the bacardi limited
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The Bacardi limited
INTRODUCTION and RESEARCH CHALLENGE
Bacardi Limited is one of the biggest Spirits company in the world, being the biggest family owned one,,managing a largely diversified portfolio, covering most price point's levels and core categories.
It operates in more than 110 markets, mainly throgh its own distiribtion net, or via local !oint"ventres,with appro#imately $.000 employees, showing a very interesting ratio of 1 %illion &ros of gross sales per employee.
Being one of the biggest in the world (rd), it still has a great distance from the 1st *iageo) and the +ndernod"-icard), raising a critical mass challenge in order to protect ftre revenes.
nowing that / +00 represented the year in which a steady gross sales growth was interrpted, my goalis to raise some paths for Bacardi in order to address its weaknesses, leverage its strengths, so that it will
be able to sei2e the biggest bsiness opportnities ahead.
I believe that Bacardi owns an n"leveraged strength that can cataplt the company to a mch near
position to the 3op+ players in the world.
ENVIRONMENT
PEST Analyi
P!litical"
• 3here is a clear trend of increasing reglation concerning alcohol brands commnication. It is not
possible to se high traffic 34 or -adio time spots. 5ear school locations tend to be ot of accessto develop activities.
• 5ight activities neighborhoods increasingly tend to be nder time limits or pressre, de tosecrity, noise or political image isses e#ample6 -ed Light *istrict in 7msterdam redcednmber of 8offee"Shops and rostitte windows licenses9 Bairro 7lto neighborhood in Lisbon sawits opening limit for Bars:*iscos limited from ;am to +am)
• Specific alcohol ta#ing changes heavily throghot markets, however it still is a big sorce of
revenes for government athorities, and dramatically changes the price positioning of brandssince it sally is not proportional related to alcoholic degree and type of drink). 3he ta#es partfor a typical branded low priced 4odka or years old as the
norm. Still there are (0 contries in the world with less than 1> or no limit for alcohol drinking.3his grop has been steadily shrinking see e#hibit 1).
Ec!n!mical"
• Spirits bsiness is valed in more than 1>.000 million litters worldwide
• %arket has been slightly decreasing at a 87? "0,(= 00:0$), and it's e#pected to grow onwards at
1= rate, ntil +011• 7sia, Latin 7merica, 5orth 7merica, 7frica and %iddle &ast have been the most dynamic regions
in consmption dring the last $ years.
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S!ci!#C$lt$ral"
• Social responsibility concerning alcohol consmption is increasingly getting visible. Spiritcompanies like Bacardi invest today more in these kind of initiatives in order to clearly show toathorities that they protect and commnicate responsible drinking. Besides the lobby:inflenceisse, among rban centers, social responsibility initiatives are trning more important as a branddecision factor see e#hibit +)
• 7lcohol consmption moments are changing " yongsters are less brand"driven. @owever, adlts
seem to be increasingly brand driven. 3hese social trend can lead to the creation of a bigger gap
between premim and non"premim brands, !eopardi2ing the critical mass for mainstream in" between) brands.
• 3he need state tends to be than split among + big reasons6 the ick need alcohol kick to feel
integrated in yor yong social grop), and the pleasre"social need in which yo drink to feel pleasre, rela# and have fn).
• 5evertheless, for both, easiness to drink is an increasing featre that is clearly related to specific
brands growth dring the last years. 3he sweet flavors, ready to drink mi#tres, and the mi#"abilityare key to recrit yongsters that don't have the patience for comple# drinking ritals.
Techn!l!%ical"
In this indstry, technology doesn't play a highly relevant role on the bsiness. @owever, state of the art prodcing technology is increasingly important to develop Aality prodcts, which mst have itsorganoletics nder absolte control, in order to keep consmer satisfied and confident on prodct intrinsiccharacteristics.
INDUSTR& ANAL&SIS
S$'tit$te
3here are several sbstittes for spirits. 3he most important is spirits itself, since strong consmer trendslead to sbstittion among sb"categories over time e#ample6 in Spain, dring the last 10 years, the
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P!*er !+ C$t!mer
• 8omparing to other indstries like @osehold, Body 8are, and general consmer goods categories,the power of cstomers for Spirits is relatively low, since the dependence on big internationalretailers is also lower than average. 3his means that the weight of independent and localwholesalers is sally high, redcing the dependence on big national chains.
• ?oing one layer below -estarants, @otels, *iscos, Bars, -esto"Bars, 8afes, etc) the power is
completely dilted• @owever, the commoditi2ation of some categories have allowed the easy switching between
brands
P!*er !+ S$((lier
• It is very low " one can by cane, malt, sgar, glass, labels and manfactring machines from
several sppliers.• here is however a reasonable variability of natral raw materials, depending on market Aotations,
which may not be immediately recovered becase cstomers:markets do not accept several pricemovements within a short period of time.
THE COMPAN&
Bacardi Limited,
Bacardi is privately owned, meaning that financial information for the company is disclosed in a verylimited manner. @owever, as it prodces only spirits and wine), sales and profits can be said to directlyderive from these bsinesses.
?ross sales in +00 stagnated at !st over CSD;.$ billion after the previos year's 10= leap in sales. Itcold be in part e#plained by a mi#ed performance in terms of volmes, with -3*sE1F, wine remainingstatic bt spirits seeing good growth.
3his category trend reinforced throghot the ne#t years, specially the strong growth in spirits, trning
possible Bacardi to achieve !st over CSD;. billion in +00G, CSD$.$ billion in +00>, and finally CSD$.( billion in +00. 3his fiscal year /'0) was responsible for the stop of a steady growth dring the last ;years.
3he contined global role ot of its ?rey ?oose vodka brand, as well as the Bombay Sapphire gin brand positive performance, seem to be the main factors for recent growth.
Hverall finances seem healthy as the company's 8&H said the company wold have no problem fnding a bid for Swedish company 4S, 4in Sprit, valed at CSD$" billion, $0= higher than its crrent grosssales, which was finally boght by ernod"-icard. /nds wold probably come from a combination ofcash reserves and bank loans.
Bacardi is headAartered in @amilton, Bermda and has a 1"member board of directors led by theoriginal fonder's great"great grandson, /acndo L. Bacardi.
/acndo BacardJ was born in Sitges, 8atalonia, Spain in 1>1; and emigrated to 8ba in 1>(0. *ring this period, rm not considered a refined drink, so *on /acndo began attempting to KtameK rm. @e finallyhit a perfect techniAe pon filtering the rm throgh charcoal removing imprities) and aging it oak
barrels KmellowingK it).
