EXPORT
- "CASE" STUDY
| WHY
COMPANIES
EXPORT - "CASE" STUDY |
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This
page last updated 2008 March 19 (added Heinken
re: Brazil + old Molson "I am Canadian" rant)
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DISCLAIMER
Readers of this page should understand that in discussing beer - specifically Heineken, in our international business class we are not implying that to be a successful international business student one must drink international beer it is simply a good example of a large company that is developing international markets using strategies and modes of export which we are learning about in MGTC44. If I happened to pick a beverage which is of consumer interest to the demographic in the class, that is mere coincidence ;-) and not meant to offend anyone who's religion or culture forbids such indulgences. - pictured to the left is our friendly, esteemed Chair of the Dept. of Management, and well loved Economics Professor, Dr. Michael Krashinsky - "raising a glass" at the MESA Gala in March 2007 WTGR |
| INTRODUCTION | In this part
of the course we have been looking at the ways of exporting, the strategies
involved and some of the actual modes of entry employed. In discussing
the "case" of Heineken, it is possible to put all of this together and
look at.
Proactive vs. Reactive
Reasons for going international
Collaborative Relationships
Export Modes
Employing FDI -
Foreign Direct Investment
"The key methods Heineken
uses for its international expansion are export, licensing, acquisitions
and Greenfield investments."
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How Big is
Heineken?
from Heineken's website - "Heineken beer is available in more than 170 countries. The company's product portfolio consists of over 80 brands. With more than 110 breweries in over 50 countries and export activities all over the world, Heineken is the most international brewery group in the world." "At the end of 2003, Heineken owned over 115 breweries in more than 65 countries and employed 61,271 people." |
| sc | Heineken
exporting because of stiff domestic competition
(from www.Heineken.com FAQ) "In the 1950's and 1960's Heineken concentrated in particular on the export markets in which maximum financial reward could be gained with relatively little effort. These included the markets in Africa, the United States, the Caribbean, the Persian Gulf region and the duty-free markets. The developed, complex beer markets in Europe, which were characterized by heavy competition, were provisionally left alone by Heineken. Only after the 'easy' markets had been captured the group switched its attention to the 'more difficult' markets in the 1970's and 1980's.". |
| . | Heineken
using a Joint Venture with another "player" to expand into a new region
(from www.heinekeninternational.com/canadabrazil23.aspx ) 2002
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| . | Heineken
using a Joint Venture with a strong local business, to expand into a new
region
(from www.Heineken.com FAQ) "In 1931 the very first foreign Heineken brewery was opened near the Indonesian city of Surabaya. Two years later Heineken set up a brewery in Singapore together with soft drinks producer Fraser & Neave: Malayan Breweries, now known as Asia Pacific Breweries (APB).The many decades of Heineken's presence in Asia have yielded additional benefits in recent years. Almost all-Asian countries have shown increased beer consumption. By utilizing its knowledge of doing business in Asia, Heineken has strongly expanded its interests in Asia via APB Heineken using Licensing agreements to expand". |
| . | Heineken
using Licensing to expand exports
(from www.Heineken.com FAQ) From the 1970's when it began to "go international" Heineken expanded its interests by licensing agreements "Firstly, by concluding licensing agreements with various breweries in France, Ireland, Spain and Italy and subsequently by taking participation in those breweries. The licensing policy pursued in the 1970's has contributed substantially to the further internationalization of the group. Outside Europe it was mainly in the Caribbean where licenses were granted. The presence of many American tourists there and the proximity of the important American market in fact meant that the Caribbean was a market that had a ripple effect." |
| . | EmployingFDI
- Foreign Direct Investment
Heineken setting up brewery operations in Africa to avoid import tariffs. "After world war two, export
became a top priority for Heineken and other Dutch companies. The aim was
to get hold of foreign currency after the destruction of the war. Shortly
after the war, African countries, especially in Western Africa, were top
export destinations for Heineken beer. However, more and more African governments
decided to increase import duties. This convinced Heineken that it was
time to opt for domestic production in Africa."
