Heineken Company Circumstance Study

Keywords: heineken case study, heineken analysis

Heineken is the globe 3th largest ale company predicated on Netherlands. They have raised significant sales throughout European countries, also their products are sold in nearly almost all countries. They have breweries in 65 countries. It bought foreign breweries or obtained licensing to lower manufacturing cost, expand products, and help local distribution. For the special case, Heineken didn`t establish it`s breweries in the united states because it considered to keep images for 'import beverage. ' Alternatively, it invested in new- internet based technique to control international syndication system successfully. Heineken has been growing up continually by utilizing a joint venture with big rivals to increase into a new market. To raise global market share, it also plan special strategies for each countries.

Many government leaders strongly recommend domestic firms to travel international to be able to create jobs and economic expansion. However, some companies have trouble advancing into overseas market because of a lack of knowledge about the foreign market.

1) Economical issues - immediately linked to the revenue (sales)

˜ People: The potential customer population of the target market quite depends upon type of the product or service (a company is marketing). Into a B2B organization, for example, the number of individuals in the united states is not a good indicator of what size the marketplace is. Also, B2C businesses usually consider the targeted inhabitants instead of the amount of the whole inhabitants. Era and gender are usually regarded as main variables for assessing international markets. Consideration about households such as average family size for the reason that country could be also a good sign. However, it is hard to foresee the near future and compare with other markets only with simple factors such as age group and sex. Maybe it's a good way of understanding international markets to focus on population syndication using tools like population pyramids.

˜ Income: A critical monetary factor to look into the target market is income degree of the country. Companies endeavoring to go into international markets can gauge the market probable through GNI or GDP. Also, they can make a decision which indicator to make use of in line with the market or product type; for example GNI per capita can be considered a clear index to understand the population's standard of living. Nevertheless, average beliefs about income such as GNI, GDP are insufficient to determine income degree of the whole inhabitants. In most nations, income isn't quite distributed among the complete population of each country; also there is absolutely no certain relationship between income level per capita and amount of income inequality. In short, using income indictors without information of income circulation can distort the consequence of market research.

2) Non-economic issues

˜ Cultural issues: Social factors such as terms, race, religion, historical record, which reflect behaviour, values, and beliefs, differ among countries. Entering global market without understanding of the prospective market's culture results in the failure. It is quite very important to firm leaders to determine how managers deal with the organization, how employees behave and exactly how consumers response matching to each country's ethnical background.

˜ Government legislation: Each region has its legislation and taxation on foreign trade. For liquor firms, government laws might be stricter in some countries that are specially sensitive about alcoholic beverages consumption of these people. Additionally, taxation on alcohol consumption can vary among different countries. For instance, Islamic countries such as Egypt may give a harsh control to their alcoholic beverage import.

Q2. Discuss advantages or disadvantages for Heineken of exporting its ale in one country to another.

Advantages

˜ Expand Sales: extending into international market gives various chances to get income for

Heineken. The permanent relationship with international market lasts, export development cost can be protected and they increase their additional sales through the market. Also, company can further create economies of range to decrease producing cost.

˜ Acquire Resources and Compete with Rivals: Heineken can acquire resources by writing and learning knowledge and experience with new marketing approach and foreign opponents. Therefore, Heineken will improve quality of products, and it can gain more market share in international market.

˜ Minimize Risk: Beer comes certain seasons: especially summer months. Thus, Heineken can utilize and avoid seasonal factors during different season in foreign countries. Also, reselling product to multiple markets allows Heineken to diversify their business and pass on risk.

Disadvantages

˜ Complexity in Operations: Heineken need to plan various marketing strategies to meet different needs for every single country. Thus, it triggers upsurge in product cost. Also, there are a great number of unstable situations for Heineken such as establishment legislation to limit alcohol, natural catastrophe etc. Heineken does not have any choice but to be reliant on fluctuation other countries` situations.

˜ Cultural Collision: multinational companies have to consider various social differences among different countries. For example, religion, traditions, purchasing behaviors are facts to consider. Consumption of alcohol is a delicate matter in this sense to numerous countries and can cause numerous sociable problems.

Q3. What exactly are the main element issues facing Heineken insofar as international licensing is concerned?

License, is a give by the holder of any copyright or patent to some other of the protection under the law embodied in the copyright or patent in short supply of an assignment of most rights.

