SABMiller: Strategy behind the success in a hostile environment

Abstract

There are very few South African companies that can boast of a history of 100 years. Despite this situation, SABMiller crossed the twentieth century in a country whose political system has a disastrous influence on the development of the local companies.

The strategy carried out by SAB enabled it to circumvent all the restrictions and to become one of the 10 most important South African companies. It has also been ranked the second brewery in the world in terms of the volume it produces. Its trade is even older than it is. The design, the production, and the marketing of beer and non-alcoholic drinks have a history that is ancient in comparison to SABMiller.

The fact that this brewery became an inevitable actor in this sector poses the question: What are the factors that have made the company successful? and, How did it cope up with the restriction policies, and the economy present in South Africa?

SABMiller group was formed from the merger of SAB, South African Breweries (South African Breweries), established in 1895 in South Africa and the American brewery Miller. Until the 1990's SAB operations were mainly limited to southern Africa, where the company had established a dominant position in the market. During this period, SAB has diversified into areas far from its core business.

This euphoric sense of diversification is integrally connected to political conditions of South Africa, however this will be discussed in more detail in the historical analysis of the company. By cons, since the early 1990 SAB has refocused on its core business and the ambitions of the brewery led it to enter the European, American and Asian. This new strategy has enabled SABMiller to have more than 200 brands of beer for a total amounting to 139 breweries. SAB in the world's 69 116 employees who produce 239 million hectoliters of beer per year.

At the Corporate Strategy (core strategies) SABMiller has changed direction several times. Indeed for many years, SAB has moved towards a strategy of diversification associated with vertical integration strategy on its core area. But in the 1990s, SABMiller was entirely devoted to an internationalization strategy, and the core strategy still exists today.

In the business-level, SABMiller is currently positioned primarily in a logical cost / volume. There are actually at SABMiller significant production of standardized products to gain economies of scale,reduced costs related to the effects of the experience curve,incorporation of technological advances to reduce costs and increase productivity. Then there is the benefit to SABMiller as described by Porter in terms of barriers for new entrants, power over suppliers and the distribution network, limiting substitutes and competitive rivalry.

But gradually as markets evolve SAB is moving increasingly towards a strategy of focus defined by Porter as follows: select a niche or segment with separate requirements and meet the needs of this market more efficiently than competitors in the industry. This strategy is facilitated by the wide ranges of SAB products that enable it to easily meet new demand be as it may in large or small quantities.

Tags: SABMiller, diagnosis of company, strategy behind the success in hostile environment.