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Carlsberg in Emerging Markets Case Solution

Solution Id Length Case Author Case Publisher
597 1249 Words (6 Pages) Michael W. Hansen, Torben Pedersen, Marcus Moller Larsen Ivey Publishing : W11045
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Carlsberg, over a decade has introduced its products to consumer of emerging markets. For this reason, they have adapted their marketing. This has been done in two ways. Firstly, a global brand is developed which helps gain substantial amounts of profit. Secondly, new products are manufactured that are designed for mass markets.

One of the major issues for MNEs is the introduction of their product in the foreign market. All the troubles for Carlsberg Breweries lie with its emerging product in the new market. For this reason, some of the issues include developing an innovated product’s positioning, expanding the market share, and the intricate devising of an entry mode.

Additionally, the form of entry mode should be able to access the local resources with ease, which would include the local brands and other such distribution channels. The MNE would have to consider and plan how to prevail over shortcomings that might entail the foreign market.

Following questions are answered in this case study solution:

  1. Introduction and Problem Statement 

  2. Analysis 

  3. Strategic Alternatives 

  4. Recommended Action & Implementation Plan  

Carlsberg in Emerging Markets Case Analysis

2. Analysis

MNEs have to face challenging business environments when entering emerging markets that might be extremely different from their home countries. Also, in cases such as that of Carlsberg, there might also be a great deal of variation between the emerging economies of the targeted countries. For instance, Carlsberg Breweries has ventured into countries that are totally different in their origins, geographical locations, cultures, races, history, society, etc.

Since the Danish company, Carlsberg decided to grow in foreign markets in the early 2000s; by 2008, the company had become one of the five largest brewery companies in the world. Today, Carlsberg breweries are running in Asia, United States, and practically all of Europe.

Now, to operate a beer company in three different continents means introducing strategies; identifying, targeting and creating customers; sketching an entry mode into each of these continents and then subsequently each of the respective countries; making sure that all resources and distribution channels are under complete control and in full running order; how the product has been positioned and finally plans to expand the current market share.

Although foreign, emerging markets might seem delectably favorable for entering for MNEs, they still pose unique and smart challenges that cannot be side stepped easily. Some of the other issues related to the target countries because of the developing nature of their market and hence the country to be more specific, include a weak institutional environment, and a susceptible local resource endowment. MNEs like Carlsberg Breweries are then posed with the challenge of releasing the potential profit that is part of these developing, yet emerging markets.

It might be said that money is made at the bottom of the pyramid; still it is not as easy done as said. Foreign investors have to devise an entry mode which is adaptable locally for the target economy. This plan thereon becomes the basis of their future implementations as it helps the MNE to develop a local position.

In order to achieve their objectives, for MNEs like Carlsberg Breweries, they have to view their entry mode strategy from a long-term perspective. For these reasons, the potential entry mode strategy is continuously readjusted according to the change in circumstances. Also, this change or readjustment is not only limited to the entry mode, but also to the marketing strategy and the relevant branding strategy also have to be modified from time to time.

3. Strategic Alternatives

i. Alternative 1: Multiple Acquisitions

For the MNE, to enter into the foreign market by multiple acquisitions, is a good option for an entry mode. This could be done my acquiring or directly buying entities that are independent in their nature. These can be several in numbers. However, these multiple acquisitions would eventually have to be integrated into one whole system, falling under the broad category or name of the MNE.

The basic purpose of this entry mode is to help build a strong market at a national level, instead of the traditional fragmented and uneven market.

However, this might lead to a chain reaction because of which there might be integration of multiple acquisitions by other entities. This could result into a fierce competition with other MNEs in that local market. Also, the market share might also be reduced because of the competition.

ii. Alternative 2: Indirect Acquisition

An indirect acquisition by Carlsberg breweries could also be a good form of an entry mode. This allows the attention to be diverted to other entities. The acquisition then becomes outside the focal market of the company. However, this MNE would also own an affiliated entity in the same emerging market.

The advantage of the indirect acquisition means that this might take place outside the country. The affiliated entity, on the other hand, becomes a strategic asset that turns out to be a supporting pillar for the acquisition.

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