The main purpose of this report is to analyze the strategic management approach by assessing the main challenges that the selected company Carlsberg had to face within their business operations. The company has a wide variety of product offerings and uses effectual strategies to be the leading brewery company across the operated market worldwide. It is evident that through strategic decisions and implementations by Carlsberg group the company has successfully retained its position and resolved every challenge that they had to face in their business operation. Understanding the strategies of the business concerned to deal with the challenges will provide insightful knowledge about the company’s strategic management capabilities and facilitate to conclude a rational comprehension. Thus, this report will be of significant use while referring to understand strategic management approaches and identified challenges of an organization to deal with efficiently.
Table of contents
Macro environmental analysis.
In the business environment, there are several challenges that business organization has to face while operating business. These challenges are identified and resolved strategically to retain organizational effectiveness. Business challenges exist in every sphere of industry irrespective of its size, nature, and capability. Concerning such fact, this report is all about analysis of a selected company to understand and assess the industry environment, challenges, threats, competitors, and future implications of the organization efficiently to provide suggestions for new strategies to improve. Thus, understanding the strategies of the company involved to tackle the challenges will give a profound knowledge about the organization's strategic management abilities and enable to conclude a rational comprehension.
Carlsberg is a Danish made international brewery company founded in 1847 by J.C. Jacobsen (Carlsberggroup.com, 2020). The company has been recognized as one of the leading producers of high-quality brewer products across the world (Carlsberggroup.com, 2020). Its flagship product is the Carlsberg beer which has gained a massive brand value worldwide; made it to be the leading selling beer across every nation (Carlsberggroup.com, 2020). The company is part of the Beverages industry with overall employee strength of more than 41,000 (Carlsberggroup.com, 2016). Carlsberg has been an effective and strategic business leader within the beverages industry serving quality products to customers worldwide.
There was been challenges that Carlsberg group have had faced during their business operation. Relating to such fact, since the company serves their products and services across the globe, the main challenge identified that the company has faced in the course of their business operations was dealing with the diverse market (Carlsberggroup.com, 2018). It includes macro-environmental challenges such as cultural diversity and regional development. The identified challenges of the company have created some amount of loss in reputation and business profitability. However, it is evident that through strategic decisions and implementations by Carlsberg group that company has successfully retained its position and resolved every challenge that they had to face in their business operation (Carlsberggroup.com, 2018).
Analyzing the macro environment is a crucial factor for a business to conduct as it creates a significant understanding of the aspects involved within the ecosystem of business. With reference to such fact, there is an effective and efficient framework for conducting macro-environmental analysis such as PESTEL analysis (Çitilci and Akbalık, 2020). It involves utilizing the framework by the business organization to understand the macro environment of the business concerning political, economic, social, technological, environmental and legal (Çitilci and Akbalık, 2020). The using of this particular framework helps organizations to scan the external or macro-environmental factors of the company to make better and effective decisions. Concerning such fact, by taking the framework of PESTEL analysis and conduct a macro-environmental analysis, it will determining the results and shall lead to making efficient decisions to help improve or eradicate the challenge successfully (Çitilci and Akbalık, 2020).
Now, concerning the macro environment analysis of Carlsberg, there are few aspects that need to be scanned efficiently to determine the ecosystem of the company. In regard to political, the company carries business operation in almost every country, thus, it is obvious that the political barriers and policies are diverse and need to be adhered strictly (Laeequddin and Abdul Waheed, 2016). The company has varied organizational policies depending on the region that it serves, for example, federal laws and state laws concerning taxation policies. In case of economic factors, the company has the ability to offer new jobs and provides employment to the unemployed citizen of any country across the world where they set up business units (Laeequddin and Abdul Waheed, 2016). About social aspects, the beer industry has witnessed an odd public opinion regarding consumption of liquor which resulted in opposition of sales in few countries like Malaysia and other Islamic countries where consumption of liquor is banned (Laeequddin and Abdul Waheed, 2016). In technological factors, the industry has refined the brewery process which makes it technologically advanced and has the ability to adopt new and effective technological changes in their processes. Whereas, in case of environmental factors, the company has a definite purpose to serve the community by contributing towards the protection of the environment adopting sustainability to improve business and world (Carlsberggroup.com, 2018).
