alcohol consumption in Brazil is the high percentage of young people in its population and the fact that the country’s economic and political situation is relatively favourable (IAS, 2012).

The Sociocultural Dimension is defined as “The dimension of the general environment representing the demographic characteristics, norms, customs, and values of the population within which the organisation operates” (Daft, 2006: 85). Cultural Frames of Reference, as seen by Johnson, Whittington and Scholes (2011: 169), show graphically the various factors that interlink culturally with both an individual, their views and the organisation. [pic].

This can be expressed further below with visually comparing a “web-like” diagram a showing what is potentially needed to greater understand a new market, organisation or country (Johnson, Whittington and Scholes, 2011: 179) [pic] | | |CAGE Framework | | | |Cultural Distance | |Administrative and Political Distance | |Geographic Distance | |Economic / Wealth Distance | | | |(Johnson, Whittington and Scholes, 2011: 278) | Johnson, Whittington and Scholes (2011) Socio-cultural Factors: For example, population changes, income distribution, lifestyle changes, consumerism, changes in culture and fashion.

Strategy for Scottish Company (Buchanan and Huczynski, 2010: 46) Scenario Planning: “The imaginative development of one or more likely pictures of the dimensions and characteristics of the future for an organisation” Strategy is the realisation of the long term goals and objectives of a given enterprise and the adoption of particular courses of action, allocating resources necessary for carrying out these. Also, it is described by Henry Mintzberg as “a pattern in a stream of decisions” (Mintzberg, 2007: 3).

Strategy is concerned with the “long-term direction of an organisation”, what they wish to do and how they plan to execute the plan to achieve organisational goals (Johnson, Whittington and Scholes, 2011: 4) [pic] [pic] 3. 1 Entry/Exit Strategy – Pros and Cons (SWOT/VRIN Analysis) (Porters 5 Forces) (Strategic Capabilities) Modes of Market (Johnson, Whittington and Scholes, 2011: 284) [pic] Risk, Return and Reactions Stages of Strategic Planning Initial Guidelines from Corporate Centre Business-level Planning Corporate-Level integration of business plans Financial and Strategic Targets Agreed Three Horizons for Strategy.

Horizon 1: Extend and defend core business. Horizon 2: Build emerging businesses. Horizon 3: Create viable options. [pic] Environmental (‘Green’) Factors: For example, environmental protection regulations, energy consumption, global warming, waste disposal and re-cycling. Cycles of Competition (Johnson, Whittington and Scholes, 2011: 67) [pic] [pic] Strategic Capabilities and Competitive Advantage (Johnson, Whittington and Scholes, 2011: 89) The four key criteria by which capabilities can be assessed in terms of providing a basis for achieving sustainable competitive advantage are: Value, Rarity, Inimitability and Non-Substitutability.

Jay Barney: ‘Firm resources and sustained competitive advantage’, Journal of Management, vol. 17 (1991), no. 1, pp. 99–120. [pic] (Johnson, Whittington and Scholes, 2011: 108) Generic Strategies (Johnson, Whittington and Scholes, 2011: 199) [pic] Miles and Snow’s 4 Adaptive Strategies Prospector Defender Analyzer Reactor [pic] (Daft, 2006: 137) Market Entry Strategy “an organisational strategy for entering a foreign market” Daft (2006: 139) Licensing: “An entry strategy in which an organisation in one country makes certain resources available to companies in another in order to participate in the production and sale of its products”.

(Lynch, 2006: 76) 7 Basic Factors Influencing the Organisation General Evaluation of the Environment Factors Affecting Many Industries Industry Organisation Competitor Co-Operator Customer 3. 2 International (PESTEL) (McKinsey Model) [pic] (Johnson, Whittington and Scholes, 2011: 55) [pic] Porter’s five forces framework Porter’s five forces framework helps identify the attractiveness of an industry in terms of five competitive forces: The Threat of Entry, The Threat of Substitutes, The Bargaining Power of Buyers, The Bargaining Power of Suppliers and The Extent of Rivalry Between Competitors.

The five forces constitute an industry’s structure. Types of Industry Monopolistic industries – an industry with one firm and therefore no competitive rivalry. A firm has ‘monopoly power’ if it has a dominant position in the market. For example, BT in the UK fixed line telephone market. Oligopolistic industries – an industry dominated by a few firms with limited rivalry and in which firms have power over buyers and suppliers. Perfectly competitive industries – where barriers to entry are low, there are many equal rivals each with very similar products, and information about competitors is freely available.

Few (if any) markets are ‘perfect’ but may have features of highly competitive markets, for example, mini-cabs in London. Strategic Directions [pic] (Johnson, Whittington and Scholes, 2011: 232) Market Penetration Market penetration refers to a strategy of increasing share of current markets with the current product range. This strategy: Strategic Capabilities; builds on established scope is unchanged; means the organisation’s Increased power; leads to greater market share and with buyers and suppliers; Economies of scale; and provides greater and experience curve benefits.

[pic] Portfolio Matrices (Johnson, Whittington and Scholes, 2011: 250) Growth/Share (BCG) Matrix [pic] Directional Policy (McKinsey) Matrix Parenting Matrix International Drivers (Johnson, Whittington and Scholes, 2011: 268) [pic] Multinational Structures (Johnson, Whittington and Scholes, 2011: 439) [pic] Configuration Dilemmas [pic] (Johnson, Whittington and Scholes, 2011: 453)McKinsey Model Global Sourcing/Outsourcing “Engaging in the international division of labour so as to obtain the cheapest sources of labour and supplies regardless of country”.

