Sabmiller Case

one-page case synopses

From the case study, SABMiller use M&A policy to get into new market like India and China. So far, they are successful to enter new market, but it still has some problems when enter in. From the SABMiller’s spokesman Oates, he says that “It is important to remember that beer is a local business and global acquisitions do not automatically bring about strong synergies.” Therefore there are some problems that SABMiller had faced. First, the problem is taxation because of that the market of China have higher tax above world average 33.6%. SABMiller’s challenge was to persuade state governments that lower duties would result in a sales kick that that would compensate for lower state collection per unite of beer. Second, the problem is severe competition exists in the brewery market, even though United Breweries and SABMiller control most of the market share, other big brewers such as Heineken have entered the Asian market with increased focus on India. Apart from these problems, distribution is another problem as it is not in the hands of the brewers. In half the states of India, the local government controls distribution, pricing and hence profitability. In the remaining states, the distribution is controlled often by well-established players.

From the class we learn there are international strategies of EMNEs, the Dodgers, Contenders, Extenders and Defenders. According to the definition SABMiller is Contender, because the brewer industry is globalising rapidly and SABMiller’s competitive advantages can be transferred abroad like they have 100 years of brewing experience as no others imitate or obtain and they has competency to acquisition of competitors and rationalisation of production and distribution facilities. So SABMiller try to became world NO.1 brewer manufacturer by M&A policy.

To solve these three problems, first is taxation. I think that the brewer manufacturers in China can unite together to negotiate with government so that maybe they can have lower tax after negotiate. Second problem is severe competitor in brewer industry. I think that SABMiller still have many advantage that other competitor don’t have like above I mention. SABMiller should use more there advantage to differentiate their market so they can grow their brands in the international premium beer more aggressive. The final problem is distribution, I think that maybe they can buy the distribution channels and vertical integration their business so that they can earn more profit in emerging market.