Bus 599 Paper

Master Degree in Business organisation Strayer University Strategic Management BUS 599 Assignment 3 Submitted in Partial Fulfillment of the Requirements for the MBA program Abstract Through this paper, one leave understand the trends in the orbicular beer market. There volition also be the possibility of Modelos international expansion. There will also be an assessment close the next foreign market that Modelo should get winding with. A decision most the challenges that Modelo faces from their ambition InBev and how Modelo should respond to this beer industry whale is presented in this paper.Last but not least, a discussion about weather or not Modelo should diversify their personal line of credit is stated in this paper. Historically, the brewing business was known as a local industry. Furthermore, solely few of the brewers were known at an international level. During the past decades, there were a lot of consolidations make within the beer industry. With the past few y ears, the process of global beer consolidation grew even racyer. By the year 2008, there were two major acquisitions make within the global brewing industry.The two acquisitions were made of stinting and New Castle by Carlsberg and Heineken. The other(a) acquisition was done of Anheuser-Busch by InBev. (www. carlsberggroup. com). The trend of beer over the last five years had a combine annual gain rate (CAGR) of 4. 8% worldwide. (www. encyclopedia. com/doc/1G2-2843300064. html. ). Within important America and South America, the CAGR increased to 6. 3%. Africa also showed growth by having CAGR that got up to 6. 4%. A key note about the growth of beer was shown in Asia. www. encyclopedia. com/doc/1G2-2843300064. html). The trends of beer for the last five years expect be tilting toward consumers wanting expensive beers. Due to that, expensive beers or premium beers accumulated 17% of the beer sales globally. The premium beer market of North America as easily as Western Euro pe sales happen to be higher than the global average for premium beers. www. carlsberggroup. com/ friendship/market). Due to the high economic downturn, the consumption of premium beer became very low.Grupo Modelo happens to be the most democratic and largest makers of beer in the expanse of Mexico. Over the years, this company has strived for excellence and became the 12th largest manufacturers of beer in the world by 1998. (www. businessweek. com/globalbiz/content/aug2008/gb20080814_195868. html). Grupo Modelos most famous cross of beer is the corona wasted. Corona Extra was noted as the first among merchandise light beers within the United States in the year 1997. Moreover, Corona Extra was ranked the fifth in light beers worldwide in 1997.Grupo Modelo is the producer of nine smears of beer within their company. Modelo mission is to produce, distribute and sell quality beer at a competitive price, optimizing resources and surpassing customers expectation in order to pass to the social development of Mexico. (www. gmodelo. com. mx). Due to North Americas allow Trade Agenda (which eliminated barriers as wholesome as tariffs) Modelo made a strategic business move that involved protecting themselves from having to megabucks with U. S. beer victorious over their sales in Mexico.Moreover, Grupo Modelo Company defined to become partners with Anheuser-Busch. The deal of coalition with Anheuser-Busch allowed Modelo to be an exclusive electrical distributor of all the Anheuser-Busch products in the country of Mexico. Within the United States, four different brands of beers produced by Modelo were sold and distributed by Barton Beer. Anheuser-Busch did not distribute any of Modelos beers within the United States. With the partnership of Modelos and Anheuser-Busch, Anheuser-Busch was not doing very well in Mexico.Moreover, Anheuser-Busch beers (Budweiser and Bud Light) during that conviction of the late 90s were only selling well in tourist areas withi n Mexico. Due to this discouraging fact of Anheuser-Busch only doing well in tourist areas of Mexico, they decided to raise their equity in Grupo Modelo to 37% in 1995 and proceeded to raise equity to 57% in 1997. By pinnacle their equity in Grupo Modelo to 57%, Anheuser-Busch total investment came up to about $1. 6 billion. Modelo decided in 1996 to renew their alliances with Barton Beers and Gambrinus for a decade.This decision made by Grupo Modelo angered Anheuser-Busch and brought about mistrust in decision devising by Modelo. By the year 1997, Grupo Modelo had 80 percent of all Mexico beer export. In addition, Modelo was exporting there brand of beers to 143 countries. (www. businessweek. com/globalbiz/content/aug2008). Although Modelo is well known for their brand distribution of Corona Extra and Corona Light, they also distribute other beers such as Modelo Especial (this happens to be Modelos second tip brand of beer), Victoria, Light Modelo, Pacifico, Estella, Leon Negra, Montejo and Negro Modelo.It is a proven fact that Modelo has done very well within the United States beer market and is still having continuous success in Latin America. The Next foreign market Modelo should flavor into must be the Asian market. This continent is understood to be Brobdingnagian consumers of beer, coming second after Western Europe. Modelo should try and make alliances with the unclutter seller of beer within each Asia nation. Modelo should also try to relinquish their powerful Latin background and try to incorporate them into the Asian culture.Although it is an applauded agenda for a business to strive for uniqueness, it is also a sensible idea for a business to be adoptive. Moreover, Modelo will have to send agents that will quantify the business environment of Asia in order to know their style and likings when it comes to beer. rather of concentrating on making huge profits by selling their products at high prices, they should focus on quality and make thei r product obtainable for a reasonable price. This will enable the buyers of the beers realize the beer taste and because become a loyal customer.Modelo should also try to work in concert with local brewers within Asia. Modelo should also invest in advertisement and forefend having to make known to customers in Asia their beer rank number one in Latin America. Moreover, the focus should be on becoming the number one distributor of beer in Asia. Modelo should also seek to built factories or plants within Asia in order to do away with export prices and the trouble of transporting the beer. construction a plant in Asia will make their business come along more intoned with the Asian culture and allow Asians to look upon this company as one of their own.Normally, when a company presents itself as an outsiders, they tend to have a nasty time adjusting to their customers. If Modelo follow this strategy of adapting to the way of blistering by their customers in Asia, they would not hav e such a difficult time selling their products. Although Modelo is known as the most successful beer distributor in Latin America, this company still has to deal with competition. One major competitors of Modelo is InBev. InBev is a Belgian-Brazilian brewer that took over Anheuser-Busch for $52 billion.Furthermore, 50% of Modelo is owned by Anheuser-Busch. This puts Modelo in a difficult predicament. Modelo also stands at a disfavour because InBev bought Anheuser-Busch and Anheuser-Busch owns fifty percent of Modelo. The strategic response Modelo can imply to the competition of InBev is to pay out Anheuser-Busch, so Modelo can once again decide their business agenda without any interference. This seems to be the best strategy for Modelo because Anheuser-Busch will always cater to InBev because thats who owns their business.Furthermore, Modelo needs to focus on maintaining their record as the best beer distributor in Latin America. The only demote InBev have of taking that title a way from Modelo is by buying Modelo. The Corona Beer is still a success worldwide as well as in Mexico and Modelo needs to consider that fact as an advantage. Diversity in the world of business is always a good thing. Furthermore, it enables a business to grow and get more customers. Modelo should diversify their business.Modelo should consider getting into the nuts take in business. This is a way to gain a larger consumer base. Although Modelo is doing well selling beers in Mexico, a lot of Mexicans dont drink alcohol or are underage to consume alcohol. Getting in the business of selling soft drinks would be a very restrained transition because Modelo is a popular a successful company. References www. businessweek. com/globalbiz/content/aug2008 www. gmodelo. com. mx www. carlsberggroup. com/company/market www. encyclopedia. com/doc/1G2-2843300064html.