Describe the Innovation strategy.
Importance of International Strategies for Organizational Expansion
The following report will describe upon several issues on the expansion of the multinational companies into the different countries. The importance of taking the several international strategies is very much important since the organizations will always look to focus on the various issues while opting for their strategies. The expansion of the organizations will depend upon the various strategies that they will follow. There are various international strategies that could be followed by the different types of the organizations in the several industries (Hitt, et al., 2016).
These strategies are based on the various things like the cultures of the regions and the mindset of the employees in the various ways. The competition in the global market is immense so all the organizations will try to provide the best offers, products and services to their customers. These services should be provided based on the customer profiles of the areas in which they are operating. However, the chosen organization for this paper is Carlsberg. The various business strategies that the company has opted will be discussed(Hitt, et al., 2016). They provide their services to different countries and it is very integral to adopt the best strategies for the international expansion of the organization.
The organization that has been chosen in this paper is Carlsberg group. The company is considered to be the global brewer. It was established in the year 1847 (Carlsberggroup.com 2018).The company operates in the beverages industry and it has a worldwide reputation in this industry as well. The headquarters of the organization is located at Copenhagen in Denmark. The various products that the organization provides are beers, ciders, soft drinks and the bottled water. The brands of beers and ciders the company provides are the Tuborg, Kronenbourg 1664, Baltika, Grimbergen and Somersby. The total number of the Carlsberg Group is more than 40,000 (Carlsberggroup.com 2018). The company provides their services mainly in Western and Eastern Europe and Asia. The various strategies they have taken to cater to their international expansion will be discussed in the following section (Collis, , 2014)
The adoption of the international strategies has been one very important matter in the case of Carlsberg. The organization will look to enter the new markets besides providing their services to the areas that they already are the market leaders (Collis, , 2014).The financial expansion is very much important as well as catering to the needs of the customers of the organization. It has been found through the proper research of the experts that the main markets of the Carlsberg group had existed in the Western part of Europe. This is where they would provide their customers with the regional brands like Tuborg, Baltika and Holsten. The various local brands also produced their items under the label of Carlsberg.The company had targeted the Eastern European market and the Asian market in the countries like Russia and China (Kotabe & Helsen, 2014)
It has been reported that the main feature of the global brewery industry depended on the intense consolidation process of the elements. The global brewery industry had faced a huge setback since the customers’ habits of the beer drinking began to change and the production costs also began to rise as well (Collis, , 2014)This had made the life of the beer producing companies to be much tough since the organizations faced a tough competition from the various new market competitors. The merger process saw Carlsberg buy a large portion of the shares from Orkla. It is because Orkla had around 50% of the ownership in the Baltic Beverages Holdings (BBH). This could give Carlsberg the option to make their position stronger in the brewery market indeed. However, in the recent times, it has been seen that the company has put much stress on the Indian market as well (Kotabe & Helsen, 2014)This will be very much important for the organization since they would look to expand into Asia and capture a huge market share. The company would be highly benefitted if they captured the booming Asian market and catered to the desires of the company in the best ways. They would be able to acquire the higher revenues as well (Buckley, 2015). One important barrier that Carlsberg had been facing in the traditional American and European markets is that of the growing health consciousness of the people. The people are much cautious about the diseases that alcohol can cause to them. This is why they have to adopt some strategies that could fit their needs in the best ways. They must be able to overcome the financial problems regarding the excessive production costs and the labor charges (Buckley, & Ghauri,, 2015)
Overview of Carlsberg Group and Its Products
The company is also facing some growing competition from the wine and spirits. This is why they will to adopt some business strategies worldwide. The costs have been rising for the prices of glass, aluminum and hops. The cost cutting procedures must be there for the Carlsberg Group as well (Solomon, , et al., 2014). However, Carlsberg understood that they were becoming a regional company though their quest was to become a global company altogether. One strategy that they could apply was to merging or getting the acquisition of the local companies so they could gain the access to them (Buckley, & Ghauri,, 2015)These things could be much helpful for them in many ways. In order to survive in this tough and competitive business environment they should take up some plans so they could get the wide access to the entire Asian market and in the countries like China and India. Carlsberg was unable to capture the market of North and South America since the other big brewery companies dominated the market there (Buckley, & Ghauri,, 2015)
One of the biggest issues in the success of the business strategies for the organization is their value creation strategy for the profitable growth(Verde, , 2015)The company began to concentrate on tapping the various emerging markets since they understood that they would not be able to become the market leaders indeed (Hitt, , et al., 2016)They would like to focus upon and strengthen their strategies on their emerging and current markets. They always want to be ‘fit for fight’and this is their primary target to be the market leaders in which they are already catering (Gilligan, & Hird,, 2012)
