Introduction
Heineken is a brewery company founded in 1864 by Gerard Heineken in Amsterdam. In 1873, it began producing beer and was active in the brewing industry in over 178 countries globally. The company was initially focused on brewing beer, not until 1933 when they started international exports (Bez). The company develops, markets, and sells alcoholic beverages under various brands. As part of its global expansion strategy, it diversified into acquiring Scottish, FEMSA, and Amstel brands to diversify its portfolio. This strategy resulted in being one of the leading producers in the beer industry in Europe. The goal of the company is to be a broad market leader and strive for sustainable growth. Its mission is guided by three major principles: strong corporate social responsibility, brand portfolio, and a solid local market position. Heineken focuses on quality and aims to be a leading brewer producer in the market.
Heineken SWOT Analysis
Like any other corporation, Heineken International has its strengths, weaknesses, opportunities, and threats. Being among the leading corporations in the brewery industry, Heineken has various strengths that enable it to foster its success in the market. These strengths help it to penetrate untapped potential markets and protect the market share. Another major strength is the company has a global network of distributors established in countries worldwide. Their well-devised distribution channels have helped the company become a market leader. It leverages its high sales volume to increase profitability by creating economies of scale (Bhasin). To attain this, it uses various strategies, such as producing high-quality products to optimize profitability. The company leverages its strong brand reputation and global availability to earn them loyal customers. Its brand recognition of Heineken unique taste and a broad portfolio of beers attracts various customers. This brand’s popularity has helped it achieve immense growth and leverage the opportunities.
Weakness areas give room for improvement and build on the company’s competitive edge and brand recognition. One of the company’s weaknesses is no production base in some countries, and the brand image is not projected in marketing. Another weakness is that Heineken has not been able to tackle challenges presented by new competitors, which has led to a loss in market share. Additionally, it lacks a global presence in the bottling business, therefore, incurring packaging costs.
Heineken leverages the opportunities of brand awareness to target customers and engages them through its multiple platforms. Its brand recognition is a brilliant strategy that exposes it to the target audience. One significant threat is that as the company operates in various countries, it is exposed to currency fluctuations. Another potential threat is customer behavior which is inevitably changing. Furthermore, the brewery industry is faced with fierce competition, and the biggest competitors to the company include AB InBev, Molson Coors, and Carlsberg (Bhasin). Lastly, the company lacks a common communication strategy to retain uniformity and convey messages to their different target markets.
The Impact of Entry into New Product and Geographical Markets on Value Creation
The company offers an extensive product portfolio for its vast customer bases. It uniquely distinguishes them from their competitors. Launching newer products that satisfy customer preferences has enabled the company to grow its brand recognition and attract various customers. Additionally, the company’s revenue increased, and it has seen profit growth globally. The strategy allows the company to generate sustainable improvements and presents an opportunity to enhance its competitive advantage. Lastly, differentiation of newer products will offer unique attributes such as superior quality, brand recognition, and innovativeness. This has enabled Heineken to acquire many loyal customers and increase sale penetration among new consumers.
On the other hand, a growth strategy is most sought after when entering new geographical markets. The company is active in over 170 countries globally, which has enabled it to sell most of its products, thus making profits (Bez). Their geographical markets have enabled the company to pursue new growth opportunities and expand its sources of revenue. Finding new profitable market niches will allow the company to escape from the intensified competitive markets.
Challenges of Heineken’s Diversified Global Operations
Different global countries have their own unique cultures, and this poses a threat to Heineken. Unlike local and domestic operations, it is more difficult to understand customer behavior in other countries. Customers from global markets have social and cultural diversities, and the real challenge for the company is to understand and incorporate their needs and preferences. Tailoring the brand to fit the international markets has become one of the challenges for Heineken. This makes it difficult for Heineken to meet the global countries’ brand touchpoints (Bhasin). Another major challenge is the competition from other breweries in the global market. Increased competition has challenged the company in the international markets. It is unsurprisingly becoming difficult for the company to stand out from the fierce competition. Many brands are trying to launch unique beers in international markets to identify themselves from their competitors uniquely.
How to Address the Challenges of Global Operations
To overcome the challenge of different cultures, the company can leverage managers with solid awareness and insight into international processes. These managers can turn the challenges into potential opportunities and profitable ventures within the global operations. Furthermore, Heineken can diversify their offers and localize its products to give them a cultural identity. This will encourage consumerisms in the global markets (Bhasin). Another solution is to adapt to the new environment and establish new practices that best work for the customers in the area. It should be noted that to attract more customers; the company has to have an integrated design for all global markets.
Heineken can focus on innovation to increase its competitive advantage. The company can leverage technological advancements to market its strategy overseas. It can also partner with local businesses in the brewery company and build good business relationships. Heineken can leverage working with companies overseas, such as shipping and storage firms, to grow. By working closely with local businesses in the brewery industry, Heineken will transition and find its customer base.
Conclusion
In conclusion, Heineken is a global leader in the brewery industry that has strived to be consistent in its endeavors. Its popularity continues to grow, and this can be attributed to its strong brand recognition and high-quality products. Global operations have fueled the business operations of the company for many decades. To attain this, it has put in place strategies such as differentiation and global marketing operations to boost the company’s success. The strategy of the company to venture into global markets has created value and increased revenue. Nevertheless, it has faced inevitable challenges in the markets, which include competition and cultural diversity.
Works Cited
Bez, Samuel. “Heineken: How Did It Become the Most Popular Brand in the Beer Market?” Medium, Web.
Bhasin, Hitesh. “SWOT Analysis of Heineken.” Marketing91, 2019, Web.