anheuser busch companies case study
TRANSCRIPT
Southwest Airlines: Expansion is the Name of the Game
Anheuser-Busch Co.
Table of Contents
Introduction............................................................................................................3
A Short History of Anheuser-Busch Companies.................................................6
Core Business Philosophy of Anheuser-Busch Companies..............................17
Existing Vision, Mission, Objective and Strategies of Anheuser-Busch.........28
Vision and Mission for Anheuser-Busch Companies.......................................31
Opportunities and Threats to Anheuser-Busch................................................33
Competitive Profile Matrix (CPM) for Anheuser-Busch.................................41
External Factor Evaluation Matrix (EFE)........................................................42
Organization’s Internal Strengths and Weaknesses.........................................44
External Factor Evaluation Matrix (IFE).........................................................45
SWOT Matrix.......................................................................................................47
Quantitative Strategic Planning Matrix............................................................50
Long Term Strategies and Objectives................................................................52
Key Ratios and Projected Consolidated Financial Statements........................53
Anheuser-Busch Strategies for the Future........................................................54
Implementation and Expected Result................................................................55
Annual Objective and Policies............................................................................57
Procedures for Strategy Review and Evaluation..............................................59
Recommendation for Anheuser-Busch Company.............................................60
References.............................................................................................................63
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Introduction
What is the formula to steer one’s company into a corporate success story? From time
immemorial to the present modern day of information revolution there have been many
volumes and tomes of business books that have been written. These books have been
trying to dissect and give a design of success in the art of doing and managing a business.
Yet, so far the authors of these books have only unraveled some of the pieces by which
can make a company or corporation attain a relative success in the industry it tries to
excel. There are still many, almost all of businesses, both long in operation and have just
entered the foray of their chosen industry that are left in partial blindness over the issue of
how they can drive their company to the hill of success.
This question of formula is difficult, almost impossible to give a definite, foolproof
answer. If one would scan the list of giant companies sauntering under the ray of
corporate bliss and financial success, one would pick several among these companies to
have been in the business since the advent of the product or service they are offering the
consumer public.
It is easy now for one to give a superficial formula to conclude that the success of the
company can be all attributed to the fact that it is the pioneer company in the business.
Who comes first emerges as the victor in the end? Success then is given a functional
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definition that it belongs to the first in line; success is given on a first come first serve
basis.
But is this kind of syllogism in the art and world of doing business is appropriate?
Though nobody can debate the fact that the first comer in the industry has an edge in the
business and has a great say as to what kind of competition may ensue when a rival
sprouts up to challenge its presence, the first comer has no absolute control and no
absolute monopoly of the market, especially if the new rival comes out with astute
business strategy.
It is safe to say then that the first comer only have at least five minutes of leadership and
success over the market when the rival company entered the competition. After this five-
minute success, everything is a free-for-all battle for ever company over the lordship of
the market and the industry in general.
It can also be said that the pressure always rest on the shoulders of the leader of the pack
since this company is the target competition that all the remaining companies aspire to
beat and clobber on the ground. The stress one enjoys as a successful company,
especially if its one of those pioneer companies in the business, is not an easy task to
maintain and at the same time sustain for the company a continuous growth in the
industry.
Every rival company is on every direction launching different and varied business
strategies aimed at replacing the company at the top. With this a fact of everyday
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business for the leader in the industry, the weight of the pressure to excel is much heavier
on the shoulders of this leading company.
Nevertheless, this heavy weight of stress and forces of competition assaulting the leader
of the pack is not everything to the disadvantage of the leading company. As they say, for
every great challenge one is expected to face it with a much greater response. This is the
fine lesson that the leading companies have learned that enabled them to stay on top of
the game.
Yes, the competition is stiff, harsh and a cutthroat at that. But successful companies,
especially those who remain to stay in operation after a decade or even a century, is not
new to this fact of the business terrain of the industry they are involved in. This is already
given.
What then the rival companies and those new in the industry – and even those companies
involved in different industries – need to see and find out is the astuteness of business
strategic maneuvers these leaders of the pack have been practicing and applying to their
business.
The question that may arise now is what made this company tick for a very long period of
time. What makes the company to acquire the business astuteness and ability to parry the
blows of its rivals in the industry? What business tools do the company used throughout
these years of successful operation? And what makes the company continue its flight of
success even up to this present day?
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As have been mentioned earlier in this introduction, many have already tried to dissect
and give a fool-proof formula for a company to succeed in its business, but then
everything is not said and still many questions are left answered. But of course, like any
other endeavors in this world, there is no such thing as 500-word as to how to become,
say, successful. One needs to have ample time to prepare, practice the endeavor with
determination and stamina of a bull, and learn from the lessons that it encounters along
the way.
This then is the crux of this case study at hand: the successful brewing company of
Anheuser-Busch Companies that has been in operation for a very long period of time.
The question of how it started as a company and how it has able to withstand the strong
winds of changing times will be attempted to be given the right answers and towards
what direction now, in this modern times, does the company has to steer itself to continue
flying on its wings of success.
A Short History of Anheuser-Busch Companies
The company of Anheuser-Busch has its history started in 1857 in the humble city of St.
Louis, Missouri. The widely popular Budweiser Lager Beer was first produced by the
company in 1876 (“Budweiser,” n.d.). Yet, the history of the company cannot simply be
stated that it started in 1857, in Missouri and stop there. The history of Anheuser-Busch
is inseparable from the story of its founder Adolphus Busch, a German-born immigrant in
United States (“Adolphus Busch Biography,” n.d.).
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Adolphus Busch was born on July 10, 1839 in a small city of Kastel, Germany. He was
the second youngest son among 22 children of Ulrich Busch and Barbara Pfeiffer Busch.
When he arrived in United States he had a lot of concern since he basically had no where
to stay to. From New York, he traveled west and found a lowly job as a clerk on the
riverbank of St. Louis, Missouri. Adolphus Busch was an industrious, enterprising and
determined young man that being a clerk did not make him contented. On his own, he
ventured in the business of brewery supply and was soon able to earn and gain modest
profit.
Then Adophus Busch met Eberhard Anheuser, who then had just bought one of the small,
struggling breweries in St. Louis. Anheuser’s company then was basically operating
without making no profits at all, and barely hanging on to the business.
The two became friends and the latter introduced Busch to his daughter Lilly which
blossomed into a love affair. Soon the two young people married and Busch dissolved his
company and started working as a beer salesman for his Eberhard Anheuser who had
become his father-in-law.
If one would characterize Busch, he was never a timid man. He was known for his
working ethics as a hard-working man who had the honesty to evaluate the state of the
business. It may not be appropriate or enough to describe Busch as an astute businessman
but his talent of running a business stemmed from his innate working ethics. This
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characteristic would soon earn a name for him as “one of the most flamboyant
industrialist of the nineteenth century” (“Adolphus Busch Biography,” n.d.).
Busch in no time, because of his working ethics, became a full partner in his father-in-
law’s brewing company. This opportunity also earned for Busch the knowledge of
learning the ins and outs of running a brewing company. Besides this fact, Busch was
some sort of a visionary in terms of his the industry he was involved in. He knew for a
fact that the first beer was accidentally created during 8000 B.C. As a man of high
ambition and vision for his own company, he had the insight that beer would become a
popular alcoholic beverage in the future, and probably forever.
In order to make true his vision for Anheuser company, he did his own research on how
to improve the taste and quality of Anheuser’s product. He traveled throughout Europe
just to study different brewing techniques. The primary goal of Busch was the creation
and formulation of a beer product that can cross the boundaries of St. Louis; a beer that
would appeal to every people without distinction of nationality and culture. And this
dream and vision that he had set for the kind of beer to sell came near in 1869 when he
was able to buy half of the ownership of the company.
He then proceeded with his vision of a popular beer that would cater to all nationality.
With the help of his best friend, Carl Conrad, the two experimented with the taste of the
beer at the St. Louis brewery. Then in 1876, they got the taste that they were looking for
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when they combined traditional brewing method with a deft blending of finest barley
malt, hops, yeast, rice and water (“Adolphus Busch Biography,” n.d.).
Thus Budweiser was born. He named the new beer product after a small town in
Germany. The company was also renamed Anheuser-Busch. Budweiser then became the
best-selling beer in the world beating by wide margin its rivals in the beer industry. After
the introduction of Budweiser as a product by Anheuser-Bucsh, the company grew in ten
folds and rapidly. It eventually became a major international brewing company operating
around the world, doing business and marketing in different countries.
In 1880, Adolphus Busch was named the president of the Anheuser-Busch upon the death
of his father-in-law, Eberhard Anheuser. Busch held on to this position for more than
three decades and at the same time considered by the company and those in the brewing
industry as the founder of Anheuser-Busch Companies.
As to the packaging of the Budweiser, Busch decided to give a go signal in using the
eagle design for the logo of the brewery in 1872 – but why an eagle was chosen and used
was not recorded thus lost already in history. Though some say this is a sign of showing
respect for America, while some claim it merely as having an unlimited vision. The “A”
in the logo stood for the original owner and father of Busch’s wife: Anheuser.