As discussed by the experts, one of the most important factors for the development of their reputation in the international arrays is the innovation strategy. They have to focus on their innovation properly so they can overpower their competitors in their own markets. They will have to adopt the different strategies for the different markets in countries like China, India and Russia (Czinkota, & Ronkainen, , 2013)The booming market in Asia in the countries like India and China are so immense that the organization would like to keep aside all their competitors and cater to the success of Carlsberg in these areas (Hitt, , et al., 2016)The large workforce might be one of their biggest resources for the success. They would look to increase their brand reputation in the best ways by the innovation process (Hoenen, & Hansen, , 2013)
The marketing strategies will have to strengthen and surveys should be made properly to identify the needs of the customers. The customer preferences will have to be understood properly and the company must look to provide the company with the proper innovative strategies (Gilligan, & Hird,, 2012)The target positioning should be made according to the demographics of their customers. The development of the market positions should be done according to the pricing and promotional strategies. The social media should be used for the proper innovation within the market. In Asia, Carlsberg will have to work very actively and they should focus on providing various types of products and services to their customers. The sales work would have to be improved in the Asian market so the consumers can be attracted could know about the quality of their products. They should also maintain the proper health standards as well (Terpstra,, et al., 2012)
International Expansion Strategies Adopted by Carlsberg Group
Russia has been considered as one of the most profitable markets for brewery despite the regional dominance of Vodka in their country (Terpstra,, et al., 2012)In this scenario, Carlsberg have tried to adopt the Russian market through the merger of Orkla ASA. This is why they would want to gain the benefits of the Russian market in the best ways indeed. The best distribution facilities through the best supply chain network should be their first priority in these markets as well (Verde, , 2015)As Carlsberg tended to merge with Orkla ASA and BBH, it was very clear that they would be able to get the opportunity to get hold of the countries like Uzbekistan, Kazakhstan, Russia, Ukraine and Belarus. The average consumption of beer was more than the East European countries than the Scandinavian countries (Solomon, , et al., 2014)It has been seen that the new taxes on liquor had been the main reason behind the consumption of Vodka.
China is also a very big emerging market for the Carlsberg group. There has been a big absence of the national breweries in China for a long time due to the regionalization of the beer market. China has been considered as the largest market for the production of consumption of brewery(Solomon, , et al., 2014)The non-premium brands were the dominators of the beer market in China. This is why Carlsberg decided to provide the opportunities for the national platform for the sale of the beer all over China. This would increase their sales along with the chance to make good promotions for the organization. The market was much capital-intensive and there were many barriers for the entry of Carlsberg. In this context, Carlsberg decided to enter into the Chinese market with a joint venture on a 50-50 market share with the Thai company Chang Beverages Pte Ltd. The Carlsberg Asia Ltd (CAL) was created in order to strengthen their market position in Asia in alarge level.
After overcoming the initial setbacks, Carlsberg continued to move forward with the goal in mind that they would surely have to make their positions to strongly enough to survive in the national beer and alcoholic beverages market (Gilligan, & Hird,, 2012). The motivational leadership among the employees was their main strategy to capture the Chinese market along with the Indian market later on. The intensified consolidation process was the outcome of the tremendous competition in the Asian market (Solomon, , et al., 2014).This is why Carlsberg had attempted to cater to the daily needs of the people in the area. In this scenario, it can be concluded that Carlsberg would have to make the proper demographic analysis of the entire China since the western sides of the country are very much poor than the eastern sides implementation and practiceimplementation and practice(Czinkota, & Ronkainen, , 2013)Carlsberg was in the hope that the living standards of the people in China would surely increase so they could gain the higher profits from all over the country. This required the growth of the national economy as well. As they are much competitive, they will look to develop the capabilities of their internal management system (Paliwoda, & Thomas,, 2013)This will surely be helpful for preparing the proper strategies for the organization and meet the requirements of the customers. However, they should also try to explore the Indian market since high benefits can be gained from their due to the high consumption of the alcoholic beverages all through. The joint venture strategy of Carlsberg should be highly useful for this matter (Paliwoda, & Thomas,, 2013)
As per the above discussion, it can be concluded that Carlsberg has various opportunities in front of them to prosper in the international market. This is why the company will surely look to engage in tapping the new and emerging markets. This will be beneficial for them since the number of competitors in these markets is not as high as the others. Thus they could explore the Chinese and Russian markets properly and get the attention of the local and regional customers in the best ways indeed. Carlsberg must utilize the opportunities to meet the needs of their customers effectively as well.
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