Introduction
South African Breweries (SAB) is an international company committed to achieving sustained commercial success, principally in beer and other beverages, but with strategic investments in hotels and gaming. The company was founded in 1895 in response to the demand by gold miners in the Johannesburg region. Prior to the introduction of beer, the miners' drink of choice was raw potato spirits mixed with tobacco juice and pepper. No wonder why the new beer was well received!
Because of Apartheid, South Africa was excluded from the United Nations from 1974 to 1990 . Due to the political isolation experienced throughout these sixteen years, SAB pursued a domestic policy of purchasing cross-holdings in other South African firms, and eventually controlled 98% of the South African beer market. Cross-holding was a form of capitalization for SAB because the local capital markets were drying up due to the international boycott of the country.
English: Economies of scale surd
A Kranz (wreath) of Kölsch beer.
beersIn the late 1990's, per capita beer consumption in South Africa was in decline, and SAB was working hard to sustain revenue growth. The fall in consumption is attributed to a number of factors, including the bad South African economy.
Now that South Africa's economy is open to the world the result will be an increased globalization strategy, necessitating an increased focus on, and benchmarking against, world-class standards in order to ensure competitiveness.
To what extent is a global strategy or a multinational strategy effective in the brewing industry?
There are two basic alternative strategic orientations in every industry -a multinational strategy and a global strategy . Beer companies expand outside their domestic markets for several reasons -to gain access to new customers, to lower costs and become more competitive on price, to leverage its core competencies, and to spread its business risk across a wider market base.