Two decades after the assumption to the presidency of the company, Busch, the ever
enterprising industrialist, developed and introduced in the market the beer brand he
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named Michelob. This new brand of beer proved to be the pre-eminent super-premium
beer on the market.
Not stopping from the achievements that Adolphus Busch had for himself and his
company of Anheuser-Busch, he went on improving his beer products by using the
process of pasteurization to ensure the freshness of the beer after bottling. Busch himself
knew that beer does not taste best when it is consumed after a long time after bottling it.
Beer is best consumed as soon after it has been brewed.
With this growth in the business and never-ending innovations applied on Anheuser-
Busch beer products, the brewing company expanded horizontally. It was able to
purchase bottlers and glass companies that were necessary in the production of the
company’s beer product.
It was no time at all that the company had able to control all the means for producing its
own beer. And on the advent of twentieth century, in 1901, Anheuser-Busch was assured
on its path towards the leader in the beer and brewing industry in the United States what
with the production of breaking the million-barrel mark for the first time since the
company’s founding. The brewing company’s production in 1901 reached a record high
of brewing 1,006,494 barrels.
During the 1920’s, in the time of Prohibition, Anheuser-Busch adjusted and made a
Budweiser a “near beer” (“Budweiser,” (n.d.) or a “dealcoholized Budweiser” (“Our
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History,” n.d.). Due also to the economic atmosphere during this era in the history of the
United States, the innovation and industrialist character of the company was shown
through its business strategy to diversify.
The need for the company to survive this economic stagnation proved to be a test in the
character of the company. In order to survive and keep the company afloat amidst the
uncertainty in the beer and brewing industry, it must need to create new products from
which the company could stay financially viable and keep its operation intact and
continuous.
The Anheuser-Busch company then ventured into different long line of products that
included ice cream, barley malt syrup, ginger ale, chocolate and grape-flavored beverage,
root beer, corn syrup, and baker’s yeast (“Our History,” n.d.). The company did not stop
here. They also ventured on truck and bus bodies and refrigerated cabinets.
After the National Prohibition in 1933, the company wanted to strike ahead of its
competitors and launched an new beer product the Budweiser Clydesdales. A year after
that, Adolphus Busch died and was replaced as the president of Anheuser-Busch
Companies by his grandson Adolphus Busch III.
The succeeding years became years of innovation and expansion for the company that
was then leading the brewing industry in the United States since the company had already
surpassed the one million-barrel production since the start of the millennium.
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One of these innovations was the introduction of Budweiser in can in 1963. Busch
Bavarian beer was also introduced in the market as one of the beer products of Anheuser-
Busch.
Then in the 1960’s the company of Anheuser-Busch struck record breaking achievements
that was unimaginable when the company was first founded and expanded by the late
Busch or even by Anheuser himself; the company just reached a staggering production of
beer by ten million barrels per year.
It was also during this decade when the old brewery in St. Louis where the company first
started its operation was declared by the United States as a National Historic Landmark.
This declaration was a testament to the fact that the brewing company had become a
symbol of American way of life.
Then in the 1980’s Anheuser-Busch as a company was listed in the New York Stock
Exchange (NYSE). More than that, the company built subsidiary companies to help in
their operation and production of beer products. A couple of these subsidiary companies
were Anheuser-Busch International, Inc., BARI, and Busch Industrial Products.
It was also during this decade when the company of Anheuser-Busch made history
through its flagship product Budweiser and other beer products such as Bud Dry, and
Bud Ice by taking the steps to expand in the global marketplace. This step earned for the
company the rights to brew and sell in Canada, Japan, and almost everywhere.
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This corporate development spurred the company to a staggering rise in production,
which gave the company half the share of beer sales worldwide. Likewise, in the local
shore of United States, it was able to corner an estimated 40 percent of the beer market
(Black, n.d.).
Thus Budweiser is ready to become in the international global market what it has become
in the United States. This was a beer which is mass-produced; a beer that epitomize the
“good life” created and made possible by a corporate enterprise (Black, n.d.). Another
new beer product was also introduced in the market: the Bud Light. This was also the era
when the company learned and exploited the use of deft advertising campaign to stay on
the top in the brewing industry. “Know When to Say When,” responsibility campaign
advertisement was one of these well-thought of advertising slogan that the company had
launched.
If the million-barrel annually was not enough for the company to show its force and
dominance in the beer and brewing industry in the United States, the company, like an
insatiable company hungry for achievement, reached in 1986 a billion-barrel of beer
brewed since the beginning of the operation of the company.
What ensued with this slew of achievements and financial growth was the ability for
Anheuser-Busch Companies to expand and acquire other companies. In 1989 the
company purchased SeaWorld. Then in 1993 the company, as part of its expansion
program invested in Grupo Modelo (Corona beer) based in Mexico. A couple of years
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after that, the company turned its vision towards East by purchasing majority interest in
Chinese brewery: the Budweiser Wuhan International Brewing Company.
The company that was started by the visionary Adolphus Busch is now experiencing
continuous growth with an annual worldwide production of beer reaching exceeding the
volume of 100 million barrels. And there seems to be no stopping this giant brewing
company from introducing more beer products in their sleeves since it just launched and
introduced to the consumer its new product the Michelob Ultra Amber in 2006.
Anheuser-Busch Companies still make beer that is almost half of the all the beer that
American consumers drink. The company is still regarded as a mighty multinational
brewery committed to excellence in their beer products. Furthermore, this multinational
company is revered as the moral triumph of the free market.
Anheuser-Busch Company: The American Dream
During the early nineteenth century when there was almost a mass immigration of every
nationality coming from every continent in the world, especially Europe, to the United
States, the selling point by which the country was chosen by these millions of immigrants
was the huge economic progress that living in the country promised. For these
immigrants, United States was the place where their dreams of economic prosperity could
come true.
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Until this present time, the country of United States still imbues this promise. In their
minds, every opportunity of making it big in any industry of their choice is freely given
by the democratic freedom that pervades the country. Every immigrant then is said to be
chasing this promise the moment they step foot in United States, pursuing what now is
called the American Dream.
And if there is a quintessential American Dream existing right now in United States
particularly in the brewing and beer industry, there can be no company that fits this
description other than Anheuser-Busch Companies.
This giant brewing multinational company is basically the American Dream of an 18-year
old Adolphus Busch – an immigrant who left Germany to seek opportunity for economic
prosperity in the United States (Goldberg, 2000) and likewise his wife who was also an
immigrant in the country.
Their fortune and realization of their American Dream basically came from their flagship
beer product Budweiser, tagged by the company as the “King of Beers.” Like what Coca-
cola is for the American consumer, Bud (as Budweiser is also known) is also what is for
the Americans: original American product.
Budweiser also epitomizes the easy and comfort lifestyle given to Americans by their
country; at the same time making this beer product of Anheuser-Busch also as the
international embodiment of the American way of life (“Budweiser,” (n.d.).
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This product of Anheuser-Busch Companies, Budweiser is an American drink. At the
present estimate one out of five alcoholic drinks being sold in the United States is a Bud
(Black, n.d.). What more, Budweiser represent wholly the American beer for American
consumers. Anheuser-Busch Companies rivals like SABMiller is 68 percent South
African owned, the same way with Molson Coors which is 51 percent Canadian owned
(“American Owned,” n.d.).
Budweiser in all its glory is unapologetic with its being an American product; with red,
white, and blue as colors of its packaging with a bald eagle. There is also a particular 19-
th century kind of patriotism about a Bud. Each container of Budweiser even encourages
nostalgia for the past: Even the forthright promise, made on every container, encourages
nostalgia: "This is the famous Budweiser beer. We know of no brand produced by any
other brewer which costs so much to brew and age. . . ." American sees this thing as
something fitting for the American way of life. The most popular and dominant beer in
American and international global market is proud to boast not a slogan or motto but a
46-word declaration for the whole world to see and read (Goldberg, 2000).
Moreover, because of Budweiser, Anheuser-Busch Companies is the leading and
dominant brewery in United States for more than a century. The economic success of this
company, due to its production of an excellent product and adherence to quality and
dedication to give the best product to the American consumer, is an American Dream
came true, especially to the clan of the Busches.
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Core Business Philosophy of Anheuser-Busch Companies
There is probably no company or corporation that has no core business philosophy by
which its organization follows as a guide or standard by which the company can attain its
goals and visions and overall success in the industry it is involved in. Since the lack of
core business philosophy can be likened to a ship that is steered towards no definite
destination. Add to that the lack of this core business philosophy is managing the
company without set of values to see to it that the company can achieve whatever it
envisions itself in the industry in the future.
For every company and organization for that matter, the core business philosophy or
value must be spelled out and made clear to every member of the organization. This
business values emanates from the top management down to the bottom of the
organization and at the same time this values and philosophy can be seen in the output in
the service or product of the company.
The importance having a core business philosophy or value is a must for a company to
survive the cutthroat competition in the market and in the industry in general. Having this
factor instilled in the company prepares it from the debacles and challenges that it must
face as it goes along in slugging it out with its rivals in the industry.
Furthermore, the existence of a clear philosophical value of a company can mean success
or doom for the company on the very onset of its operation. Clear and well understood
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value of how should the business functions takes a huge part in helping the company gets
nearer to its sole destination: success in the industry.
