5What challenges would SABECO face when entering into an international market?...6What international market would you recommend SABECO to explore?...8REQUIREMENT II.... 5 Trang 5 REQUIR
MINISTRY OF FINANCE UNIVERSITY OF FINANCE – MARKETING INTERNATIONAL MARKETING GROUP EXERCISE : SABECO & THE JOURNEY TO THE INTERNATIONAL MARKET Group Members Student Code Paticipation Lê Châu Nhi 20% Phan Ngọc Hà 2121000346 20% Ngô Ngọc Hân 2121003416 20% 2121000359 20% Phạm Thị Thu Hương 2121003419 20% Huỳnh Đặng Minh Quân 2121012582 Faculty: Marketing Class: CLC_21DMA04 Tutor: Đặng Huỳnh Phương Ho Chi Minh City – 2023 TABLE OF CONTENTS LIST OF TABLES II LIST OF FIGURES III REQUIREMENT IV REQUIREMENT I Why Sabeco still not go international ? What challenges would SABECO face when entering into an international market? .6 What international market would you recommend SABECO to explore? .8 REQUIREMENT II 10 Compare and Contrast between Polycentric & Geocentric Management 10 Which orientation would you recommend they adopt when diversifying? 12 REFERENCES LIST A LIST OF TABLES Table SABECO Business Model LIST OF FIGURES Figure Core Value of SABECO Figure SABECO’s Beer Categories Figure SABECO’s Wine & Beverage Categories Figure SABECO’s Sales & Income (2018-2022) Figure SABECO’s SG&A Expense (2018-2022) Figure The world top 40 Brewers by BARTHHAAS REQUIREMENT Requirement 1: Choose a Vietnamese company which have no international presence, one only appearing in Vietnamese Market, then give analysis to answer folowing questions: Why did they only sell their product in Vietnam? What challenges would they face when entering into an international market? What international market would you recommend they explore? Requirement 2: These are four types of company orientations: (1) ethnocentric, (2) polycentric, (3) regiocentric, (4) geocentric management Discuss, Compare and Contrast the two orientations out of four (2/4) Keep the Vietnamese Corp your group had chose above, then use these analysis ask an answer to questions below: What would be the different challenges faced with each orientation Which orientation would you recommend they adopt when diversifying? REQUIREMENT I General Information • Company name : SAIGON BEER – ALCOHOL – BEVERAGE CORPORATION (SABECO) • Headquarter : 5th floor, Vincom Center Building, 72 Le Thanh Ton, Ben Nghe Ward, District 1,Ho Chi Minh City, Vietnam • Main business : Producing and trading Beer, Wine and Beverage (FMCG sector, B2B) Vision Developing SABECO into a top corporation leading beverage industry of Vietnam, has a position in the region and international market Mision • Contributing to the development of • To fulfill all obligations towards the State on Vietnam's beverage industry world level the basis of business transparency • Promote Vietnamese culinary culture • Actively participate in community activities • Bring practical benefits to shareholders, • Ensure development towards international customers, partners, employees and society integration • Improving quality of life by providing high • Fullfill International food safety and quality, safe & nutritious beverage products hygiene standards “An food hygiene & environmental protection” Recommended for you Document continues below BT Vật lý lần - Lecture notes 3123 31 Kỹ thuật 100% (7) đo lường COCA-COLA FINANCIAL ANALYSI… 39 Corporate 100% (6) Finance MKT 1605-Individual assignment 33 Corporate 100% (3) Finance Chapter 1+3+4 AHT - fin202 100% (3) 25 Corporate Finance Core Value Figure Core Value of SABECO Source : [CITATION SAB22 \l 1033 ] Business Model Table SABECO Business Model Key Key Value Custumer Custumer Propositio Relationship Segments Partners Activities n s 26 Subsidiary Marketing Campaign Traditional Value Create online content Mass Market (some Companies Manufacturing (Original Taste of or offline event (music product line has Product, Familiar fest) to engage preference 18 Joint Stock Key Brand) customers and push customer) Companies Resources comsumption Ex: Mass Production : 26 Channels Factories in VietNam Accessibility by SaiGon Chill & , 200.000 sales Both On & Off trade locations around the diversity in SaiGon Special world 10 main suppliers Beer’s Making Tech distribution across VietNam focus on upper- channel Apply new distribution middle class managerment system Social Value (DMS; WMS; SFA; customers through social S&OP) campaign While “Saigon Export focus on foreign market Beverage’s Brand : 333, SaiGon Beer, Xá Xị,… Cost Structure Revenue Streams Marketing Campaign & Sales Invest in Subsidiary Companies and