/acndo and his brother osM set p shop in a Santiago de 8ba distillery they boght in 1>+, in whichrafters lived frit bats, which finally became the symbol of the rm and the company. 7fter theindependence war and the CS occpation, K3he Hriginal 8ba LibreK and the *aiAiri were both bornwith Bacardi rm. It then started the company's international e#pansion by opening new bottling plants in
Barcelona and 5ew ork 8ity.
Some Bacardi family members initially spported the 8ban revoltionaries inclding /idel 8astro)./amily members, employees and facilities were pt to se by the movement, and the company spportedthe revoltion pblicly with advertisements and parties. Bt their spport trned to fierce opposition as the
pro"Soviet 8he ?evara wing of the movement began to dominate, and as 8astro trned dictatorial.
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3he Bacardi family and company left 8ba after it became clear that 8astro was serios abot his pledgesfor nationali2ing and banning all private property on the island as well as all bank acconts. @owever, thecompany moved the all important Bacardi international trademarks ot of the contry to the Bahamas
prior to the revoltion. 3he fact that it owned a plant in erto -ico to save in import ta#es for rm beingimported to the CS, also helped the company srvive after the commnist government nationali2ed allBacardi assets in the contry.
Bacardi, despite having no prodction and bsinesses) in 8ba today, have decided to re"emphasi2e their8ban heritage in recent years, mainly de to commercial reasons6 the main brand of rm in 8ba is
called @avana 8lb, a formerly private company nationali2ed by the government. In 1>, nder thedistinctive bat logo, the phrase Kcompany fonded in Santiago de 8ba in 1>+K was added. Bacardicontines to fight a war in the corts with the 8ban government of the rights to trademarks arond theworld.
Pr!d$ct
Bacardi has made several acAisitions to diversify away from the Bacardi rm brand6 in 1+ acAired%artini -ossi, the famos Italian prodcer of %artini vermoth and sparkling wines9 in 1> acAired*ewar's scotch and Bombay Sapphire gin for D+ billion9 in +001 acAired the 8a2adores teAila brand9 in+00; prchased ?rey ?oose, a /rench made vodka, from Sidney /rank for D+ billion9 in +00 prchased
5ew Nealand vodka brand ;+ Below. Hther associated brands inclde the C.S. version of @avana 8lb,*rambie Scotch whisky liAer, *isaronno 7maretto, &ristoff vodka and BB and BMnMdictine liAers.
Strate%y
Bacardi's strategic ob!ectives are difficlt to define de to the private natre of the company. @owever itseems its main aim is to become one of the leading global spirits companies.
*espite having a nmber of wine brands especially its %artini vermoth), the company does not seem tosee this as a particlarly core area and nlike similar international companies like *iageo, ernod -icardand /ortne Brands, Bacardi has not added to its wine portfolio since the trn of the centry.
3he company seems increasingly focsed on vodka as a key growth driver for its spirits bsiness. 3he lasttwo ma!or acAisitions by the company have been vodka brands, notably ?rey ?oose in +00; and ;+Below in +00. 3his was followed in %arch +00G by the company e#pressing a written interest in 4S,the owner of 7bsolt that finally was boght by ernod"-icard).
*espite having a relatively broad portfolio of spirits brands, the company does lack in certain categories,and shold seriosly e#pand frther into other areas especially brown spirits, sch as single malt Scotchwhisky, Irish whiskey, borbon:other CS whiskey, cognac and liAers. tending its brown spirits
portfolio wold also help it e#pand into rapidly e#panding emerging markets sch as 8hina, India and-ssia, where actally are the most dynamic markets and in which Bacardi has the lowest position.
3o become a global company and not fall too far behind other global players the company needs to rapidly
e#pand its distribtion network into the more dynamic emerging markets, sch as 8hina and India. et todo this, as stated before, it will need to e#pand its brown spirits portfolio.
-inancial
3he aggressive acAisition strategy of Bacardi has clearly broght strong reslts in gross sales !st below= 87?), mainly spported by its already installed and spread distribtion strctres.
Hne can confirm also that ?ross rofit has been growing at an almost doble rate of ?ross Sales' one !stover 11=), which shold be related to good improvements in cost of goods mainly driven by plantclosings and prodction rationali2ation), and also the increasing weight of white spirits and premim
brands in bsiness, which have lower relative cost of goods, compared to vermoths and lower priced brands.
Hperating profit has been registering very good progression !st over 1= 87?), which show a goodcontrol on fi#ed costs strctre, people), which permit the company to contine to fel the growthredirecting fnds to 7dvertising, romotion, Selling strctre and I3 spport.
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/inally, the !st over +G= 87?- on 5et rofit shows that interest e#penses and ta#es are decreasing itsrelative weight in the operating profit, showing an sperior ability to pay its debt, as well as an aggressivefiscal policy. E+F
5evertheless, the downtrn in +00 figres cased by the economic depression that we are still facing atthis time) raises perhaps other challenges that were slightly covered by the previos good figres.
Looking specifically to 0 " 0> progression, althogh there is a good performance on adapting to thenegative sales sitation, both trade investments rates and 8H?'s see ?ross rofit less negative variationof "1=), the same didn't happen when looking to Hperating rofit, probably de to the choice of not
stopping most of the advertising promotion campaigns in order to accommodate the higher relativeweight of infrastrctre in bsiness.
Hnce we know that Bacardi has a very decentrali2ed operational organi2ation local H8H's are fll Lresponsible), it has, on the contrary, a very centrali2ed Strategic %arketing department with fllresponsibility for global brands campaigns, which accont for $$= of total bsiness). 3he natral Aestionis that if this strctre is the ideal one for ne#t years, in order to fel the growthO
Im(lementati!n !+ Strate%y
S.OT
Hnce there is very little information available abot Bacardi Limited, instead of addressing the strategyimplementation area by area which is almost totally nknown), I will address the challenge starting with aglobal S
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• *ynamic rm " Bacardi's core sector is forecast to show strong growth over the +00"+011 period
with volme sales p 1$=), particlarly in 5orth and Latin 7merica,
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7ccording to collected information, sales teams sally have (0= of its yearly gross salary based oncommercial performance, and managers do have yearly targets. 5o disclosed information.
The C$lt$re
In line with its local entreprenership spirit and almost fll local atonomy, there isn't a niAe Bacardicltre, bt a mi# of cltres, coming from the 8ban heritage from the 7merican region, and an Italianheritage from %artini -ossi acAired company in
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with local companies, especially in contries sch as 8hina where it has very limited localknowledge.
