Heineken Case Solution

2. Strategic Analysis

Heineken is a renowned brand identity around the world. This valuable internal strength has enabled the company to establish its footprint in Asia, Europe, North and South America, and other places around the globe, with or without any local association. It operates on a mass scale, making it successful in reducing its costs due to economies of scale. Previously, family ownership did not effectively face the challenges of the evolving competitive landscape evolution. The company also strengthened the bureaucratic structure of the company so that it can take some quick decisions to further strengthen the position of the company in the overall brewery market. 

On the external front, various developments were taking. At one time, Heineken was the market leader in the United States (US) market, but it eventually lost its place to Latin American brands, as it did not effectively utilize its brand identity to come up with customized marketing campaigns. On the other hand, competitors like Anheuser-Busch continued to gain market share at a rapid pace. Consolidation had become a major trend in the industry, and this threatened the position of the flagship premium brand of Heineken, leading to overall sustainability issues for the brand.

3. Financial Ratio Analysis

The evolving scenario in the brewing industry also reflected on the fluctuating financial performance of Heineken. The Net Profit Margin of the company increased from approximately 7.8% to 9.2% from 2014 to 2015, and then in 2016, it dropped to 7.4%. This showed the instability in the earning for the business, and manifest that the brand is required to undertake key strategic measures to put the company towards continuous growth. Similarly, the Return on Equity also showed a fluctuating trend, as over the period of the last 4 years, the ratio hovered between 37%-38%. Therefore, fluctuating financial results demand a strong action to be taken to build upon the existing strong brand image of the brand.