Joint ventures Manufacturing Retails on On & Off trade flatforms Human Source : [ CITATION Ale10 \l 1033 ] & Authors Analysis Product Categories Figure SABECO’s Beer Categories Figure SABECO’s Wine & Beverage Categories Source : [CITATION SAB22 \l 1033 ] Why Sabeco still not go international ? Sabeco already has export to the international market BUT, their active in the international market is so small that can be consider “insignificant” Direct quote from Sabeco’s Annual Report (2022) : “…export segments only accounted for an insignificant proportion of the Group’s revenue and did not require a separate report Accordingly, the financial information presented mainly reflected the business activities of the Group in the territory of Vietnam.” We suggest there are several reason that make Sabeco still don't really want to expand and gradually shift their focus to the international market The Pandemic ! Pandemic had cause serious damage to the development of Sabeco as well as beer industry in general Sales and Revenue of Sabeco had suffer huge drop in 2020 and 2021 due to the Pandemic (-5.68% in 2020 and about -26.22% in 2021) Despite the decrease in revenue, SG&A remained at a high level and rebounded quickly after the pandemic ended duel to the increase simultaneously of raw material (malt,aluminum, labels ) and labour cost These figures show the drop in beer consumption the VietNam market which is always in the top 10 countries that consume the most beer in the world This indicates that the beer market is not at a good shape at the moment Figure SABECO’s Sales & Income Figure SABECO’s SG&A Expense (2018-2022) (2018-2022) 40000 6000 35000 5000 30000 4000 25000 3000 20000 2000 15000 1000 10000 2018 2019 2020 2021 2022 5000 TrilioSnGV&NAĐ Expense 2018 2019 2020 2021 2022 Sales/RevenueTrilionGrVoNssĐIncome Net Income Source : Summary from [CITATION SAB221 \l 1033 ] & SABECO’s Annual Income Statement – [CITATION Wal23 \l 1033 ] The mission of leading the beer market in VietNam ! In the shareholder structure of Sabeco, even though there are more than 60% are belong to foreign shareholders (53,6 of Vietnam Beverage Company Limited (ThaiLan) & 9% of other Foreign shareholders) But there are still a significant portion control by the gorvernment/ state (about 36% of State Capital Investment Corporation) [CITATION SAB22 \l 1033 ] This make Sabeco isn’t an international corp but still a “VietNamese company” to some extend And just like most of other VietNam companies, dominating and take over the home market - Vietnam is strongly emphasized That why the Vision and Mission of Sabeco are alway include VietNam, these mention the wisdom to grow Sabeco into a “National Company”, making Sabeco the face of Vietnam's beer industry For these reason, Sabeco still mainly forcus on growing in VietNam market rather than go international What challenges would SABECO face when entering into an international market? Big Market - Big Competitors As every other company have to deal with when they first expand into the international market, SABECO has to deal with a lot of “Whale” dominating the beer industry A report of BARTHHAAS (2021 -2022) had shown that SABECO was at rank 17 in the world top 40 brewing groups, with about 0.8 % share of world beer production This is remarkable for a Vietnamese business However, Sabeco still has to face many competitors with huge scale and potential such as Heineken or Carlsberg Although Sabeco has succeeded in competing equally with these competitors in the Vietnamese market (Sabeco is only behind Heineken in terms of beer market share in Vietnam with more than 30% market share), but in order to be able to develop in the international market where there are many differences in culture, law, great competitiveness,…requires Sabeco to put in much more effort Figure The world top 40 Brewers by BARTHHAAS Source : [ CITATION Bar22 \l 1033 ] Difficulty by Differences Beer or Alcoholic can cause a lot of social problem, so it is fundermantal for a gorvenment to restrict and control the consumtion of those Vietnam has a law banning the sale of alcohol to people under the age of 18, but in fact, young Vietnamese can still access alcoholic beverages very easily This is also happening in some other Asian countries, The New York Times wrote an article about this phenomenon in Thai Lan, where they ironically called it "Unevenly Enforced" This not so true with regions that are far apart, the cultural and social differences in these regions are greater, so there will be distinct points For example in the