Sabmiller Audit Analysis

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Audit Report - Africa - SABMiller - 29.11.2017

Outline

1. STEEPLE C
2. Porter’s 5 Forces
3. Competitive Market
4. Capabilities

1. Strategic Capabilities
2. Capabilities - VRIO

1. Value Chain Analysis
2. The Cultural Web
3. TOWS Matrix
4. Key Strategic Issues (KSI)
5. Stakeholders
6. SFA
7. ANSOFF
8. Recommendations

External Analysis

STEEPLE C

• Socio-cultural:

• The major production plants of SABMiller are located in developing countries where the hygiene condition is unstable and diseases are easily spread among workers when there is outbreak of pandemic. Productivity would be affected then.
• When there is changes in society, such as urbanization or development of life-styles would change the consumption preference which can increase the sales of brewery products

• Technological: Advance in technology help in better productivity and distribution by shortening the production procedures and more convenience in transportation which can save cost and increase the efficiency at the same time

• Economical:

• Since the business of SABMiller spread around the world, one of the source of income is currency between different locations and monetary markets.
• At the same time, the listing on stock exchange can help them to acquire source of capital for acquisition.
• In some regions in Africa such as South Sudan and Zimbabwe, the growth and development of SABMiller was hampered by poor economic fundamentals there.

• Environmental: The glass content of each beer bottle is 30% less than other ordinary bottle so that consumption of raw materials is reduced to protect the environment. Also, lighter bottle means the costs on transportation can be reduced by consuming less fuel or manpower.

• Political + Legal: SABMiller should pay attention to this aspect when they go into emerging markets because the regulations and requirements are different from place to place. This can be the advantage for local company while restrict the foreign company to join the market.

• Ethical: Better working environment and treatment on workers may increase cost and at the same time the incremental benefits can be larger than the costs. For example, SAB publishes a code of non-discriminatory employment in 1978, which was the first company doing so in South Africa. This can enhance the staff morale and the productivity can consequently increase in this circumstance.

• Competitive Market: Africanist culture and fearlessness in tackling emerging markets is much less inimitable. The operations in emerging markets where the status of country is turmoil or the infrastructure of the country is relatively poor. Majority of competitors dare not to join the market so SABMiller gains many benefits from those markets, especially the managers are expertises to handle such kind of situation.

Porter’s 5 forces

So, basically, the 5 Porter’s keys help to identify and analyzes 5 competitive forces that shape every industry, and helps determine an industry’s weaknesses and strengths. It also allow to determine corporate strategy  and the profitability and attractiveness.

First of all, we are focus on the competitive rivalry, in this case its power is moderate. Actually the global beer market is fragmented in four leading players, there is a strong differentiation of beer among other alcohols drinks which reduced the rivalry. Last but not least,  the fixed cost are high which create financials difficulties.