Kweichow Moutai Inc. Situation Analysis
Situation analysis is an important part of strategic management. Under the situation analysis, the company gathers information on the external and internal environments in order to examine present strengths, weaknesses, opportunities and threats, which in turn helps to guide its objectives and goals (Fang 2020). The situation analysis of Kweichow Moutai can be completed with the help of SWOT analysis. The company intends to build strengths by reducing weaknesses under the situation analysis.
Industry Structure and economic feature
Kweichow Moutai operates in the alcohol industry of China. The market structure of the alcohol industry of China is oligopoly as it is dominated by few sellers. Moreover, Kweichow Moutai along with its competitors set the price of alcohol in the market. Thus, they are price setters, which is a vital feature of oligopoly (Yang et al. 2020). High set up costs create entry barriers in the alcohol industry of China. Economic features of China are vital for the growth and development of Kweichow Moutai in the alcohol industry of the country. In this regard, it is necessary to remember that China is an emerging economy with abundance of demand, which contributes largely to the growth of the company. In addition, there was an economic downturn in China in 2020 due to the advent of the global pandemic COVID-19. As a result, it affected the performance of the company significantly.
Kweichow Moutai Strategic
Business Level Strategies ii) Corporate Level Strategies
There are differences between business level strategy and corporate level strategy of a company. Business level strategy of Kweichow Moutai emphasizes on the competition in the marketplace (Yang et al. 2019). The presence of competitors affects the performance of the company as they can influence the decision related to price and output. On the other hand, the corporate level strategy of the company emphasizes on the business profits and growth. It formulates strategies to earn profits and grow the business.
Competitive Analysis and Advantage in the industry
Competitive analysis is essential to understand the position of the competitors in the alcohol industry of China. Knowledge related to sales, product and marketing of competitors are necessary for the competitive analysis of Kweichow Moutai (Li 2018). One of the advantages of the company in the alcohol industry of China is its research and development activities in order to bring innovation in its product line. It helps Kweichow Moutai to beat the competition. Hence, research and development acts as a competitive advantage for Kweichow Moutai in the alcohol industry of China. Competitive advantage helps the company to become the most valuable non-technology company of China.
SWOT analysis of Kweichow Moutai helps to understand its internal environment. These factors affect the performance of the company significantly.
Strength of Kweichow Moutai remains its research and development activities that enables the company to scale up its product along with launching new products in the market of alcohol in China.
One of the major weaknesses of the company is its competitors, which creates a pressure on the company (Cao et al. 2020). Competitive pressure can influence the performance of Kweichow Moutai in the alcohol industry of China, which needs to be corrected for the sustainable growth of the company.
Kweichow Moutai expanded its business internationally. The domestic market of the company is an emerging one. As a result, emerging economies enable the company to increase its sales in the domestic and international markets.
One of the major threats of Kweichow Moutai remains regulatory concerns. Government legislation creates problems for the company, which leads to difficulty (Zheng 2021). As a result, it affects the performance of the company. The fight against waste by the government encouraged people to save more and buy less. It lowered the sales of Kweichow Moutai in China.
PESTLE analysis intends to assess the external environment of Kweichow Moutai on the basis of political, economic, social, technological, legal and environmental factors.
Political stability of China offers significant benefits for the company. In addition, the recent trade war with the United States affected the performance of the company.
Social factors such as a large population helps the company to ramp up its sales. The buyer base of the company strengthened its position in the alcohol industry of China. China is an emerging economy with strong economic growth (Guo 2021). High economic growth rate acts in favour of the Kweichow Moutai as it helps to boost the sales. Thus, it scales up the revenue of the company as well.
The company developed anti-counterfeiting technology that enabled them to detect fraudulent activities and take preventive measures. Therefore, it boosts the performance of the company exponentially.
Legal factors play a vital role influencing the performance of the company. Government regulations influence the business of Kweichow Moutai.
Another vital factor that influences the business of Kweichow Moutai is the environment. The government of China directed to lower the waste and encourage people to buy less alcohol to manage waste (Reddy and Joshi 2021). This action of the government to protect the environment influenced the business of Kweichow Moutai.
Target Market Analysis of Kweichow Moutai
Target market analysis is important for Kweichow Moutai which can be done with the help of demographic characteristics, psychological characteristics and behaviour of the target market.
Demographic Characteristics of Market
The factors under demographic characteristics can affect the sales of Kweichow Moutai. China has a large base of middle-class population, which makes it essential for Kweichow Moutai to create products as per their convenience (Li 2022).
Psychological Characteristics of the Market
Psychological characteristics help to understand the nature of customers in reaction to their states and preferences.
Behaviours of the Target Market
One of the most effective ways to conduct target market analysis is to understand the behaviour of the target market. The emerging economy of China increases the demand for products of Kweichow Moutai by understanding behaviour of customers.
Strategies Appealing to Market
The introduction of Maotai spirit in the market of United States has helped the management of the company to increase its customer base (Zhang 2021).
Marketing Mix of Kweichow Moutai
Product Strategy (Product Mix)
The importance of the marketing mix for Kweichow Moutai cannot be denied. It involves four 4Ps such as product, price, promotion and place.
The company takes a competitive pricing strategy to grab the attention of customers. It helps the company to promote its brand online and offline.
Promotional/ Advertising Plan
marketing strategy factors such as market segmentation, targeting, differentiation and positioning in alcohol industry combinedly contribute to the success of the company (Qian 2021). In addition to this, it promotes the products with the help of advertising tools to reach customers efficiently such as social media advertising.
Kweichow Moutai Competitive Analysis
4Ps’ comparisons with competitors ii) Product iii) Price iv) Place v) Promotion vi) Strengths’ comparisons with competitors vii) Weaknesses’ comparison with competitors viii) Organization’s Competitive Advantage
It produces products as per customers' tastes and preferences. Further, it offers a competitive price to grab the attention of customers (Jin 2020). In addition to this, it promotes the products with the help of advertising tools to reach customers efficiently. Place indicates the market where the company can sell its products to target customers. Research and development acts as a competitive advantage for Kweichow Moutai in the alcohol industry of China. It also acts as strengths over its competitors. Pricing strategy of competitors acts as weakness over competitors.