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1. ANALYSIS OF SABMILLERS STRATEGIC POSITION
Introduction
SABMiller is an international company with its main interest the brewing of beer. To understand SABMillers strategic position is to consider their strengths and weaknesses against what is happening in the environment (Robson, 1997, p. 29). Annexure A reflects the prioritisation of the basic process of strategic analysis.
External factors affecting SABMiller
Annexure B contains a P.E.S.T analysis for SABMiller but since environmental factors are country specific it is most effective when performed for all countries of interest.
1.2.1.
Political Analysis
Governments across the world take extreme measures to regulate alcohol because it affects the consumers mind. The Miller deal exposed SABMiller to one of the highest regulated industries in the world. Re-establishing consumer loyalty towards the Miller brand will be made difficult by factors such as nationalism.
1.2.2.
Economical Analysis
Figure 1.1 indicates that the acquisition of Miller ensured a greater balance between a cash-generative mature market and the cash-consuming developing markets. However, negative impact of brand, pack and geographic mix, increased cost of raw materials and greater energy costs make business in the USA difficult. (SABMiller, 2003, p. 8)
Figure 1.1
1.2.3.
Social Analysis
SABMiller assess their alcohol issues policy regularly to ensure responsible advertising, packaging, promotions and that the underage is not targeted.
They recognise their social responsibility towards HIV/Aids and provides support and training that focuses on the prevention of the disease.
1.2.4.
Technological analysis
“Technological developments affect marketing in two basic ways: with new products and with new processes” (Perreault and McCarthy, 1996, p. 130). SABMiller has an aggressive programme to implement production systems across the world with the optimum level of flexibility.
SYSPRO 6.0, a fully integrated business software solution providing complete control over the planning and management of all facets of business, forms a critical element of SABMillers business mode. (SABMiller, 2003, p.19)
Internal Factors affecting SABMiller
The financial performance should be the starting point of an internal analysis. However, ” A S.W.O.T analysis (Annexure C) helps the manager focus on a strategy that takes advantage of the firms opportunities and strengths while avoiding its weaknesses and threats to its success.” (Perreault and McCarthy, 1996, p. 594)
1.3.1.
Strengths
Implementing affirmative action programmes in South Africa from the 1970s gave SABMiller the experience to deal with cross-cultural issues effectively.
SABMillers policy of entering into long-term ventures with its suppliers ensures consistency of supplies.
1.3.2.
Weaknesses
Large staff numbers need to be controlled and make SABMiller vulnerable for labour action. To keep abreast of technological developments the retrenchment of labour becomes unavoidable. The Food and Allied Workers Union took SABMiller to labour court for alleged racism due to the retrenchment of several hundred employees during the 2002 and 2003 years.
1.3.3.
Opportunities
Re-establishing consumer confidence in Miller would enable cross selling of products like Pilsner Urquell. The existing sales force and distribution network could be used.
The unique buying patterns of young adult consumers i.e. they purchase alcohol for immediate consumption, is a major opportunity for beer, wine and spirits manufacturers.
1.3.4.
Threats
The South African Government is trying to create three distinct tiers in the liquor industry – manufacturing, distribution and retailing – and the linkages between these tiers will be regulated through the Liquor Bill passed in Parliament 22 October 2003. The cost linked to ownership changes, as required by the Bill, will ultimately be passed to the consumer. Some politically sensitive bargaining will be necessary to enable SABMiller to maintain its position in the South African Market.
Competitive analysis
The competitive structure of an industry can be explained using the Porters Five Forces model. (Annexure