Strategic Analysis of Cobra Beer and the Global Brewery Industry

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  1. EXECUTIVE SUMMARY:

This report investigates Cobra Beer and the Global Brewery Industry. The aim of this report is to analyse the macro and micro environment of Cobra Beer Company. An analysis if the external environment examines contemporary issues within the brewery industry using PESTEL. Furthermore, Porters Generic Strategy Model examine the competitive rivalry in the market segments. Followed by analysis of internal environment using Resource Based View. A Value Chain is also incorporated to enhance the understanding of how the Cobra Beer competences create value for the customer and the company with particular focus how strong the company’s brand image and reputation are. Moreover, the issues that affected the image of the company in past years will be introduced and briefly analysed.

Lastly, the report induces new strategies and evaluates prior and current strategies the airline has foregone. The airline has adopted the differentiate strategy (Porter, 1985) that its competitors integrated many years ago.

The efficacy of both business and corporate level strategies is assessed as its corporate level strategy has seen the introduction of an expansionist approach.

Finally, the strategic analysis of Cobra Beer company will be conducted.

  1. INTRODUCTION:

Cobra Beer is an Indian beer that is manufactured in China and United Kingdom. The company was founded in 1989 by Karan Bilimoria. At that time, he was only 27 years old. The Headquarters are located in Burton upon Trent, Staffordshire in United Kingdom. What is more, as the business was growing rapidly, brewing was switched from India to United Kingdom in order to meet demand. The first ship of containers from India to UK arrived in 1990. Nowadays, the company is serving areas such as India, United Kingdom, Europe, Middle East and East Asia. The main products are Cobra Premium Beer, Cobra Zero and King Cobra. They key people of the company are Mark Hunter who is a global CEO of Molson Coors, followed by chairman of Cobra Beer Partnership- Karan Bilimoria. (Smale, 2014). There exist Cobra Foundation founded in 2005 that supports various of charities and non-charitable good causes that undertake work within the parameters of Cobra Beer mission. It is an independent charity providing health, education and community support for young people in South Asia, especially through the provision of safe water. Our charitable objectives include giving help with Disaster Relief in the Region. Cobra beer has been awarded with 88 Gold Medals in total by Monde Selection.

 

  1. ANALYSIS OF EXTERNAL ENVIRONMENT:

In order to understand the nature of Cobra Beer company, we need to look into the overall global environment of the beer industry. As it is believed that every business environment consists all the external influences that affects its decision making process and its performance. (Grant and Jordan, 2015). According to Euromonitor (2015), in 2015 the global demand for alcoholic beverages fell by 0.7%; This means that there was a loss of 1.7 billion litters of alcoholic drinks volume of sales since the 2014. What is more, it is believed by Mintel (2017) that beer industry is undergoing a shift as the craft beer is believed to disrupt the category. It is believed that the ‘BRIC’ nations that are: Brazil, Russia, India and China, were the most problematic for the beer industry. And what is more, the decline were bruising for the overall segment and the volume of sales were affected.  (Kell, 2016). Europe is believed to be the highest revenue generating region in the global beer market. (Bisht, 2015). Following paragraphs will show the PESTEL analysis of the company. That uses different factors to describe the macro-environment. Next the Porter’s five forces analysis will be used. (Michael Porter, 1985).

 

3.1 PESTEL ANALYSIS:

POLITICAL:
To start with, taxes on alcohol are among the oldest in the United Kingdom and they are still an important source of the tax revenue the political influence on the beer industry is believed to be face large amount of regulations. Therefore, alcohol and tobacco are subjects of heavy taxation and relatively frequent changes in tax rates. (Grant and Jordan, 2015).. This is payable once the product is released for consumption. Followed by a beer duty which is chargeable for beer if their strength is more than 1.2% alcohol by volume. The beer is liable for duty as soon as it is produced.  (Gov.uk, 2009).  VAT is currently charged at 20% on both excise duty and the final price of the goods. All alcohol duties rise by retail price index (RPI) inflation each year. It is believed that the measure keep changing the expected duty rates on alcohol manufactured in, or imported to the United Kingdom. (Gov.uk, 2017). Moreover, on 8th March on 2017 there was a new policy paper published, where Chancellor of the Exchequer announced that all alcohol duty rates will rise in line with RPI inflation from 13 March 2017. It s also believed that these measure in not expected to have any significant economic impacts. (GOV.UK 2017). There are also regulations that include mandatory approval of process and the formula that the company is using. Moreover, as the impact of the Brexit is not certain yet, businesses try to predict what will happen with the industry and they try to understand the implications of the vote. But it is believed by Mortimer (2016) that Brexit could boost the craft beer but at the same time hurt big beer businesses. On the other hand, there could be discontinued investments as the UK will leave the EU.  Expanding the classification of small breweries of maximum of six barrels per year- more taxation (Lowrie, 2017). Large brewers to acquire smaller brands raising anti-trust concerns in the political debate (The New Times, 2017) mergers and acquisitions taking place with in last years.

