Heineken Business Strategy Management
Porters five forces models are widely use to approach by companies as a tool for theirs industry structure analysis (Craig S. Fleisher, 2007). The competition faced by “Heineken Beer” versus its competitors is analysed with Porters 5 forces model as to explain Heineken Beer competitive positioning and its strategic advantages. Despite of decline of the whole beer industry stays extremely competitive with number of large companies have multiple private label brands, which carry different tastes and needs throughout the world. The threat of substitution with beers takes up high where beer vulnerably to the other alcoholic drinks such as wine, champagnes and hard liquor. For instance wine consumption in the world are increasing dramatically started in the years 2005 and predicted to be continue increasing as it is a healthy drink according to researchers, as it could improve heart disease and many more (Geralyn G. Brostrom, 2009). Although beers industry is the biggest sector amongst the alcoholic beverage industries, the market has reached to the saturation which restricts the industrys growth potential and indirectly forces many beer companies to go global and focus on emerging market.
A pioneer in the market and it strategy, becoming the first brewer to cut deals to distribute worldwide is one of the strength for Heineken beer where it is a barrier for new entry. Its unique taste comes from the yeast that is used to make Heineken beer until today were developed since 1886 is another barrier of entrants. Moreover being the pioneer in the market with its strong financial, have the advantages for Heineken to joint venture or merging with many other beers industries in the worlds such as Tiger, Foster, Strongbow, Newcastle Brown Ale and many more which more than 200 brands in the world. Thus threat of new entrants can be considered as the strongest as they are bringing in new capacity with a desire to obtain market share as it is difficult for new entry to compete with it strong and many barriers to entry especial to those smaller brewers.
Bargaining power of buyers is the weakest force when customers are purchasing item rarely and sellers brand position with good quality and performance are very important to them (Thompson, Strickland & Gamble, 2010). Beers consumer easily swayed advertising that will reduce the brand loyalty. Customers in this industry have numerous selections as there are many company are serving beers. For instant, a pub served a lot of beers to the customers that fit their taste such as Guinness, Bud Ice, and Busch. As a result, choosing of customer for what kind beer they want to drink will bring threats to Heineken.
The profitability of new entrants can be restricted by barriers to entry such as access to distribution channel, economies of scale, and cost advantage of existing