C!re 3 Or%ani0ati!nal rec!mmendati!n
• 8reate a 4ision for the Bacardi company within $ years, and clarify the transversal vales neededto bring the KtaskK flfilled, rolling ot throgh regional strctres the necessary local markets
plans. 3his cold be completed with the identification of core competencies to identify, follow anddevelop.
•
*evelop a 3op"*own activity in order to create common grond and ob!ectives among marketsshold be taken place. 3his is key to pt top managers arond the world strggling for the samefinal goals, instead of e#ecting whatever actions they might think are the best for its own
bsiness.• *evelop a process throgh which the global strategic marketing department clarifies global brand
positioning, withot !eopardi2ing local market fle#ibility. 3his cold be done revisiting the rolesand responsibilities of local and global strctres, as well as trning it nearer to consmer andshopper trends.
• Besides looking to acAisitions, strong -* developments shold be ndertaken. Cnder crrent
brands, it may e#ist potential e#tensions, flavors or prodct developments in order to flfillconsmer trends and needs.
S$mmari0in%"
• In order to e#ploit organic bsiness opportnities rm, vodka and teAila), it is key to develop and
roll"ot processes to secre that all managers and its teams share the same core ob!ectives andvales., as well as investing in -* innovation) for actal core brands.
• Bacardi shold develop its distribtion coverage flly owning or !oint"ventring) especially
aiming towards 7sia"acific, &astern &rope, 7frica and %iddle"&ast. @owever in most of theseareas it is key to own a brown spirits portfolio and:or a single malt scotch whisky, which still is nota reality. 3herefore, it is key to previosly acAire strong brands in these categories, so that thedistribtion e#pansion delivers a highly positive retrn.
BIBLIOGRAPH&
• http6::www.bacardilimited.com:viewQfile.asp#OfRbacardiQannalQreportQ+00.pdf
• http6::www+.potsdam.ed:hansond!:inde#.html
• http6::www.eromonitor.com
1. -eady to drink often known as -3*) is a term sed to describe packaged beverages that are soldin a prepared form, ready for consmption. 3he term is typically sed to contrast packaged formsof beverages that are also sold in forms that reAire preparation, for e#ample iced tea which canalso be prepared sing tea leaves and frit !ice) and 7lcopops which can be prepared by mi#ing
alcoholic beverages with frit !ices or soft drinks)+. 8ollected and smmari2ed information from &romonitor and Bacardi 7nnal -eports(. rof. *avid . @anson, h.*. " Sociology *epartment, State Cniversity of 5ew ork, otsdam, 5
1(G.;. ?lobal %arketing 8ampaign and replication for ortgese %arket call a 3a#i)
SWOT Analysis of Bacardi with USP, Competition, STP (Segmentation, Targeting, Positioning) !ar"eting
Analysis
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Bacardi
Parent
Company Anheuser-Busch
Category Be#erages
Sector $ood % Be#erages
Tagline/ Slogan &o' "now when its Bacardi *i#e li"e yo' mean it
USP
BACA+- r'm is the world.s fa#orite, most awarded and the topselling r'm in the
world/
STP
Segment People who li"e to sociali0e o#er drin"s at a rela1ing and in#iting atmosphere/
Target Group &o'ng 'r2an men and women
Positioning 3reat drin"s and great parties at an a4orda2le price/
SWOT Analysis
Strengths
5/ P'2lic imagewell esta2lished 2rand
6/ 7ast prod'ct line and one of the most pop'lar 2rands
8/ Commercials, tie'ps with cl'2s % parties
9/ 3ood A#aila2ility across the world in o#er 5:; co'ntries
:/ Strong 2rand presence thro'gh ad#ertising
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Competition
Competitors
5/a!ana clu"
6/Appleton
Introduction
There is continuing interest in the study of the forces that impact on an organisation, particularly those that can be harnessed
to provide competitive advantage. The ideas and models which emerged during the period from 1979 to the mid-1980s !orter,
1998" were based on the idea that competitive advantage came from the ability to earn a return oninvestment that was better
than the average for the industry sector Thurlby, 1998".
#s !orter$s % &orces analysis deals with factors outside an industry that influence the nature of competition within it, the forces
inside the industry microenvironment" that influence the way in which firms compete, and so the industry's li(ely profitability is
conducted in !orter's five forces model. # business has to understand the dynamics of its industries and mar(ets in order to
compete effectively in the mar(etplace. !orter 1980a" defined the forces which drive competition, contending that the
competitive environment is created by the interaction of five different forces acting on a business. )n addition to rivalry among
e*isting firms and the threat of new entrants into the mar(et, there are also the forces of supplier power, the power of the
buyers, and the threat of substitute products or services. !orter suggested that the intensity of competition is determined by the
relative strengths of these forces.
Main Aspects of Porter’s Five Forces Analysis
The original competitive forces model, as proposed by !orter , identified five forces which would impact on an organi+ation's
behaviour in a competitive mar(et. These include the following
• The rivalry between e*isting sellers in the mar(et.
• The power e*erted by the customers in the mar(et.
• The impact of the suppliers on the sellers.
• The potential threat of new sellers entering the mar(et.
• The threat of substitute products becoming available in the mar(et.
nderstanding the nature of each of these forces gives organi+ations the necessary insights to enable them to formulate the
appropriate strategies to be successful in their mar(et Thurlby, 1998".
Force 1: The Degree of Rivalry
The intensity of rivalry, which is the most obvious of the five forces in an industry, helps determine the e*tent to which the value
created by an industry will be dissipated through head-to-head competition. The most valuable contribution of !orter$s five
forces/ framewor( in this issue may be its suggestion that rivalry, while important, is only one of several forces that determine
industry attractiveness.
• This force is located at the centre of the diagram
• )s most li(ely to be high in those industries where there is a threat of substitute products and e*isting power of
suppliers and buyers in the mar(et.
