Carlsberg Beer Company And Their Global Entry Expansion Strategy (Case Study Sample)
The task entailed ANALYZING the global expansion strategy of CarlsBERG BEER COMPANY.
THEREFORE, THIS SAMPLE PROVIDES A BACKGROUND STUDY OF CARLSBERG BEER COMPANY, ITS ENTRY STRATEGY, AND THE KEY LEARNING S FROM THE CASE.
Carlsberg Beer Company and their Global Expansion Strategy
Carlsberg Beer Company and their Global Expansion Strategy
In the contemporary world, the business environment is diversifying, and the primary concern for most entrepreneurs has been the increased effect of globalization. Notably, globalization is affecting individuals and large companies since it is enhancing the integration of consumer tastes and demands. Indeed, the impact of globalization is in some instances described to be turning the world into a global village. In this situation, more competitors are in the business, and the consumers enjoy the variety of goods and services. For that reason, most companies are aiming at internationalizing their business, and this strategy takes different approaches depending on the target market and the size of the company. It is important to note that internationalizing business involves more challenges that might pose risks to the performance of the business. If the planning strategy is ineffective, the company might end up making losses, especially considering social, political and economic vagaries that exist between nations.[Katerina Ristovska and Aneta Ristovska, "The Impact of Globalization on the Business," Economic Development/Ekonomiski Razvoj 16, no. 3 (2014): 2.]
Carlsberg Entry Strategy
Before highlighting the strategies chosen by Carlsberg to foreign entry, it is essential to have a brief background on the fundamental operations of the company and then identify the reasons for internationalizing the business. Carlsberg used to operate as a domestic player in the 1860s. Later in the same period, a trial export was established in Sweden and Iceland, and this was the beginning of exportation. In 1868, the company initiated operations with the U.K where matured beer was sent to merchants in Thiemann and Danish. Jacob Christian Jacobsen played a significant role in enhancing business with Europe by spending time in Edinburgh for four years. After creating a friendship with Thielemann, Jacobsen identified unexploited potential in Scottish Market and recommended for the selling of beer in the area.[Martin Iversen and Andrew Arnold, "Carlsberg: From Exporter to an Integrated Multinational Enterprise," Brewery History 131 (2009): 51.]
During the initial stages of expanding the business, Jacobsen was concerned with possible risks that would be associated with the possibilities of comprising with the quality of the products. The concern centered on controlling the production methods so that the same quality would be sold overseas. If the standards were not met, it would threaten to damage the reputation of the company. In this case, he perceived oversea business as more experimental than a commercial one. From a close assessment, Jacobsen was more concerned building reputation at the early stages more than making the profit. If the company maintained the reputation and the national name on the beer products, this would result in increased sales and trust by the consumers in the subsequent years.[Ibid., 53.]
Although Jacobsen was a perfectionist and worried about maintaining the quality of the products, it came to a point he had to adopt new production strategies. The primary reason for changing to a new approach was to enhance the manufacturing, packaging and transportation of goods that would endure a long transportation period to the destination. As a result, he had to embrace the English approach of production that enhanced bottling of beer and steam boiling. This method resulted in several advantages that enhanced the company to meet the demands of its destination. The reputation of the company was strengthening after being praised for enduring a long journey and still maintaining their quality. As a result, the company became famous at the international level, and this was the basis for its expansion.[Ibid., 53.]
Now, the study provides basics on how a company can build its reputation by first considering the need for strengthening the reputation and setting aside its profit objectives. In this case, it is elemental that a company can achieve its desired goals by setting aside a substantial amount that is an investment that would allow creating a large consumer base. If the company overlooked the need to maintain the quality, it would still achieve the expansion in the short run but in the long run encounter low performance.
After the company built its reputation, new competitors entered the market. Competition is inescapable in the market, and this situation is non-exceptional. Tuborg came in the industry with its own bottling plants in Copenhagen and became an export for the brewery. However, this competitor did not make sales to the extent of outdoing Carlsberg. However, later in the period Tuborg established pilsner and started to pose many overseas direct sales in countries like Denmark which was the same strategy used by Carlsberg. Nevertheless, the companies did not have any direct sales, and the performance was relatively low.[Martin Iversen and Andrew Arnold, "Carlsberg: From Exporter to an Integrated Multinational Enterprise," Brewery History 131 (2009): 53.]
However, Jacobsen made several reservations that were meant to improve the sales of the company. In this case, the exports started increasing, where the orders averaged at 2,300 and sold to Scotland and England. Later in 1885, the sales rose to 10,000 hectoliters. Later, there were disputes in the company where the father and the son split. Jacobsen started a new brewery that exported lighter products compared to Bavarian beer. This product formed the foundation for the expansion of Carlsberg in 1914, and a total of 42,322 hectoliters were shipped from the product alone. However, the development of business at the international level is not escapable from the political issues. Now, during the World War I, the sales declined significantly and then the firm encountered challenges in reaching the overseas. The sales only reached 25, 000 hectoliters. In this case, the demand had gone down, and there were increased breweries in Japan and China. Some of these organizations became famous by taking advantage of the conflicts.[Ibid., 53.] [Martin Iversen and Andrew Arnold, "Carlsberg: From Exporter to an Integrated Multinational Enterprise," Brewery History 131 (2009): 53.]
However, in 1924, Carlsberg identified that the workers had overlooked some aspects in exportation, especially in consideration of the use of faked label by the companies. It was, therefore, essential to mitigate the problem and take it as an opportunity to rebuild the company's reputation against the failure of the other companies. In this case, the organization established th...
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