Likewise, in the case of Anheuser-Busch Companies, from the time when its considered
founder Adolphus Busch started working for the company, it has already set the
foundation by which the company will be managed and ran. It must be remembered that
Busch, after marrying the daughter of Anheuser and began working as a beer salesman
for the company, showed his relentless passion for being a hardworking man by spending
long extra hours for the company.
This working ethics of Adolphus Busch will prove to be the foundation of how and on
what ground the brewing company can attain survival in the market and eventually
dominance in the beer industry. This working ethics of Busch is not alone the core
foundation that he had instilled in the company of Anheuser-Busch Companies.
One of these is the thirst for innovation which from the start spelled out the success of the
company. It must be recalled that it was Adolphus Busch who initiated the application of
innovation in the company by experimenting with the taste of the beer that they would
sell to the public.
Busch, along with his best friend Carl Conrad, spent hours at the St. Louis brewery
concocting and experimenting with all the ingredients of what makes a beer a beer, until
they got at last the taste that they envisioned a beer should tastes like. That was a
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quintessential innovation done for the company by Busch and Conrad. And that
innovation catapulted the company into the stratosphere of beer industry.
Up to the present day, this core business value and philosophy of Adolphus Busch can be
seen and observed on how the present management of Anheuser-Busch Companies
sustains their success. The company as seen does not stop from just having the same beer
products that they produce.
Continually, the company of Anheuser-Busch is introducing new beer products in the
market to reach a far, broader consumer base. The company does not stop from
experimenting with different taste of beer and always on their toes for what could be the
taste of beer that a diversified drinking consumer wants.
Aside from these qualities of being an organization that values hard work and innovation,
the company of Anheuser-Busch proves to be a company that is known for its no non-
sense business-style of managing its organization and company.
External Audit
There is no doubt that external factors or forces have an effect on the types of products
developed by a company. These factors also determine nature of the company’s position
in the industry and on what market segmentation strategies would it apply. These factors
even have an effect on the type of services offered, plus the choices of businesses to
acquire or sell or merge with.
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When Anhauser-Busch Companies performs an external audit about the company, having
a good sight of the financial viability of the business they are engaged in, the company
has the chance to create and develop a clear mission for which it can aim its business
strategies. Another advantage of this external audit is the opportunity to design good
business strategies with which the company can apply in its operation, both internal and
external, in order to achieve long-term objectives. Another plus factor as to what this
external audit can offer the company is the ability to develop policies with clear insight
and objective perspective by which it can achieve annual objectives which is primarily
the goal of growth and profitability for the company in general.
To count, there exist nine trends and events that have an effect with great significance on
all products, services, market share and even a company’s or corporation’s organizations
around the globe. This fact has been proven and tested by time and history of those
involved in the business of providing services and products to the public. Underneath is a
list of these nine factors followed by short descriptions on how they can affect the
company of Anheuser-Busch Companies.
1. Demographic
2. Economic
3. Governmental
4. Social
5. Technological
6. Environmental
7. Cultural
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8. Political
9. Competition
It cannot be overstated that the economic forces have a direct impact on the internal and
external operation of a company. These economic forces direct and determine the
potential attractiveness of various strategies that a company can apply on its every day to
day operation thus gain and achieve the full potential of the company to lord over the
industry it is involved in. To start, in this modern day setting and society where many
household have double incomes (both the man and his wife has to endure the daily grind
of work to meet both ends of having a good comfortable life), their combined household
income can be concluded as higher, thus giving them the opportunity to enjoy whatever
the market of consumption can offer. This fact is a good prospective account on the part
of Anheuser-Busch Companies by which it can exploit the market to its full benefits and
potential as a company.
One of the ways by which Anheuser-Busch Companies can exploit the opportunities
given by these economic factors is the chance to introduce as many quality beer products
in the market by which the consumer public can experience the comfort of what their
income can give them. Another business strategy by which Anheuser-Busch Companies
can exploit the advantages as presented by these economic factors is to make sure that the
products of the company are always available within hand-reach of its target consumers.
Another thing is by enhancing trouble-free brewing operations of its slew of beer
products by ensuring dependable and reliable maintenance and repair services of its
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machines and other tools and ingredients in the creation of its known for quality beer
products.
As the company of Anheuser-Busch Companies evaluate and proceed into its external
audit, the company as a result may go on monitoring specific economic variables thus
ending with alternation or improvement of its business strategies. By doing so, this effort
of evaluating and performing external audit of the company’s capability vis-à-vis
economic factors its business strategies will be geared towards increasing its
opportunities for growth in the industry and at the same time limiting the many threats
that pose as a danger on the operation and growth for profit of the company.
Some of these economic variables that can determine and direst the business strategies by
which Anheuser-Busch Companies can apply to its operation are listed in no particular
order as to their importance below:
1. Import/Export factors
2. Income per region and consumer groups
3. Tax rates
4. Consumption patterns by the public
5. Unemployment percentage in the overall work force of a region or country
6. Value of the US dollar in the market
7. Exchange rate vis-à-vis the US dollar
8. Employment percentage in the work force
9. Financial health of a region or a country, etc.
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Other trends in the list by which the operation of Anheuser-Busch can be tremendously
affected are the ever-changing social, cultural, demographic and environmental forces. In
order for the company of Anheuser-Busch Companies to survive the blows of these
forces, the company must and ought to adapt to the changes in the industry caused by
these forces. As it is understood by many experts in the industry of running a business,
the business operational norms by which a company must keep its operation in line is for
the consumer public to be pleased and gratified to the fullest as the product providers can
do.
The fact of this is that the public consumers want themselves to be pampered to the hilt.
Public consumers want to avoid hassles and to spend less time having themselves to
worry over the issues of how and when to purchase products. More than this, the modern
public consumers want to have the knowledge that they are receiving the best end of the
deal when buying and consuming a certain product. These factors alone should help
Anheuser-Busch Companies prepare and create and also to develop good strategic
business scheme to squeeze out everything that it can in these determinant factors for
running a business.
Other than the social forces that have been discussed above, trends that can pose as
threats to Anheuser-Busch Companies are the demographic, cultural and environmental
factors. As of this present day, there are an estimated eight billion people living on the
surface of this planet. There are only about 300 million of eight million living in the
United States. The company on a great business maneuver has understood this factor
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since the very beginning, since the time of its founder Adolphus Busch. Anheuser-Busch
Companies has long been involved in marketing its number of core beer families in
different parts of the world. This visionary business tactic has superseded the time of
globalization. Anheuser-Busch Companies has seen the need to expand globally since the
very beginning of its operation.
This business strategic in fact was already in the minds of Adolphus Busch since the time
when he was experimenting in the brewery in St. Louis Missiouri to create a distinct taste
for the company’s beer that can universally appeal to everybody anywhere in the world.
Right now, Anheuser-Busch Companies still see this global expansion a part of its
business strategy; the company knows that global expansion and to cater to the needs of a
demanding and dynamic global public consumer is part of its mission to lord over the
beer industry, not only in its origin land of United States. Another reason as to why
Anheuser-Busch Companies sees this fact of global expansion a good business strategy is
the fact that presence in the global market for its number of beer products means
insurance for increased revenue and profit and at the same time sustainable growth
through continuous market share.
While Anheuser-Busch Companies has already considered going for a global expansion
since the very start of its operation, the continuous need for analysis regarding the public
perception toward life in general, leisure time, saving versus spending money, profit
quality and good customer service is part of its business job to assess and compare with
its business strategies. It is still necessary that the company should and ought to examine
intercity environments, customer’s buying habits and preferences, and population change
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Anheuser-Busch Co.
in city, county, state, country and continents. And on these issues the company seems to
lead the pack in giving an astute, well-thought of business strategic reaction.
This business strategic reaction can be seen from the kinds of advertisements that the
company have been producing and relaying to the drinking public consumers. There are a
number of these campaigns that have surely touched the consciousness of the drinking
public and thus the beer products of Anheuser-Busch Companies have been ingrained in
the minds of the drinking public as beer of choice when it comes to moderation in
drinking, status as a beer drinker, and lastly the responsibility as to drinking beer.
Then the company of Anheuser-Busch also has to address the drinking consumer’s
environmental concerns such as air pollution, waste management, and ozone depletion
into consideration. Still, like a true leader of the pack in the industry that the company is
involved, these environmental concerns have been addressed by the company to its full
potential and advantage by diversifying in environmental parks. The acquisition of
SeaWorld and Discovery Cove in Arizona, Florida is a testament to the dedication of the
company of providing a healthy environment to the consumer public. And while the
company is doing this task of addressing the environmental concerns of the public,
besides earning for the company the image of having a heart for the environment, it is at
the same time earning profits and revenue from these natural parks, adding a huge sum of
money to the company’s coffers.
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Anheuser-Busch Co.
Anheuser-Busch Companies have taken seriously these key social, cultural, demographic
and environmental variables without doubt. The company has taken these variables with
great consideration as the company continues to expand in the global market. By doing
so, the company of Anheuser-Busch then can be concluded as having a good view of
where threats and opportunities for the company exist. And, thus so far, the company is
able to respond to these business variables with flying colors.
