Sabmiller Case Study

...

Question 2b

Strategic Capabilities

VRIO

Competitive Implications

Ability to develop and maintain a strong portfolio

Valuable: ✓

- Meeting demands to add value to the target market, hence bring in revenue and capture market share. In 2005, SABMiller’s profit was US $1,224m and had been increasing annually to hit US $4,221m in 2012.

- Portfolio has a good spread of SABMiller international business hence is able to reduce the impact of setbacks or threats in 1 or 2 individual countries.

Rare: ✓

- SABMiller’s adaptability aid in supporting a strong brand portfolio.

Inimitable: ✓

- The leadership and organization culture are inimitable as it is built up by years of adapting to tough conditions in SA.

Organizational Support: ✓

- Decentralization allow managers to focus and adapt to the local markets’ demands.

- SABMiller is able to tap into resources and capabilities of local companies via M&A, which established a localized process in transforming the business yet retaining the brand.

Sustainable Competitive Advantage

Ability to be a specialist in mergers and acquisition

Valuable: ✓

- Despite the investments in consolidation, SABMiller still has a healthy financial status with growing profits.

Rare: ✓

- The reason for SABMiller’s success in M&A is the deep-rooted experience of their leaders to be able to exercise flexibility. These qualities are unique.

Inimitable: ✓

- The keen eye and essential knowledge for M&A are difficult to follow as it is integrated deeply into the culture

- The good rapport between suppliers and local communities is a trait that SABMiller took pride in and due to complexity, it might be hard for competitors to achieve.

Organizational Support: ✓

- Supported by SABMiller in terms of continuous investments even during economic crisis.

Sustainable Competitive Advantage

Ability to have an accurate strategic vision of the future

Valuable: ✓

- Management has a deep understanding in conducting business in different markets adds value in terms of mitigating threats and identifying opportunities.

Rare: ✓

- The unique deep-rooted experience of the leaders and management enable SABMiller to recognize potential markets.

- Sustainable as long as the talents stay with SABMiller.

Inimitable: ✓

- The culture and management style are difficult for others to follow. These are dynamic traits that are developed over time.

Organizational Support: ✓

- Embraces the challenges when management discover an opportunity in business expansion.

Sustainable Competitive Advantage

Ability to achieve economic of scale

Valuable: ✓

- The decrease in cost per unit will contribute in the overall revenue.

- Add value to the supply chain by minimize threats such as increased pricing of raw ingredients to produce beer.

Rare: ✘

- Other organizations like AB InBev, has the same focus and ability of achieving economic of scale to boost their revenue.

Inimitable: ✘

- It is possible for others in the market to undergo similar strategic to reduce input costs.

Organizational Support: ✓

- Good reward system encourages employee to be efficient in reducing costs and maintain productivity.

Competitive Parity

SABMiller has 3 distinctive strategic capabilities that give the company a sustainable competitive advantage. These 3 capabilities are the driving forces of making SABMiller an expert in their M&A, joint-ventures and alliances. They are also sustainable as the capabilities are deeply-rooted into SABMiller’s organization culture and management style.

Question 3a

STRENGTHS

- Valuable M&A knowledge and experience of the management. [Key]

- Adaptability and resourcefulness in developing a brand portfolio for each market. [Key]

- Accurate Strategic vision

- Global geographical presence

- Scale of Economic via consolidation

WEAKNESSES

- Highly dependable on consolidation without much organic growth.

- Less strength and knowledge in the M&A in matured countries (USA and Australia)

- Limited expertise in other beverages as SABMiller is specialized in beer brewing. [Key]

- Lacking in product development [key]

THREATS

- Strong competition

- Diminishing consolidation opportunities or costly M&A [Key]

- Rapid changes in consumers’ preferences and taste [Key]

...