Heinlein Case Study
Political conditions Heinlein operates all over the world, from Europe to Africa – Asia to America with it’s veer 190 breweries in different political conditions.
There are major differences among countries in their alcohol policies such as Middle East Arabic countries forbidden alcohol sales and uses and many government set alcohol policies(Custom barriers , high tax ratios , restrictions and/or bans on advertising and marketing, sponsorship, point-of-sale )to try to limit the overall production, sale and consumption of alcohol products, including beer to protect public from harmful effects of alcohol .
On the other hand , Heinlein does not believe that this ‘less is better’ approach is necessarily the best way to protect publics. Instead it has the greatest effect on the many consumers who enjoy beer,wine or spirits responsibly. Heinlein thinks more specific , targeted measures and research should be carried out to create effective policies to educate publics for responsible drink behaviors. Heinlein is willing to work with third parties such as governments , and non government organizations fighting with alcoholism to educate consumers about alcohol .
And they promote sensible and moderate consumption of beers – because in the long run it is both socially responsible and economically sensible to do so. 2. Economic conditions How economic conditions affect alcohol consumption is still a matter of debate. The convention wisdom in the economics literature is that alcohol is a prototypical normal good. Income elasticity for alcohol tend to vary around 0. 5-0.
8 in several studies , with per capita consumption of all beverages, including beer, wine, and spirits, falling during recessions.
Trembler and Trembler (2005), in a comprehensive study of the brewing industry, report on eight studies of beer demand, including their own, six with positive income elasticity and two with negative income elasticity, averaging bout 0. 2. Common stocks of brewing companies typically carry “betas” less than 1. 0, meaning that their systematic risk is less than the market. For instance Heinlein has seta 0,64 .
On the other hand some Psychological theories suggest that alcohol is countercyclical, as economic downturns are causes of stress-induced drinking, but there is not enough evidences to support this thesis.
A Study from USA , Freeman (2001) used monthly shipments data of beer in the U. S. From 1955 through 1994 to test Tort ten snort-run response to economic Doctors sun as unemployment, Insularly reduction, and personal income. Although there does appear to be a long-run relationship between beer consumption levels and the economic variables, Freeman finds no evidence of short-run cyclical response of beer to economic variables.
3. Social and cultural conditions In the era of globalization companies which expanded into new markets in the developing world, sometimes faced unexpected cultural and social issues.
Heinlein operates all over the world in very different cultural and social conditions, in a wide range from Islamic culture which prohibited alcohol to excessive free European Culture. Heinlein always show attentions to the social and cultural demands ,and creates social programs under social responsibility . For example When Heinlein entered the Cambodia market via local agents who employed a largely female sales force to sell beer.
A campaign of social activism arose against Heinlein because there was a perception that the women selling beer in bars and clubs faced unacceptable risks at work. Heinlein like many global companies acknowledged that it had new social responsibilities. An academic research, based on a cybernetic model of corporate responsibility, was made by Professor Roomer to solve the robber. 4. Technological conditions Technological factors affect specially the production system of Heinlein ,for example gene technologies for food ingredients.
Heinlein supports the responsible application of ingredients derived from genetically modified crops for food production based on government regulations, taking into consideration continuous scientific research, the on-going assessment of the attitudes of the general public and the individual considerations of companies in the food industry.
Heinlein also use technology to surprise and excite his customer . NNE of advertising campaign , Heinlein Ignite , is an good example of technological innovation .
Smart Beer Bottles were designed which has small microchips . Bottles controlled by wireless and exciting shows was created by these bottles in night clubs . 5.
Environmental conditions Clean Water is the most important source for all countries in 21 the Century. Some experts suggest that there will be water wars as oil wars in 11th Century. All governments take actions to protect their water resources. Water is the main source of brewing industry, at least 3 liter clean water is need to produce 1 liter beer.
Water institution in the agriculture of food ingredients for beer is another environmental problem of brewing industry .
