Assessment 1 ESM Richa 01

 

Strategy Management

 Assessment 1 SUSTAINABLE & MARKET PENETRATION STRATEGY

Module Leader: Dr. Krishna Raj Bhandari Submitted By: Richa Tandukar (EMBA, 2021)

 

Table of Contents ............................ ............................. .............................. ............................. ............................. ............................. ............................. .............................. ................................ ..................... .... 4  Assignment Overview.............. ............................. ............................. ............................. ............................. .............................. ............................. ............................. .............................. ....................................... ........................4 4 Company Overview...............

Organizational Structure................ Structure........................................... ...................................................... ...................................................... ..................................... ..........5 5 Industry Overview....................................................................................................................6 ............................ ............................. ............................. .............................. ............................. ............................. ............................. ..................................... .......................... ... 7 1. EXT XTE ERN RNA AL AN ANAL ALYS YSIS IS.............

1.1 PESTLE Analysis................... Analysis.............................................. ....................................................... ................................................................. ..................................... 7 Political Factors............. ........................... ............................. .............................. ............................. ............................. ............................. ............................. .............................. ............................. .........................7 ...........7 Economic Factors.............. ............................. .............................. ............................. ............................. ............................. ............................. .............................. ............................. .................................. .................... 8 Socio-Cultural Factors............. ............................ ............................. ............................. .............................. ............................. ............................. ......................................................... .......................................... 9 ............................ ............................. ............................. ............................. .............................. ............................. ............................. .............................. ............................ ............. 9 Technological Factors.............. ............................. .............................. ............................. ............................. ............................. ............................. .............................. ............................. ............................. .............................. ......................... .......... 10 Legal..............

Environment............... ............................. ............................. .............................. ............................. ............................. ............................. ............................. .............................. ....................................... .......................... .. 10 1.2 Porter’s 5 Forces................. Forces............................................. ....................................................... ................................................................. ...................................... 10 Threat of New Entrants............... ............................. ............................. .............................. ............................. ............................. .............................. ............................. ..................................... ....................... 11 Threat of Substitutes.............. ............................ ............................. .............................. ............................. ............................. ............................. ............................. ........................................... ............................ 12 ............................. ............................. ............................. .............................. ............................. ............................. .............................. ..............................12 ...............12 Bargaining Power of Buyers..............

........................... ............................. .............................. ............................. ............................. .............................. ............................. ...........................12 .............12 Bargaining Power of Suppliers............. ............................ ............................. ............................. .............................. ............................. ...................................................... ........................................ 13 Intensity of Competitive Rivalry.............

1.3 Key Strategic Issues........... Issues...................................... ...................................................... ...................................................... ........................................ .............13 13 2. RES ESOU OURC RCE EB BAS ASED ED AU AUDI DIT T.............. ............................. ............................. ............................. .............................. ............................. ............................. ............................. ............................. ............... 14 2.1 Internal Analysis..................... Analysis................................................. ....................................................... .............................................................. ................................... 14 2.2 Resource Based View.................... View............................................... ...................................................... ....................................................... ............................ 14 Resource.............. ............................. ............................. ............................. ............................. ............................. .............................. ............................. ............................. .............................. ............................. .................. .... 15 Capabilities.............. ............................. .............................. ............................. ............................. .............................. ............................. ............................. ............................. ........................................... ............................. 16 2.3 Capability Based Planning...............................................................................................17 2.4 SWOT Analysis...................................................................... Analysis................................................................................................................ .......................................... 18

 

2.5 Core Competencies............... Competencies.......................................... ...................................................... ...................................................... ..................................... ..........18 18 3.

BUSINES ESS S MODEL............. ............................ ............................. ............................. .............................. ............................. ............................. ............................. ..................................... .............................. ....... 20

4. STRATEGIC OPTIONS............. ............................ ............................. ............................. ............................. ............................. .............................. ............................. ............................. ............................23 .............23 4.1 Segmenting beer category...............................................................................................23 4.2 Market Leader Strategies........................................................... Strategies................................................................................................. ...................................... 24 4.3 Penetrating Strategy................... Strategy.............................................. ...................................................... ...................................................... ................................ .....26 26 ............................ ............................. ............................. .............................. ............................. ............................. .............................. ............................. ............................. ................................ ................. 26 CONCLUSION............. ............................ ............................. ............................. .............................. ............................. ............................. .............................. ............................. ............................. ...................................... ....................... 27 References.............

