Assignment by Matthew Jackson
Table of Contents:
1. Assignment Cover Sheet3
2. Question 14
3. Question 25 - 8
4. Question 3 9 - 11
5. Question 412
6. Question 513 - 16
First Names:Matthew William
I hereby declare that the assignment submitted is an original piece of work produced by myself.
Critically analyze SAB’s Globalization Strategy in the food and beverage industry. Support your presentation with relevant theories and/or models. Introduction
South African Breweries (SAB) is one of South Africa’s largest Multi-National Enterprises (MNE). From their humble beginnings in 1883 they have grown to a Global Market leader in the food and beverage industry. The success SAB earned has been in part to the core values they have displayed through their business activities. These include: 1. A well managed, competitive strategic domestic business base. 2. Maximum decentralization and development of the separate, independent and individual identities. 3. Striving for consistently high productivity with performance matching risk and return. From these statements, we will discuss how the concepts of mergers and acquisitions, diversification, coming to grips with the political policy environment, research and development, sound foreign direct investment and a definite corporate code of contact, has helped SAB to truly become a global industry giant. Globalization Strategy Theoretical concepts
Thompson, Strickland and Gamble (2008) discuss the six strategic options available for entering and competing in foreign markets. They are 1. Maintain a national (one–country) production base and export goods to foreign markets. 2. License foreign firms to use the companies' technology to produce ands distribute the companies' products. 3. Employ a franchising strategy.
4. Follow a multi-country strategy.
5. Follow a global strategy.
6. Use strategic alliances or joint ventures with foreign companies as the primary vehicle for entering foreign markets.
Yip (1997) discusses the multi-domestic and pure global strategy in five strategic dimensions. The dimensions relate to market participation, product offering, location of value added activities, marketing approach and competitive moves.
Thompson, Strickland and Gamble (2008) state that multi-country competition exist when competition in one national market is not closely connected to competition in another national market. Global competition is when competitive conditions across national markets are linked strongly enough to form a true international market. According to this definition, SAB Miller is a truly global competitor because the consumption of products in the food and beverage markets is universal. Since SAB decentralize its separate identities, do local marketing and in some cases offers customized product offerings it is actually also competing as multi-national competition.
Bartlett and Ghoshal (1989) introduce a new concept in which companies become transnational. They manage overseas operations as an independent portfolio, but they also manage operations as delivery pipelines for a unified global market. They are therefore dispersed, interdependent and specialized in their structure. They conduct Research and Development jointly and share it with the other subsidiaries. Their role becomes one of differentiated contributions.
We will discuss how SAB Miller is a good example of this transnational model, and critically discuss their strategy in each of these characteristics.
Ellis and Williams (1995) identifies four phases if internationalization where companies move on from restricted national market...