Mind the gap…

In Uncategorized on January 15, 2012 at 12:56

And Globalagogogo is not talking about the high street retailer!  Though he might well capture the essence of such a global organisations when he does his strategy exam at the end of the month.

No, its been a while has it not.  There as been a significant gap in our communications due to a high volume of work towards the end of 2011, trips upto Scotland and study time, all of which has swamped your friend and narrator.

Being so busy has meant that Globalagogogo messed up on one of his assignments!  What a t…t!!   He allowed himself to drift from the path which led to poor revision, poor review process and lack of reflection on the assignment brief.  Non the less we must take only the good from every event and move on.  The assignment has been fully re-drafted and re-issued.

Globalagogogo is now revising for his strategy exam on a south Aftrican based brewing company called SABMiller and he`d like to share his work in progress which he`s copied below.   This is an ongoing revision so I`ll send a more refined piece of work over next week.

 SABMiller – Exam revision notes:  MMc: 08.01.2012/15.01.2012

*Additional information and ideas utilised from the MBA cohort `The fab four` AKA `The five forces`!!!!!

  • Apartheid plays a significant part in the early years of the SABMiller organisation 1948 to 1994 but may now have little relevance in today’s markets other than its ability to deal with adversity or development under pressure
  • SAB is strong in business start-ups as a result of its history in SA, following number of key acquisitions this has strengthened its management ability
  •  and consolidated its position
  • SABMiller is an Oligopoly – e.g. few organisations dominate
Year Event
1948 Apartied established in south Africa
1960’s Obtained licences to brew locally, Guinness, Amstel, Carling Black Label.
1970 SAB became fully incorporated in South Africa
1978 Ground broken on Sun City development (hotels and gaming)
1979 SAB estimated to control 99% of market in South Africa
1990 SAB invested in 3 mega breweries across the country
1990’s Established operations in China, Poland, Romania, Russia, Czech Republic.
1993 Hungary – Acquired largest brewer, Dreher. European ‘beachhead’
1994 Tanzania – Joint venture with Tanzanian government to revitalise industry
1994 Invited back into Zambia, Mozambique and later Angola
1994 Apartied ends
1994 China –  joint venture China Resources Snow Breweries
1995 Poland acquisition of Lech
1996 Poland acquisition of Tyskie
1998 Russia entry via greenfield site in Kaluga near Moscow
1999 Poland merger of two breweries acquired in 95 and 96
2000 49 out of 50 beers consumed in SA brewed by SAB
2000 SAB lost over 15% relative to FTSE 100 in first year listed
2001 SAB has breweries in 24 countries
2001 China – SAB take majority stake in Sichuan Blue Sword Brewery Group
2002 SAB acquire Miller and became 2nd largest brewer by volume.
2003 SABMiller market share drops from 19.6 to 18.7% in first year
2003 Miller portfolio rationalised from 50 brands to 11 or 12 (Lose market share before regaining it)
2003 Italy acquire Birra Peroni
2005 Vietnam – Local distribution partnership with Vietnamese company
2005 Bavaria – Merged with Grupo Empresarial Bavaria, 2nd largest brewer in South America
2005 South America now second largest profit centre after South Africa
2005 Purchase in Bavaria increased gearing from 25.2 to 52.1
2005 India – Buy out of joint venture partner Shaw Wallace & Co.
2006 Expansion focus to return to ‘developing economies’
2006 Competitive Advantage – ‘our ability to succeed in developing markets’
2006 Non-core hotel and gaming revenue contributes 3% (3% of EBITA)
2006 Acquisition of Fosters business in India and South Vietnam
2006 Vietnam – joint venture with Vinamilk to establish a brewery
2006          Australia – joint venture (SABMiller/Cocacola Amtil) Pacific Beverages Pty Ltd to market, sell and distribute SABMiller brands in Australia
2007 Renamed SABMiller
2007 2nd largest brewery by volume
2007 Russia – $170 million invested in new brewery
2007 Australian JV (Pacific Beverages) buys Australian premium brewer Bluetounge Brewery
2008 Acquisition of Grolsch
2009 Romania – acquire Bere Azuga
2009 Poland – buy remaining 28% of Polish business
2009 Vietnam – buy remaining 50% of Vietnamise business
2009 China – acquired 3 further breweries in China
2009 Sudan – Investment in new plant
2009 Russia – Investment in new plant
2009 Africa – Tanzania, Mozambique and Angola investment in new plant


SABMillers four strategic priorities were formally announced late 2009 and began to roll out in 2010.  These were as follows:

  • Create a balanced and global spread of the business
  • Development of strong and relevant brand portfolios in the local market
  • Constantly raise the performance of local businesses
  • Leveraging the global business through scale
  • Strong home base in Africa affords it a global local focus though recently it dropped to second largest brewer in SA as a result Heineken taking back the rights to brewing  Amstel from SABMiller after 20 years losing 10% of its market share (Competition models – five forces, )   
  • Now has international brands which spread out across Europe and developing countries
  • Strong product range which is now more focused and less diverse
  • SABMiller has a well-balanced product portfolio to diversify and spread or fund risk
  • New or emergent markets can be funded through its African cash cow (Castle) along with Latin America (Bavaria brand) and U.S. (Miller)
  • Good spread of shareholders, alliances and partners (e.g. Vietnam) or China (Snow brand)
  • Has a strong reputation for dynamic management and works on a local, national and international market/strategy base

 To competently and adequately address the historic events which structured SABMillers growth and look at how the parent company may develop into future growth areas the paper proposes the use of a series of established business models, these are illustrated further as follows.

It is worth noting that SABMiller don`t have a great record of taking over large organisations and therefore its development through organic growth through acquisition of smaller brews might be its best course of action and given Carlsberg focus on the Russian markets they need to be mindful of gamesmanship (Competition models –  benchmarking, competing values, core quadrants, Senge)

  • Development opportunities abound with a good management and development reputation in the `soft money` and high risk` areas of the globe – Tunisia, Mozambique and Uganda
  • Risks from the changing nature of consumers and fashion: move over to wine and spirits
  • May need to consolidate
  • Look at three strategy models: Cost focus (Castle), Differentiation, (Snow/Bavaria), Focus (Peroni/Grolch)
  • Needs to avoid drift into `the middle`
  • Could look at new markets in middle east
  • Could look at acquisition of Green King to take out a rival, provide more coverage and move into the food sector

Moving forward

  • Scope: How broad to make the portfolio
  • Corporate parenting: How should the parent add value
  • Portfolio matrix: Which SBU`s to invest in

As stated, more to follow next week as we begin to edit and add specific strategy development models and structure the noted format a little better.

Anyway, I`d best be off now as I`ve a family event to attend!  strangely enough as I`ve been typing there has been a significant explosion at an electrical sub-station across from the old industrial unit/portacabin which has given me a headache – how weird is that?!!

Thoughts to the stricken ship, crew and passengers laid on its side in the sea of Italy – In theory “that rock wasn`t supposed to be there” said the captain (who legged it nearly four hours before the ship was finally cleared) ….Awkward!

TTFN Globalagogogo…




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