US, which is known for its strict legal policies on alcohol, a person can face hefty financial penalties and even jail time for selling beer to people under the age of 21 This is also true to a lot of Europe contries Differences are always a big challenge for integration, whether in daily communication or in corporations that want to expand the market Therefore, before entering these markets, Sabeco has to invest a lot in market research to be able to reduce the probability of failure to as low as possible What international market would you recommend SABECO recommend to explore? After some analysis, we would highly SABECO to explore the European market Beer Consumption Europe has a strong beer culture and is known for its diverse beer styles and traditions The European market offers a wide range of opportunities for Sabeco to introduce its unique beer products to beer enthusiasts who appreciate different flavors and styles According to the Brewers of Europe (The Brewers of Europe) , Europeans consumed over 39 billion liters of beer in 2019 The per capita beer consumption in Europe is among the highest in the world, with countries like the Czech Republic, Austria, and Germany leading the rankings Market Size Europe has a significant market size with a large population and diverse economies Countries such as Germany, the UK, France, and Belgium are known for their beer consumption and offer potential growth opportunities for Sabaco Europe is home to approximately 740 million people, offering a significant consumer base for beer products Major European beer markets such as Germany, the UK, France, Spain, and Italy provide substantial opportunities for expansion [ CITATION Ric20 \l 1033 ] Craft Beer Trend There is a growing trend of craft beer consumption in Europe, with an increasing number of consumers seeking out specialty and artisanal beers Sabaco, with its focus on quality and craftsmanship, can tap into this market segment and position itself as a premium craft beer brand The craft beer market in Europe has been growing steadily in recent years According to Statista, the craft beer market size in Europe was estimated at around €4.35 billion in 2020 and is projected to reach €8.45 billion by 2025 The number of microbreweries and craft beer bars has been increasing across Europe, catering to the demand for unique and high-quality beer.[ CITATION Chr89 \l 1033 ] Export-Friendly Environment: Europe has established trade agreements and a relatively open market for imported goods, making it easier for Sabaco to enter and operate in the region The European Union's single market and customs union facilitate trade and simplify logistics for exporters The European Union is known for its open trade policies and strong import/export relationships The EU is the world's largest importer and exporter of beer.The EU has trade agreements with various countries, facilitating trade and reducing barriers for imported goods Cultural Appreciation European consumers often value and appreciate products with a strong cultural heritage Sabaco, as a Vietnamese beer brand, can leverage its unique Vietnamese identity and brewing techniques to appeal to European consumers seeking authentic and exotic experiences European consumers often appreciate and seek out products that represent different cultures and offer unique experiences Sabaco, as a Vietnamese beer brand, can leverage its authenticity and cultural heritage to attract consumers looking for distinct and exotic beer options REQUIREMENT II Compare and Contrast between Polycentric & Geocentric Management Definition Polycentric Management Geocentric Management Is an approach where a company treats each Is an approach where a company takes a global foreign subsidiary as a separate and perspective and integrates its subsidiaries into a independent entity The decision-making unified, cohesive organization authority is decentralized to the local management team Key characteristics : Key characteristics : • Global Integration: High level of coordination, collaboration, and integration between the • Local Autonomy: Each subsidiary has headquarters and subsidiaries significant autonomy and independence in decision-making • Best-Person Approach: Management positions are filled with the most suitable individuals, regardless of • HCN Dominance: Key management positions their nationality are filled by host-country nationals • Transfer of Knowledge: Emphasizes the transfer of • Limited Integration: There is limited integration knowledge and expertise across different and coordination be