 

Assignment Overview

Through this work project, I wanted to analyze the company’s performance by conducting an external audit, resource audit, sustainability assessment & business performance. To proceed to this study, I have decided to take a multinational company, Carlsberg Group in a joint collaboration in Nepal with the leading business house- Khetan Group. Gorkha Brewery was for me the best example of  international investment success over the years in the Local Market. From problem formulation, ensue two other questions: How Gorkha Brewery through its evolution is still now a competitive company? And how to measure the performance of a company from an external point of view? There is an interesting market that they operate in i.e., the business world and business environment. As we are in the Strategic Management course, it was interesting to study the multinational company culture including its economy and portfolio. To answer questions, I have decided to introduce some elements of the beer market. The first part is going to present the company company overview historica historicall part of Gorkha Brewery and its evolut evolution ion until now followed by an external & internal analysis of the company, Business Model that they operate in and finally last part will describe Gorkha Brewery’s actual strategy also on different market and regarding its competitors.

Company Overview

Gorkha Brewery was established in 1989 as a joint venture between the Khetan Group and the Carlsberg Group. The company is the market leader in Nepal with more than 58.1% market share and today Gorkha Brewery's product portfolio includes mainstream, premium, local premium, and strong beers. Major brands of the company are Tuborg, Carlsberg, San Miguel, Gorkha, RedBull and Somersby. Gorkha Brewery (GB) has one of the most advanced production sites in South Asia with its state-ofthe-art brewing facility and technical expertise. The brewery is located on the banks of river Narayani near Narayanghat city with nearly seven hectares area. GB has the most modern and complete wastewater treatment plant in the region. Many words of praise are won by GB for its commitment to protecting the environment. The plant of GB can reduce biological oxygen demand to below 10 mg/lt to international standards. Gorkha Brewery has been successful in becoming an integral part of Nepalese lives over the last 32 years. The mantra behind this extraordinary success is the result of excellence in every arena: brewing beers of truly international standard, stringent quality control, efficient and nation-wide

 

distribution, cutting edge marketing, sales strategies, prudent financial management, and the company’s focus on the social & environmental sector. (Gorkha Brewery, 2018) Organizational Structure

 An organizational structure defines how the overall activities are proposed toward the achievement of organizational aims. The structure of the company affects organizational actions and provides the foundation on which standard operating procedures and routines rest. Organizational structure can also be considered as the viewing glass in which individuals see an organization and its environment. (Organizational structure - Wikipedia, 2021) Managing Director Ajith Babu

Corporate Afairs Director

Accounts & Financial Control Director

Prabin Adhikari

Prasad Gaywali

Health & Saety Manager

HR Director Shanta Shova Tuladhar

Deputy Managing Director & CFO Surendra Silwal

Markeng Director

Sales Director

Ashish Bista

Kajiman Subba

Trade/ Channel Markeng Manager

Sales Manager

Brand Manager

Area Sales Manager

Brand Execuves

Sales Execuves

Producon Director

CSC & Strategy Director

Premchand Sharma

Amar Baidya

Sales Representaves

Gorkha Brewery’s organizational structure is divided into 3 levels that help to function the company’s vision, mission & strategy. Corporate Level

Strategies are developed by the leadership team for the entire company considering all the factors. Calls to action points raised by operations level are addressed in the strategies. Business Level

This level focuses on bringing strategies in line, developed by the upper-level management.

 

Members of this level develop action strategies, take decisions in the respective departments to improve the flow and achieve the target. Operational Level

This level focuses on the implementation of decisions briefed by top levels of management & provided real market insights to company as; members of this level are the one who functions in the market by the understanding mission, vision & strategy of the company.  All the 3 levels are equally important on their own aspect. Flow of information & communication communication is both ways and all the members are strictly aligned towards the same goal. Likewise, the operations within the departments are flexible and keep on innovating as per the situation in the market to achieve sustainable competitive advantage. Industry Overview

The beer market is expanding its horizon and is scaling up, in the way that new breweries are entering into the market and by the existing breweries introducing new variants. Beer availability is almost there in every store and restaurant all around the country. Since antiquity, beer is the most consumed alcoholic drink. There are 12 breweries and around 45 brands available in the Nepalese market. Beer is and had been a part of the culture of many many ethnic groups and is often ass ociated with social traditions.

