1. Anheuser - Busch in China
Report 1: Strategy Formulation
David Arraya, Kevin Gardner, Trenton Jackson, Brad Orr

2. EXECUTIVE SUMMARY Anheuser-Busch Beer Non-Alcoholic Beer Energy Drinks
Budweiser
Busch
Michelob
Natural Light
Non-Alcoholic Beer
Energy Drinks
Specialty Malt Beverages
Domestic beer, International beer, packaging, and entertainment markets
Largest brewery in the U.S. (48.8% of beer sales)
4th largest brewery in the world

3. EXECUTIVE SUMMARY The Chinese Beer Industry Dominant Firm’s
Tsingtao
China Resource Enterprises
Beijing Yanjing Group
Key’s to Success
Gaining vast market share
Establishing presence with brand name and low prices

4. COMPANY VISION AND MISSION
Through all over our products, services and relationships, we will add to life’s enjoyment
MISSION
Be the world’s beer company
Enrich and entertain a global audience
Deliver superior returns to our shareholders

5. SWOT ANALYSIS External Environment Economic Political Technological
Huge population
Low per capita beer consumption
Highest beer volume consumption in the world
Rising income levels
Social
“Pub” culture emerging
Price conscious consumer
Political
Bureaucratic government
Beer taxed heavily
Technological
Old, out-of-date beer manufacturing plants
Ecological
Pollution and waste a growing concern in China

6. IMPROVEMENT OF THE MISSION
Focus on employees
State objective of how they intent on becoming the best beer company in the world
Reflect corporate social responsibility

7. COMPANY PROFILE Value-Chain Analysis (Market)
Problem is market, not businesses
Large, fragmented, and traditional
In order to gain a competitive advantage, the businesses must focus on Primary Activities
Inbound Logistics
Outbound Logistics
Marketing and Sales
Service

8. COMPANY PROFILE Resources Tangible Assets Production facilities
Harbin Brewery
Established suppliers
Financial resources
Intangible Assets
Brand recognition
Company reputation
Accumulated experience
Organizational Capabilities
Global distribution coordination - World-class distribution network

9. COMPANY PROFILE Strengths Access to capital Brand recognition
Acquisition of Harbin Brewery and interests in Tsingtao
Experienced and solid management team
Weaknesses
Foreign competitor
Taste for local brands
Large investment
Competitive Advantage
Leadership in Northwest China (Harbin)
Creation of large production facilities

10. PORTER’S FIVE FORCES Present Ranking Force Threat Level
#1 Threat Substitute Products High
#2 Threat Threat of Entry High
#3 Threat Rivalry Among Competitors Moderate
#4 Threat Buyers Low
#5 Threat Suppliers Low
Future Ranking Force Threat Level
#1 Threat Rivalry Among Competitors High
#2 Threat Buyers Moderate
#3 Threat Substitute Products Moderate
#4 Threat Threat of Entry Low
#5 Threat Suppliers Low

11. LARGEST BEER PRODUCERS IN CHINA
Ranking Company Name Competitive Advantage
#1 Tsingtao Market Consolidation
#2 China Resource
Enterprises Low-cost Leader
#3 Beijing Yanjing
Group Advanced Distribution

12. FINANCIAL ANALYSIS
Used financial statements and ratio analysis to compare Anheuser Busch’s past years and the competitive market
Increase in sales from million to million dollars from 2003 to 2007, which is above the industry average

13. RATIO ANALYSIS

14. CORE ISSUE Market Fragmentation Symptoms from Core Issue
brewing firms in China
No dominant leader in the market
Symptoms from Core Issue
Price wars
Decreased profits
Buyer power

15. LONG-TERM OBJECTIVE
“Harbin brewery is committed to increasing its market share in Northeast China, becoming the dominate market share holder within the next 10 years”

16. PREMISES AND SCENARIOS
Major Premises
Acquisition of competition will create “trench warfare” between regional powerhouses
Foreign Investment will continue
Scenarios
Best Case - Harbin will become dominate market player
Worst Case - Harbin will be bought by another powerhouse
Most Likely Case - Harbin will grow by 10% and remain the 4th largest brewer in China

17. CORPORATE-LEVEL STRATEGIES
Continued acquisition of companies in China to gain market share
Offer lower cost products to compete with the largest segment of beer drinkers.
Build CSR

18. BUSINESS-LEVEL STRATEGIES
SBUs
Budweiser Family of Beers Harbin Premium Beers

19. BUSINESS-LEVEL STRATEGIES
GENERIC STRATEGY
Low-Cost Leadership
Need to penetrate traditional market
Want to get the product in the minds of the consumer
GRAND STRATEGIES
Market development - Bring Harbin to the rest of China
Innovation - mainly through advertising
Horizontal integration - acquisition of smaller breweries

20. STRATEGIC CHOICE Growth through horizontal integration Very feasible
Will allow Anheuser-Busch to establish presence in other regions of China
Anheuser-Busch has the financial capital to carry out this option
Will increase market share

21. Thank You and Remember to Drink Responsibly