Still there are still other factors that affect the external audit of a company and these are
the political, governmental and legal forces. It must be understood that political
forecasting can be serious with critical and complex characteristics for any multinational
companies, like Anheuser-Busch, that depend on other countries for natural resources
used for their products’ creation, facilities, and products distribution. During this time of
globalization where each country is dependent on each other regarding their economies,
markets and governments in general and when the continents are shrunk into one close
community, it is of dire importance for companies such as Anheuser-Busch Companies to
consider the possible – this is inevitable – impact of political variables on the formulation
and implementation of its business strategies to remain competitive and sustain the
growth and profitability of the company in the beer industry.
Other governmental and legal forces that can affect the external audit of Anheuser-Busch
Companies would be the prospect of government regulations and deregulations. These
forces can take in the forms of changes in tax laws, exchange in the currency vis-à-vis the
US dollar and labor markets. Since this modern times is already plagued by malicious
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Anheuser-Busch Co.
activities that poses great danger on every government of around the globe, the forces of
where and the severity of terrorist activities are also included now in the equation.
If a certain government which Anheuser-Busch Companies has an operation, that
government’s decision regarding economic policies may affect the operation and
profitability of the company. Say for example, if the government deregulated several of
the international laws regarding tariffs and taxes on beer products, Anheuser-Busch
Companies would have to find new means by which it can provide its drinking
consumers in that particular government of its products.
Finally, Anheuser-Busch is not taking the risk of neglecting the technology forces that
surely has an effect on its external audit as a firm and a multinational company. For a
start, the company has already built a online site wherein which the drinking public can
access the detailed information about the company: its history, publication, annual
reports, people behind the company, and to the new products that the company are
introducing in the market. For Anheuser-Busch Companies, the use of technology is an
economic enhancer for its overall operation and never considered it as a barrier.
The company knows that technological forces can be a threat to it if not used diligently
and to its advantage. It must be understood that technological forces can also pose as a
threat to the health of any business if these forces are not well taken cared of. These
technological forces are one of the factors in external audit of a company. Negligence on
these issues therefore can put a company out of business. Since the popular technological
advancement right now can be found in the World Wide Web, checking and utilizing
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Anheuser-Busch Co.
whatever it can bring to the benefit of the company is good. When the new order of this
era is for more information to bring to the insatiable consumer, this effort of taking good
business of the forces of technology is a great help for the sustainability and profitability
of a company.
Existing Vision, Mission, Objective and Strategies of Anheuser-Busch
When Adolphus Busch first handled the beer brewery company which will later on be
called Anheuser-Busch Companies, his vision was for the company to brew a kind of
beer with a taste that will cater to the bud of all beer drinkers. As of the present this
vision of Busch has been achieved already basing from the strong and dominant existence
of Anheuser-Busch beer products in the market.
What the present management of the company right now has for a vision for the company
is to stay as the American Dream in the beer industry and at the same time get a sizeable
market share of the international beer market. The company of Anheuser-Busch vision
for the company is to stay on top of its game, retain the almost half share of the beer
market in the beer industry in the United States and at the same time make its array of
beer products create a strong market existence in the international and globalized beer
market.
Yet, this is not only the vision that the company of Anheuser-Busch has set for itself.
Slowly, the vision of the company is looking for diversification. It envisions the company
as a company that will not only be known from its array of beer market.
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Anheuser-Busch Co.
A testament of this kind of diversification is the purchase of Sea World and the opening
of Discovery Cove located in Orlando, Florida. The company as it set itself to diversify is
at the same time showing that the company is concern with the state of nature and
environment too. The setting up or acquisition of Sea World and Discovery Cove seems
a far cry from a company that is known to be a leading beer company. Still, with a vision
to make a good public impression, the company has embarked on managing and owning
these environmental parks.
Nevertheless in spite that the management of these environmental parks is off the path of
what should a beer company should take as a kind of diversification, the company is
successful in this endeavor. For one, the company is earning huge profits from these
environmental parks and these earnings add up to the total net profit of the company year
in and year out.
It is not at all a cause of surprise to know that the main objective of the company right
now is to maintain its leadership in the beer market in the United States and at the same
time expand and exploit to its full potential the international beer market. The
management of the company knows at the same time that this objective to remain a major
player in the beer industry both local and abroad is a difficult challenge for the whole
company. Rival beer companies pose a great threat and risks for the company.
Add to this the factors that there are changes in the beer market, especially in the
demographics, shifts in consumer preferences. At the same time there is a rising
competition from other forms of alcohol. And there are also innovative breakthroughs in
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Anheuser-Busch Co.
this age of information revolution. (“Brewing Our Future,” 2006). To sum up, the main
objectives of Anheuser-Busch Company is to increase domestic beer segment volume
and per barrel profitability, increase in international beer segment profit growth and
lastly, continued growth in pretax profit and free cash flow from the other segments of
the company (“Brewing Our Future,” 2006).
Yet, from the words of the former CEO of Anheuser-Busch Companies Patrick Stokes:
“The real test of a company is not whether it encounters challenges, but what it does to
respond to challenges” (Stokes & Busch III, 2005).
And under this light, the strategies that the company of Anheuser-Busch is applying on
its internal business operation are embarking on aggressive actions by reducing the price
umbrella of several of its premium products in relation to its major domestic competitors.
More than that it the company has embarked on innovating both of its products and their
packaging. At the same time, the company has realigned the marketing support behind all
the major beer products of the company. Major internal operational policies has also
been applied like cost-cutting measures through elimination of bonuses for corporate and
U.S. beer business employees (this case particularly was applied in 2005). Likewise
similar cost-cutting measure was done through the freezing of officer’s salaries for the
year of 2006.
Regarding its external operational strategy, the company has decided to focus on it core
brand of beer. Since the management knows that beer represents 57 percent of all alcohol
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Anheuser-Busch Co.
servings in United States and in this share the company Anheuser-Busch has a share of
48 percent. It is then the move of the company to continue to develop innovative
advertising and marketing strategy for its core brand of beers. These core of brand of
beers are Budweiser, Michelob, Busch and Natural families.
Moreover, the company is on the pursuit of enhancing its extensive portfolio. While the
focus of the company of Anheuser is still its core brand of beer, it also tries not to neglect
other avenues where the company can earn additional revenue.
One of the company’s focused is the high-end imports and craft beers. The company of
Anheuser sees the opportunity that it can earn additional revenue on this part since the
entire industry of beer had been bolstered by the growth of these two components by
more than ten percent in 2006.
Vision and Mission for Anheuser-Busch Companies
Granted that the products of Anheuser-Busch Companies, particularly the Budweiser
family of beers, has been in the market for more than a century already and been lording
over the market share in the beer industry in the United States, this does not mean that
there should be a lack for a new vision and mission for the company of Anheuser-Busch
Companies. There are still many not trodden path which to follow and direct that
company for the next coming years and decades and probably for the next century.
The new vision and mission for Anheuser-Busch Company somehow does not stray afar
from the original and first vision and mission that had been set by Adolphus Busch for
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the company since its first day of operation a century ago in the small town of St. Louis,
Missouri; that is to still lead the pack of beer breweries scattered across around the globe.
This vision and mission for the company has an air of difficulty since remaining as the
leader of the pack is hard to sustain during this uncertain times and stiff and hard
competition happening in the beer industry in United States and around the globe. Yet,
there is no doubt in every experts in business that this vision and mission is impossible to
do. As business gurus would usually say, those difficult and hard problems for a company
is doable while those of impossible in nature will only take time to accomplish and get
solved. This vision and mission for the leading beer brewery in United States can then be
concluded as doable and achievable without a speck of doubt.
For Anheuser-Busch Company to make this new vision and mission for the company to
be realized ought only to follow the simple yet proven business strategy of continuously
following the path for expansion and innovation in terms of introducing new array of beer
products to the market. This business strategy has worked countless of times already for
the company and I see no reason as to why the company will desert this style of business
ethics and strategy.
Furthermore, the company must stick with greater vigor and intensity in using the tools of
advertisement to forward its dominant existence in the beer industry. The company of
Anheuser-Busch has been known for utilizing this kind of business strategy efficiently
more than its slew of competitors in the beer market. If we would follow the number of
effective slogan the company has ingrained and made it in the minds of the American
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drinking public, there are countless to be counted. Following again this aspect of pushing
the beer product of the company to the public is advisable for the company to continue.
Opportunities and Threats to Anheuser-Busch
Opportunities
What opportunities lie before the path for continuous success for Anheuser-Busch
Companies? In the United States, 57 percent of alcohol servings is represented by beer.
And from this 57 percent, Anheuser-Busch leisurely enjoys 48.4 percent share of the U.S.
beer market. Moreover, the brands of Grupo Modelo, a product of Anheuser-Busch
Companies expansion program and makers of Corona, for it has an estimated 40 percent
share of the import segment in the country of United States. Anheuser-Busch has a 50
percent share in Grupo Modelo.
\It can thus be concluded that Anheuser-Busch Companies is one of the largest player in
terms of import profit pool in United States. Another product of the company’s
aggressive business strategy to have a strong presence in international beer industry is its
relative huge share in Tsingtao, the largest beer brewer in China. Anheuser-Busch has 27
percent stake in it. Besides this fact, Anheuser-Busch flag product, the group of
Budweiser brand, takes half of the market share of the premium beer segment in China as
of 2006 (“Datamonitor,” 2007).
