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South African Breweries.

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Introduction

South African Breweries BY Abdalla Bader Abdalla Hamed MBA, MSc Information System Bader Alhasse & Co ( charted accounting and auditors) , Libya South African Breweries: In 2001 South African Breweries (SAB) finds itself as the fifth largest brewer in the world. SAB has brewing operations in 21 different countries around the world with an annual output of "77 million hectolitres of beer. South African Breweries also holds a chain of 77 Southern Sun hotels throughout Southern Africa and also owns three casinos."( http://www.sabmiller.com/ ) South African Breweries (SAB) has grown on the basis of its strength in developing markets, first in Africa and then in other parts of the world. SAB has become one of the major beer and beverage companies in the world. It was registered in London by a syndicate of investors from the UK and South Africa in 1895. Castle Large was launched in Johannesburg in 1898 and in same year SAB was listed on the London stock exchange. In South Africa, SAB leads the beer market with Castl Larger. However, its wider portfolio included: * SAB: beer- south Africa and continental Africa with breweries for both larger and sorghum and brands such as Castle, Carling Black Lable, hansa Pilsner, Lion, Amstel, Heineken, Hoftbrau, Dakota Ice and 24 other brands. * SABI Asia: breweries in china and India; with 18 major beer brands in China and purified water and Soya milk. * SAB Europe: breweries in the Canary Island, Czech Republic, Hungary, Poland, Romania, Russia and Slovakia and brands including Pilsner Urquell, Gambrinus, Radegast, Keller, Ursus, Redd's, lech and Tyskie. ...read more.

Middle

The SAB acquisition of the US brand Miller may create an opportunity for marketing its established brands in the world's largest market, but it has also been necessary to consolidate the position of the famous names in local markets. Hence the creation of the Castle lager Web site (www.castlelager.co.za). Flexibility was just one concern for SAB," says Warren. "The Castle lager site is both interactive - users can submit their own pictures for snap competitions, for example - and transactional. A number of Castle-brand merchandise products can be ordered via the site. Another advantage for SAB is the depth of Microsoft skills among their own staff, as well as the obvious ease with which Content Management Server integrates with the company's existing Microsoft server products. http://www.microsoft.com/southafrica/casestudies/sab.htm The strategic position that SAB has chosen to follow is to "continue to protect and further develop its South African operations, whilst investing for growth in its international beer business, where a profitable base, with critical mass in selected developing markets and regions has been achieved, incremental growth, both organic and through acquisitions is being pursued aggressively".( Johnson, G & Scholes, K ,2002 PG 898) South African Breweries has chosen to follow an aggressive strategic business plan in its overseas ventures, based on market expansion. SAB takes a share in a brewery with a local partner and whilst retaining the brand, transforms the business by upgrading the quality and consistency of the beer, for which people are prepared to pay more, thus giving a healthy profit margin. Once SAB has acquired an initial local strong hold they then advance into regions beyond the brewery's original catchment area. ...read more.

Conclusion

As SAB has a strong history of foreign acquisitions this will help them ultimately "take share, divert the attention of the competitor, and establish a foothold from which they could move forward". (Jonson, G & Scholes, K, 2002, PG 328) SAB is not yet developed in the majority developed countries or created international brands, SAB Miller needs to create an international brand after the several mergers and acquisitions it has done. The African heritage could be considered as a weakness for SAB Miller SAB has been following the acquisition strategy for many of years, to be able to expand geographically and also diversify its operations in different sectors. Although, we are assuming that SAB has been able to generate a high rate of 'retained earnings' and/or access to debt agreements with financial institutions, the ability to improve the marketing and distribution channels of its acquired businesses, underline the financial power of SAB. Since the mission of the group is to be a world class manufacturer and deliver high quality beer, the strategy used by SAB is appropriate. SAB has been able to gain a significant market share and improve its quality by not only acquiring different companies around the globe, but by having a decentralized marketing and sales group within each country. This strategy has also helped it to increase the economies of scale by effectively utilizing its capacity and productive methods. SAB, has been using its resources and capabilities as effectively as possible in order to follow and attain its strategies SAB has achieved to establish a global business network. By doing so, the company increases its turnover and its profits, which without doubt satisfies stakeholders' expectations. That's why they should support the pursue of the strategy even if they feel insecure about certain acquisitions. ...read more.

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