Foreign Market Entry and Diversification Essay

2783 Words Sep 10th, 2011 12 Pages
Assignment #3 Foreign Market Entry and Diversification
Daniel S. Carrera
Dr. Kimberly Anthony
Strategic Management - BUS 599
Strayer University – Newport News
4 August 2011

Abstract
This paper will identify and discuss the trends in global beer markets. It will discuss how Modelo’s International expansion was made possible through strategic partnerships with experienced distributors in local markets. The paper will focus on how Modelo should enter in the foreign market and what is the best strategy. We will discuss various challenges Modelo will face from his competitors and whether he should diversify his business to promote growth.

During the past five years, on a pure alcohol-equivalent basis, beer has increased its
…show more content…
For mainstream beer consumers, particularly in emerging markets, the most common trade-up proposition is to attractive, local, premium brands.
In markets such as North America and Western Europe, premium beer’s share of total sales is already well above the global average. On the other hand, premium’s share of 10.1% in Central and South Africa and 3.0% in Africa shows the significant opportunity that still exists for premium beer sales in these regions. There is sizeable potential in Colombia and Brazil where premium beers respectively claim 3.7% and 5.6% of total sales (Karrenbrock, 1990).
The trend towards premium beer consumption has slowed somewhat in the recent economic downturn; however, down-trading is limited and there are notable instances of consumers continuing to trade up, both into beer and, within the category, into premium products. Over the past decade, the beer industry has seen significant consolidation and this trend continued during 2008. On a pro forma basis, beer sales by the top 10 players now total approximately 65% of total global sales compared to less than 40% at the start of the century. In recent major developments, the division of Scottish and Newcastle’s business between Carlsberg and Heineken was completed during the first half of 2008 while InBev acquired Anheuser-Busch in November 2008.
The International Vice-presidency coordinates efforts to increase global sales and consolidate the company´s presence worldwide. Through