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Anheuser-Busch Co.
The company of Anheuser-Busch’s strong market presence and position gives it with
huge field wherein it can apply its business strategies and enhance the awareness about
the company’s brands in the drinking public.
These facts alone give the obvious impression that Anheuser-Busch is the company that
is to beat in the beer industry, locally wise in United States and in the international setting
as well. Going back to the previous question then, what still lies ahead as opportunities
for the company in this obvious dominance in the beer industry, both local and abroad.
First and foremost, since the company of Anheuser-Busch has already conquered the beer
market in the United States, the opportunities that lie ahead for the company then is
abroad: the beer market share internationally speaking. The company can look forward to
a positive result in its expansion program as represented by the company’s growing
market share in China and Russia.
Let us deal first with the growing market share of Anheuser-Busch in China. For the last
previous five years, the Chinese beer market has delivered a strong, stable growth for the
company’s brand of beer in the country’s beer industry. The total generated revenue for
the fiscal year of 2006 that Anheuser-Busch Companies earned in Chinese beer market
reached a staggering $24,584 million. This amount reflects a compound annual growth
rate or CAGR for Anheuser-Busch of seven percent spanning the years of 2002-2006. In
2006 this means that the company has brewed and sold a total of 29,722.8 million liters
(“Datamonitor,” 2007) serving the large population of China.
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Anheuser-Busch Co.
What’s more is that the market volume for Anheuser in this country is estimated to rise
up to 38,273.3 million liters by the end of this decade. If this would materialize, then the
CAGR of 5.2 percent for the period of five years starting 2006 to 2011 is expected for
Anheuser-Busch. For the company, the standard lagers represent the most lucrative
aspect of the Chinese beer market in 2006. It was during this fiscal year that the company
is able to generate a total revenue and profit of $16,332 million. This amount is gives the
company an equivalent of 66.4 percent of the Chinese beer market and overall value.
Meanwhile, Anheuser-Busch’s sales of premium lager earned staggering revenue of
$4,656.9 million (“Datamonitor,” 2007) in 2006. If this revenue could be equated to the
Chinese market’s aggregate revenues, it thus represents an 18.9 percent. If the Chinese
beer market is not an obvious representation as to the place where the company can
squeeze out more revenue and profit for it in the coming years and decades to come, then
the estimate of Datamonitor (2007) that the market share for Anheuser-Busch beer
products will grow at a compounded annual growth rate of 4.9 percent during the coming
period of 2006 to 2011, spanning five years, is already a good business prognosis that the
company has a foolproof business opportunities to mine in the Chinese beer market.
Meanwhile the presence of Anheuser-Busch Companies is starting to be felt in Russia.
Russia in terms of its beer markets is one of the world largest. To give a short background
of the Russian beer market, the country’s beer market is dominated by premium lager
segment. Premium lager has about 48 percent of the total market value in Russia. It is
also forecasted that the Russian beer market to reach an estimated value of $12.9 billion
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Anheuser-Busch Co.
when the year 2009 comes. This estimate is an increase of about 39.5 percent
(“Datamonitor,” 2007) compared with 2004. And what place is better then for Anheuser-
Busch Company to expand its beer brewery network than in this large Russian beer
market. True to the company’s dedication for growth and continuous expansion,
Anheuser-Busch Companies entered into a licensing agreement with Heineken in the year
of 2006. Under the agreement, Heineken will have the exclusive rights and license to
brew, sell and distribute Anheuser’s ‘Bud’ product in the entire Russia.
Considering that Anheuser-Busch is financially healthy plus its advantage of being well-
positioned in the beer market industry, the company has all for itself to take advantage of
exploiting the long-term growth opportunities that is being offered by the beer markets in
China and Russia. First of all, it has for itself its fully owned product Budweiser strong
presence in the Chinese beer market. Add to that that the company has Harbin operations
and a business strategic alliance with Tsingtao. It is thus can be said that Anheuser-Busch
Companies has its tentacles of being a huge multinational beer company involved in all
the segments of the Chinese beer industry. This strong presence of Anheuser-Busch
Companies in the international beer industry is even more reinforced by the fact that
Grupo Modelo picked the company as the exclusive importer of its brands all over China.
This new agreement will take effect beginning the year of 2007 and includes in the pact is
Corona Extra, which is at the present the most popular Mexican beer in the world. There
is also the future prospective that other Modelo brands will be included in the agreement.
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Anheuser-Busch Co.
To cut the chase short as to where opportunities lies for Anheuser-Busch Company for
the company’s intention for continuous growth and strong presence in the international
beer market, the discussion can be summed into two sentences. The strong demand in the
market for beer compounded by the strong market presence of Anheuser-Busch
Companies in the Chinese beer market can be translated as an increase in terms of
revenue and profit for the company. The opportunity that lies then for the company in
Russia, considering that there is a strong demand in that particular country for beer
products, will mean a growth in terms of licensing revenues for the Anheuser-Busch
Companies.
The opportunities for Anheuser-Busch Companies does not end and stop at the good
business prospect that is offered by the Chinese and Russian beer market. It must be
remembered that Anheuser-Busch Companies does not only mainly deal with alcoholic
beverages alone. Besides its good standing as a leading beer brewery both local and
abroad, the company is engaged in other diversified products and services. To name one,
it has for a long time invested and ventured in environmental and theme parks, thus
spreading its interest in other facets of American lifestyle and kind of life.
Another opportunity wherein the Anheuser-Busch Companies can direct its focus is the
growing non-alcoholic beverage market. Anheuser-Busch for the start does not enjoy a
good, strong presence in the non-alcoholic beverage market in the countries where it has
an operation. Meanwhile, its rival company Constellation Brands is involved in the
selling and marketing both alcoholic and non-alcoholic beverages.
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Anheuser-Busch Co.
If the survey done by Food and Beverage report 2006 would be used as a basis as to
where Anheuser-Busch Companies can take a peek and look at the prospect of additional
revenue and profit for the company, then it is said that there is an increase in the
preference of the public consumers for non-alcoholic drinks. This increase demand for
non-alcoholic beverages by the public is an offshoot of the public’s concern about their
health and especially for drinks with high calorific values. During the span of five years,
from 2001 to 2006, the combined sales of carbonated drinks, milk, and including fruit
juice and drinks have declined by roughly five percent. At the same time, the U.S. market
is showing an increasing trend for the consumer public’s preference and demand for non-
alcoholic beverages and low-calorie drinks.
Anheuser-Busch Companies, considering its strong cash flow and healthy financial state,
can invest in this segment of the consumer market since there are clear signs that this
trend for preference for non-alcoholic beverages will stay and will become a part of
lifestyle of modern man who are now not lacking as to the information about healthy way
of life.
Another opportunity for Anheuser-Busch Companies where the lure of additional and
huge revenue is enticing can be seen in the growing demand for energy drinks. Since
Anheuser-Busch Companies has already set foot in this segment of the market, the
growth for the company in this fast growing and highly promising energy drink segment
is greatly probable. As of the present, Anheuser-Busch has in its array of products two
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energy drinks: the 180 and 180X3. This segment of the market that craves for energy
drinks is now pegged to be a $3.5 billion business (“Datamonitor,” 2007).
For the next coming three years, this business segment is estimated to reach a market
value of ten billion dollars. The involvement of the company in this kind of product is a
great help in the diversification of the products the company is offering the public.
Furthermore, Anheuser-Busch Companies has a strong brand equity that can be used to
benefit from the growing demand for energy drinks. The company then can quickly and
easily capture a substantial share of the energy drink market.
Threats
If there are threats that pose as a danger to the continuous growth of the company of
Anheuser-Busch, the first of these is the changing consumer preferences for drinking
non-alcoholic beverages and energy drinks and the increase for opting to choose wines
and spirits over beer. Since the main bulk of revenue of Anheuser-Busch comes from its
families of beer brands, like the Budweiser beer family, this trend on the preference of
drinking public is a serious threat to the financial stability and overall healthiness of
Anheuser-Busch as a company.
First and foremost, the growth being experienced by the beer market, in particular in
United States, is showing signs of slowing down. It is forecasted that for the period of
2005-2009 the growth rate for the demand for beer in the U.S. setting is pegged only at
roughly one percent (“Datamonitor,” 2007). This estimate growth is lower compared with
the market for wines and spirits which is pegged to gain growth in the market at 3.3
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Anheuser-Busch Co.
percent and 2.6 percent. Wine manufacturers are expected to achieve growth and to eat a
considerable share of the beer market because of wines’ affordable lower price and
success in targeting the young adults as its consumers. Since young adult is one of the
target consumers of beer producers, this is a heavy blow for the companies like
Anheuser-Busch. This trend on the consumer preferences can result in the end to lower
revenue for Anheuser-Busch Companies since huge portion of its market is located in the
United States.