The life cycle stage of the brewery or beverage industry has several ups and downs which are marked by growth and change significantly. The beer or brewery industry continues to gain a massive share of the market within the regions where the demand is high and promising as compared to other ineffective countries as per the company perspective (Cannatelli, Pedrini and Grumo, 2017). The market share gains continuously from a domestic market to rising in all sizes within the global market. Building and running a brewery company or industry involves more than a typical and average venture (Cannatelli, Pedrini and Grumo, 2017). Besides that, there are several critical points in time within the life cycle stage of a brewery industry that affects the effectiveness and rate of growth considerably (Cannatelli, Pedrini and Grumo, 2017).
Concerning the porters five forces model is a strategic tool which is used by a business organization to identify the market competition of the company considerably which mainly comprise of competition, the potentiality of new competitors, power of the suppliers, power of the customers, and threats of substitute products significantly (Grebenshchikova and Yakushev, 2017). Now, relating to such fact, the market competition analysis of Carlsberg indicates that the market position of the company in regard to its effectiveness and competitive advantage is concerned. Carlsberg main competitors are Heineken, Anheuser-Busch Inbev, and Royal Unibrew who compete with each other closely through strategic approaches to lead the highly competitive market of quality beer. However, the tactical decision of Carlsberg in contributing their efforts and earnings towards society and environment in the context of corporate social responsibility (Carlsberggroup.com, 2018). The company has understood the concept of sustainability and strategically adopted the CSR activity actively to safeguard the environment and building a healthy community across the region where it operates a business (Carlsberggroup.com, 2018). This ensures a competitive advantage for the company as well as enables attractiveness among society and other competitors (Carlsberggroup.com, 2018).
It is apparent that the resource and capabilities of a company defines and determines its effectiveness and efficiency simultaneously. In context to such fact, assessing and understanding the resources and capabilities of the Carlsberg group will provide an insight to conduct the analysis effectively. The company uses the adequate and efficient resource to make sure the organizations always stay ahead of its competitors, for example, within the market of Denmark; Carlsberg holds a share of 63% of beer market along with 50% of the market in soft drinks and other beverages (Carlsberggroup.com, 2020). Besides that, with the strategic approach of the sustainable business model by focusing on the issues of environment and held a helping hand to the society in protecting the environment. The company make efficient natural resource in developing their products and has a protective plan to achieve sustainable management and efficient utilization of natural reserve by the year 2030 (Carlsberggroup.com, 2020). By making an effort of contributing value to society will enable the company to make profits in the future. The core competencies of the company include merger and acquisition strategies to grasp the new market and adaptability to manufacturing changes (Carlsberggroup.com, 2020). This indicates that Carlsberg is vibrant and relentless to achieve success by adopting challenges and developments. According to the VRIO framework which helps analyze the competitive advantage which is sustained of a company signifies that Carlsberg has used an optimal level of strategy to utilize CRS activity and flexibility towards changes makes the company top player within the local and global markets (Carlsberggroup.com, 2018). As defined within the vision statement of the company, it states thirst for great, it is proceeding accordingly towards achieving the organization's vision (Carlsberggroup.com, 2020).
Heineken and Royal Unibrew are the major and strong competitors of Carlsberg (Hatch and Schultz, 2017). Both the companies are into the same business of brewery and beverages and are part of the same beverage industry. There has been some indication of threats by looking at the porter’s five forces analysis. First, there is been a high risk of threat from substitute products as the market of beer can be easily be replaced with other brands or drinks (Hatch and Schultz, 2017). Second, less differentiation of products and offerings may results in a lack of loyalty by the customers. The bargaining power of buyers is moderate as there are numerous buyers; however, there are also end numbers of competitors within the market. Besides, there are only some competitive substitutes to the company flagship product beer (Hatch and Schultz, 2017). There is been a low bargaining power of supplier as the brand strength of them is minimum, the switching cost for manufacturers is low, and of highly substitutable ingredients within the products. On the other hand, the threat of new entrant is also low as it will be hard and challenging for smaller brands to enter into the competitive market as the market share of Carlsberg is on the higher side across the globe and in local markets as well (Hatch and Schultz, 2017). Also, due to its strong global presence and brand strength, Carlsberg has a low threat of new players in the competitive market of the beverages industry.