ECONOMICAL:
To start with, there was a British economic crisis, which was the lowest level of beer consumption in the UK since 1948. (Star City News). It is believed by McCurry (2010). that the economic crisis has affected beer sales all around Europe. There are higher prices which cause lower rates of drinking and reducing the spent capacity. Moreover, there has been a drop in disposable income and raising unemployment rates that had a negative influence on sales growth.  It is believed that the key to the success is the understanding of the penetration of the foreign market. What is more, there has been issues on Indian labour market that influenced beer industry. Such as surplus labour force and unskilled labour. (Kwatiah, 2016). Moreover, there is a large impact of the beer substitutes such as wine and gin, and other alcoholic or not alcoholic beverages.

SOCIAL:
For many decades there has been an opposition towards the use of alcohol. It has begun traditionally because of the religious or moral beliefs. Nowadays, there is less opposition from moral and religious reasons but there is more Influence of responsible drinking campaigns that let the consumers’ aware of negative effects of alcohol. (Pigott, 2016). Moreover, the awareness about health and alcohol effects consumers have reduced their beer consumption, it believed because changing for diet and health issues. This has created a shift from beer to its substitutes such as gin and wine.  (BBC News, 2005). What is more, following the trends in order to fulfil the customers’ needs and changes in preferences and attitudes towards consumption. This means innovating different kind of beers and different taste. Moreover, there has been a significant rise in the count of females drinking beer. It is believed by Bisht (2015) that women in the age of 21 to 30 consume more beer than the other age groups. This is because the evolving cultural changes and modernization (Bisht, 2015).

TECHNOLOGICAL:
It is believed that the technology helps the brewing industry companies in order to develop more efficient distribution channels and upgrade the facilities. Such as innovative fermentation in order to get the unique taste, quality of the cultivate ingredients and harvesting process, efficient production due to advanced factories incorporating latest technologies. Use of technology helps to increase consistency and reduce costs. (EmergingTechnology, 2016).

LEGAL:
The industry is facing large amount of regulations from legislation and government on alcohol import and production. Beer industry is affected when it comes to labelling, packaging and advertising. It needs to follow the Portman Group code of practise. Consumers that are targeted must be over 18 or 21 years old, depending on the country. In some of the countries the alcohol products are banned. Therefore, Cobra Beer needs to follow the rules depending on the country where it operates. As it was mentioned earlier Cobra Beer needs to pay tax on alcohol import and production. Moreover, there has been a new Licensing Act in 2003- (Legislation.gov.uk, 2003) which made the provision for the regulation of the supply and sale of alcohol.

ENVIRONMENTAL:
There are few factors that affect the beer industry such as recycling waste, water conservation and treatment, energy management and awareness of global warming contributions. The key factor is the low carbon emission level that acquire the company to package and sell products in a more environmentally friendly way. Moreover, it is believed that the recycling is very important as 30 % of the materials are used to produce new bottles, that is why major companies are encouraged to recycle their own production units. (Beer Serves America, 2009). As the wastewater of Brewery Company has a big impact on the environmental aspects as well as the overall health. That is why according to Olajire (2012) the companies should comply to the corporate social responsibility as well as they should consider certain regulations and rules on environmental sustainability and water waste management. What is more, the TNS – framework of natural steps should be embraced in order to reach sustainable development. The Brewery market should also consider the sustainability of the brewing process by taking to account the: habitat and greenhouse gas mitigation, toxic release inventory, ecological and carbon footprints, (Olajire, 2012).