Franchising: “a form of licensing in which an organisation provides its foreign franchisees with a complete package of materials and services” Multinational Corporation (MNC) or Global Corporation: “an organisation that receives more than 25% of its total sales revenue from operations outside the parent company’s home country” Managing Cross Culturally: Leading, Decision Making, Motivating, Controlling, (Lynch, 2006: 690) Comparative Advantage of Nations: Porter’s Diamond Theory (1990) Factor Conditions Related and Supported Industries Firm Strategy, Structure and Rivalry Demand Conditions [pic] Heineken Case Study 8.

1 SABMiller Case Study 8. 4 Financial Budgeting (? 2 million investment) (Lynch, 2006: 81): Market Definition and Size, Growth and Share (Lynch, 2006: 5) Corporate Strategy: the identification of the purpose of the organisation and the plans and actions to achieve that purpose. Identification of market opportunities. (Lynch, 2006: 117): Sustainable Competitive Advantage (SCA): is an advantage over competitors that cannot easily be imitated (Lynch, 2006: 119) SCA: Differentiation, Low Costs, Niche Marketing, High Performance, Quality, Service, Vertical Integration, Synergy, Culture, Leadership and Style.

(Lynch, 2006: 627) Corporate Strategy Plan Objectives Marketing Objectives Operations Objectives Human Resources Objectives Finance Objectives Research and Development Objectives Role of Government and role of chance events (Lynch, 2006: 695) GATT: General Agreements on Tariffs and Trade: Non-discriminatory, Consultative and Sanctions for non-compliance Daft (2006: 268) Strategic Management: “The set of decisions and actions to formulate and implement strategies that will provide a competitively superior fit between the organisation and its environment so as to achieve organisational goals”.

Stability and Rentrechment Daft (2006: 270) Levels of Strategy: Corporate: What businesses are we in? , Business: How to compete? and Functional Levels: How to support? Daft (2006: 276) 4. 1 Investment Appraisal (Cost/Benefit) Sourcing on market entry / forecasting Accounting for internationalisation 4. 2Potential Products (275ml, Lager, Ale and Alcohol Free) 3 P’s 4. 3 Competition/Consumer Behaviour Conclusions 5. 1Key strategies for operations mentioned Specific growing Alliances Niche Markets / (Hospitality / Function Sectors) Product Diversification VRIN and SWOT Analysis.

Strategic Capabilities Analysis 5. 2Likelihood of Success? Unlikely Partial investment if any Wrong to pursue strong entry into market Currently Highly competitive alcohol market Booming Brazilian economy but still very hard to successfully and noticeably penetrate Monopolistic Industry with one major player (AmBev) References 6. 1Bibliography Buchanan, D. A. and Huczynski, A. A. (2010) Organizational Behaviour. 7th ed. London: Financial Times Prentice Hall. Daft, R. L. (2006) The New Era of Management. International ed. Ohio:

Thomson South-Western. Johnson, G. , Whittington, R.and Scholes, K. (2011) Exploring Strategy: Text & Cases. 9th ed. Harlow: Financial Times Prentice Hall. Lynch, R. (2006) Corporate Strategy. 4th ed. Harlow: Financial Times Prentice Hall. 6. 2Journal Articles Almeida-Filhoa, N. , Lessaa, I. , Magalhaesa, L. , Araujoa, M. J. , Aquinoa, E. , Kawachib, I. and James, S. A. (2004) ‘Alcohol drinking patterns by gender, ethnicity, and social class in Bahia, Brazil’. Rev Saude Publica, 38(1), pp. 45 – 54. Chandler, A. D. (1963) ‘Strategy and Structure: Chapters in the History of American Enterprise’. MIT Press Da Rocha, A. and Dib, L. A.

(2002) ‘The Entry of Wal-Mart in Brazil and the Competitive Responses of Multinational and Domestic Firms’. International Journal of Retail & Distribution Management, 30(1), pp. 61 – 73. Farrell, T. and Gordon, R. (2012) ‘Critical Social Marketing: Investigating Alcohol Marketing in the Developing World’. Journal of Social Marketing, 2(2), pp. 138 – 156. Kerr-Correa, F. , Tucci, A. M. , Hegedus, A. M. , Trinca, L. A. , De Oliveira, J. B. , Floripes, T. M. F. , Regina, L. and Kerr, S. (2008) ‘Drinking Patterns between Men and Women in Two Distinct Brazilian Communities’. Rev Bras Psiquiatr, 30(3), pp. 235 – 42. Mendoza-Sassi, R.A. and Beria, J. U. (2003) ‘Prevalence of Alcohol Use Disorders and Associated Factors: A Population-Based Study Using AUDIT in Southern Brazil’.

Addiction, 98, pp. 799 – 804. Porter, M. E. (1996) ‘What is Strategy? ’ Harvard Business Review, pp. 60 Silveira, C. M. , Siu, E. R. , Wang, Y. , Viana, M. C. , De Andrade, A. G. and Andrade, L. H. (2012) ‘Gender Differences in Drinking Patterns and Alcohol Related Problems in a Community Sample in Sao Paulo, Brazil’. CLINICS, 67(3), pp. 205 – 212. Wilsnack, S. C. and Wilsnack, R. W. (2002) ‘International Gender and Alcohol Research: Recent Findings and Future Directions’. Alc.

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