In the truth of a ale company as Heineken, this would mean to license a brewery in a country they wish to enter. The accredited local brewery then would produce Heineken branded ale with Heineken's unique menu. This way, Heineken doesn't need to personally create a new brewery for the reason that area which will save time and money. Heineken has used licensing in an effort to develop its business internationally.

Although this business of licensing may appear to be a total win-win situation, sometimes there are side results that come along with it. For instance, despite the benefits of licensing, Heineken has often restrained itself from licensing an area brewery in marketplaces such like the. This was for reasons that revolved around the fact that Heineken was a beverage company. Reasons that people ingest a certain make of ale can be various but merely to name the two significant reasons would be because first, a consumer is merely loyal compared to that brand because they was raised with it or, for another reason, to drink a specific brand of beer provides consumer a feeling of exoticness. The first reason usually goes for local brands, and the next reason goes for overseas brands. Thus, to make a beer that individuals drink mainly because this is a foreign brand in an area brewery would drive consumers away. Additionally because consumers assume that the "real" Heineken ale originates from Dutch breweries, Heineken can charge dual for Dutch made beers.

The circumstance of Hoegaarden illustrates the difference of conception on locally-made beverage and imported beer. After Korean consumers found out that Hoegaarden, a Belgian ale was being locally produced, many complained that the taste was different. Some even began calling the beer O-garden, discussing that proven fact that it was qualified to Korean beer company OB.

Q4. Compare the FDI between Heineken and Anheuser-Busch

Anheuser-Busch has FDIs in usually large rising markets such as China and Mexico. It invests heavily in these market segments through large local companies. In China for instance, Anheuser-Busch paid $700 million for the Harbin Brewery and in the case of Mexico, Anheuser-Busch owns 50 percent of Modelo, the manufacturer of Corona.

Heineken who was the pioneer of coming into international markets for beer companies, has just a bit smaller scaled FDIs. Apart from the size of the FDIs, Heineken usually joined countries that were neighboring or African countries that got historical relations with Europe.

Conclusion

1. Alternatives

1) The current situation: Heineken has refused to determine a brewery in america, instead, they keep shipping its ale to the U. S. That's because customers in the U. S. don't agree to the fact that the beer, which is manufactured in a brewery in there, is the same using what Heineken export from its home country.

2) Alternatives

We recommend not to deliver Heineken beers into the U. S. but to set up a brewery in the U. S. Regarding Asahi beer, which is the top Japanese beverage, they increased in sales, using FDI when they go into the foreign market. Penetrating in to the U. S. market with FDI, which is distinguished from licensing, would help American customers notice there is absolutely no difference between beer from Netherlands and from its country. For using this plan in the U. S. market, we suggest a couple of effective ways to cope with the potential risk.

˜ Positive marketing: The inability that Heineken experienced previously results from customers' popularity. To make this plan successful, therefore, Heineken has to give customers perception that beer from the U. S. brewery does not have any difference from the original one. Heineken could actively use various marketing strategies such as blind tasting.

˜ Rates: They have risky for Heineken to all of a sudden switch its distribution channel. There is certainly possibility to bring about the same inability with before, so they can use a gradual way to relieve risks. Pricing is an excellent way. At the beginning, Heineken maintain the original exported beverage at the same time produce ale in the U. S. brewery. Then they differentiate the price between two types of ale, even when there is no change in the menu. The initial exported beer would have higher price than the other. Thus, we can get for customers in the U. S. to produce a choice between Heineken beers, not another brand.

2. Recommendation

Actually, Heineken is doing a quite good job in the global market, however they tend to pursue only safe way in their marketing. Therefore, we could recommend some ways to boost their express in the international market which is getting tough.

First of all, we give a recommendation of growing in the U. S. market. Despite the fact that other markets of expanding countries, such as BRICs, are arising, the U. S. market is still one of the most significant markets worldwide. So, it might be better for Heineken to penetrate the U. S. market more positively

Secondly, it would be very important to Heineken to maintain and increase its global market show. Usually do not stop raising the amount of its worldwide breweries and the reputation in each region.

Last but not least, more hostile and innovative advertising about its product might help to boost its sales and position in the industry. It seems that the main concentrate on of Heineken cannot include young people, so it can have a chance to take the young who be its large concentrate on. Additionally, Heineken must grasp developments such as well-being. It will lead as well as follow the tendency; they can create low-calorie and healthy ale to follow well-being tendency.

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