It seems beer is one of the most profitable drinks. It allows increasing growth and increasing profits because it is a high-margin product, biggest taxpayers. Interestingly market consists of 15 to 17 million potential beer drinking age groups. (Pradhan and Khanal, 2019)

 

1. EXT EXTERN ERNAL AL ANA ANALYS LYSIS IS

Externa Ext ernall envi environm ronment ent ana analys lysis is is a primary primary stu study dy and ana analys lysis is of mac macro-e ro-envi nviron ronmen mental tal for forces ces,, indu indust stry ry an anal alys ysis is an and d comp compet etititor or an anal alys ysis is in pu purv rvie iew w of an orga organi niza zatition on’s ’s gr grow owth th.. Ma Macr crooenvironment enviro nmental al forces are dimens dimensions ions in the broader society which influence influence the firms within it. GB’s strategies are made considering PESTLE analysis that focuses on the future probability of events. (External Environment Analysis Definition | Marketing Dictionary | MBA Skool-Study.Learn.Share., 2021) 1.1 PESTLE Analysis

PESTLE framework involves the collection and portrayal of information about external factors which have, or may have, an impact on business. As it is an analysis of the political, economic, social, and technological factors in the external environment of an organization, which can affect its activities and performance. (Jurevicius, 2013) Political Factors

The power of the government is very high in this industry as the beer industry is heavily dependent on taxation regulations. Since the government approves & increases the rates, the beer industry must comply legally to produce, distribute, and advertise the product. Everything from the ingredients to the labels on the bottles & cans must be approved before the product can hit the process. Scenario 1

(Threat)) Each brand is affec (Threat affected ted differen differently, tly, though. Take Tuborg & Gorkha Strong, for example. The alcohol percentage of the beer determines taxation criteria. -

(Opp (Oppor ortu tuni nity ty)) In the the gi give ven n sc scen enar ario io,, GB ha havi ving ng a wi wide de rang range e of pr prod oduc uctt po port rtfo folilios os can can compensate for the increase of the price of one brand with another brand.

Scenario 2

(Threat) Penalties for drinking responsibly are also mandated by the government. Rules like MAPASE have resulted in fewer losses to the company. -

(Opport (Opportuni unity) ty) In the the given sc scena enario, rio, G GB B associat associates es with with “Don’ “Don’tt drin drinkk & drive” cam campai paign gn and build relationships with service provider company like tootle, pathao to assist the motive. (Pradhan and Khanal, 2019)

 

Economic Factors

The beer industry is ginormous but also saturated. Gorkha Brewery being a big name in the market that has been in the game for decades must also compete among themselves for shelf space in liquor  stores & also for consumers’ attention. Scenario 1

(Threat converting into opportunity) Companies have to maintain a relationship with a lot of members in a channel to sell products to the final consumer. This relationship can get costly when competitors come to market aggressively. With the demand of the market, each channel has to stocks up numerous brands and invests more in purchases. -

(Opportunity) Credit availability could be the tool that might come across this stage which will hold up the money in the funnel.

Scenario 2

(Threat) Gorkha brewery’s beer brands ingredients, bottles, labels all come from the third country so fluctuation on exchange rate will affect the company directly.

Socio-Cultural Factors

SocioSoc io-cul cultur tural al fac factor torss aff affect ect var variou iouss aspects aspects of compet competiti itiven veness ess – inn innovat ovation, ion, pro produc ductiv tivity ity,, and international cooperation. As Nepal is highly influenced by international cultures so the trend of  drinking beer is also seemed to be adapting.

 

(Opportunity) GB is a multinational company with a mixture of team members all around the globe affects in working culture. Being operating as international bands which hold brand history that needs to be delivered while selling is one of the greatest challenges. However, Socio-cultural factors provide an opp opport ortuni unity ty to dev develo elop p com compet petiti itiven veness ess str strate ategie giess bas based ed on bui buildi lding ng cros cross-cu s-cultu lture re uni unique que advantages. (Opportunity) Many religions in Nepal have alcohol as a show of faith. GB is tapping on the cultural part with its local brew to build on an emotional relationship with core locals which will create brand imagery & build trust among locals for a long run. (Threat Converting Converting into Opportunit Opportunity) y) Consum Consumer er lifes lifestyle tyle has change changed; d; attit attitudes udes towar towards ds healt health h also focus as an important role. Strategic Analysis of Carlsberg Group expected shift towards healthy eating eatin g and diet among the consumers, and this could be a poten potential tial threat to the industry industry consumer  consumer  are concern to issues related to weight and obesity. Keeping the trend in consideration of proactive shift among the industry. GB compels to innovate brews that are light on calories & containing healthy phenol benefits . Technological Factors

