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Chapter 1

1.0 Introduction

1.1 Industry background

Beer and Stout Industry are considered as one of the most important sector of Malaysia. The two most important players of this industry are Carlsberg Brewery Malaysia Berhad (CMBB) and Guinness Anchor Berhad. Out of the total population of 28.3 million, almost 3.5 million people consume alcohol (CMBB, 2015). The legal purchasing age of alcohol in this country is 18 years. However, compared to that of other Asian countries, excise taxes on beers and stouts in Malaysia are quite high (Euromonitor International, 2015). Following the three successive hikes of tariff, Malaysia has now been considered as the second highest duty providing nations for alcohol (after Norway) (Euromonitor International, 2015).

 

1.2 Company background

Carlsberg Brewery Malaysia Berhad (also known as Carlsberg Malaysia) has been set up in December, 1969 (Carlsberg Group, 2015a).The company has started brewing Carlsberg Green Level Beer in the local market since 1972.

Figure 1: Carlsberg Malaysia company logo

(Carlsberg Group, 2015a)

Within a period of time, the company has become one of the most popular beer manufacturing brands in Malaysia. The company is mainly engaged in manufacturing and distribution of beers, stouts and other malt-based beverages (Carlsberg Group, 2015a). Lars Lehmann is the present Managing Director of Carlsberg Brewery Malaysia Berhad. The sales of the company have been managed by its subsidiaries. Apart from the flagship brand, Carlsberg Malaysia also offers a wide range of international and attractive brands like Carlsberg Smooth Draught, Carlsberg Special Brew, Carlsberg Green Label, Kronenbourg 1664 Blanc, Asahi Super Dry, Somersby Apple and Pear Cider, Corona Extra, Connor’s Stout Porter, Royal Stout, SKOL, SKOL Super, Jooly Shandy and Nutrimalt. (Carlsberg Group, 2015a). With the help of optimisation of the resources and sustainable business practices, Carlsberg Malaysia has been committed to improve its business performance retrospectively. Some of the key facts of the company have been presented in the table below:

 

Table 1: Key facts about Carlsberg Malaysia

Breweries

1

Market Position

2

Market Share

45%

Annual beer consumption per person

6 litres

Carlsberg Ownership

51%

(Carlsberg Group, 2015a)

Table 2: SWOT analysis of Carlsberg Malaysia

Strengths

  • Reduced labour charges
  • Huge barriers to entry into the market.
  • Experienced business units of the company
  • High revenue and profitability 

Weakness

  • Increased taxes
  • Productivity in the future days

Opportunities

  • Expansion in the global market
  • Growing economy
  • New acquisitions

Threats

  • Government regulations

Table 3: Key Stats of Carlsberg Malaysia

 

2013

2014

2015

Revenue

RM 1555 million

RM 1635 million

RM 1660 million

Profitability

RM184 million

RM 212 million

RM 216 million

Market share

43%

44%

45%

 

(Carlsberg Group, 2015a)

 

1.3 Business opportunity

In order to formulate business strategy, it is important for the marketers to derive the scopes of the market (Barney, 2009). Based on the market forecast, it can be stated that the total volume for beer is expected to grow at a rate of 4% in the upcoming years and it is slightly higher than that of the last years (3%) (CMBB, 2015).The growth of volume for beer will be driven by the high scale consumption of the middle income group people of the country (Euromonitor International, 2015). On the other hand, strong performance of the beer industry can also be related to the brand loyalty of the consumers towards the companies like Tiger and Carlsberg. These companies have almost become synonymous with drinking in Malaysia and been preferred by most of consumers who have reached the legal drinking age according to the norms of the country’s government. Thus, Carlsberg Malaysia can use the customer loyalty factor for improving their business performance in the upcoming years.

 

1.4 Purpose and rationale

In order to sustain in the highly competitive market place, the companies are required to continuously analyse and improve its business strategies. Analysis of the current business scenario enables the companies to improvise more effective business strategies that may provide it competitive edge over the rivals. The purpose of this research is to analyse the present business condition of Carlsberg Malaysia and recommend suitable strategies for the company to improve its business performance. In the process of in-depth analysis, the researcher has also evaluated the challenges for implementing the proposed business strategy and its mitigation plan.

Carlsberg Malaysia has been considered as one of the market leaders of the brewing industry in Malaysia. However, the company has been facing stiff competition from the brands such as Tiger and Guinness Anchor Berhad. The market share of the company has been significantly affected by these competitors over the last few years (Carlsberg Group, 2015a). Therefore, it is crucial from the point of view of Carlsberg Malaysia to develop an effective planning for the purpose of improving its present business condition. As the business development planning involves a significant amount of investment from the perspective of the company, it is important to conduct a detailed research before implanting the strategies. Moreover, as it is directly related to the bottom line performance of the company, identification of the critical success factors is important. Therefore, based on the concerned issues, it can be stated that selection of the research topic is relevant. The outcome of the research can help the management of Carlsberg Malaysia to analyse the current business situation and formulate an effective business development planning based on that.

 

1.4.1 Problem Statement

It has been observed Carlsberg Malaysia has been facing immense competition from the market from the companies like Guinness Anchor Berhad, Tiger and Heineken. Thus, in order to maintain sustainability, Carlsberg Malaysia is required to improvise current business strategies in respect to the marketing, operations, financial and human resource management.

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