The aim of this assignment is to conduct an analysis of a SAB case study and to identify 10 strategic issues from this case study. Strategic analysis of the SAB case study
The following information will be gathered to analyse 10 strategic issues in the above mentioned case study: Market size| * Current and future|
Growth rate| * Focus on product life cycle|
Market profitability| * Porters 5 forces|
Industry cost structure| * Porters value chain model|
Distribution channels| * Existing distribution channels * Trends & emerging channels * Channel power structure | Market trends| * Source of opportunities and threats|
Key success factors| * Access to essential unique resources * Ability to achieve economies of scale * Access to distribution channels * Technological progress|
According to the South African Breweries website the South African Breweries Limited (SAB) is a holding company whose principal line of business is brewing. The company holds 98 percent share of the beer market in South Africa, where it sells 14 brands of beer, including local lagers Castle and Lion as well as foreign brands brewed under license--Heineken, Guinness, Amstel, and Carling Black Label. Aggressive overseas expansion following the end of apartheid has also given SAB ownership of, or stakes in, more than 25 breweries in the emerging markets of central Europe, China, and sub-Saharan Africa. Overall, in terms of volume, South African Breweries is the world's fourth largest brewer. SAB also has a variety of non brewing operations, such as carbonated and natural fruit drinks and other beverages, retailing, hotels and gaming, and manufacturing of safety matches and glass. The company has been divesting many of these noncore assets in the late 1990s. SAB's history is in many ways the history of the South African brewing industry, most notably through the government-ordered merger of the largest breweries in 1956. The company's history was also greatly influenced by the apartheid system and its effect on the domestic economy, on domestic firms, and on foreign investment in South Africa.
To determine the growth rate, it is necessary to consider the life cycle of a product. For this analysis a formal definition is used by Philip Kotler as well as Kotlers 5 phases of the life cycle. The idea is that products, like people, have a birth, a life and a death, and that they should be financed and marketed with this in mind. Even as a new product is being launched, its manufacturer should be preparing for the day when it has to be killed off. An example is the Iced cucumber soft drink launched and killed off by Pepsi, solely for awareness, even though the product was sold out within record time, the products life cycle was at its end because it had done what was set out to be done, to create awareness. Its sales and profits start at a low level, rise (it is hoped) to a high level and then decline again to a low level. This cycle is sometimes referred to simply as PLC (product life cycle). (Philip Kotler, 2009) Philip Kotler breaks the product life cycle into five distinct phases: * Product development
The growth rate of SAB should be at the cash cow, but because of SAB strategic decision to maintain low retail prices and therefore increasing the demand it is still at the growth or star of the development. The decision to make the products of SAB available to all willing consumers at an affordable price is what is keeping the barriers of entry almost impossible for new entrants to beat. SAB constant diversification and expansion of existing lines is also a strategic decision that has given them the advantage over competitors and a kind of man made monopoly in the South African brewing industry. Market Profitability
To determine market profitability this assignment will use the Porters...