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A Business Management Case StudyRandy FriesenJune 30, 2016

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A lack of management planning resulted in a delay of alcohol beverage diversification by Molson Coors leading to

market share losses and lower sales volume.

Problem Statement

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Molson Coors is…

• the 2nd largest manufacturer and distributor of beer in Canada.

• the oldest brewer in Canada, founded in Montreal in 1786.

About the Company

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The Molson Coors' vision is to be a top-performing brewer winning through inspired employees and great brands. We're driving growth by becoming an innovative, brand-led company, delivering and re-investing productivity for growth as we build a winning, value-based culture.

Vision

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ATTIT

UDE

Plan

ning

Leading

Org

aniz

ing

Determining organizational goals and a means for achieving them.

Planning

Deciding where decisions will be made, who will do what jobs and tasks, and who will work for whom.

Organizing

Inspiring and motivating workers to work hard to achieve organizational goals.

Leading

Monitoring progress toward goal achievement and taking corrective action when needed.

Controlling

Controlling

Keys to Success

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2.171hL

7.055hL

1.458hL2.150hL1.947hL 2.303hL

2014 Q2

2.262hL

2014 Q3 2015 Q3 2015 Q42014 Q1

7.118hL

2014 Q4 2015 Q1 2015 Q2

1.530hL

2016 Q1

Sales Volume in HectalitersProduced in Canada, 2014 to 2016

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Porter’s 5 Industry Forces

ModerateCharacter of the Rivalry

Moderate: New independent craft brewers

Favorable: 2nd largest supplier of beer in Canada

High: Low switch costs & minimal differences in flavor of light beers.

Favorable: can secure suppliers at lower fixed & variable costs.

Threat of New Entrants

Bargaining Power of Suppliers

Bargaining Power of Buyers

Threat of Substitute Products/Services

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22.88Million hL

2009

Craft breweries: 1.18 million hL

2014

22.39Million hL

Craft breweries: 2.01 million hL

Declining Market Share Molson Coors vs Independent Craft BrewersProduced in Canada, 2009 vs. 2014

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Men 59.5% Women 40.5%

Source: Financial Post, 2015

19 to 30 years old: 19.9%31 to 50 years old: 15.6%51 to 50 years old: 14.3%71 years and older: 19.9%

19 to 30 years old: 12.1%31 to 50 years old: 10.1%51 to 50 years old: 10.4%71 years and older: 7.9%

Who Drinks Beer?Major Market Segmentation, Canada, 2015

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Grand Corporate StrategyGrowth

Industry StrategyCost-Leadership.

Corporate & Industry Strategies

Grand Corporate Strategy??

Industry Strategy??

PAST FUTURE

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StrengthStrong distribution channels, delivering products to businesses, government/private liquor stores.

OpportunitiesConsumer trends in industry: increase in premium beer.

New niche markets: Lagers, low alcohol and gluten free beers.

WeaknessCash tied up in building new

breweries (Vancouver & Montreal)

Lost first-mover advantage by not investing in premium craft brews.

ThreatsThreat of new entrants include

independent craft breweries continuously entering market.

S WO T

SWOT Analysis

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Stability Strategy – Leaner Manufacturing Retrenchment in streamlining operations by divesting or updating old breweries or building new ones to maximize economies of scale.

Growth Strategy – Merger & AcquisitionsPurchase independent craft breweries that are developing product lines in niche markets for related diversification.

Growth Strategy – Portfolio DifferentiationDevelop related product lines to fill niche markets and gain first-mover advantage.

Determination of Alternatives

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Chosen Alternative: Growth Strategy

Growth Strategy – Portfolio DifferentiationDevelop related product lines to fill niche markets and gain first-mover advantage.

• Creating niche beer for smaller target markets reduces advantages of economies of scale.

• This strategy would boost market share and expand focus to new customer bases. Although, profit margins will not be as significant on new niche products, this is still the best strategy.

• Maintain moderate corporate growth by opening new markets and regaining lost market share

+

-

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Grand Corporate StrategyGrowth

Industry StrategyCost-Leadership.

Corporate & Industry Strategies

Grand Corporate StrategyGrowth

Industry StrategyFocused Differentiation.

PAST FUTURE

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Project #1 Project #2

Expansion of Existing Product Line Developments

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Project #1

Project #2

Project #3

New Product Line Developments

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18%

14% Cost of Aluminium

Cost of Wheat

Lower prices in Cost of Goods over previous 12 months

Bargaining Power

26% Cost of Crude Oil

Source: indexmundi, 2016