Grolsch Growing Globally Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Grolsch Growing Globally Case Solution

Grolsch has the potential to enter new markets by following the adaptation strategy as it launched green swing top bottle to be delivered globally while the bottle remained brown in the Netherland domestic market.
Grolsche has expertise in creating local value to the customers.
Ceramic swing top bottle is the door opener of entering new markets i.e. it’s the key product generating potential profits for the company and grabbing market share.

Weaknesses

Grolsche is only focused to developed markets, where the competition has become fierce, and no focus has been given to the developing market, ultimately leading to declined sales volume and profitability.
Grolsche distribution systems is not strong as there has been an increased distribution turnover as most of the distribution is carried out using the outsourced distribution or partnerships, such as the partnership with Molson Coors.Whereby the company has to lose control over the operations, and operations play a vital role in premium quality product by Grolsch.
Grolsch pricing strategy does not focus on price elasticity because it charges premium prices in domestic market, whereby the stand product price is low and it charges discounted prices in markets.Whereas the competitors like Heineken, are charging premium prices.
International execution is another weakness of Grolsche a sit relies on partnership and venture to grow globally, rather having its own production facilities.
Despite following an adaptive strategy and focused on western European markets, the company’s product portfolio doesn’t include any northern European product, i.e. 88% of the profits are generated from the western markets and no focus is given to the northern part.
Grolsch brand recognition in the international markets is very weak as compared to its brand recognition in the domestic market.

Opportunities

Developing marketing such Africa, Asia and Latin America offer huge growth potential as Grolsche has the ability to enter new markets and it has an expertise to keep its product according to the customers’ local needs.
Grolsch needs to develop own production facilities internationally as well as domestically in order to meet the rising demand efficiently.
Amsterdam has been performing well since the loss in Grolsch brand occurred, so the company can also focus on growing its Amsterdam brand more, for consumer preferring non-premium product or product with lower prices.
Capturing North European markets represent another opportunity for Grolsch to expand its business internationally.
Optimizing costs by setting up own distribution networks globally.

Threats

Grolsch focused developed markets have been shrinking, and are expected to shrink more in future.
Threat from entrants in domestic market of Nether-land as the customers prefer price elastic product.
Grolsch has also a threat from new entrants or crafts in its premium beer segment, who are selling craft beers at premium prices in international markets.
The total volumes of the standard beer has become stagnant.
Grolsch growing concerns regarding loss in financials and market position might place it under the threat of uninvited-acquisitions.

Porter’s Five Force Model

Porters’ five force model shows the overall competitive position of the company. (Porter, 1979). The detailed Porter’s five force analysis for Grolsch is as follows:

Threat of new entrants

The threat of new entrants is low as acquisitions and mergers have been trendy in the beer industry. There are high entry barriers as there are few big companies, leaving a very little space for the new entrants to enter the market. The new entrants would require high financial investments and it would be difficult for the new entrants to grab the market as there are loyal customers in the European market, making it difficult for them to grab business from the well-established market leaders.

·Threat of substitute products.

The threat of substitutes is high because there are different substitutes such as energy drinks, soft drinks, wine etc., which have become popular in the European markets, and it is another contributing factor to the declined volumes of beer consumption in the European market.

·Bargaining power of suppliers.

The suppliers of glass bottles are very so there bargaining power is low, because they have to adjust their product quality and pricing in order to remain competitive. On the other hand, the supplier for the raw material of energy or brewing are huge in number, who can exert high pressures on their buyers.

·Bargaining power of buyers.

The customers have a high bargaining power as their switching costs of the customers are low and they can easily switch brands. Same is the case for supermarkets, again a massive potential market;it can also switch brands easily, so the bargaining power of buyers is high.

·Existing Rivalry.

The existing rivalry in the brewing industry is high as there is a very low switching cost for the brewers and Grolsch is also facing fierce competition from big players like Heineken, who has been taking the first mover advantage for years and charging premium price in European markets, whereby Grolsch is offering products at discounted prices.

Recommendations

Grolsch has initially focused on the developed markets only, which due to fierce competitions, shifting trends in tastes and preferences of customers, has gotten penetrated. It’s high time for Grolsch to enter new markets by opting a blue ocean strategy, by reaching out untapped markets and creating its own niche and grabbing the customers by being first mover into the market.
In order to increase brand recognition, Grolsche needs to spend more on advertising and its marketing in order to increase its sales and remain competitive in the strong competition.
Grolsch should increase its plant capacity and it should develop its production facilities in foreign so that it would be able to provide premium quality products at a premium pricing, because now it has to give control to partners for the company’s operations.
Grolsch can also acquire or partner with existing companies in the developing markets such as Latin America, Africa and Asia in order to grab more customer base, profitability and to expand its global presences.
Grolsch should properly follow its adaptation strategy in its pricing, distribution and product development especially. As its now offering its premium products at discount in foreign markets for instance in the USA, hereby the consumers prefer premium brands. So, it should take adaptability as its key focus, which should not be compromised.
Grolsch should also focus on continuing innovation by hiring skillful research team, which enables the company in developing a premium quality product for markets which prefer a premium product especially for markets such as the USA, which is famous for having low quality beer.
Over the past, Amsterdam brand has been successful and covered the unprofitably of the focused premium brand – Grolsch. So, the company should focus on selling Amsterdam brand to the markets that prefer a non-premium brand.
In order to enter African market, Grolsch should take advantage of the SABMiller’s production facility by adding up a Grolsch product line. This would enable the company to reach a potential market by reducing cost too.
It should remain focused on premium brand also but by adding a touch of localization i.e. developing products according to the localized needs of the customers. For instance, Grolsch should add a Northern European product in its product portfolio in order to grab the Northern European market.

Conclusion

Grolsch, the world’s 51^st largest brewer Royal Grolsch, was acquired by SABMiller’s in 2007. The management had to find out if any changes were required in the globalization strategy of the company or not. Grolsch offered premium as well a non-premium products, but it had its co-refocus on its premium products only, which were offered to the developed markets.These development markets became stagnant for years. After a complete analysis, it is suggested that the company should enter into developing markets also as it represents a hug potential and profitability by focusing on its premium products with a localization flavor and by emphasizing on selling its Amsterdam brand more.....................

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Grolsch Growing Globally Harvard Case Solution & Analysis