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Force 2: The Threat of ntry
oth potential and e*isting competitors influence average industry profitability. The threat of new entrants is usually based on
the mar(et entry barriers. They can ta(e diverse forms and are used to prevent an influ* of firms into an industry whenever
profits, ad2usted for thecost of capital, rise above +ero. )n contrast, entry barriers e*ist whenever it is difficult or not
economically feasible for an outsider to replicate the incumbents' position !orter, 1980b 3anderson, 1998" The most common
forms of entry barriers, e*cept intrinsic physical or legal obstacles, are as follows
• 4conomies of scale for e*ample, benefits associated with bul( purchasing
• 5ost of entry for e*ample, investment into technology
• 6istribution channels for e*ample, ease of access for competitors
• 5ost advantages not related to the si+e of the company for e*ample, contacts and e*pertise
• overnment legislations for e*ample, introduction of new laws might wea(en company's competitive position
• 6ifferentiation for e*ample, a certain brand that cannot be copied The 5hampagne"
Force !: The Threat of "u#stitutes
The threat that substitute products pose to an industry$s profitability depends on the relative price-to-performance ratios of the
different types of products or services to which customers can turn to satisfy the same basic need. The threat of substitution is
also affected by switching costs that is, the costs in areas such as retraining, retooling and redesigning that are incurred
when a customer switches to a different type of product or service. )t also involves
• !roduct-for-product substitution email for mail, fa*" is based on the substitution of need
• eneric substitution ideo suppliers compete with travel companies"
• 3ubstitution that relates to something that people can do without cigarettes, alcohol".
Force $: %uyer Po&er
uyer power is one of the two hori+ontal forces that influence the appropriation of the value created by an industry refer to the
diagram". The most important determinants of buyer power are the si+e and the concentration of customers. :ther factors are
the e*tent to which the buyers are informed and the concentration or differentiation of the competitors. ;ippenberger 1998"
states that it is often useful to distinguish potential buyer power from the buyer$s willingness or incentive to use that power,
willingness that derives mainly from the ris( of failure/ associated with a product$s use.
• This force is relatively high where there a few, large players in the mar(et, as it is the case with retailers
an grocery stores
• !resent where there is a large number of undifferentiated, small suppliers, such assmall farming
businesses supplying large grocery companies
•
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buyers usually indicates that the mar(et is characteri+ed by high supplier power and at the same time by low buyer power
!orter, 1998". argaining power of suppliers e*ists in the following situations
• =here the switching costs are high switching from one )nternet provider to another"
• >igh power of brands ?c6onalds, ritish #irways, Tesco"
• !ossibility of forward integration of suppliers rewers buying bars"
•&ragmentation of customers not in clusters" with a limited bargaining power as@!etrol stations in remote places".
The nature of competition in an industry is strongly affected by the suggested five forces. The stronger the power of buyers and
suppliers, and the stronger the threats of entry and substitution, the more intense competition is li(ely to be within the industry.
>owever, these five factors are not the only ones that determine how firms in an industry will compete the structure of the
industry itself may play an important role. )ndeed, the whole five-forces framewor( is based on an economic theory (now as
the 3tructure-5onduct-!erformance/ 35!" model the structure of an industry determines organi+ations' competitive
behaviour conduct", which in turn determines their profitability performance". )n concentrated industries, according to this
model, organi+ations would be e*pected to compete less fiercely, and ma(e higher profits, than in fragmented ones. >owever,
as >aberberg and Aieple B001" state, the histories and cultures of the firms in the industry also play a very important role in
shaping competitive behaviour, and the predictions of the 35! model need to be modified accordingly.
(o& to &rite a )ood Porter*s ' Forces analysis
The !orter's &ive &orces model is a simple tool that supports strategic understanding where power lies in a business situation.
)t also helps to understand both the strength of a firm's current competitive position, and the strength of a position a company
is loo(ing to move into. 6espite the fact that the &ive &orce framewor( focuses on business concerns rather than public policy,
it also emphasi+es e*tended competition for value rather than 2ust competition among e*isting rivals, and the simplicity of its
application inspired numerous companies as well as business schools to adopt its use =heelen and >unger, 1998".
=ith a clear understanding of where power lies, it will enable a company to ta(e fair advantage of its strengths,
improve wea(nesses, and avoid ta(ing wrong steps. Therefore, to apply this planning tool effectively, it is important to
understand the situation and to loo( at each of the forces individually.
)n conducting an analysis of !orter's &ive &orces, it is reCuired to brainstorm all relevant factors for the company's mar(et
situation, and then chec( against the factors presented for each force in the diagram above. The ne*t step is to highlight the
(ey factors on a diagram, and summari+e the si+e and the scale of the force on the diagram. )t is suggested to use relevant
signs, for instance, D/ and -E to represent the forces moderately in company's favour, or for a force strongly against.
#fter identifying favourable and unfavourable forces for the company's performance and industry's attractiveness, it is
important to analyse the situation and e*amine the impacts of the forces. :ne of the critical comments made of the &ive &orces
framewor( is its static nature, whereas the competitive environment is changing turbulently. #re the five forces able to foresee
industry e*pansionF )s it the corporate strategist$s goal to find a position in the industry where his or her company can best
defend itself against these forces or can influence them in its favour, or is the goal to become part of the ongoing commerce
with the intention to produce innovative ideas that will e*pand the si+e of the industryF )s it true that the environment poses a
threat to the organisation, leading to the consideration of suppliers and buyers as threats that need to be tac(led, or does it
offer the ground for a constitutive industry player co-operationF
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y thin(ing through how each force affects a company, and by identifying the strength and direction of each force, it provides
an opportunity to identify the strength of the position and the ability to ma(e a sustained profit in the industry ?ind Tools,
B00G".
+i,itations of Porter’s Five Force Model
!orter's model is a strategic tool used to identify whether new products, services or businesses have the potential to be
profitable. >owever it can also be very illuminating when used to understand the balance of power in other situations.
!orter argues that five forces determine the profitability of an industry. #t the heart of industry are rivals and their competitive
strategies lin(ed to, for e*ample, pricing or advertising but, he contends, it is important to loo( beyond one's immediate
competitors as there are other determinates of profitability. 3pecifically, there might be competition from substitute products or
services. These alternatives may be perceived as substitutes by buyers even though they are part of a different industry. #n
e*ample would be plastic bottles, glass bottles, and cans for pac(aging soft drin(s. There may also be the potential threat of
new entrants, although some competitors will see this as an opportunity to strengthen their position in the mar(et by ensuring,
as far as they can, customer loyalty. &inally, it is important to appreciate that companies purchase from suppliers and sell to
buyers. )f they are powerful they are in a position to bargain profits away through reduced margins, by forcing either cost
increases or price decreases. This relates to the strategic option of vertical integration, when the company acCuires,
or merges with, a supplier or customer and thereby gains greater control over the chain of activities which leads from basic
materials through to final consumption unger, 1998".