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| . | EmployingFDI
- Foreign Direct Investment
Heineken's Greenfield Investments Heineken says
from "Heineken University"
"Ploughing free cash flow
into greenfield investments, thereby shifting the balance of a portfolio
currently 70 per cent reliant on mature markets, is an investment in the
future"
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| COMMENT | In addition
to the information from Heineken's own PR dept., there is a recent story
in the Financial Times of London, as carried in the National
Post of Canada, about Heineken's entry into "emerging markets".
WTGR |
| , | ad
Heineken using acquisitions (FDI - Foreign Direct Investment) to expand exports Bickerton explains in the Financial Times article that "" A rapid-fire flurry of acquisitions has put Heineken, the Dutch brewer, back on the map in a global consolidation battle that is increasingly focused on emerging markets." Recently Heineken has acquired major breweries in Egypt, Costa Rice and Lebanon. More deals are expected in Africa - Heineken bought a majority stake in Nigerian Breweries. FT logo used according to the "Terms of Use" posted on their website http://news.ft.com/home/us (2004) |
| KEY
POINTS |
The effects
of the "ENVIRONMENTS" can be seen here, - particularly the Social/Cultural
Environment and the Competitive Environment; Europe has a rapidly aging
population - there are not so many young people out in bars drinking beer
in great volumes, - so, if you want to continue to sell high volumes, you
have to go to new places.
WTGR |
| . | Heineken
exporting because of stiff domestic competition
"With some home markets suffering
low levels of growth, emerging markets are the future for all the brewers,"
said one person who knows the company well. "It is in these far-flung regions
that the consolidation struggle is really being fought." Many analysts
have suggested Heineken's tightly controlled ownership structure would
limit its ability to fund significant acquisitions. However, with the global
consolidation battle at its keenest in markets such as Latin America and
Africa, the issue of Heineken's rigid shareholder structure has proved
to be a red herring."
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| . | Global Diversification
Bickerton says
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| . | Management
changes - leadership style effecting global business
Bickerton says
He leads a five-man executive board that is, on average, ten years younger than 18 months ago. Rene Hooft Graafland, Mark Bolland and Belgian-born Jean-Francois van Boxmeer are all in their early 40s. "These are young, forward-thinking, dynamic guys," said the person close to the company. That emphasis on youth is carried through in Project Beacon, Heineken's attempt to tap into a younger consumer. The idea struck Mr Ruys as a "wake-up in the middle of the night" kind of moment. "I realised that what is
really important is to keep the company and its brands
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| Update
2007 |
May 2007
Molson and Heineken issued
press releases discussing their JV saying
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Heineken is distributed in Canada through Molson Breweries. |
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Heineken update
re: Canada 2007
Heineken Named Official Beer for Caribana 2007 www.caribana.com www.caribanafestival.com - as a consequence of distributor Molson partnering w Caribana organizers - Justine Rae, Heineken Brand Manager, Molson Canada Molson - most famous for
their "I am Canadian" rant
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Text
of the Molson 2000 "I am canadian"
rant
Hey,
I'm not a lumberjack, or a fur trader....
I have
a Prime Minister, not a president.
I can
proudly sew my country's flag on my backpack.
Canada
is the second largest landmass!
My
name is Joe!!
|
www.heineken-university.com |
"Heineken established the
Heineken University in 1998 to help the organisation develop its employees
and meet ever-changing business requirements."
www.netg.com/content.asp?link=1449 |
if
you have a lot of time to waste you can see Heineken's "online course"
about beer making
http://212.204.210.71/kraitierientrial/BforNB/BforNB.html
ft.com on their website http://news.ft.com/home/us
has a "Terms of use" section in which they state "...may display an FT
logo" , "You can use any of the graphics below as a hyperlink to FT.com.
Image sizes are also provided...."
Contact was made with Jolie
Hunt, Public Relations, North America, The Financial Times for quoting
extensively from the article by Bickerton.
Copies of emails are kept
in the permissions binder.
For permission to use the
Heineken logo and quotes and links,
Contact was made with Heineken
through Molson's Canada. Contact was Veronique Schyns, Heineken International
Communications Department in Heineken head office in Amsterdam.
Copies of emails are kept
in the permissions binder.
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