Global Forces

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TABLE OF CONTENTS
Introduction----------------------------------------------------------------------2 Pestel Analysis------------------------------------------------------------------2-5 Five Forces Analysis----------------------------------------------------------5-6 Positive and Negative Impact of Trends on the Companies------6-9 Relative Strength and Weaknesses of the Four Companies----- 6-9 Bibliography------------------------------------------------------------------------9

Introduction
This case highlights how the European Brewing Industry is striving to grow and gain competitive advantage worldwide. In line to achieve this there have been a lot of innovation, acqiusitions, mergers and of course rebranding of beer products in the Industry. Companies are further trying to reduce operational costs for improved profit. It is therefore imperative that we analyze the global forces in this industry. 1.A PESTEL ANALYSIS

(i)PESTEL FACTOR:
Political:
Firstly I noted that there have been strong campaigns by Governments to stop drunken driving. This might affect the consumption levels for the beers. More especially when there are functions such as weddings and parties, because during such functions Drivers are tempted to drink as functions unfolds. Also people may start avoiding taking beer from Pubs and restaurants since they are required to drive home from such places. Political effects are further emanating from the Government campaigns against binge drinking or overindulgence on alcoholic beverages, hence discouraging consumers from pubs or any social clubs. This may act as catalyst in the reduction of business opportunities for the brewing companies. I further noted that Governments regulate on how packaging for beer should be done due to environmental issues. For example Denmark the use of Bottles is instead of cans. Politically some this may affect the profitability of some brewing companies in Europe. Economic:

The Government’s regulations to restrict alcohol consumption in terms of drunken driving and excessive consumption have really helped in increased sales of beer in supermarkets. As indicated in the case statistics shows that sales increased to 66% in 2005. The shift to Chain Stores has worked to the advantage of the brewing industry as the use cut-price on beer which, attract people to buy the commodity. This scenario or should I simply economically the brewing companies would survive as they are assured of more sales though this is indirect business. However there have been little growth in consumption of alcohol or in a nutshell a shift in demand to the developing economies such as China and Brazil. This requires that the brewing industry in Europe should move its investments to overseas markets. Social Factor:

Discouragement of binge-drinking affects some people socially as they are denied happiness that comes with alcohol consumption. Furthermore the highly publicized issues of alcohol effects on Health and fitness cause consumption levels to go down. Due to such awareness people chose to socialize without taking any alcohol in some set ups. Technology:

I note from the case the due technological advancement has led to the introduction of new products tailored to peoples tastes such as fruit flavored beers and extra cool lagers. In European brewing industry, it is the technology that makes the products attractive as labeling on packages communicates how good the beers on sales may be and also changes to packaging styles is made easy with technology. It is also clear in the case that there have been economies of scale in brewing and distribution of alcoholic beverages as machineries as readily available due to advancement in technology in Europe. Environment:

As stated above the Government’s regulations toward environmental protection affect the brewing industry in the European markets either positively or negatively as they have to change packaging to the...
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