)t is important to be aware that this model has further limitations in today$s mar(et environment as it assumes relatively static
mar(et structures. ased originally on the economic situation in the eighties with its strong competition and relatively stable
mar(et structures, it is not able to ta(e into account new business models and the dynamism of the industries, such as
technological innovations and dynamic mar(et entrants from start-ups that will completely change business models within short
times. &or instance, the computer and software industry is often considered as being highly competitive. The industry structure
is constantly being revolutioni+ed by innovation that indicates &ive &orces modelbeing of limited value since it represents no
more than snapshots of a moving picture. Therefore, it is not advisable to develop a strategy solely on the basis of !orter's
models ;ippenberger, 1998 >aberberg and Aieple, B001", but to e*amine it in addition to other strategic framewor(s
of 3=:T and !43T analysis.
Hevertheless, that does not mean that !orters theories became invalid. =hat needs to be done is to adopt the model with the
(nowledge of its limitations and to use it as part of a larger framewor( of management tools, techniCues and theories. This
approach, however, is advisable for the application of every business model Aec(lies, B001".
Porter*s "i- Forces ,odel and its relationship to the standard Five Forces ,odel
!orter's &ive &orces model actually has an e*tension referred to as !orter's 3i* &orces model. )t is considerably less popular
than the &ive &orces model as its acceptance has been less positive than the &ive &orces model. The 3i* &orces model
though is very similar to the &ive &orces model with the only difference being the addition of the si*th force in the framewor(.
This si*th force in the model is termed as the relative po&er of other sta.eholders, and can refer to a number of other groups
or entities, depending on the factor which has the greatest influence including
I /o,ple,entors :ne school of thought loo(s at the si*th force to be complementors, which are businesses offering
complementary products to the sector in focus and being analysed rove 199G". The author states that these complementary
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businesses, as a si*th factor, affect the industry as changes in these businesses such as new techniCues, approaches or
technologies" can impact on the dynamics between the industry and the complementors.
I The govern,ent The si*th force in the framewor( can also be considered to be the government, and is included in the
framewor( if it has potential to impact on all the other five forces ordon, 1997". Thus, the government can have direct impact
on the industry as the si*th force, but can also have indirect impact or influence by affecting the other five forces, whether
favourably or unfavourably.
I The pu#lic Jet other viewpoints loo( at the public as the si*th force in the model, particularly if the public has a strong
influence in the dynamics of the sector resulting in changes to the other forces or in the sector as a whole.
I "hareholders This group can also be considered potentially as the si*th force. This is more important in recent years
where shareholder activity has increased significantly in the boardroom, and management of firms has been scrutinised much
more and even given Kthreats' if certain actions favoured by the shareholders were not pursued.
I ,ployees 4mployees could also be considered as the si*th force if they wielded e*traordinarily strong influence on the
firm in a particular sector. The status of employeesseems to follow similar rules in certain sectors, and thus could be
considered a strong influence in these sectors. &or e*ample, in the automobile sector in the 3, a large part of the wor( force
are unionised, and thus could be considered the si*th force instead of the government or complementors.
=hile a si*th force has been added to !orter's original &ive &orces model, the acceptance of this framewor( has been
somewhat limited. This could be for two reasons. &irst, is that there is no definite and specific si*th force in all sectors, as it is
different for each sector. 3econd, while a si*th force could be defined for all sectors, the influence of this factor can also be
captured in the other five forces and thus the necessity of having it in the framewor( is less compelling.
0here to find infor,ation for Porter*s ' Forces analysis
)n conducting the analysis it is crucial to e*amine the e*isting literature
• !eriodicals, business articles on the industry performance, etc
• #nalyst reports and trade organisations
• 5ompany annual reports and its publications on the main suppliers and distribution networ(
• #nything that will give the e*posure to the mar(et situation, competitors present in the mar(et, new emerging
companies in the industry.
)t is important to ma(e sure that the sources are reliable and relevant to the current condition of the industry. )t has to be viable,
reliable and valid, in order to conduct a good analysis of the model. &or this purpose, the gathered data and information has to
be chec(ed and be applied to the current business conditions. &urther limitations could be present in the nature of mar(et
forces that reduce the applicability of the information sources to present situations and the amount of detailed information
reCuired. This can be prohibitive to its practical use. &or e*ample, the level of competitor information reCuired is very detailed
and may not always be available.
/onclusion
#ny company must see( to understand the nature of its competitive environment if it is to be successful in achieving its
ob2ectives and in establishing appropriate strategies. )f a company fully understands the nature of the !orter's five forces, and
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particularly appreciates which one is the most important, it will be in a stronger position to defend itself against any threats and
to influence the forces with its strategy. The situation is fluid, and the nature and relative power of the forces will change.
5onseCuently, the need to monitor and stay aware is continuous.
3ome issues during the implementation of these &ive &orces are crucially important for organi+ations to build long-
term business strategy and sustaining competitive advantagesrather than simply list the forces. 3uccessful use of the !orter
?odel #nalysis includes identifying the sources of competition, the strength and li(elihood of that competition e*isting, and
strategic recommendations for the action a company should ta(e in order to develop barriers to competition.
)f you found this article useful please have a loo( at the other articles we have written #nsoff analysis, ?c;insey 73
&ramewor(, 3=:T analysis, 5 rowth-3hare ?atri*,!orter$s eneric 3trategies, 3cenario !lanning, alue chain
analysis, !est #nalysis,alanced 3corecard, 5ompetitor #nalysis, 5ritical 3uccess &actors, )ndustry ow 5ompetition &orces 3hape 3trategy, >arvard usiness Aeview, 3eptember-:ctober, pp.1L7-1M%.
!orter, ?. 1980b" 5ompetitive 3trategy, Hew Jor( &ree !ress.
!orter, ?. 1998" 5ompetitive 3trategy TechniCues for #naly+ing )ndustries and 5ompetitors, Hew Jor( &ree !ress.
3anderson, 3. 1998" Hew approaches to strategy new ways of thin(ing for the millennium, ?anagement 6ecision, ol. LG
issue 1, pp.9-1L.
Thurlby 1998" 5ompetitive forces are also sub2ect to change/, ?anagement 6ecision unger, N. 1998" 3trategic ?anagement and usiness !olicy, Gth ed., Aeading #ddison-=esley.
%i#liography
a(er, ?. 199B" ?ar(eting 3trategy and ?anagement,
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rove, #. 199G. !aradigms of paranoia every company will be confronted by e*ternal crises that revolutionise the rules of its
business. >ow can 54:s identify these e*igencies before it is too lateF usiness Today. OonlineP. O!ublished BB Hovember
199GP. #vailable from http@@www.factiva.com. Ocited 9 6ecember B007P.
