Businesses are seeking strategies that will help them build and sustain a competitive advantage. Strategies can be utilized to gain new customers and increase sales, increase differentiation and value to raise prices and lower cost structures to increase profitability. In many cases, companies pursue corporate-level strategies, such as integration, to achieve these objectives.
The purpose of this exercise is to practice the ability to develop corporate-level strategies to improve the overall strength of a company.
In this project, you are consultants for a large brewing company. Your competitive landscape has been changing over the past few years with the rise of small craft beers on one side and market consolidation among the world’s largest brewers. Your current products are large-scale and not considered to be craft. Because of this, you have seen unit sales decline as you lose share in this niche. Your current capabilities do not include a craft product or the capabilities to produce a craft beer in the same way your new competitors are. You currently buy ingredients and supplies from separate vendors who offer the best value to maintain your low cost structure. You are leveraging economies of scale.
The leadership team of the brewing company has charged you with developing a strategy for entering the craft beer market through new corporate level or global strategies.
Step 1: To begin, your team will gather to discuss what each member knows about globalization, integration, and diversification. Discuss the pros and cons of each of these approaches and how they relate to the strategy your company is pursuing.
Step 2: Analyze the brewing industry. Are you top competitors in the craft beer market? How are they structured to compete in this space? Have they had success in their corporate level strategies? Thoroughly think through all of the possible scenarios.
Step 3: Global Strategy: Determine if any global strategy is suitable for your business. A global standardization, a globalization strategy, localization strategy, international strategy, or a transnational strategy. The team will also need to determine which entry strategy you will pursue (e.g., franchising, joint venture, wholly owned subsidiary, etc.).
Step 4: Diversification: Based on the industry your company is competing in, discuss if diversification could be implemented. What are the possible strategies to diversify? What products or businesses could your firm enter to achieve a profitable diversification? Develop ideas in both unrelated and related diversification. Decide which diversification idea you will pursue and identify the type of diversification. Determine which method of entering new industries is best for your company. Discuss the pros and cons of each method. Develop cases for each to determine which method your business should pursue. Remember, the goal is profitability.
Step 5: Develop plans for both vertical and horizontal integration and identify the strengths and limitations of both. Then, determine which option you feel is most viable to meet the company’s need and explain why.