Since one of the tools as to why Anheuser-Busch has able to lord over the beer market,
especially in the United States, is its efficient and effective use of advertising to its
advantage, the stringent advertising rules in many countries is making it difficult for
Anheuser-Busch Companies to fully market its brands of beer. In many countries, alcohol
producers have been continuously criticized for their being irresponsible in terms of
portraying alcoholic drinks in every kind of advertisements. This fact is truer Europe than
any other continents where Anheuser-Busch Companies has an operation. There is an
ever presence of advertising watchdogs that target every alcoholic advertising. The claim
of these advertising watchdogs is that the very nature of alcoholic advertisement fuel
binge drinking especially to the young adults. If this is the case, then the stringent
regulations on advertisement surely have a negative effect on companies such as
Anheuser-Busch Companies.
Another threat to the financial health of Anheuser-Busch Companies is too much
governmental regulations. As of the present, the Anheuser-Busch Company is under
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Anheuser-Busch Co.
extensive regulations imposed by the federal, state and local governments in the United
States. Following the directives of these governments in terms of selling and marketing
alcohol can be expensive and thus may result the profit margins of Anheuser-Busch.
Competitive Profile Matrix (CPM) for Anheuser-Busch
Competitive Profile Matrix
Anheuser-Busch Co.
SABMiller Carlsberg
Critical Success Factors Weight Rating Score Rating Score Rating Score
Employee Satisfaction .10 2 .20 3 .30 2 .20
Low Cost .10 2 .20 4 .40 2 .30
Technology .5 1 .50 3 1.50 2 1.00
Customer Loyalty .15 4 .60 2 .30 3 .30
Market Share .10 4 .40 2 .20 3 .30
Attracting Customers/Advertising
.15 4 .60 2 .30 2 .30
Expansion .5 4 2.0
2 1.00 4 .20
Product Quality .10 3 .30 3 .30 3 .30
Total 1.00 4.80 4.3 2.90
Note: (1) The rating values are as follows:
Basing on the above Competitive Profile Matrix (CPM), Anheuser-Busch Companies
leads its other rival beer breweries in the industry. The company’s employee’s
satisfaction is relatively high, though only coming as a second placer to SABMiller. Yet,
the company gets a high marks on the aspects of customer loyalty and customer
satisfaction. It is therefore without doubt that with these characteristics of the company
enjoying wide margins as compared with its rival beer breweries, Anheuser-Busch
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Anheuser-Busch Co.
Companies leads the competition and is lording over the local beer industry in United
States.
External Factor Evaluation Matrix (EFE)
External Factor Evaluation Matrix (EFE)Key External Factors Weight Rating Weighted ScoreOpportunities Information technology .05 1 .05
Deregulation of price .05 3 .15
International MarketExposure
.15 4 2.00
Purchasing power increase
.10 2 .20
Positive Media Exposure .20 4 .80
ThreatsCompetition .15 4 .6
Changes in Consumer Preferences
.10 1 .10
Taxation .05 1 .05
Inflation .05 1 .05
Bad Media Exposure .10 2 .20
Total 1.00 4.2
According to this External Evaluation Factor Matrix (EFE), Anheuser-Busch Companies
is able to exploit to the hilt all the opportunities that external factors offer the company. It
is very obvious that the company is effective in having positive media exposure since
Anheuser-Busch is known as a company that heavily relies on the tools of advertisement
in getting its brand of beers receives high recognition from the drinking consumers. It is
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Anheuser-Busch Co.
not at all unexpected that the company gets a high mark creating for itself a positive
media image.
Likewise, the company of Anheuser-Busch gets a good grade in terms of embracing its
opportunity to gain an international presence for its array of beer products. A mark of 2
points is already high for the company that is just starting to exploit this avenue where it
can gain more revenue and profit. The company on the other hand does not enjoy a good
evaluation on its Information Technology (IT) utilization. Nevertheless, with the stature
of Anheuser-Busch as the leading brewery in United States, the effect of this low
utilization of Information Technology has no dire effect on the company’s operation. The
company in the first place has already put up an online site wherein consumers would
have first hand information about the company. And this is already a good way of
utilizing Information Technology.
As for the threats that the company has, the only risks that poses as a great danger for the
company is the highly stiff competition. It is therefore not at all unexpected that among
the list of threats against the company, the category of competition gets the highest mark
for the company. Change in consumer preferences on the other hand gets a relatively high
mark. The reason for this is that there is a growing trend in the domestic market in the
United States that demands more for non-alcoholic beverages than the alcoholic drinks.
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Organization’s Internal Strengths and Weaknesses
Anheuser-Busch Companies has numerous internal strengths and weaknesses as well.
Below is a list of its internal strengths and weaknesses. The rest of this case analysis will
define and highlight later on these internal strengths and weaknesses of the company:
Internal Strengths
Loyal employees
Captures 48 percent of the US beer market
Strong beer brands
Capacity for advertisement expenditures
Nurture customer loyalty
Products have high recognition
Strong network of breweries
Customer satisfaction
Low-cost structure
Serve fresh beer to customers
Internal Weaknesses
High dependence on its U.S. market
Has substantial long-term debt
Poor liquidity position
Difficulty in raising money for expansion plans
High dependence on wholesalers
Week bargaining power in the market
Financial performance is highly vulnerable
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Anheuser-Busch Co.
Internal Factor Evaluation Matrix (IFE)
Internal Factor Evaluation Matrix (IFE)Key Internal Factors Weight Rating Weighted
ScoreInternal StrengthsCaptures 48 percent of the US beer market .15 4 .60
Capacity for advertisement expenditures .10 4 .40
Loyal Employees .05 2 .10
Nurture customer loyalty .05 3 .15
Strong beer brands .15 4 .45
Customer Satisfaction .05 3 .20
Strong network of breweries .15 4 .60
Internal WeaknessesHigh dependence on its U.S. market .05 1 .05
Poor liquidity position .15 2 .30
High dependence on wholesalers .10 1 .10
Total 1.00 2.95
What this Internal Factor Evaluation Matrix (IFE) tells about the internal aspect of
Anheuser-Busch is the fact that the company enjoys a good lead in the beer market in the
United States; the home base of the company. It is not a surprise then that this segment
where the company cornered a sizeable chunk of the beer market in United States gets the
highest mark of .60 in this evaluation. This internal factor of the company has a great and
staggering impact on the healthiness of the company, financially-wise and business in the
general.
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Anheuser-Busch Co.
Likewise, the company also enjoys a high mark on its financial capacity for
advertisement expenditures. It must be noted that Anheuser-Busch Companies relies
heavily on advertisement for its marketing strategy. In the fiscal year alone of 2006, the
company spent $771.2 million and 675.3 million for advertising and sales promotion
respectively. In the category of strong beer brands, the company also gets a relatively
high mark of .45. For the reason that the flagship products of Anheuser-Busch already
exist in the beer market for more than a century already, these products are easily
recognizable and earn loyalty from the public consumers.
As for the weaknesses of the company, the company really falls short on being too
dependent on its domestic market. It is like putting all eggs in one basket. The company
of Anheuser-Busch then is held hostage by the U.S. beer market. We can therefore, say
whatever happens to the market in U.S. is the same fate that the company will experience
or suffer.
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Anheuser-Busch Co.
SWOT Matrix
The following SWOT analysis below captures the key strengths and weaknesses within
the company, and at the same time describes the opportunities and threats facing the
organization.
Strengths Weaknesses
Leading in beer market position
Strong beer brands
Strong networks of breweries
High dependency on domestic market
Poor liquidity position
High dependence on wholesalers
Opportunities Threats
Growing Chinese and Russian beer markets
Increase share in non-alcoholic beverage
market
Growth in energy drinks
Changing consumer alcoholic preferences
Stiff advertising rules in many countries
Governmental rules and laws
Since Anheuser-Busch Companies has been in existence for more than a century already,
what comes with this longevity in the beer industry is that the company now enjoys a
huge or rather almost half of the domestic beer market share in United States. It follows
then that this is the main strength of Anheuser-Busch. This multinational brewing
company is the leader of the pack of beer producers both locally and abroad. What gives
Anheuser-Busch Companies this leadership in the beer industry is for the simple reason
that it has in its sleeves a line-up of strong beer brands. Likewise, it can be said that the
company, since it enjoys the leadership in the beer industry globally, has a very strong
network of breweries scattered strategically all over the world.
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Anheuser-Busch Co.
Yet, these strengths are being threatened by the company’s high dependency on domestic
market. The company basically is held hostage by the market of United States. As I have
mentioned above, whatever happens to the market in the U.S. is the same fate that
Anheuser-Busch Companies will experience and suffer. Another weakness in its financial
portfolio is the company’s poor liquidity position. If the company would try to plan in
investing for expansion, it may face the difficulty of obtaining the funds for such a
project. Another weakness that is evident in the operation of the company is high in its
dependency in letting the wholesalers do the selling for the company.
At the same time this weaknesses of the Anheuser-Busch Companies is being aggravated
by the external threats to the whole organization in general. First, there is a growing trend
in the market in the change of preferences of the consumer public. There is the threat of
being beaten by the competition being launched by other types of alcoholic beverages
like wines and spirit. It is estimated that the growth market share of the wines and spirits
is more than the growth that will be experienced by the beer in the coming several years
to come. Another threat that poses a danger to the international operation of the company
is the stiff regulations being implemented by foreign countries regarding alcoholic
beverages. It must be understood that the main marketing tool being used by Anheuser-
Busch to sell its product to the public is by the heavy use of advertisement. If this tool for
marketing will be deprived for the use of Anheuser-Busch then there is really a threat for
the company to suffer financial losses in the coming future if this threat is not addressed
promptly. Then there is the presence of governmental regulations that is reigning the
freedom of the company to direct its business strategies in its full potential.