:'3haughnessy, H. 199G" ?ichael !orter's revisited, ?anagement 6ecision, ol. LM )ssue G, pp.1B-B0.
!orter, ?. 1979" >ow competitive forces shape strategy, >arvard usiness Aeview, ol. %7 )ssue B, pp.%-8.
3cott-?orton, ?. 4d." 1991" The 5orporation of the Hineties, :*ford :!.
=olpert, N. B00B" rea(ing out of the innovation bo*, >arvard usiness Aeview, pp.77-8L.
http@@www.mindtools.com@pages@Hewsletters@B0Nan0%.htm
http@@www.themanager.org@3trategy@eyond!orter.htm
/opyright 2223 Papers$4ou5/o, All Rights Reserved
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Bacardi Limitedblished6 +(, %arch +01$
-ntrod'ction
Bacardi *imited is an international ?rm that is one of the leading alcohol prod'cers in
the world/ Company has e1panded its prod'ct line from r'm drin"s for yo'ng, partying
teens to e1pensi#e, @premi'm drin"s for sophisticated drin"ers/ The #ariety of prod'cts
was gained from merges of se#eral large li'or companies/
The p'rpose of this report is to analy0e Bacardi *imited competition position and gi#e
recommendations on internationalising its prod'cts/ -t will incl'de a description,
competiti#e analysis of the company, analysis 2ased on choice of potential mar"et
(PST*, SWOT) and prod'ct to enter with into the mar"et with decision ma"ing on the
choice of mode of entry/
5/ escription of company
BACA+- *imited is the worlds largest pri#ately held spirits company/ With its
head'arters in Berm'da and se#eral operating s'2sidiaries aro'nd the world,BACA+- prod'ces, mar"ets and distri2'tes a #ariety of internationally recogni0ed
spirits s'ch as BACA+- r'm, 3+A& 3OOS #od"a, WA+S scotch whis"ey, BO!BA&
SAPPD-+ gin, CAEAO+S te'ila and many more (Bacardi *imited, 6;;F)/
The company recorded re#en'es of G:,889/=;= million d'ring the ?scal year ended
!arch 6;;F ($&6;;F)/ The operating pro?t of the company was G5,;=5 million d'ring
$&6;;H, an increase of 56/FI o#er $&6;;=, howe#er it dropped 9I d'ring the $&6;;F/
The net pro?t was GH;: million in $&6;;F, an increase of 5I o#er $&6;;H/
Bacardi c'rrently operates in 55; di4erent mar"ets worldwide with the 8FI of sales less
e1cise ta1es in >orth America, :5I of sales less e1cise ta1es in 'rope, !iddle ast and
Africa, 5;I of sales less e1cise ta1es in *atin America and Asia Paci?c for $iscal 6;;F
(Bacardi limited Ann'al +eport, 6;;F)/
Barriers to entry
The spirits ind'stry is highly competiti#e 2'siness, where the maJor glo2al spirits
prod'cers hold appro1imately
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all the new inno#ations always s'cceed, the m'ltinationals still hold the ad#antage of
higher potential to in#est large amo'nts of money into the mar"et (-CAP, 6;;
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Bacardi is the worlds si1th 2iggest spirits company and worlds third largest
international company, 2ehind iageo and Pernod +icard (1hi2it 5), with almost 6I of
glo2al #ol'me sales in 6;;=('romonitor, 6;;Fa)/
According to 'romonitor (6;;Fa) report the company is facing high press're from all
sides, as if compare to its two main ri#als iageo and Pernod +icard, Bacardi has 'nder
performed in growth terms in 2oth organic and inorganic terms o#er the 6;;66;;=
period/Companys poor performance has meant that its glo2al #ol'mes were less than half
2oth iageo and Pernod +icard in 6;;=/ The company achie#ed growth of 5:I o#er the
6;;66;;= period, compared to iageos 66I and Pernod +icards H9I, from m'ch high
6;;6 #ol'me growth/
So'rceL 'romonitor, 6;;H2/ 3lo2al Alcoholic rin"sL B'ying and Winning Share in
3lo2al Spirits 6;;H 6: p
!ission of Bacardi is distri2'tion its portfolio of international 2rands to trade clientsand cons'mers all o#er the world/ As it is a maJor prod'cer of distilled li'ors, the goals
of the company seem logicalL to e1pand the sales of the prod'cts internationally is the
goal of most mainstream companies, and to e1pand the prod'ct line s'ccessf'lly is to
e1pand the pro?t/ Also from the competiti#e analysis it can 2e seen the companys poor
performance compared to its competitors, which is also dri#e to f'rther
internationalisation (Bacardi *imited, 6;;=)/
6/ Analysis on choice of entry co'ntry/Prior to ma"ing a choice of entry co'ntry, it was re'ired to analyse e1isting mar"ets
and loo" at other potential mar"ets as well/
Primarily, Bacardis main foc's is on de#eloped economies as =
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There is potential growth of 2lended Scotch whis"ey, cognac, premi'm #od"a and
te'ila in the +'ssian mar"et, whereas in Bra0il, #od"a and 2lended Scotch whis"ey
ha#e strong growth prospects/ ('romonitor, 6;;F)
Bacardi sho'ld foc's its attention in B+-C co'ntries #i0/ Bra0il, +'ssia, -ndia and China/
The rationality for this approach are the following reasonsL these co'ntries acco'nt for
98I of worlds pop'lation
Show real growth prospects in the near f't're i/e/ :6; years as compared to de#elopedeconomies (1hi2it 6)/
Chinese economy will pro2a2ly o#erta"e 2oth U and 3erman economies 2y year 6;5:
and e1pectation is that it will deli#er aro'nd 5 2illion new cons'mers o#er the ne1t
'arter of a cent'ry
$'ndamental ad#antage of B+-C co'ntries is that, as they de#elop, money ?lters down
to the general pop'lation, which in t'rn increases their p'rchasing power/
(*earn!oney/co/'" *td, 6;;F)
So'rce
With regards to answering which co'ntry within the B+-C sho'ld Bacardi in#est in, the
data of prod'cts in Bacardis portfolio will analy0ed (Appendi1 A)/ After consideration,
we cere2rate that Chinese mar"et loo"s the most promising for in#estment as it has the
largest mar"et si0e and its predicted growth rate is aro'nd 69/HI from 6;;H6;58 which
ma"es its #ol'me growth two times the si0e of -ndia, which comes in second (ash,
6;;=)/
To f'rther e1amine the 2'siness en#ironment and the mar"et for spirits in China,
PST* analysis is doneL
PoliticalL
The Chinas accession to WTO 2ro'ght a2o't many changes to the 2'siness
en#ironment/ -t is considering drafting a Nat ta1 rate of 6:6HI, regardless of the
