Exam (elaborations)
MNG 3702 ASSIGNMENT 1
- Course
- Institution
MNG 3702 ASSIGNMENT 1
[Show more]
Seller
Follow
EstudyTube
Reviews received
Content preview
A+MNG 3702
ASSIGNMEN
T 1
This document contains
workings and solutions to
the question below
Admin
JIMMY COSMAS
, How a South African company turned constraints into global strengths On 28 September
2016, the shareholders of South African born international brewer, SABMiller, approved
the company’s acquisition by Anheuser-Busch InBev for $104 billion (R1.5 trillion). The
deal paved the way for the creation of what is now by far the world’s largest brewing
company. For a company that started out selling beer to miners in Johannesburg during
the gold rush of the late 1800s (SAB was founded in 1895 as Castle Brewery and became
the first industrial company to list on the Johannesburg Stock Exchange in 1897), it has
been quite a journey. How did a brewing company from a developing country rise to
compete with the multinational brewing behemoths from the developed world? A series of
interviews with senior executives and managers who presided over the growth of what
was then South African Breweries’ (SAB) rapid expansion during and after the 1990s are
revealing. After building up a monopoly-like position in the beer market in South Africa, the
company went in search of new markets. With a vision to be the most admired company in
South Africa; a partner of choice, an investment of choice and an employer of choice, it
used its experience in South Africa in its entry strategies abroad. SAB’s path reflects the
differences between multinationals from developed and emerging markets in terms of
location choices, sequencing, time horizons and motivation. A two-phased expansion path
emerges to explain the remarkable success story. The first pillar to SAB’s international
expansion was a focus on developing markets. Coming from a developing country itself,
the company would cope better with emerging market conditions than brewers from the
developed world. These ventures became a powerful base for SAB to take on developed
markets. The second was to expand into developed countries. This became necessary as
it became clear the company was over exposed to emerging markets. After a few early
forays into South Africa’s neighboring countries prior to 1993, SAB executives realised
that the company could exploit its knowledge of institutional shortcomings in its home
country. It would use this experience to adapt more easily than its competitors to
conditions in developing countries would. And so began the first part of its
internationalisation strategy: a rapid expansion into emerging markets worldwide. Through
a series of acquisitions and joint ventures throughout the 1990s, SAB gained a foothold in
various countries in Africa, Eastern Europe, and Asia. Although many were geographically
distant (like Hungary, Czech Republic, China, and India), they echoed South Africa in
terms of their socioeconomic development. Eastern Europe, for example, was still
emerging from political reform in the wake of communism, and infrastructural, institutional,
and economic weaknesses persisted. 2 By expanding into countries that shared
socioeconomic characteristics with South Africa, SAB was able to make use of its
experience to turn a perceived drawback – institutional weakness – into a strength. As one
respondent explained: ‘To be frank, we accepted that we would live with the political risk
and poor institutions. We did not really shy away from high-risk countries unless, of
course, there was a raging civil war that we would have to wait to subside.’ Once it had
established this expansion plan, SAB diversified into developed markets such as Italy and
the US. As one interviewee put it: ‘Investors became skeptical of companies whose only
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller EstudyTube. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $2.70. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
77858 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now