Brewing industry has a significant CO emission during manufacture , transport and packaging . Brewing companies issues policies to reduce their CO emissions. Sustained growth is one of The Heinlein Goal. Heinlein has issued several environmental policies for this aim ; Switching transport system from road to rail to reduce CO. -Reducing water consumption in manufacturing with using high technology .
Agriculture projects to create a sustained sources 6. Legal conditions Alcoholism Decodes a major social problems Tort developed Ana emerging countries in 21 the century . Governments fights drastically with alcoholism to lower consumption . There is restrictive measures in alcohol promoting to protect under ages . Advertising alcohol products is becoming more difficult day by day all over the world .
Brewing companies can subject to law suits and administrative penalties during their operates . Heinlein is committed to promoting responsible consumption .
Since 2011, a range of tools has been in place to support this commitment. Whininess’s responsible consumption message, which is aimed at young, UN-loving adults, is a positive one: You can’t control everything in life, but you can control how much you drink. ‘ This original approach puts individual responsibility and decision-making at the heart of the concept.
7. Others Effects of the (Immediate) Industry Environment 1. Threat of competitors (Medium Increasing) Brewer industry is a high competitive industry.
Many brewers leave the industry and losing money. Competition among sellers in the Beer Industry is based primarily on brand, quality, and packaging with price not embodying the most important factor.
ABA Invent, Millimeters, Heinlein, and Scrabbles–controlling 50% of the global share and ABA Invent and Millimeters alone making up 80% of the US market share. With this consolidation and the resulting stronghold over the market, competition is increasing within the Beer Industry for distribution, raw material access, and customer loyalty.
Market Share of the two main competitor of Heinlein ,ABA Ellen and SAP Miller , increases their market share ,especially in USA. They have an aggressive acquisition policy to increase their market share globally. 2.
Threat of new entrants ( Medium ) Craft- Brewing segment grows in the sector. Consumers are looking for newness, experimentation, and supporting smaller local brewers. Retail support has also been strong for this segment ,given higher margins to the producers.
While the Beer Industry has seen a boom of craft brewers enter the marketplace over the last five years, the barriers to entry still remain fairly high. The big brewers have significant economies of scale, the ability to spend large amounts on branding, marketing, and promotions, as well as somewhat of a lock on both the limited shelf space of the detailer as well as the distributor/wholesale channel with regulations limiting the number of distribution agreements on a regional basis. In addition, the process of brewing beer is very capital intensive with the manufacturing process and the branding involved.
Lastly, as alluded to above, the industry is highly regulated and taxed on both a federal, state, and even local level. 3. Threat of suppliers (Medium) Competitive pressure from supplier bargaining power is considered to be generally low with respect to the industry as a whole. However , due to the high commodity raw trial exposure?around 58% of industry cost of goods sold?which include packaging (glass/aluminum/cardboard), barley, sugar, malt, corn, rice, wheat, hops and preservatives–uncertainty regarding cost swings is high.
Suppliers of these materials would include hops and grains suppliers, wheat and barley farmers, flour millers, corn/Waynesboro windflowers, sugar processors, wood pallet suppliers, cardboard box/container manufactures, and glass product manufacturers. Thus, when recent “shocks” hit the commodities market, I.
E. Russia placing an export ban on wheat, brewers see their costs rise in accordance. . Threat of customers (High) The three components of Beer Buyer are distributors/wholesales, retailers/ restaurants, and consumers..
Distributor/wholesalers are an essential link in the market channel for breweries especially in US market where regulations are prohibiting the sale of beer directly to both retailers and consumers .
Wholesalers / Distributors have became important also in Turkey market with the regulation prohibiting selling beer after 22. 00 . Thus, distributors/wholesalers have quite a bit of bargaining power and can impact market share by way of their support, marketing, ND promotions depending on the incentives offered by the manufacturer. Retailers and restaurants are another buyer channel.