company 2eing foreign or domestic/ China is considering red'cing ta1ation on itsmiddle class to impro#e cons'mption/ +ecent s'ccess of Chinese -E policy and
incenti#es has res'lted in massi#e inNows of $- (ChinaBritain B'siness Co'ncil, 6;;Fa)/
conomicL
M 3rowing ann'ally at 5;I Chinese economy is the second largest worldwide/ Typically,
Chinese e1pendit're is 6;8;I lower than -ndia and imm'ne to pay inNation and
wor"er t'rno#er (e#ott, 6;;F)/
M 1pected growth of :I 2etween 6;;H and 6;58 ('romonitor, 6;;F2)/
M isposa2le income is rising in the middle income gro'p, tho'gh this doesnt hide the
'nderlying income ine'ality/
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M China employs a progressi#e ta1 system which ad#ances with income from : to 9:I/
Acco'nting for 56I of glo2al spending, Chinese elite still allow themsel#es to spl'rge on
l'1'ry items ('romonitor, 6;;Fc)/
M B'ying of premi'm spirits will contin'e increasing d'ring the forecast period, with
champagne, scotch and cognacs in high re'irements/
M Prices increased signi?cantly 'p to FI mostly d'e to companies increasing their
prod'ct pricing ('romonitor, 6;;Fc)/
SociologicalL
M 6:; million Chinese middle class is increasing 2ecoming 2rand aware (U trend %
-n#estment, 6;;=)/
M -ncreasingly, cons'mers are paying attention to the health awareness/ Dence drin"s
with low calorie and alcohol content are the main selling point/
M emographically 2eing the largest mar"et in the world with 5/8 2illion cons'mers
(China access, 6;;F)/
M The increase in p'2s and 2ars contri2'tes to the pop'larity of foreign alcoholic drin"s
li"e cognac, whis"y and r'm ('romonitor, 6;;Fd)/
M Chinese cons'mer prefers gifting premi'm 2rands of 2oth Chinese as well as foreign
alcohol as ideal gifts for family and friends, with an aim to highlight their generosity and
economic stat's ('romonitor, 6;;F2)/
TechnologicalL
M +apid 'r2anisation has led to maJor impro#ements in transportation infrastr'ct're
(U trend % -n#estment, 6;;=)
M +eg'lations are imposed on alcoholic drin"s ad#ertisements on tele#isions and radios
('romonitor, 6;;Fd)/
*egalLThere are many legal re'irements in starting an enterprise in China, primarily
o2taining an a'thori0ed 2'siness licence/ After that there are nine more go#ernment
2odies with which the company m'st register/ 7ario's locations ha#e di4ering policies/
-t 's'ally ta"es aro'nd 856 months to set 'p 2'siness in China (ChinaBritain B'siness
Co'ncil, 6;;F2)/
Tho'gh there is no legislation enforcing the legal drin"ing age, alcoholic drin"s are not
allowed to 2e sold to indi#id'als 2elow the age5H/
Ta1ation and 'ty *e#ies on Alcoholic rin"sL alcoholic drin"s and alcohol white spirits
made from cereal 6:I, white spirits made from potatoes 5:I, yellow spirits 69;
y'an per tonne, 2eer 66; y'an per tonne, other alcoholic drin"s 5;I, alcohol :I/
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$or tele#ision ad#ertising, no more than two ad#ertisements for alcoholic drin"s are
allowed on any channel 2etween 5F/;;hrs and 65/;;hrs, and no more than 5; are
permitted per day/ Also, T7 channels may not show than two ad#ertisements for
alcoholic drin"s in an ho'r/ ('romonitor, 6;;Fd)/
n#ironmentalL
Chinese go#ernment is foc'sing on attracting $- in en#ironmental sector, withemphasis on poll'tion control and water reso'rces management (U trend %
-n#estment/ 6;;=)/
Dowe#er, main ris"s and 'ncertainty factors in Chinese alcohol mar"et also sho'ld not
2e ignored, e#en mar"et loo"s attracti#eL economic crisis, which has a greater impact on
highend prod'cts, in o'r case, o'r premi'm spirits 2rands nat'ral disasters
(earth'a"es and Nood) might damage man'fact're sites/
Choice of prod'ctBefore entering into Chinese mar"et it is cr'cially important to recogni0e which prod'ct
or line of prod'cts sho'ld 2e prod'ced/ $ramewor" for choice of prod'cts was
prepared 2ased on secondary information from 'romonitor (6;;Fa,6;;F2, 6;;Fd)/
According to a framewor" for choice of prod'cts (3'pta, 6;;9), after considering the
re'ired degree of local adaptation and the e1pected payo4s in the Chinese spirit
mar"et the most attracti#e prod'ct for internationali0ation in China is a 2aiJi', a @white
li'or, which is the most pop'lar local spirit in China and the worlds 2est selling spirit2y #ol'me/
Choice of location
The diKc'lties for foreign prod'cers loo"ing to enter the mar"et are presented 2y a
#ast si0e and scope of Chinese mar"et/ $or analy0ing all regions SWOT analysis was
done for Bacardi (*e', 6;;=)L
The entry process from analysis on regions in China (SWOT analysis) shows thatSo'thwest and Central regions are the most appropriate location to start 2'sinessL high
demand on 2aiJi' drin"s, local spirits preferences, good transportation networ"s and
low e4orts of threats compared to other regions/
Choice of mode of entry
Chinese spirit mar"et 2y PST* analysis is shown as a h'ge mar"et with strong local
and foreign competitors with 'nfamiliar preferences for Bacardi limited therefore Joint
#ent're (Q7) has ad#antages o#er ac'isition/ #en a main disad#antage of forming a Q7is that partner shares the pro?ts of the 2'siness, 2't the downside of ac'isition
method is worse than that since not only a signi?cant capitalisation cost is ine#ita2le,
2't it also re'ires Bacardis own e4orts to 2'ild 'p a comple1 Chinese mar"et
"nowledge and s'pply chain system which will 2e a #ery time cons'ming process and
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the chance of ending 'p fail're is li"ely to occ'r/ Q7 permits ?rms to share entering
mar"ets costs and ris"s, allows rapid access to local "nowhow, and gi#es managers the
Ne1i2ility to respond more 'ic"ly to dynamic glo2al competition, also allows ?rms to
ta"e ad#antage of the Chinese partners local "nowledge, to 'se distri2'tion channels
(3'pta, 6;;9)/
Q7 'ndo'2tedly "eeps the speed of entry to high le#el which is #ery important, as
