The company having so many strengths, it also has weaknesses. One of the weaknesses is in terms of quality of production. The company is producing in large quantities which at times may be very difficult to monitor the production quality. Small scale competitors who have taken their workers and producing very strong brands, thus endangering the strength of Heineken. There are the government policies and regulations regarding alcohol in various parts of the world.
Heineken operates in many countries and each country has its own regulations regarding alcohol in terms of taxes and other prohibitions which affects the strength of the company. You find that for the last five years the African countries are busy increasing taxes on beer at the expense of the producer. Although the expense is past to the consumer, the company feels the pinch when the consumer turns away from taking the drink. Importation taxes have also been increased in various countries making the company have a higher cost of production in terms of the high price of materials imported or transfer cost been charged a higher tax rate.
The craft beer industry have seen the growth of other brands in various parts of the world meaning that majority of the citizens of any country will wish to take beer which is home made rather than imported beer. This becomes a very crucial weakness of Heineken. Preferences developing in America towards American made beer by companies like Boston Brewing Company. This is a major competitor of Heineken in the United States. The company has a weak customer loyalty because of the brand image and tastes of her beer.
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Heineken brand which has been in the market for a long period has started losing loyalty from many people and they are trying to adapt change. This makes their competitors at an advantage as they are able to sell their new brands to the new market and attract Heineken’s market. The company depends greatly on the sales made in Europe and America in support of their strong financial position. The competitors are looking at Africa, South America and Asia as a strong emerging market with a population of almost 3. 5 billion people, in anybody’s mind this is a huge market for beer products.
The company should engage in production of new products that will replace the old products that the people are trying to change. This will enable them acquire the larger market share as they are among the largest companies in the beer industry in the whole world. Heineken Company has a very good image and her involvement in social activities has given the company an advantage over other companies. This is an opportunity the company has to market its products without fear. It has room for expansion since they are the only sponsors of European Champions League.
It has also an advantage of growing the line of products and acquisition of better human resources. Another opportunity available for Heineken Company is the ability to acquire any company in craft beer through its financial resources. If you look at the financial statement of Heineken you could realize that the company has huge financial resources which can assist them to acquire any company without borrowing from banks. The company can acquire or merge with any craft beer company in the US or in Africa for strategic reasons.
Another opportunity is that Heineken Company obtains a great market segment through the supply of beer using integrated means. This means that the use of fridges, electrical rails, refrigerated ships, the product of Heineken can reach any part of the world including Asia, African, South America, Australia, North America and Europe. The company with the financial resources of Heineken can produce a good tasting beer because of the new technology they have embraced and the human resource they have.
Another opportunity for the company is the ability to produce a product which can be acceptable in the Muslim world as a drink that can be consumed by Muslims. This will give companies in the Muslim world a major challenge. This form of diversity for Heineken can assist them to increase their resources in terms of financial. The company can also diversify to other activities that are related to beer production because of unlimited financial positions they boast. The company can enter into advertisement, construction of stadiums like emirates and even the production of soft drinks which will give the Coca cola Company a run for their money.
The company also can increase its market share through sponsoring HIV/AIDS advertisements and programs in various parts of the world where HIV/AIDS prevalence is high. The increase in the market will enable her acquire more resources as compared to other companies in the brewing industry. Another opportunity available for the company is to start a fund that sponsors wildlife and needy children in various parts of the world. They should also be involved in funding conflict resolutions in various parts of the world using their huge financial resources which will assist them acquire a greater market share.
There exist several threats for the Heineken Company which are both internally and externally. These can emerge from the financial position to operations. The company operates in many countries which may cause double taxation. Also in complying with accounting standards, the company finds themselves in a difficult position when one of the segment markets recognizes different accounting standards from the mother country. For the company to have uniformity they should also lobby in various accounting governing bodies in various countries where they operate to adopt international accounting standards.
Another threat for this company is the change of prevalence of the American market towards their home made products. This will give Heineken Company a major in the American segment market. The Americans will prefer to improve a home made company as compared to a company perceived to be foreign. In the industry there are new taxes imposed to beer products in order to discourage the consumption of beer. This is slowing down the market growth of beer. When the beer market is coming down Heineken Company will not expect growth as they have been enjoying in the past.
Also most countries are trying to industrialize and they are imposing huge taxes to foreign companies especially those with transfer costs. This will affect the profit of Heineken Company. The company should come up with strategies that will enable them maintain and acquire another market share if they have to be on the front. They should have knowledge on the prevalence of the market abroad and forecast change of regulations in various countries if they have to expand their market.
Another strategy the company should adopt is the acquisition of small companies in the African continent and some parts of South America and Asia to enable the company stand tall in the brewing industry. Strategic alliances with the suppliers and distributors abroad are a very crucial strategy for the company for its growth. The company should give the abroad distributors incentives which are above what is offered by competitors so that its products will remain in the market as a leader. Heineken Company should try to be listed in the American Stock Exchanges in order for the American people to have confidence in the company.
The company also should sell their shares in various parts of the world like in African where there is a huge market like in Nigeria, South Africa, Kenya and some parts of North Africa. Business for Heineken Company has a future growth and stabilization should they adopt the listing strategy.
1. Bhaaskar Nath; Environmental Management In Practice; Routledge 1999 2. M. Armstrong; Strategic Human Resource Management; Kogan Page, 2000 3. Anne W Harzing ; J V Ruysseveldo; International Human Resource Management; Sage Pub; 2004
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