  1. PORTER’S FIVE FOURCES ANALYSIS:

https://sites.google.com/site/admn703ai/_/rsrc/1362763048393/the-team/porter.png?&/><strong> </strong>
			</p>
<p>
				FIGURE 1:<em>, Five Forces Model</em> by Michael Porter (1985)
			</p>
<p>
				In this section of the report Michael Porter’s Five Forces framework will be used. In order to analyse and determine the nature of competition within the global brewery industry that Cobra Beer belongs to. Porter’s five forces include 3 sources of horizontal competition and 2 sources of vertical one. (Grant and Jordan, 2015).
			</p>
<p>
				The framework can be determined with the use of five factors such as shown on the graph and table below.
			</p>
<table>
<tr>
<td>
<p>
							<strong>Level of power </strong>
						</p>
</td>
<td>
<p>
							<strong>Forces/ Threats</strong>
						</p>
</td>
</tr>
<tr>
<td>
<p>
							<strong>Very High </strong>
						</p>
<p>
							<strong> </strong>
						</p>
<p>
							<br /><strong><em>ILC->MATURE</em></strong>
						</p>
<p>
							<strong> </strong>
						</p>
</td>
<td>
<p>
							<strong>Competitive Rivalry</strong>
						</p>
<ul>
<li>
								Competitive forces are very high in the beer industry
							</li>
<li>
								High concentration/ high innovation
							</li>
</ul>
<ul>
<li>
								There are many competitors with diversified range of portfolio of products, they play a lot with the price and quality and competition rivalry is intense.   (Haberberg and Riepe, 2008).
							</li>
<li>
								Global key players in the beer industry: Heineken N.V, Carlsberg Group, Diageo, Molson Coors Brewing Company, SABMiller, Anheuser-Busch InBev. However, the last two of the companies merged in 2016 (Mickle, 2016).
							</li>
</ul>
</td>
</tr>
<tr>
<td>
<p>
							<strong> </strong>
						</p>
</td>
<td>
					</td>
</tr>
<tr>
<td>
<p>
							<strong>medium/Low</strong>
						</p>
<p>
							<strong> </strong>
						</p>
<p>
							<strong> </strong>
						</p>
<p>
							<strong><em> </em></strong>
						</p>
</td>
<td>
<p>
							<strong>Supplier Power</strong>
						</p>
<ul>
<li>
								Supplier relations are long term, as there are costs occurring while changing suppliers
							</li>
<li>
								Raw materials are usually from small suppliers in developing countries. 
							</li>
<li>
								Wide variety of suppliers to choose from meaning that those suppliers has a little power (Haberberg and Riepe, 2008).
							</li>
<li>
								Highly complex production and high commodity raw material exposure- 58% of the industry cost of goods sold.
							</li>
</ul>
</td>
</tr>
<tr>
<td>
<p>
							<strong> </strong>
						</p>
</td>
<td>
					</td>
</tr>
<tr>
<td>
<p>
							<strong>HIGH- </strong><br />(For larger Distributors, retailers, restaurants)
						</p>
<p>
							<strong>LOW</strong>- (for single consumers)</p>
<p><strong> </strong>
						</p>
</td>
<td>
<p>
							<strong>Buyer Power</strong>
						</p>
<ul>
<li>
								Price sensitivity and price competition (Mintel, 2012)
							</li>
</ul>
<ul>
<li>
								Variety of substitutes, many different products to choose from – alternative source of supply
							</li>
<li>
								Low switching costs
							</li>
<li>
								Consolidation of industry: distribution connected to retailers
							</li>
<li>
								Many small operators supplying the industry (Haberberg and Riepe, 2008).
							</li>
</ul>
</td>
</tr>
<tr>
<td>
<p>
							<strong> </strong>
						</p>
</td>
<td>
					</td>
</tr>
<tr>
<td>
<p>
							<strong>Medium / HIGH</strong>
						</p>
<p>
							<strong> </strong>
						</p>
<p>
							<strong> </strong>
						</p>
<p>
							<strong><em> </em></strong>
						</p>
</td>
<td>
<p>
							<strong>Threat of new entrants</strong>
						</p>
<ul>
<li>
								High production and probability threshold for the beer market: Products are differentiated rather than homogenous
							</li>
<li>
								High Capital Requirements, Economies of scale,
							</li>
<li>
								Closed distribution channels,
							</li>
<li>
								Customer or supplier loyalty
							</li>
<li>
								Access to supply and distribution channels
							</li>
<li>
								High Government Regulation.
							</li>
</ul>
</td>
</tr>
<tr>
<td>
<p>
							<strong> </strong>
						</p>
</td>
<td>
					</td>
</tr>
<tr>
<td>
<p>
							<strong>HIGH </strong>
						</p>
<p>
							<strong> </strong>
						</p>
<p>
							<strong><em> </em></strong>
						</p>
<p>
							<strong><em> </em></strong>
						</p>
</td>
<td>
<p>
							<strong>Threat of Substitutes</strong>
						</p>
<ul>
<li>
								Growing substitute industry: Threats in substitute products such as wine, cider, liquor and soft drinks.
							</li>
<li>
								When the price of substitutes decrease, it influences the beer industry
							</li>
<li>
								Also, product innovation such as flavoured beers can be a threat.
							</li>
<li>
								According to Mintel (2012) main buyers are also distributors followed by restaurants and consumers.
							</li>
</ul>
</td>
</tr>
<tr>
<td colspan=

