Essay on Anheuser Busch and Coors Brewing Company

6260 Words Nov 27th, 2011 26 Pages
Strategic Analysis of

Anheuser-Busch Companies and Coors Brewing Company

Tuesday, October 18, 2011

Contents
Introduction 3
Industry Analysis 3 Barriers to Entry: 3 Competitive Rivalry: 4 Power of Suppliers: 5 Power of Buyers: 5 Substitutes: 6 Summary of Five Forces: 6
Strategy Analysis 7 Anheuser-Busch 7 Operational Excellence 7 Customer Intimacy: 9 Evaluation of Anheuser-Busch’s Strategy: 10 Coors Brewing Company: 11 Operational Excellence: Through Strategic Alliances 11 Brand Management: Differentiation and Expansion 14 Evaluation of Coors’ Strategy 16
Event Response Analysis 17 Demand Contraction: Anheuser-Busch and Coors Brewing Company 17 Rise in Demand: Anheuser-Busch
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On the other hand, diminishing consumer demand, evidenced by declining beer sales (see Figure 2), and high fixed costs that lead to high minimum efficient scale production, increase the intensity of rivalry within the industry. Furthermore, the capital expenditures associated with brewing beer on a large scale make the exit from the industry difficult, thereby increasing the intensity of rivalry. Taking all of these forces into consideration, the intensity of the rivalry within the beer industry can be considered moderate. While this analysis focuses on mass-market producers, it is worth noting that the craft beer market is highly fragmented and subject to a different level of competitive rivalry between firms.

Power of Suppliers

The power of suppliers within the beer industry is low. The inputs for beer producers are malted grain, hops, water, and packaging (bottles, cans, or barrels). Given the scale of dominant multinational players, the threat of forward integration from the suppliers’ side is weak or non-existent. The commodity-based packaging products are typically undifferentiated and sell in efficient market. The independent hop and barley growers are numerous and have limited alternative markets besides the brewers. For instance, barley can be sold for animal feed and malted barley for distillation in the production of spirits, but breweries account for a high percentage of the overall output. In addition, the

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