Entering Belgium Using Fdi ( Foreign Direct Investment ) Entry Strategy

Vertical integration is a concept in which a company develops or acquires production units for outputs which are

Vertical integration is when one firm joins with another at a different stage of the same production process. Forward Vertical is when the other firm is at a later stage and Backward Vertical is when the other firm is at an earlier stage. Vertical integration as a whole allows for a firm to control key stages of the production process; guarantees access to a market; and gains control of supplies. Companies such as Zara and American Apparel are vertically integrated, especially at key stages of

Vertical integration – when you choose to produce raw materials and/or distribute finished goods themselves rather than rely on independent suppliers, factors and agents for these tasks

Vertical integration is a business growth strategy for economics of scale. It is typified by one firm engaged in different parts of production example; growing raw materials, manufacturing, transporting, marketing, and/or retailing to expand business in existing market for the firm. It can function in two directions both forward integration and backward integration.

From this sprang forth the popularization of CEOs and different departments to increase efficiency. Vertical integration because many of big businessmen of the time had a large capital to start out, so buying all the means of production was an easy and sound investment. Horizontal integration calls for buying out the competition. In these cases, the largest company would often times drive down their prices so low that the smaller company would attempt to compete, but end belly up and sell the business for a smaller

New Belgium is, however, the third-largest craft brewery in the nation, with estimated sales of over $100 million, equaling approximately 700,000 barrels of beer per year. An analysis of the craft beer industry as a whole suggests that there is continued growth potential for New Belgium. Exhibit 5.1 of the New Belgium Brewing (B) case shows that craft beer is the fastest growing segment of the U.S. alcoholic beverage market, with an increase in market share of over 100 percent from 1999-2011. It is also an industry whose customers tend to be extremely loyal, making them less likely to view craft beer as a commodity. Consequently, craft beer has a higher probability of being immune to competition from inferior goods and substitutes. This is particularly applicable to New Belgium’s target market of “beer connoisseurs” that appreciate the high quality and taste of craft beer and who include “executives, lawyers, and accountants” with the continued ability to pay higher prices for craft beer, enabling the craft beer industry to achieve gross margins of up to 30 percent (Clark & Rogler, 2013).

With bringing your factories to foreign countries you get cheaper labor land and can avoid many taxes.

Vertical integration is a strategy used by a company to gain control over its suppliers or distributors in order to increase the firm’s power in the marketplace, reduce transaction costs and secure supplies or distribution channels.

SABMiller and Diageo are two largest beer producer in Africa. ”SABMiller, if combined with its partnership with France's Castel Group, sells roughly 60% Africa’s beer by volume. Diageo’s also expands its operation successfully that Senator Keg, its supercheap beer, is also now number two most popular beers in Kenya. As these giant brewers monopolized Africa’s beer market, it can be said that the market has an oligopoly market structure, and both pursue identic operations, so the market can be labeled as competitive. The interdependence that is happening between both brewers makes the competition happens. As SABMiller produces Impala that is half price from its previous beer Manica, Diageo produces Senator Keg to balance it. Diageo

New Belgium’s revenues for last year totaled 111 million dollars. This represents a 16% growth from the previous year.

New Belgium has received many awards for it continued performance of environmental sustainability (“The Brewery with,” 2003). Before global expansion, it would be smart for New Belgium Brewery’s marketing directors to travel overseas and engage with the beer drinkers in different countries before global expansion. Also, by interacting with consumers overseas, New Belgium Brewery can determine which beers need to be sold overseas. The marketing directors for New Belgium should not automatically try to sell every brand of beer they carry overseas. If they try to do this, they will more than likely lose

From 2002 to 2010, New Belgium distributed in only 16 states; by 2010, it had become the third-largest craft brewer in the country and the seventh-overall largest brewer in the United States. [2]

New Belgium does attract customers that are generally high income, most often Caucasian, and the lower middle-age citation ("New Belgium Consumer Insights and Demographics | InfoScout.co," n.d.). The company also attracts customers that have a shared interest in environmental issues and appreciates the dedication to environmental issues that New Belgium Brewery has shown through the years.

Vertical integration is when two businesses or organizations at different levels of production merge. The principal goal is to increase the overall efficiency and to cut down costs throughout the supply chain. In return, it will improve profitability and competitiveness. It allows companies to obtain matchless amount of influence over them, and if you have a company and are thinking about using it in your organization as a business strategy, it is important to know its Pros and Cons beforehand.

Even though a company must invest a large amount of money to get started in a foreign country, this can have the long-term effect of lowering costs. by take advantage of large tax benefits. The company can also pay less for labour and other goods that may be needed for the production of products. This lowers the overhead for the company and helps it operate more profitably