TABLE 2: PORTER’S FIVE FORCES ANALYSIS (Haberberg and Riepe, 2008).

 

Combining the findings from PESTEL and Porters 5 Forces the global beer industry is very competitive, attractive and at the same time it is not very profitable. It is possible and not that difficult for the new competitors to enter the market and the same time there is the differentiation advantage.

 

  1.  INDUSTRY LIFE CYCLE THEORY (ICL):.

Product life cycle theory is believed to have four different stages. Starting from: introduction, growth, maturity and decline. (Haberberg and Rieple. 2008). It is believed that the markets such as Africa, China and Central and Eastern Europe are in the early stage of the product life cycle. It is characterised by low barriers to entry, rapid growth and explosive business proliferation. As to industry life cycle theory the beer industry is in a maturity stage, were the customers are more knowledgeable and markets have more competitive nature with the slightly declining or flat growth rates. (Sekar, 2010). Moreover, there are repeated sales, the products are differentiated and high quality. Market is signalling and there are occasional price wars. However, the mature industries are not always stable as they can be disrupted by price wars or acquisitions (Haberberg and Riepe, 2008). What is more, Cobra Beer is believed to be in the progressive mature industries where the rules are well-defined. Also, the brand names and corporate reputations are well developed, people are believed to already now which companies and what products do suit them. This stage of the lifecycle could be very competitive as the new prices or new product development could ve quickly copied by competitors. (HABERBERG and Riepe, 2008).

INTRODUCTION GROWTH MATURITY CUSTOMER RESISTANCE
China
Vietnam
India
Central Eastern Europe Latin America
UK
France
USA
Switzerland
Western Europe
kg
TABLE 3: INDUSTRY LIFE CYCLE (Mackay, 2002)

  1. ANALYSIS OF INTERNAL ENVIRONMENT:

This section of the report will undertake an internal strategic analysis of Cobra Beer Company, using appropriate organizational and strategic models. The strategic analysis will concentrate on the internal aspects of Cobra Beer Company. This will include Resource based view of the company.

4.1.  RESOURCE BASED VIEW OF COBRA BEER

‘The resource-based view (RBV) Is an approach of achieving the competitive advantage of a company that lies primarily in the application of a bunch of valuable tangible or intangible resources at the firm’s disposal’ (Mwailu & Mercer, 1983). This include resources such as financial, physical, human and intellectual. They are believed something that the organization owns and controls. Or anything that a firm has or has learned to do in order to conceive and implement strategies to improve efficiency and effectiveness. (Haberberg and Rieple, 2008). The rest of RBS can be found in the Appendix 1.

TABLE 4: RESOURCE BASED VIEW
TANGIBLE: Valuable Rare Difficult to imitate Difficult to Substitute Competitive advantage
Product Range:
(Cobra Premium, Cobra Zero, King Cobra, Cobra Light)
Yes Yes Yes No Sustained
INTANGIBLE:
Financial Strength Yes No Yes Yes Temporary
Brand Image Yes Yes Yes Yes Sustained
Intellectual Assets Yes Yes Yes Yes Sustained

4.2 VALUE CHAIN:

Cobra beer is a manufacturing –style organization kind of organization that set of inputs is translated into a set of outputs using the classic path. In order to gain insight into a firm’s competitive position the value chain analysis will be used. Value chain separates the activities of the firm into a sequential chain and explores the linkages between the activities. (Grant and Jordan, 2015). It is believed by Haberberg and Rieple (2008) there are some primary activities as well as support activities.

