Adolph Coors in the Brewing Industry Take-aways

Internal Fit A strategy should fit internally Activities of the firm should link in a complementary way with one another This requires a cross-functional perspective An activity map is an important tool to assess the internal fit of a company’s strategy

An Activity Map Procurement Manufacturing Marketing Distribution Other Plant One Regional Scale Product Distribution One Intermediate Location Price Distribution Backward Controls Integration · Cans · Other inputs High Limited Capacity Advertising Utilization Other Product All- Unique Process • Attributes Equity • Asset-Intensive • Rocky Mount. Finance • Long Image • Unpasteurized Family Control Confronta- tional Manag.

External Fit A strategy must also fit externally A company’s strategy needs to make sense in the “terrain” in which they are operating Comparative financial statement analysis is a key tool for this type of assessment Identify the key drivers of change in making comparisons

Coors’ Strategy 1970s: Product Advantage vs Competitive Advantage Scale and Centralization Missed opportunities Static view of rivals and opportunities 1980s: Constrained by Earlier Choices Reactive strategy Little adaptation

Operating Performance Comparison, Coors vs. Anheuser Busch

Coors Update 1985 — Miller introduces Genuine Draft August 1 1986 — Agreement with Asahi Breweries in Tokyo—to brew and distribute Coors in Japan 1987 — Shenandoah packaging facility opened 1987 — Agreement with AFL-CIO ends 10-year boycott against Coors 1988 — Record volume moves Coors from #5 in the industry to #4 1989 — Introduced Keystone (a popular beer that cannibalized Coors’ premium sales)

Coors Update 1990 — Coors rises to #3 among US brewers 1991 — Entered 50th state (Indiana) and began exporting to Puerto Rico, Guam and Cayman Islands 1992 — Spun off nonbrewing assets including diversified technology business 1993 — New president and COO hires from Frito-Lay; first non-Coors family member to be president 1994 — Purchased brewery in Spain 1996 — Anheuser Busch has captured 48% of US beer sales

Coors Performance Post 1985 (end 2003) Coors + 52% (end 1995)

Coors Performance Post 1985 relative to Anheuser Busch