There is been a strategy behind Carlsberg success and growth to hold the largest market share of beer across the world. According to the annual report of 2019, it signifies that the company exports brands to more than 100 nations across the globe (Carlsberggroup.com, 2020). The company has utilized strategic approaches to climb the stairs towards achieving the goal and success of becoming the leading producer of beer worldwide (Carlsberggroup.com, 2020). Concerning corporate-level strategy, the company has initiated a new strategy called Sail'22 with an intention to make the organization an effective, proficient, and smart brewing firm in their operated markets across the world (Carlsberggroup.com, 2020). The main goal of the strategy was to strengthen the core competencies, positioning the company for achieving growth, and creating a captivating culture to ensure organizational effectiveness at all verticals of business processes (Carlsberggroup.com, 2020). However, by looking at the competitors' analysis, it is expected that the market will fall as the strategies of other players are changing and advancing. There is a need for requirement based strategy that focuses on finding target groups for the company’s major brands both nationally and internationally and fulfil all their needs. Besides, it is likely competitors will able to gain market through effective marketing communications, thus, it important to increase marketing campaigns both digitally and traditionally to increase brand awareness and acceptability among the target audience. Concerning social factors as identified in PESTEL analysis, penetrating the brand within young crowds will be an advantage and market the product as party refresher will add a bonus to its profitability and effectiveness at the same time.
Carlsberg Group has a significant amount of resources and capabilities that make the company number one in producing quality beers across the world. The company has a wide variety of product offerings and uses effectual strategies to be the leading brewery company across the operated market worldwide. Since the brand strength of the company is strong; there are low chances of new players to take over their market. By focusing on strategic CSR activities, the company has gained significant potentiality to create a strong market presence overcoming the challenges of a few macro-environmental factors like social, political, and cultural. However, there is still some improvement required in the marketing and creating a need-based strategy to ensure to be on the safer side in the competition as the market completion is increasing with changing strategies and changes. By refining the digital setting of Carlsberg, the company can ensure sustainability within the competitive market. Thus, focusing more on target groups to penetrate the brand and better use of digital marketing strategies and position the market within the young population will lead to prosper success and growth.
Cannatelli, B., Pedrini, M. and Grumo, M., 2017. The Effect of Brand Management and Product Quality on Firm Performance: The Italian Craft Brewing Sector. Journal of Food Products Marketing, 23(4), pp.303-325.
Carlsberggroup.com, 2016. ANNUALREPORT 2016 | Carlsberg Group. [online] Carlsberggroup.com. Available at: <https://www.carlsberggroup.com/media/10899/carlsberg-group-annual-report-2016.pdf>
Carlsberggroup.com, 2018. SUSTAINABILITY REPORT 2018. [online] Carlsberggroup.com. Available at: <https://www.carlsberggroup.com/media/28929/carlsberg-sustainability-report-2018.pdf>
Carlsberggroup.com, 2020. About The Carlsberg Group. [online] Carlsberg Group. Available at: <https://www.carlsberggroup.com/who-we-are/about-the-carlsberg-group/>
Çitilci, T. and Akbalık, M., 2020. The Importance of PESTEL Analysis for Environmental Scanning Process. Advances in Marketing, Customer Relationship Management, and E-Services, pp.336-357.
Grebenshchikova, L. and Yakushev, N., 2017. Definition of Competitiveness of the Enterprise Using the Five Forces of M. Porter. Bulletin of Kalashnikov ISTU, 20(3), p.51.
Hatch, M. and Schultz, M., 2017. Toward a Theory of Using History Authentically: Historicizing in the Carlsberg Group. Administrative Science Quarterly, 62(4), pp.657-697.
Laeequddin, M. and Abdul Waheed, K., 2016. Strategic management in cartelized environment: case of Hisham Packaging, Dubai. Emerald Emerging Markets Case Studies, 6(2), pp.1-16.
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