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Anheuser-Busch Co.
Nevertheless, these weaknesses and threats posed against on the company of Anheuser-
Busch can be address with good insight as to where do the opportunity for growth lie for
the company. Since the company is already dead-serious about pushing its brands of beer
in the international market, the opportunity of achieving huge revenue and profit can be
found in the growing beer market of China and Russia. The company has already started
exploiting this opportunity and so far it is achieving positive results in its operations in
both countries.
More than what this expansion in China and Russia can offer, there is a growth waiting
for the company in the segment of marketing non-alcoholic beverages. There is right now
a trend towards this segment of the market and the company of Anheuser can grab this
opportunity. There is also a growing market for energy drink that the company can
venture in and earn for it a niche in this nascent business. Both of the previously
mentioned opportunities for Anheuser-Busch are also means by which the company can
diversified its products.
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Anheuser-Busch Co.
Quantitative Strategic Planning Matrix
Anheuser-Busch Increase Sales Expansion AS TAS AS TAS AS TASKey Factors Weight 1 to 4 1 to 4 1 to 4Information technology 0.35 1 .35 4 1.4 4 1.4Strong beer brands 0.15 4 0.6 4 0.6 4 0.6Demographic Changes 0.15 2 0.3 4 0.6 4 0.6Purchasing power increase 0.25 3 0.75 4 1 4 1Positive Media Exposure 0.1 3 0.3 2 0.2 3 0.3
Total should = 1.0 1 International MarketExposure 0.15 1 0.15 2 .3 4 .6Market Share 0.6 4 2.4 1 0.6 2 1.2Loyal Employees 0.14 2 0.28 2 0.28 2 0.28Negative Media Exposure 0.2 3 0.6 3 0.6 3 0.6Low Price 0.2 3 0.6 4 0.8 4 0.8Customer Satisfaction 0.13 3 0.39 4 0.52 4 0.52Attracting Customers/Advertising 0.18 4 0.72 4 0.72 4 0.72
Total should = 1.0 1 Total 7.44 6.74 8.62
Based on the above Quantitative Strategic Planning Matrix or (QSPM) the strategic
options that is available right now for Anheuser-Busch Companies are three: remain as it
is or retain the status quo; increase the sale of its beer products; and lastly but not the
least is the enticing opportunity to venture into an expansion program. As can be seen
with the variables at the left side corner of the table, I enumerated the factors that are
proven to be success factors in the beer industry.
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Anheuser-Busch Co.
And if one would look at the total marks each strategy that is represented in this matrix
the strategy that got the lowest mark is the business strategy to just increase the sales of
the products of Anheuser-Busch. This strategy basically proves to be not an attractive
option for the company. The intention of this strategy might be good but this lacks the
imagination of a true visionary which Anheuser-Busch company has been known for.
Likewise, the prospect of staying or retaining the status quo, using the old business
strategy for the company suffers a low mark of 7.44. If one would think, retaining the
status quo is the same as putting the company in a state of stagnation. What is then the
purpose of this matrix but to employ new strategies by which the company can use and
apply in is day to day operation.
The business option left for the company to follow and which got the highest mark of
8.62 is the strategy for the company to venture into an expansion program. A couple of
the aspects that got a strong approval are the strong exposure in the international market
and the utilization of Information Technology. This two are just a couple of the factors
that ensures the success of a multinational company with the mission to conquer the
international market.
Long Term Strategies and Objectives
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Anheuser-Busch Co.
Based on the Quantitative Strategic Planning Matrix Anheuser-Busch Companies should
focus on venturing in an expansion program. Key factors that would allow this expansion
to be successful would be the utilization of information technology (like setting up online
site for the company), the company’s existing strong beer brands, and demographic
changes of the customers to name a few. Since the strengths of Anheuser-Busch is its
strong presence in the domestic beer market in United States, then it can be concluded
that this same dominance in the beer market can be achieved in countries where the
company chooses to expand. And basing from the opportunities that are laid in front of
the company, the Chinese and Russian beer market are enticing markets wherein which
the company can exploit to further its vision and mission for leading the beer industry;
but now, in the international arena.
Since one of the weaknesses of the company is its focused dependency on domestic
market, the option of venturing into foreign shores for its operation is an attractive choice
for it. The company then at the same time will avoid the pitfalls of being held hostage by
one market and simultaneously exploit the opportunity of expanding its operation. Basing
from the data gathered and financial statistics discussed and given earlier in this paper,
the opportunities of continuous growth for the company is achievable if the company
would venture in the beer markets of China and Russia.
It is then the long term strategy of the company to exploit every uncharted territory where
the demand for beer products is high or growing. The first target places then will be
China and Russia and probably in the next succeeding years other countries as well. The
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Anheuser-Busch Co.
objective of this strategy then is very obvious: it is to maintain the lordship of Anheuser-
Busch in the beer industry in an international setting. If the consolidated net earning of
the company reached 4.5 percent in 2006, it the objective of this plan to increase that net
growth rate by up to 6 percent in the first year of the implementation of the
recommendation.
Key Ratios and Projected Consolidated Financial Statements
Fiscal Year 2006
Projected Fiscal Year 2007 Increase
Income Statement Information $ in Millions
Gross sales $ 17,957.8 $ 19,035.2 $ 1,077.4
Net sales – intersegment ---- ----- -----
Net sales – external 15,717.1 16,660.1 943.0
Depreciation and amortization 988.7 1,048.0 59.3
Income before income taxes 2,276.9 2,413.5 136.6
Equity income, net of tax 588.8 624.0 35.2
Net income 1,965.2 2,083.1 117.9
Balance Sheet Information
Total assets 16,377.2 17,359.8 982.6
Equity method investments 3,672.4 3,892.7 220.3
Goodwill 1,614.4 1,711.2 96.8
Foreign-located fixed assets 517.7 548.7 31.0
Capital expenditures 812.5 861.2 48.7
Anheuser-Busch Strategies for the Future
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Anheuser-Busch Co.
In a letter to the shareholders written by Anheuser-Busch Companies President and CEO
August A. Busch IV (“Brewing Our Future,” 2007), Busch IV stated one by one the
strategies that the company is going to pursue in the future for the company’s continuous
growth. In general he enumerated the strategies as improvement in the internal operations
of the company. Among the business plan that the company will follow and implement in
the coming year is listed below:
1. Internal development
2. Acquisitions and alliances with other beer producers spread across the world
3. Dedication to focus on the company’s core brands
4. Expansion of the company’s portfolio of high-margin, high-growth products.
The company is also in pursuit of going beyond beer production in the alcohol category.
For a start, the company has already tested a new product of distilled spirit named Jekyll
& Hyde. The company also introduces SPYKES, which is a series of unique flavor shots.
The aim of the company is to reach out to the contemporary adult consumers.
Similar with my recommendation, the company also is looking forward in venturing to
the growing international market for beer products around the globe. The company in this
aspect experienced an annual growth rate of 20 percent since 1999, of which the revenue
coming from this segment represented the 32 percent of net income of the company for
the fiscal year 2006. At the same time the company wants to enhance its packaging and
entertainment operations that are giving the company net profits year after year.
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Anheuser-Busch Co.
Regarding its financial strength, the company targets to increase it cash flow which it has
able to do in the fiscal year of 2006; increasing it by 21 percent or an added $300 million
to what it had in 2005.
Implementation and Expected Result
There are only several simple steps in the implementation of this recommendation to the
board of directors of Anheuser-Busch Companies. The first simple step is for the top
management to create a team of managers with proven background in international
business transactions, particularly those who have had involvement in business activities
in China and Russia. Since these target countries have different cultures compared with
the home based of the company that is United States, it is important that those who will
represent the company of Anheuser-Busch have a good grasp as to the business culture of
the mentioned countries.
This team of managers and executives will then have to contact, deal and get a favorable
agreement with other beer producers in the said countries. Since the Anheuser-Busch
Companies has already begun some small steps in an attempt to penetrate the beer market
of these countries, there are still much more that awaits the company if it will pursue with
aggressive business manner the beer market of these countries.
And to repeat the fact that a relative huge share has been invested in China’s major beer
producer Tsingtao by Anheuser-Busch, this team of managers will pursue to increase the
share of the company in the said brewery and at the same time scout for prospective
breweries in China that have the potential to grow as a major player in the Chinese beer
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Anheuser-Busch Co.
market. These prospective breweries then will be the target for acquisition by the
company to strengthen and reinforce the company’s involvement in Chinese beer market
and industry.
Likewise the same business strategy will be applied in the country of Russia. Russia
represents one of the huge beer market in the world and with the same business strategy
as applied on China will be applied to Russia, the prospect of gaining a positive result for
the company of Anheuser-Busch is great.
It is expected by this recommendation that in a short time spanning probably six months,
these detailed top managers and executives assigned in China and Russia will be able to
close several deals concerning investment in stock shares of leading beer producers there.