Table 5: PRIMARY ACTIVITIES (Mill T, 2005)
Inbound Logistics
  • Cobra beer is distributed globally: USA, Europe, India, Russia and China. Cobra beer is available in more than 50 countries in the world
Operations
  • In 2009 Cobra Beer entered a joint venture with Molson and Coors and became ‘Molson Coors Cobra’
Outbound logistics
  • Manufacturing, Labeling and bottling plant takes place in Burton-upon-Trent UK and its done by Molson and Coors Brewing Co.
Marketing and sales
  • £1 more expensive than the competitors
  • Expensive campaigns, Indian heritage
  • ‘Less gassy’ beer
Service
  • King Cobra, Cobra Zero, Cobra Premium
  • In 2005-6 they Cobra lunched Cobra Zero that is non-alcoholic, and Cobra Lower low-calorie beer aimed for women between 25-35.

 

4.2.1 Primary activities that are directly involved with delivering products and services to a user. Such as manufacturing operations, sales, marketing, aftersales service, advertising sales.

Manufacturing:
When it comes to manufacturing. According to Cobra Beer Ltd the company manufacture different kind of beers, such as Cobra Zero, King Cobra and Cobra Premium. In order to adapt and be more competitive on the market. The first idea was to simply produce the high-quality lager-type beer that is less gassy. The idea behind the products it its taste and texture. The maize and rice have been added to the usual lager mix.  What is more, the size of the bottle is an unusual one, as the India standard size of bottle id 650ml while most of the beers sold in UK are 330 m bottles. Moreover, the beer is marketed as an Indian beer, however most of its production has been carried out in Europe.

Sales and marketing:

When it comes, to sales and marketing, Cobra Beer was deliberately put upmarket because of having the good strategy. There was a vision and determination and the sales-pitch.  The main aim was to go for the best restaurants and their pitch was pointing out that their beer does not make people that full as it is less gassy and better quality. So restaurants can sell more beer. As for marketing the price was always deliberately positioned up market, the price was around £1 more expensive (10-15%) than the competitors’ beers, in order to target the particular market.
Advertising:
Advertising has been always important for the company. From the start, there was a strategy and a vision followed. Cobra has always been introducing as the Indian beer, and its bottle size turned out for the company’s advantage. As food is typically shared in Indian restaurants, customers were encouraged to share the bottle of beer instead of buying two. The Cobra Beer also won several design awards. The Indian motif is widely expanded to the firm’s website and other promotional material. Company also uses TV advertising campaigns and some of them has been much praised. It is believed that the Cobra advertising uses striking images and inventive humor that helps in compensating for the limitations in its marketing budget comparing with the competitors. What is more, they use expensive (Haberberg and Rieple, 2008).

Table 6: SUPPORT ACTIVITIES (Haberberg and Rieple, 2008; Davies, 2009)
General
Administration
  • Cobra Beer was one of the fastest growing beer brands on the UK with a turnover of £80 million. In 2009 Cobra Beer went into the joint Venture with Molson and Coors.
Human Resource Management
  • Cobra has been included in the top 50 best places to work,
  • The culture is relaxed, inclusive and cosmopolitan There is no dress code and no fixed hours of work.
  • Salaries are above shares and employees were privileged to access shares in the company
Technology Development
  • The innovation is very important for the Cobra beer company, everything focuses around the ‘Less Gassy Beer’, and that is where the technology development is focused on.

4.2.2 Support activities: that contribute indirectly to the value adding, through supporting the primary activities. These include Infrastructure, human resource management, technology development, procurement, product development, planning and financial control (Haberberg and Rieple, 2008). To start with, Cobra Beer ltd was founded and developed by Karan Bilimoria. The mission of the company stays the same, it is to brew the finest Indian beer. However, Cobra Beer faced some financial problems and had to be put up for sale in 2008. Molson Coors bought 50.1% of the shares, the remaining 49.9% is still with Bilimoria and other stakeholders. And the company now is named Molson Coors Cobra. In terms of staff recruitment, according to Haberberg and Rieple (2008) the company had a mere od 95 UK employees, and 19 of them were the marketers. What is more, the technology is the very basis of the Cobra products. The unique recopies and production processes are used to get the distinctive character. At the begging the company have been a step ahead as they worked in the collaboration with a PhD in brewing technology from Czech Republic.

