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A Case Study On Strategic Management (Chapter - 2) : Submitted To

This document is a case study submission on strategic management from a group of three students - Rana Mondal, Umme Salma, and Gias Uddin. It was submitted to their professor Farzana Nasreen at Jagannath University. The case study addresses four questions related to the concentrated United States brewing industry, analyzing it using Porter's five forces model and discussing implications for smaller mass market firms.

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Shovan Saha
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82 views3 pages

A Case Study On Strategic Management (Chapter - 2) : Submitted To

This document is a case study submission on strategic management from a group of three students - Rana Mondal, Umme Salma, and Gias Uddin. It was submitted to their professor Farzana Nasreen at Jagannath University. The case study addresses four questions related to the concentrated United States brewing industry, analyzing it using Porter's five forces model and discussing implications for smaller mass market firms.

Uploaded by

Shovan Saha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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A case study on Strategic Management

( Chapter – 2 )

Submitted to :
Farzana Nasreen
Dept. of Finance
Jagannath University

Submitted by : Group - 2
Rana Mondal --------- M-19180203726
Umme Salma --------- M-19180203728
Gias Uddin ------------- M-19180203721
Question – 1 : Why has the United States brewing industry become more
concentrated over the last two decades?
Answer : Over the last two decades, the beer industry in United States has changed as
following reasons; - The consumption of beer in the United States has been continuously
declining due to the growing consumption of substitute products, particularly wine and spirits.
In order to keep the business in the market, each company needs to take away some market
share from their rivals. As a result, the small business could not stay in the market and go out
finally. Then, there are few main players to compete each other in the market. - The increasing
trend of advertising expense was also the key point to make customer loyalty to the brand. This
is the big issue for any small company that cannot afford this cost and forced them to go away
from the business. - Due to the technological change in canning and distribution, it leaded to
the concentration in brewing industry as well. Most producers turned to focus more on the
mass market in order to achieve the economies of scale and not all companies could reach the
minimum efficient scale of production.

Question – 2 : Analyze the competitive structure of the industry using Porter’s


five forces model
Answer :
 Risk of entry by potential competitors: New micro brewing companies have low
barriers of entry, because they do not rely heavily on brand loyalty or economies
of scale. Mass market brewers are faced with higher barriers to entry because of
brand loyalty of customers and absolute cost advantages.
 Intensity of rivalry among established firms: new customers are always entering
the market as they become legal age, so mass market brewers try to appeal to
them to get their business, minimizing the competition to take other companies
competitors. Demand has also been growing, making them less competitive.
 Bargaining power : The bargaining power of buyers in the U.S. beer industry
could be a threat as it will lower prices and raise costs.
 The bargaining power of suppliers could raise costs causing lower profits for
those in the industry.
 Any substitute product are also can be threaten for this beer industry.
Question – 3 : What are the implications of the evolving competitive structure in
the brewing industry for the profitability and strategy of a smaller mass market
firm in the industry?

Answer : The booming industry of the substitutes – wine and spirits, is an alarming threat to
the three dominating big companies namely: Anheuser-Busch, SAB-Miller, and Molson Coors.
However, their effects are much greater to the small mass-market segment. When threats
emerge, small mass-market segment suffers most due to their low capital, small scale economy,
and other factors. For example, when a new big company enters the industry, the share of
market of small mass-market companies become small and this will result to smaller profit.
Now, the small mass-market strategy might not be anymore be needed. However, new
strategies means new cost which may not be able to afford by the small mass industries.

Question – 4 : Are there different strategic groups in the industry? What are
they? Do you think the nature of competition varies between groups?

Answer : Yes, there are two different strategic groups that can be observed – the mass-
market segment and the premium beer segment. The mass-market segment revolves around
aggressive pricing, brand loyalty, distribution channels and national advertising spending while
premium beer segment focuses on discerning buyers and they build their brands around taste
and cover higher product costs by changing much higher prices. The nature of the competition
does not vary between the groups however, effects of these competition may differ depending
upon the kind. Say for example, the substitute, wine and spirit, the closest competitive threat to
beer industry. The sudden appearance of these substitutes offering cheaper price forces the
beer industry to limit their change or else the customers will turn to substitutes.

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