The main goal of the retailer is to drive traffic through their stores in order to improve sales and, coincidentally, balancing profit margins. As a result, retailers are looking to stock their shelves or bars with the beer products that are selling with a recent focus on more sub-premium brands due to the recent economic situation, as well as supporting their growth of craft beers which have been outgrowing the industry and offer higher average selling prices as ell as higher margins.
Lastly, consumers ultimately drive the preferences of both the distributor and the retailer channel as they are the end “user” of the beer beverage.
Consumer trading up the craft beers and is looking up for unusual flavors. He can pay more and support local small craft beers by consuming less. At the same time beer consumer is also economically sensitive , high tax rates increase the beer price in market. Health problems increase consumer attractive to light and no sugar beers , market share of the light beer increase day by day . 5.
Threat of substitutes(Medium -Increasing) The pressure from sellers of substitute products is increasing. Market research shows that both the wine and spirits industry are gaining share at the expense of beer.
A 2011 Gallup Poll noted 36% of those surveyed preferred beer to wind and liquor?down from 41% in 2010. Within that, the all important 18-34 year old groups beer preference fall from 51% to 39%. Also notable, the per capital consumption of malt beverages has been steadily declining?from 24.
6 gallons in 1981 to 20. 6 gallons in 2010. The drivers to this include both the wine and spirits industries have increased both their promotions and pricing more aggressively versus beer, the growing perception of beer being less healthy and exotic than wine and spirits, demographics, and both increased alcoholic and non-alcoholic beverage competition. . The effect of governments on their activities( High) Governments try to reduce beer consumption by increasing its price with additional tax.
Less consume target AT governments to protect puddles detects consuming Ana beer market. Heinlein issued policies for Responsible Drinking to minimize this effect and work with third parties for this issue . US given regulations prohibiting the sale of beer directly to both retailers and consumers. Thus, distributors/wholesalers have quite a bit of bargaining power and can impact market share by way of their support, marketing, and promotions depending on the incentives offered by the manufacturer.
Social Responsibility Engagements 1. Which projects are they involved in? The most important social project of Heinlein is Africa Foundation to support the improvement of health for people living in sub-Sahara African communities by financially supporting relevant health projects and health-related education.
Underpinning HEINLEIN long-standing commitment to Africa, projects are carried out in countries in which HEINLEIN is operating. At the creation of the Heinlein Africa foundation, HEINLEIN made ?¬ 10 million available and in 2010, HEINLEIN donated an additional ?¬ 10 million to the foundation.
Since it concerns an endowment fund, the Heinlein Africa foundation can spend an annual amount of approximately ?¬ 1 million on health projects in Africa as of 2010. 2. What are their future involvement plans? Heinlein issued sustainability reports every year to share their targets and the result f future involvement plants for environmental and social . Heinlein has a business priority ,Embed and Integrated sustainability ,their strategy is Brewing a Better Future .
Heinlein Focus on ; -Protecting water resources -Reducing co Emissions -Sourcing Sustainability -Advocating Responsible Consumption And issued targets for their focus . 3. If none what would you suggest them? State you reasons. Ethical Values 1. Do they have an ethics statement? Heinlein has a Code of Business Conduct which has published in 30 language.
It ensures that each and every one of our colleagues understands what is expected of hem when acting on behalf of the company.
This code has underlying policies in three group ; A)Personal Integrity Responsible consumption and communication Employees’ and human rights, harassment and discrimination Health, safety and environment Conflicts of interest B)commercial Integrity Fair Competition Bribery and improper advantages,Gifts Entertainment and hospitality Political contributions and charitable donations Business partners C)Company Integrity Use of company resources Confidential information Insider trading Financial and non-financial records Fraud 2. How do they approach ethics?
Heinlein approach that everything they do as a company and an employee is a reflection of who they are, what they stand for and what they aspire to. All employees must all display personal integrity in order to ensure operate and the confidence of all their stakeholders. Heinlein is committed to the principle of vigorous but fair competition. Len particular, their business relations with customers suppliers and competitors , require careful attention to competition rules.
They avoid bribery and improper advantages in any way or form.
