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Team 6: Carlsberg and San Miguel Corp.
Overview
●
Carlsberg Group is a multinational brewing company which serves over 150 markets
●
Organic revenue (9.2%) and profit growth (5.2%) continue into 2023
●
Recent expansions in Canada (Waterloo) and China (Jing-A)
●
2023 goal: Better serve the Asian market through expansion (2023 report)
Strategy
What strategy do we propose?
Carlsberg strategically collaborates with San Miguel Corp. (SMC) located in the Philippines
through a contractual licensing agreement. In this agreement, SMC facilities produce
Carlsberg specialty beers in exchange for profit (and experience producing specialty beers).
How should this be executed?
Step 1: Go through local Philippine regulations and connect with related associations.
Step 2: Make the offer, and potentially negotiate four main details with SMC:
1.
Investment channel
●
Carlsberg: financial and technology support: costs, expertise, and advanced
equipment
●
SMC: asset and technology support: local knowledge, facilities, and
reputations.
2.
Ingredients: using SMC’s existing supply chain and Carlsberg paid in PHP
3.
Marketing and distribution: SMC’s existing channels
4.
Labor:
●
Carlsberg: skilled labor for expertise support
●
SMC: skilled and unskilled labor
Key Factors
1.
This is a market not yet served by Carlsberg
2.
Large market size with relatively high beer consumption
3.
Geographical access to East and South-east Asian markets
4.
Large population and base for skilled and unskilled labour
5.
SMC has near market dominance in the Philippines (over 90% market share)
a.
Ability to use SMC’s local production facilities and supply chain through
partnership
6.
SMC offers only 8 beers, mainly low-cost pilsners
a.
Carlsberg Group can provide craft/premium beers to the Philippine market
7.
High and increasing foreign beer import tax of 43PHP per litre ($0.77 USD)
a.
Increasing 6% annually
8.
Limited cultural separation between Denmark/EU and the Philippines
a.
Both countries with strong western influence
b.
Christianity dominant religion
9.
Growing middle class and urbanization in Philippine society
a.
Poverty rate declined from 23.3% in 2015 to 18.1% in 2021
Risks and Mitigations
Foreign Exchange Rate-Related
●
Risk: Fluctuations in exchange rates can affect the company's revenue and expenses in
terms of conversion and translation.
●
Mitigation strategies: financial hedging, diversification
●
Long-term planning: FX risk management policy that aligns with Carlsberg's long-term
business goals and risk tolerance
Operational
●
Risk: Technical failures, quality control issues, and workforce management challenges
●
Mitigation:
○
Establish clear production standards, quality control processes, and regular
audits
○
Provide training and technical support to SMC staff involved in production
Environmental and Social
●
Risk:
○
Higher resource consumption, including water, energy, and raw materials
○
Waste generation in brewing and packaging processes
○
Noise, traffic, waste disposal to the local communities
●
Mitigation:
○
Environmental impact assessments and eco-friendly technologies
○
Waste management plans to reduce, reuse, and recycle waste generated during
production and packaging
○
Wastewater treatment systems
○
Engagement with local communities through transparent communication,
community consultations, and stakeholder engagement initiatives
○
Contribution to local development projects
Supply Chain-Related
●
Risk: Simply reliance on SMC's supply chain exposing Carlsberg’s supply chain to
possible disruptions or delays
●
Mitigation:
○
Diversify suppliers and maintain contingency plans for alternative source
○
Collaborate with SMC to optimize supply chain efficiency and reduce lead times
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