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Carlsberg Group Case Solution
The company that was taken under study is the Carlsberg Group. The purpose of the report is to find strategies useful for Carlsberg’s expansion in Europe to help it experience a 5% increase in sales revenue. Carlsberg falls under the star quadrant in the BCG matrix following its recent successful marketing campaign. The company extensively spends on technology and building its human capital that reflects on its improved capabilities. Porter's Five Forces show that the industry is highly competitive. Based on Porter's generic strategies and Ansoff Matrix, the strategy suggested for Carlsberg future growth comprises a combination of product differentiation and product development strategy that gave the saturated beer industry and changing customer preferences. The proposed strategy will keep Carlsberg in line with the changing market trends and will help improve its margins and overall sales volume.
Following questions are answered in this case study solution:
Conclusion- Selection of Winning Strategies
Case Study Questions Answers
It can be seen that with the passage of time, the trends for digitization are rising with the speedy pace for technological advancement (Bhimani & & Willcocks, 2014). As per the New Insights from the Sales Growth, it has been found that successful organizations in terms of leading sales make use of digital sources to support business growth (McKinsey & Company, 2020). Companies have started undertaking digital innovation to manage their operations, as it helps in establishing a competitive advantage. Furthermore, with the increase in the number of smartphones and other digital media users, who extensively rely on online shopping, the concept of digitization has become even more as a means to increase sales.
The case study used for this report is that of the Carlsberg Group. The report aims to focus on strategies Carlsberg can use to disrupt international trade channels, including bars, restaurants, and cafes, and focus on digital interaction with the customers, which would boost sales for the business in the European region. The report will comprise of internal and external environment analysis of Carlsberg Group, which will be supported by using different frameworks. These will then be used to derive the proposed strategy, given the business objective of the Carlsberg Group.
1.1. Company Background
The Carlsberg Group was established in 1847. The group enjoys the status as a global brewer, having more than 140 brands in their beer portfolio comprising of core beer brands, craft, and specialty and alcohol-free brews. Its reach is spread across Western Europe, Asia, and Eastern Europe. The company employs approximately 40,000 employees and has a strong financial position owing to a strong sales record, improved margins, and a positive cash flow position (Carlsberg Group, 2020a). The company is involved in a number of sustainability promoting initiatives, for which it also uses its digital media effectively. It did so by having its Digital Guiding standards, which protected the people below the legal drinking age from alcohol-related content. In addition, it used digital media to spread awareness about the disadvantages of drink driving (Carlsberg Group, 2018b). Apart from this, Carlsberg has invested effectively in technology to manage its worldwide operations effectively and reduce costs.
1.2. Industry Background / Current Issues Facing the Industry
The global brewery industry has seen increasing trends of consolidation over the past 20 years, with 50% of the global volume supplied by the three major global players (Howard, 2014). The consolidation trends are driven by M&A activities, which caused the emergence of the Carlsberg’s largest global competitor, Belgium based AB Inbev. Ab Inbev, which was formed after the merger of the six largest breweries at that time.
In Europe, the beer industry is at a stagnant or mature stage with a value of 140 billion EUR and a volume of 386 billion liters. This is because the demand for beer has saturated due to the aging population, increasing the number of health-conscious customers, and low economic growth. Furthermore, other categories of alcoholic beverages, including wine, spirits, and RTD products, have shown stronger growth than the beer segment. Also, the industry has shown a distinct upward shift in premium craft beers and small specialty mixed beer, resulting in the development of the entire beer segment (Hancock, 2019). This is because people have started demanding high quality, premium beer products. Major players, including Heineken and Stella Artois dominate the industry, which provides tough competition to Carlsberg (Bloomberg Website, 2017).
2. Strategic Analysis
2.1. Internal Analysis
2.1.1. BCG Matrix and Value Chain Analysis
Based on the BCG Matrix, Carlsberg can be initially placed in the Question Mark or Problem Child quadrant. This is because Carlsberg had comparatively lower profitability as compared to its competitors due to high costs (Bloomberg, 2013). Also, its product range was limited, considering the changing consumer trends who had shifted to premium beers. With the stagnant traditional beer market dominated with low demand and high growth in contrary in the craft beer segment and premium beers, Carlsberg was successful in converting its Question mark into Star. It did so through its successful marketing campaign by promoting negative tweets to extend its reach and then introduced its New Danish Pilsner, which was consistent with the market trends and drove huge profitability for the business (Awards Analyst, 2019).
For its value chain, Carlsberg has outsourced its production, warehousing, and distribution of beer. In the UK, it has outsourced its inbound and outbound logistics to XPO logistics, which allows it to quickly respond to customer demand and ensure high customer satisfaction. XPO overlooks sites for Carlsberg, receives the inbound raw materials, runs them on the production lines, which then fill the bottles and cans. These then go to the storage area where they are inspected under quality control standards and then finally transferred to the distribution centre, where it is further delivered to the end customers (Pink, 2019).
2.1.2. The McKinsey 7s Matrix
Strategy: Carlsberg has been found to be extensively spending on technology to strengthen its global network. Furthermore, the company has engaged in numerous sustainability management initiatives focusing towards increased awareness about safe alcohol consumption. This has improved its global reputation and given it an edge in managing a large customer base and ensuring a positive experience.
Structure: It comprises of two main groups including Carlsberg Breweries, which provides funds to Carlsberg Foundation, which in turn funds it relevant research departments, and Foundations aimed at fulfilling the social causes of the group (Carlsberg Foundation, 2020).
Systems: The Company makes use of the Integrated Supply Chain that ensures centralized decision making for production, procurement, and logistics and planning functions (Carlsberg Group, 2020e).
Shared Values: The core values of the business comprised of integrity, responsibility, honest, and ethical business conduct. It focuses on compliance with laws and has introduced anti-corruption and anti-bribery laws and also focuses on responsible drinking (Carlesberg Group, 2018a). Its values are based on creating a winning culture and having an inclusive culture in a diverse environment.
Style: The leadership prevalent in the company is an optimal balance of stability and change. Carlsberg defined eight leadership competencies for different countries. The leadership program comprises of four modules: Peak Performance, Think Business, Leading the Team and Leader as Coach, which has created a culture providing opportunities to leaders to lead each other on real-life tasks (Carlsberg UK, 2020).
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