At the same time a positive result is expected that these teams of top managers and
executives have successfully scouted for prospective breweries which the company of
Anheuser-Busch will acquire.
The overall expected result of this recommendation then is to gain a considerable and
palpable presence in the beer market and industry in these countries. And the time frame
for that is not later than six months. What this effort will give the company of Anheuser-
Busch will be additional revenue that can still grow exponentially in the coming years.
As the trend in the drinking habit of public consumers in the domestic beer market in
United States, where the bulk of income of the company comes from, this expansion
program will give the company a breathing space to pursue its goal of continually
increasing its production of beer annually. It is also expected that this international
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Anheuser-Busch Co.
segment of the operation of Anheuser-Busch will add to the consolidated revenue and net
profit of the company by at least 1.5 percent at the maximum. It is thus expected that the
growth rate of the company will shoot up to 6 percent in the succeeding years.
Annual Objectives and Policies
The use of clear and definite annual objectives gives the company a partial representation
of the progress of its long-term objectives, vision and mission. It is a tool by which every
top level managers of the company are able to discern the achievability of a particular
program set to result in the coming years a favorable result for the company in terms of
its financial healthiness, competitiveness in the industry it is involved in. Much more
annual objectives are small steps geared toward a more definite status of the company in
the industry. For the case of Anheuser-Busch, the long-term objective in general is to
remain the leader of the pack of beer producers locally and abroad. In order to achieve
this goal, the table below represents the dissected tasks of each major segment of the
organization on how to achieve this general vision and mission of set by the company for
itself. Another point that must be cleared and understood is that annual objectives are
basically tools by which the top managers of the organization can evaluate the
performance of the company according to a previously set strategy it has made. We can
say thus that annual objectives are major instruments for monitoring the progress in
attaining long-term objectives (David, 2005).
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Anheuser-Busch Co.
Anheuser-Busch
Companies Long-term Objective
Expand its beer operation globally and maintain its domestic market share. Diversify in different drinking products
Domestic Market Annual
Objective
International Market Annual Objective
Maintain the market share of brands of beer. Diversify in energy and non-alcoholic drinks
Increase foreign revenues by 5% this year. Penetrate Chinese and Russian beer market
R & D Production Marketing Finance PersonnelDevelop the online site of the company to give more information
about the company’s products.
Increase production of beer barrels
by 10 percent
Engage in partnership
with media to achieve an aggressive advertising campaign
Increase the consolidated net growth of the company from 4.5 % to
6%
Train employee to gain more
efficiency in their tasks.
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Anheuser-Busch Co.
. Create and implement marketing scheme for foreign markets.
Increase Consolidated Net Sales by $943 million.
Develop shrewd advertising campaign that follows a country’s rules and regulations.
Procedures for Strategy Review and Evaluation
Procedural strategy for review of this recommendation, first and foremost, will be
handled by the Board of Directors themselves since this project is of great importance for
the continuous grow and profitability of the company. The expansion in operational
activities of the company in foreign shores cannot be given an iota of doubt that it will
soon be the source of more revenue and profits for the company in the coming future.
The Board of Directors may meet concerning this objective and strategy project every
three months to evaluate and study the progress of the program. The meeting may last for
two to three hours since short time meeting gives more than what long, tedious meeting
can give to the company (David, 2005). The agenda during this short period of time of
the meeting will be to assess the cultural barrier in dealing with foreign counterparts in
the pursuit of the company to expand internationally.
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Anheuser-Busch Co.
Review and evaluation on the financial as well as the operational aspects will be studied
during this time. During this short period of time the internal and external evaluation
factors of the company will also be reassess to see whether the company is able to
address the weaknesses of the company in the industry it is involved in. This evaluation
and assessment done on by Board of Directors will help the company take a peek as to
what areas in the industry, especially in the international market, it has shortcomings.
Doing this simple procedural review of the project, the Board of Directors can have a
better picture as to the whole progress of the strategy being undertaken. This simple
procedural review then can be used as the basis for evaluating whatever there are benefits
or risks that the project gives or poses to the company and to the whole organization in
general.
Recommendation for Anheuser-Busch Company
The vision that had been set by the late founder of Anheuser-Busch Companies Adolphus
Busch has already become a reality after setting the business strategy of the company to
cater to the buds of beer drinkers anywhere in the world. After a century of operation and
presence in the domestic beer market of United States, the array of beer brands produced
by Anheuser-Busch Companies have already captured 48 percent of the beer market in
the country. The flagship beer product of the company, the Budweiser beer family, is
already an institution and a reflection of the way of the American way of life. Now that
the company is a multi-billion business focusing on the beer industry, the mammoth
company is still on its toes, ever alert to the challenges that it has to face in order to stay
as the leading player in the industry it has chosen to be involved in.
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Anheuser-Busch Co.
Yet, upon cursory look and application of simple business tools to gauge the capacity of
the company to sustain its growth in the beer industry there are still some weaknesses and
threats that pose to be a risk for the continuance of the company’s operation. Basing on
simple SWOT matrix, the strength of the Anheuser-Busch Companies proves to be its
own weakness after all. Given that the beer products of Anheuser-Busch Companies has
able to corner the beer market of United States, taking half of the overall market share,
this fact still does not ensure the continuous smooth operation of the giant company. Its
over-dependence on the domestic market for its main source of revenue poses a risk to
the financial viability of the company. As I have mentioned earlier, whatever happens to
the market of United States is the same fate that Anheuser-Busch Companies will
experience and suffer in the end.
Nevertheless, there are still several opportunities for the company to grow as a major
player in the providing products to public consumers. One of these opportunities is the
growth in diversification in the portfolio of drinking products of the company. In this
modern times, there is a trend in the changing preference of the consumer public to prefer
non-alcoholic beverages and for energy drinks. The company of Anheuser-Busch has
already taken the first step by testing and introducing in the market several energy drinks
like 180 and 180 Sports.
Yet, the most enticing and attractive opportunity for Anheuser-Busch is the growing
demand for beer in the international market. This I would say the company has already
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Anheuser-Busch Co.
made an initiative to exploit and penetrate to gain additional revenue and profit. It has
invested in shares in several foreign brewed beers around the world and as of this date,
the company’s total bulging net profit is relatively helped by the revenue it gets from its
international ventures. Right now, there are two attractive countries by which Anheuser-
Busch can choose to put up an operation or engage into alliance with those local beer
producers there to enhance its own brand of beers presence in those countries. The
company is able to prove this strategy a deft business move when it acquired a
considerable share in the Tsingtao, the most popular brewery in China. At the same time,
the company also has activities for business alliances with those located in Russia.
My recommendation is that the company should pursue these two beer markets to ensure
its financial viability in case something wrong happened in its market share in United
States. Both the country of China and Russia are huge beer markets in the world and this
fact alone should stir the company of Anheuser-Busch to put an extra effort in penetrating
these markets. The financial returns in these countries is almost sure, considering that
these countries’ beer market is still growing. Anheuser-Busch Companies has already
conquered the domestic beer market of the United States. It is then the right time to go
beyond the borders of America and conquer some uncharted territories. Anheuser-Busch
Companies has no choice but to expand its operation and sustain its continuous growth.
And the first step to be done is penetrating these beer markets of China and Russia. Then
the flagship beer product of Anheuser-Busch which is Budweiser will no longer be just
an American beer, but the universal beer for everybody around the world.
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“Adolphus Busch Biography,” (n.d.). Encyclopedia of World Biography on Adolphus
Busch. Retrieved November 9, 2007 from
http://www.bookrags.com/biography/adolphus-busch/
“American Owned,” (n.d.). American Owned. Retrieved November 14, 2007 from
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Black, B. (n.d.). Budweiser. St. James Encyclopedia of Pop Culture. Retrieved November
14, 2007 http://findarticles.com/p/articles/mi_g1epc/is_tov/ai_2419100183
“Brewing Our Future,”( 2006). Anheuser-Busch Companies 2006 Annual Report.
Retrieved November 19, 2007 from
http://www.anheuser-busch.com/pdf/2006AR_Anheuser_Busch.pdf
“Budweiser,” (n.d.). 1960s: Commerce. Retrieved November 9, 2007 from
http://www.bookrags.com/research/1960s-commerce-bbbb-04/budweiser-bbbb-
04.html
Datamonitor. (May 2007). Anheuser-Busch Co. Company Profile.
David, F. R. (2005). Strategic Management Concepts and Cases 10th ed. New Jersey.
Pearson Practice Hall
Goldberg, J. (2000). Buds for Life: A Man and His Beer – Legacy of Anheuser-Busch.
National Review. Retrieved November 14, 2007 from
http://findarticles.com/p/articles/mi_m1282/is_18_52/ai_66106576
“Letter to Shareholder,” (2005). Anheuser-Busch Companies 2005 Annual Report.
Retrieved November 19, 2007 from
http://www.anheuser-busch.com/_pdf/2005AR_LetterToShareholders.pdf.
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Anheuser-Busch Co.
“Our History,” (n.d.). Welcome to Anheuser-Busch Companies. Retrieved November 14,
2007 from http://www.anheuser-busch.com/our_company/history.html
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