4.3 CORE COMPETENCES

It is believed by Haberberg and Rieple (2008) that there are core competences in every organization, most of them meet the VIRUS criteria and underpin the important competences in its core business. There are some resource combinations that that led the company to achieving competitive advantage. Moreover, Prahalad and Hamel (1990) outlined that core competences are achieved when threshold competences and resources are combines. Therefore, this would ultimately create strengths that are unique for the company.

All of resource combinations are believed to be core competences that drive the company to the competitive advantages and potential of future growth.

Resource Combination Core Competence Benefits
Research and Development Product differentiation and innovative new product development Customers have variety of products to choose from
Marketing and Product Design Strong Brand Image and Reputation Credibility, loyalty, good quality product that can be sold up-market. (at higher price)
Human Resources and Brand Image Highly trained workforces Effectives sale promotion and distribution
Table 7: Core Competences (Haberberg and Rieple, 2008)

What is more, Cobra Beer has achieved its competitive advantage mostly through differentiation advantage rather than cost leadership advantage. This can be seen through the Value Chain and RBV.

  1. ANALYSIS OF PR CRISIS

This section will identify external stakeholder issues that Cobra Beer faces and critically assess their impact on the corporate reputation and brand equity.

 

5.1 COBRA FACING FINANCIAL CRISIS.
One of the crisis that Cobra Beer has faced was in a year 2008.

Global financial crisis that led Cobra Beer to put up for sale in November 2008. (Smale, 2014). It is believed that is because they were already in a lot of debt and they did not see the crisis coming. They reported a net loss of £13 million in 2007. The creditors lost £75million. The Cobra Beer wanted to sell itself for £180 million, unfortunately they could not find anyone and in 2009 and in order to save the company, Lord Bilimoria made a joint- venture with a huge company from USA- Molson Coors. (Bridge, 2009). 50.1% was sold to the Molson and Coors and Lord Bilimoria and rest of the shareholders still retain 49.9% of the company. (Heilpern, 2016). In this case the external and internal factors that led to the crisis of the Cobra Beer can be seen. External one when a large strategic investor pulled out his investment 2 months before Lehman Brothers bankrupt. And internal: The Lord Bilimoria stated: “We had too much debt. I didn’t see the financial crisis coming. I had hired some wrong people. I have to take responsibility for that.” There was some wrong decision made when it comes to HR and that is believed to be an internal factor. This shows the responsibility of leadership. According to Karan Bilimoria there were three factors that kept his business afloat during the hardest times. These were branding, a loyal team, values and integrity. To start with, branding is believed to be very important and what is more branding and advertising may establish company’s reputation. (Haberberg and Rieple, 2008). In case of this crisis Brand and Image crucial. One of the creditors said: ‘Feelings are running very high. Its business model was to own nothing except the brand – it didn’t even brew its own beer.’’ (Bridge, 2009). Moreover, Cobra beer sales did not drop once through the difficult times, that shows the loyalty of the customers and how strong the brand and reputation is for Cobra Beer. Also, Karan Bilimoria believes that the strong team that supported the brand and the owner. Followed by two more factors that was the ‘values and integrity’, which means retaining completely honest and open about the situation of the company. (Heilpern, 2016). Karan Bilimoria also said that there will be no cutting corners and the integrity helps to build trust and it is essential for surviving and it had to be done in line with the supply chain. (Davies, 2009).

Corporate Governance and CSR both focus on the ethical practices in the business and the responsiveness of the organization to its stakeholders and the environment which it operates.  (Syed, 2009). It is believed by Davies (2009) that the sustainability is the key dimension of the corporate governance. And as for Karan Billimoria the mobility and foresight are crucial to achieve and sustain the success, (Davies, 2009)

As the Corporate Social Responsibility focuses on actions beneficial for external stake holders and may not be as good for share holders. (Syed, 2009). It is believed that  
BIllimoria has always had a strong sense of CSR

Stakeholder theory-this theory focuses on the issues concerning stakeholders within the company or organization. It provides a balance between the interested to ensure that all the receivers remain satisfied.  (Yusoff and Alhaji 2012)    http://www.todayscience.org/JBM/article/jbm.v1i1p52.pdf

  1. STRATEGIC ANALYSIS OF COBRA BEER:

 