seen the headquarters and subsidiaries, facilitating learning and innovation subsidiaries Source : [ CITATION Chr89 \l 1033 ] , [ CITATION Dan07 \l 1033 ] Polycentric Management Geocentric Management • Local responsiveness: Local managers have a better • Global coordination: The centralized allow better understanding of local markets => respond quickly to alignment of strategies, sharing of best practices & changes & opportunities resource optimization • Cultural sensitivity: The use of host-country • Talent utilization: Allows the company to leverage nationals enhances cultural sensitivity & adaptation the best talent from around the world, enabling a => reducing the chances of cultural clashes diverse & highly skilled workforce • Government relations: Local managers have better • Knowledge transfer: The emphasis on knowledge relationships & understanding of the host country's sharing fosters innovation & the spread of best government => facilitating smoother operations practices across the organization Benefits Source : [ CITATION Dan07 \l 1033 ][ CITATION Ric20 \l 1033 ] Drawbacks Polycentric Management Geocentric Management • Lack of global coordination: The decentralized can • Resistance to change: Local managers may resist or result in => A lack of coordination & communication feel threatened by the increased influence of between subsidiaries, leading to inefficiencies or headquarters, leading to challenges in implementing missed opportunities global strategies • Limited career mobility: As the top management • High costs: The centralization of decision- making positions are typically for local managers => Reduced and coordination may result in increased costs due to career advancement opportunities for employees the need for extensive communication, coordination from headquarters mechanisms Source :[ CITATION Dan07 \l 1033 ][ CITATION Ric20 \l 1033 ] Overall Chanllenges Polycentric Management Geocentric Management Lack of Global Integration Resistance to Global Initiatives Communication and Coordination Issues Cultural and Language Barriers Limited Transfer of Knowledge High Coordination Costs Limited Career Mobility for Headquarters' Talent Management and Diversity Employees Which orientation would you recommend they adopt when Polycentric diversifying? For going global, we suggest Management orientation for SABECO Variety in beer favourite Different market has very distinguish preferences when it comes to beer For example, Lager Beer like Budweiser, Coors Light, Corona…, are very popular in the US market According to Winemag magazine, large beer producers accounts for roughly 87% of the US beer market While Chibuku beer, a traditional beer make from sorghum, is the most popular beer in the Southern African market This distinguish in beer culture require a company must have very deep understand about the local market Fortunately, Local responsiveness & Cultural sensitivity are big advantage of Polycentric Manegement, which make it is the most suitable for a beer coporation like SABECO Advantage in operation Beer or Alcohol Beverage in general has a lot of restriction from the local gorvernment laws or policy Recruiting local staff who understand their country's policies very well will be a huge plus for SABECO when entering foreign markets In addition, the relationship of these employees with the local government will certainly contribute greatly to smoothing the operation of SABECO overseas REFERENCES LIST [1] Alexander Osterwalder, Yves Pigneur (2010) Business model generation: a handbook for Wiley [2] (2021/2022) BarthHaas Report [3] Beer - Europe (2023) Retrieved from statista: https://www.statista.com [4] Christopher A Bartlett ; Sumantra Ghoshal (1989) Managing Across Borders: The Transnational Solution [5] Daniels, J D., Radebaugh, L H., & Sullivan, D P (2007) International Business: Environments and Operations (11th Edition) Pearson/Prentice Hall [6] Holl, J (n.d.) The Most Common Beer Styles, Explained Retrieved from wineenthusiast [7] Lincoln, A (n.d.) The Oxford Companion to Beer definition of Africa, traditional brewing in Retrieved from beerandbrewing: https://beerandbrewing.com [8] Partner, R M (2020) International Management: Culture, Strategy, and Behavior [9] (2022) Sabeco Annual Report [10] (2018-2022) SABECO Financial Report [11] Statista (2023) Retrieved from Tea - Vietnam: https://www.statista.com [12] The Wall Street Journal (2023) Retrieved from https://www.wsj.com [13] Chứng Khoáng Bảo Việt (2023) Báo cáo c p ậnh t SậAB 02.2023 – NEUTRAL - Tăng trưở ng chậ m lạ i 2023 A