Bacardi is losing its leading position e#ery year among competitors ('romonitor,6;;Fa)/ To s'm 'p, a green?eld strategy is not preferred to Bacardi limited and for the
reason that Bacardi c'rrently does not ha#e 2aiJi' prod'ct in its portfolio, licensing also
is not a#aila2le as a mode of entry/
'e to the fact that more than 5H,;;; 2aiJi' prod'cers are e1isting in China (&ang,
6;;F), the largest company sho'ld 2est s'it with the scale of Bacardi company/ Qoining
forces with strongest Chinese partner will not only 2e 2ene?cial for the company to sell
directly to e#ery region of Chinese domestic mar"et 2y the 'sed of its s'perior e1isting
distri2'tion networ" and relationship with local retailer/ -t also ena2les Bacardi topercei#e 'ic"ly the implications of promoting, mar"eting and to 'nderstand Chinese
c'lt're and ha2its in each partic'lar region/ !oreo#er, Bacardi will get "nowhow of the
process to prod'ce premi'm 2aiJi' prod'ct, hence e1tend its portfolio f'rther in the
area of spirits in which perfectly match with the companys main foc's/
Ta2les on Company Shares of Spirits 2y >ational Brand Owner 6;;86;;= and Company
Shares of Spirits 2y 3lo2al Brand Owner 6;;86;;= in Chinese spirit mar"et (Appendi1
C) show Sich'an &i2in W'liangye Company *imited is the leading company in spirits in
China, with 6 I of #ol'me sales in 6;;= ('romonitor, 6;;Fe) and with 5/HI CompanyShares of Spirits 2y >ational Brand Owner 6;;=/ The company s'pplies the local mar"et
from in co'ntry, with almost all prod'cts of W'liangye 3ro'p Co *td 2eing prod'ced in
&i2in, Sich'an/
After all analyses and considering assessed characteristics, the decision was made that
the 2est method to enter to Chinese mar"et for Bacardi Company is to distri2'ting its
2rands with 2aiJi' prod'ct thro'gh Joint #ent're (Q7) agreement with W'liangye &i2in
Company *imited while Bacardi possess the controlling sta"e/ As W'liangye &i2in
Companys 2rand is well"nown in China, Bacardis 2rand is more famo's as an
international 2rand, which appears as the third place in the worlds most powerf'l
spirits % wine 2rands 6;;H report (-ntangi2le 2'siness, 6;;F), the second place as The
Strongest Brand 2y Brand Score and as The !ost Powerf'l Brand 2y Share of !ar"et/
Therefore it is recommended to 'se the e1isting 2rand for this premi'm 2aiJi' prod'ct
and e#ery prod'ct later on in this Q7/ oing this is not only reNecting the primary
o2Jecti#e why Bacardi ma"e an in#estment in China 2't also it helps strengthen Bacardi
2rand awareness in the Chinese c'stomer mind/ -n this way, all other prod'cts from
Bacardi will also recei#e the 2ene?t from this e4ort/
While Bacardi concentrates on selling premi'm 2aiJi' prod'ct with its Q7 partner, it can
ac'ire "nowledge a2o't the Chinese mar"et and adJ'st their mar"eting campaign
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accordingly, which will help them to optimally penetrate the mar"et and gain
dominance for their prod'ct portfolio/
After adJ'sting to the Chinese spirit mar"et with premi'm BaiJi', it is s'ggested to 'se
China as the 2ase of prod'ction for e1panding into AsianPaci?c region/ S'2se'ently
to increase prod'ction of alcoholic prod'cts, thereafter it is recommended to change
the mode of entry 2y either increasing a share in the Q7 or ac'ire controlling sta"e in
&i2in w'liangye distillery company/
Concl'sion eKciency
This report introd'ces Bacardis c'rrent sit'ation in the world mar"et thro'gh the
Porters ?#e forces analysis/ Analysis is done to ?nd a s'ita2le entry co'ntry and a
strategy to o#ercome its growth stagnation/ After intense st'dy of the prospected
target, it was decided to enter the Chinese mar"et which has the largest mar"et si0e and
good growth rate in the spirits ind'stry/ To add 'p, China is considered as a gateway to
AsianPaci?c mar"et, which is strategically important for Bacardi limited/ UnderstandingChinese mar"et is also cr'cial 2efore ta"ing any actions, so PST* has 2een 'sed/ Since
China is an enormo's co'ntry, SWOT analysis was done to ?nd an apt region to start
2'siness/
Premi'm 2aiJi' spirit was chosen as a most attracti#e prod'ct according to the
framewor" of choice of prod'ct/ The recommendation on cond'cting Q7 with Chinese
domestic company &i2in w'liangye distillery was done 2ased on the PST* analysis
and trends in Chinese spirit mar"et/
The controlling share of the Q7 with a Chinese domestic company will gi#e an
opport'nity for Bacardi to penetrate the Asian mar"et/
Two main limitations need to 2e addressed here,
M ?rstly relating to the type and range of data 'sed here, which is secondary data/ -t is
ad#isa2le that Bacardi sho'ld perform more research into mar"eting with 'pdated
information from 2oth primary and secondary data
M ta"ing into acco'nt 2oth ris" management and other 'ncertainty factors, which many
of them are not co#ered in this report, and co'ld ha#e signi?cant impact in reality to a
2'siness
M in depth ?nancial aspects, the critical part for the realworld in#estment, as well as
competitors strategies were not incl'ded in this report/ +etaliation from competitors
against any mo#ement in the mar"et which ha#e ignored in this report, sho'ld 2e
considered in reality/ All in all, intensi#e feasi2ility st'dy with the latest information is
s'ggested 2efore Bacardi ma"es any decision/The second limitation is related to its Q7 partner/ The 'estion to 2e answered is that
whether W'liangye yi2in Company interested in doing Q7 with Bacardi/ -t depends on
many 'ncontrolla2le factors for e1ample the c'rrent sit'ation in the mar"et, ?nancial
term of the company or the decision from CO/ #en if they agree to do Q7, the
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negotiation process will need to 2e foc'sed to ens're it meets 2oth Bacardis and
W'liangye yi2ins e1pectations/ -f W'liangye yi2in is not interested in this deal, Bacardi
might ha#e to consider the other Chinese local company instead/
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