6.1. BUSINESS LEVEL STRATEGY

It is believed by Porter (2008) that the focus strategy is an appropriate for businesses that want to target a specific market. They are also able to design products specifically for customers.  The segmentation strategy has two approaches that is cost leadership or differentiation. Cobra beer firm focuses on the needs of small groups of people that is selling to Restaurants serving Indian cuisine. (Bilimoria, 2009). Cobra’s strategy was to develop personal relationships .The Cobra beer company chose the differentiation strategy rather than cost leadership strategy (Haberberg and Rieple, 2008). Products were made by using he best quality natural ingredients, as well as the unique blend. (Bhattacharyya, 2009). Moreover, products are differentiated and company tries to offer level of service and features that competing products do not have, rather than competing with a low price. (Haberberg and Rieple, 2008). Moreover, obtaining inputs through an effective supply chain and utilizing the company’s resources within its value chain. The differentiation strategy enabled Cobra Beer to sustain competitive advantage. This can be proved by looking at the company’s RBV and the Value Chain. (Porter, 1985).  What is more, Cobra Beer is scientifically diversifying its portfolio through expanding product range. For example, creating new products such as Cobra Light and Cobra Zero in order to enter new markets. (Tlfresearch.co.uk, 2017). This validates the success of Cobra Beer’s differentiation strategy.  It is also important to mention that Cobras business strategy is market led as it relies on the growth of Indian Cuisine market. What is more, unique blend and premium quality and very creative advertising helped cobra beer achieve market penetration.

 

6.2. THE CORPORATE LEVEL STRATEGY
The Ansoff Matrix outlines key approaches that a company may use in order formulate a strategy for a growth and expansion. (Watts, 1998). In the table below the Corporate Level Strategies will be introduced and analysed.

  CURRENT PRODUCTS NEW PRODUCTS

 NEW MARKETS         CURRENT MARKETS

MARKETS PENETRATION STRATEGY PRODUCT DEVELOPMENT STRATEGY
  • Increase penetration of Indian brewery market,
  • Cobra Beer website,
  • Cobra Diversification division (CDD)
  • Online shop (delivery),
  • Tube advertising,
  • Air India, Jet Airways, Virgin Atlantic- serving cobra beer on the flight
  • Independent bars and clubs,
  • King Cobra
  • Cobra Zero
  • Cobra Light
  • Cobra Bite
  • Cobra Premium
  • Draught Cobra
MARKET DEVELOPMENT STRATEGY DIVERSIFICATION STRATEGY
  • Developing new channels:
    India, China, Russia, Eastern Europe, South Africa,
  • Launching Krait in USA in 2004,
  • Export Markets
  • Adding new products to new markets has been avoided by Cobra Beer so far.
  Table 8: The Cobra Multiplier Matrix
(Tflresearch.co.uk, 2017; Davies 2006, Grant, 2013, Bhattacharyya, 2009).

In recent years Cobra beer evolved a market penetration and product development strategy through simultaneously diversifying its products. The increased penetration has been mostly achieved through the very creative advertising as well as premium quality of the products (Bhattacharyya, 2009). It is believed that the most important reason for diversification approach for the company is the growth. Cobra Beer is diversifying into new markets by offering a full range of packaging formats like cans and multipacks. The Beers are available in pubs, bars, supermarkets, off-licences, as well as they being delivered over the Internet (Tflresearch.co.uk, 2017). As for the Market Development Strategy, according to Haberberg and Rieple (2008) Cobra Beer was too reliant on the UK and needed to spread the market risk. That is why decided to open the subsidiaries in South Africa, India and United States, moreover they expanded in Russia and Eastern Europe. Bilimoria sees the Indian Market providing next big opportunity for the company growth. The Indian market is believed to continued expanding and despite the religious intolerance of alcohol consumption, it is becoming more acceptable especially for women in India to be seen drinking (Tflresearch.co.uk, 2017).  As for Product Development Strategy, they try to follow the trends and changes of people’s testes. For example, Cobra introduced Cobra Light for women in between age 25-35, and Cobra Zero that is a non-alcoholic drink. Considering all the Cobra’s products there is not many products introduced since the last product that was the Smooth Pour Glass, and it is currently is a phase of test in pubs and bars around the UK. (CobraBeer, 2017). What is more, Cobra Beer has a Strategic Business Unit (SBU) called Cobra Diversification Division that is an operating division.