Heinlein is sensitive to social and cultural traditions but does not make contributions to Laotians or political parties for advantages . They want to create goodwill and foster long-lasting business relations. Company integrity is an important policy for Heinlein. Company resources (including information) are entrusted to employees . They must protect them carefully and professionally.
Company brands, innovations and intellectual property rights are the most important assets to protect. Effects of Technology 1. States the level of technology (simple-average-high) briefly explain. Level of technology change in brewing industry is medium .
Basic process is the same, but turning to more automation. Recession measurements enhances quality control in brewing .
Heinlein utilize new techniques developed by other foods. Main driver is the cost reduction . Brewing companies develops new technologies in manufacturing ,storing ,packaging and transport to reduce their cost . Combining technology and differentiating products is essential for Heinlein to protect and increase its market share . 2.
How often do they need to renew the technology? The manufacturing process of the beer is same. But consumers demand on unusual flavors and differentiating products requires innovation.
New technologies also would be applied in production to reduce cost. Beer prices is increasing more than Initiation In most countries Owe to tax erects Ana Increased raw material completes prices. Automation in process , reduce energy consumption in storing , cost saving in packaging , innovative and recycled packages , efficient transport are major technological factors that Heinlein should improve . 3.
An you opinion what technological advances are likely to affect them in the next five years? Brewing industry need high volume clean water . Minimizing water consumption will be the key advances in brewing in the future water scarcity.
Reducing Co 2 emissions is another key factor for Heinlein. Brewing industry has a high co emission due to its packaging and transport. New material technologies for packaging will affect the brewing industry . Recycled, environment-friendly materials should be innovated for sustained growth .
Innovation 1. What is their track record in innovations? Heinlein has a connected innovation space, HEINLEIN Innovators Birdhouse which is open to entrepreneurs, inventors, universities, suppliers and great beer minds. Its aim is to collectively shape the future of beer and cider through invention and hared development.
With Innovators Birdhouse Heinlein connect to the outside of the world because Heinlein thinks that there are many great minds and ideas out their company that can complement them. They can reach new levels of insights ,solutions and innovations by combining their collective knowledge . Some of the innovations created by Innovators Birdhouse are; -Reader, is a mix of high-quality beer and lemonade.
-SUB Draught Beer in home – Desperado Verve: a unique mix of tequila flavored beer with a twist of lime ; mint, at 4. 7% ABA. -The New David XSL Green a new design keg system for servicing efferent product together . [email protected] Fountain Extra Cold , a new design for serving beer extra cold with energy efficiency. -Desperadoes An extraordinary mixture of silver and golden tequila aroma, together with lightly spiced notes 2. If none what would you suggest? Why? Competitive Advantage 1.
Attempts for cost leadership? If not what will be their major reasons? Heinlein has issued several cost saving programs since 2006 . Fit 2 Fight in 2006 targeted 450 million Euro , Total Cost Management 1 in 2010 million Euro savings , Total Cost Management 2 from 2010 to 2014 targeting 500 million Euro saving .
Supply chain will be a big contributor beyond this policy , “not so much by closing breweries but much more by increasing efficiencies in the breweries. ” There will also be gains in the commercial realm, as Heinlein reduces the number of advertising agencies globally and scales up those that remain, and in wholesaling. Input costs per hectoring are forecast to increase by 6% over 2012, with the cost of malted barley cited in particular. This will be a substantial amount of money: Hoof Grassland placed Whininess’s total input costs at ?¬3.
5 billion, equating a 6% increase to 200 million euros. Attempts for product differentiation? If not what will be major reasons? What product differentiation would you suggest to them? Increased demand Tort carat Deere Ana unusual Tailors requires product Transliteration to protect market share and position in brewing industry. Heinlein introduces several differentiated products beer such as Reader , Desperadoes and differentiated premium beer SUB draft beer , Extra Cold and The New David XSL Green 3. Any attempts to focus on niche markets? If not what will be major reasons? Niche products are craft beers and unusual flavors in brewing sector.