 

6.3. STRATEGY RECOMMENDATION

The current strategy that Cobra Beer has is believed to be a success based on the evidence shown in this report. That is the focus strategy with a differentiation variant.

It is recommended for the Cobra Beer company to sustain its current strategies. Such as product development strategy and market penetration strategy.

As the Cobra Beer is currently in the progressive mature industries. (Haberberg and Rieple, 2008)

According to Haberberg and Rieple (2008) firms with a well-developed innovation capability such as Cobra Beer, they might consider product innovation as a path of differentiation. However, these innovations are likely to be a small and incremental.

STRATEGIC OPTION OUTLINE KEY ASSPECT EVALUATION
PRODUCT DEVELOPMEMNT As it was outlined earlier customers are increasingly reliant upon new product, the trend keep changing and the preferences as well. People care more about health and Cobra zero was the right product to release in order to respond for customers’ requirements. SUSTABILITY -as the already existing Product Development strategy
ACCEPTABILITY
FEASIBILITY
MARKET PENETRATION SUSTABILITY
ACCEPTABILITY
FEASIBILITY
TABLE 9: SAF ANALYSIS (Haberberg and Rieple, 2008)
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  1. Appendices:

 

9.1 APPENDIX 1: Resource Based View

TABLE 2:RESOURCE BASED VIEW
TANGIBLE: Valuable Rare Difficult to imitate Difficult to Substitute Competitive advantage
Product Range:
(Cobra Premium, Cobra Zero, King Cobra, Cobra Light)
Yes Yes Yes No Sustained
INTANGIBLE:
Financial Strength Yes No Yes Yes Temporary
Brand Image Yes Yes Yes Yes Sustained
Intellectual Assets Yes Yes Yes Yes Sustained

 

4.1.1. TANGIBLE

COBRA BEER PRODUCT RANGE (tflresearch.co.uk, 2017)

PRODUCT RANGE:

Cobra Premium, Cobra Zero and King Cobra.Cobra beer is believed to have a unique recipe and intricate brewing process. (CobraBeer, 2017). There is a selection of ranges such as King Cobra, Cobra Light, Cobra Zero and Cobra Premium.  They have introduced the Cobra Zero that is an alcohol-free beer. It is believed to have the same taste characteristics and the smoothness as the Cobra Beer family. What is more, there is King Cobra that is the first double fermented pilsner style lager.
Although it is not hard to substitute beers itself as the table above shows that it all the products are valuable, rare and definitely hard to imitate. This is a tangible competitive advantage that the Cobra Beer competitors cannot attain.

 

4.1.2. INTANGIBLE

FINANCIAL STRENGTH: Lord Bilimoria has found the financial resources in the variety of unusual sources such as: Government Loans, factoring,invoice discounting, cash flow and different types of shares. (Haberberg and Rieple, 2008)
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Repackaging (Cobra Beer, 2017)

BRAND IMAGE:

When a company builds a brand it tries symbolizing certain things to prospective customers (Haberberg and Rieple, 2008). Cobra Beer based its success on marketing fundamentals, and that is fulfilling or meeting customers’ needs. That is a ‘less gassy’ beer for Asian Cuisine. The brand strongly focuses on Indian Heritage. It has always been promoted as an Indian Beer (Haberberg and Rieple, 2008). In 2002, the bottles have been changed and Cobra Beer came up with a new design. That is how the brand image started to be created and it can be said that it was fundamental as well as its effective advertising, The story is told on the bottles by embossed icons such as The Crossed Swords that symbolize the army background of Karan Bilimoria, The Elephants that symbolize the way in which youth acquires enlightenment from seniority, The Snake Charmer that symbolizes the magic of the traditionally Indian Cobra recipe, The Scale and Palm Trees and Building, and The Boat. These icons are unique and hard to imitate. What is more, they showed it through the bottles image but also through the firm’s website and other promotional materials. (Tflresearch.co.uk, 2017). The brand image as it can be seen in a table above it is a valuable and rare resource, also that is hard to imitate and substitute, according to all these factors Brand Image is sustained competitive advantage.

INTELLECTUAL ASSETS:

It is believed by Tflresearch.co.uk (2017) that Karam Biliimoria is believed to be innovative and resourcefulness. (Tflresearch.co.uk, 2017). What is more his business philosophy relies and focuses on the constant innovation, never giving in, being disciplined, perfecting the product and turning setbacks into opportunities.

 

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