Thiss ind Thi indust ustry ry relies relies hea heavil vilyy on tec techno hnolog logy, y, sta starti rting ng fro from m orde orderr pla placem cement ent to mov moveme ement nt till till the distribution of the product to channels. Without technology, there would not have any beers on the shelves. With technologies, it leads to speed up production as well as distribution process. Without it can even limit the amount of beer produced or put a company out of business. (Opportunity (Opport unity)) GB spends massively on R&D and innova innovation tion activit activityy of the compan companyy as it gives back clear return. Taking a real example, GB uses Sales Force Automation Device (SFA) for monitoring the sales team’s daily route to market activity and also for order tracking. For office accounting latest software NAV NA V is used used th that at co conn nnec ects ts vend vendors ors,, suppl supplie iers, rs, deal dealers ers un unde derr on one e ap appl plic icat atio ion n for for mo mone neta tary ry transactions. Staying updated makes the company grow & achieve the target. Legal

GB has a Joint international legal framework with a set of rules set by Carlsberg Group & regulations that need to be fulfilled stated by the Nepal Government. This industry is heavily dependent upon government act which needs to be fulfilled by company as per following laws or else company has to pay penalty to minimum & in too extreme case license may get canceled.

 

Environment

One of the main industria industriall consumers of water is the brewing industry. The brewing industry's industry's major  environmental problems remain energy use, water consumption, wastewater, solid waste and byproducts, product s, and air polluti pollution. on. They discha discharges rges a huge amount of highl highlyy pollut polluted ed effluents (Wang et al. 2008a, b;Wang et al. 2010;Wang et al. 2010) which causes several environmental and public health problems. (Olajire 2012) (Threat) The estimated beer carbon footprint varied from as low as 25 to as high as 259 kg of carbon dioxide dioxi de equivalent (CO2e) hL−1 owing to several reasons, such as the beer type, packagi packaging ng format, brewery size, and inclusion or not of the consumer phase.  Adding on, the world is facing a climate emergency that threatens people & the environment. Unions and government now and again inspect the plant. 1.2 Porter’s 5 Forces

In addition to PESTLE Analysis, Porter's Five Forces is business analysis model, that helps to explain why various industries can sustain different levels of profitability. The model was published in Michael E. Porter's book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors" in 1980. By doing Porter's Five Forces, we can analyze a GB’s competitive factors in external environment. The number and power of a company's competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence a company's profitability.

 

Moderate

High

Low

Low

High

 

Threat of New Entrants: Entrants: Moderate

The industry’s saturation is moderately high with a monopolistic competition structure. Economic of scale: For new entrants, the initial investment is not significant as they can startup at a

moderate modera te level of investment investment.. Exist Existing ing breweries are introducing introducing new variant variantss to expand the market from existing beer types. Price Segmentation: Beer market is divided into 4 segments as per price range. Higher competition

faced by GB is on Economy segment as 1 brand is fighting against 20+ competition brands. Price competition is comparatively high, which creates a moderate barrier to entry. Market penetration: penetration:  Entering in the market is relatively easy but they are countered by large

incumbent brands identities like Tuborg, Carlsberg, Gorkha which are GB’s product, who have achieved economies of scale by capturing a huge market share in premium, upper main stream & lower main stream market. Competitors are playing in economic segment where GB has low MS.

Threat of Substitutes: Substitutes : High

There are many reasonable substitute beverages to beer, which are mainly cider, carbonated drinks, water, soda’s, energy drinks etc. Bars and Pubs with non/alcoholic beverages could also substitute for the social experience of GB.

 

Local Brew: Consumers could also make their own home ferment fermented ed liquids at a fract fraction ion of the cost

for buying beers that costs more. Product Varieties: It is important to note that industry leaders like GB & Raj Brewery are currently

trying to counter threat by selling wide range of beers like lager, pale pilsner, wheat beer, craft and draft beers & adding SKU’s. This threat puts pressure in margins. Othe Ot herr Crit Criter eria ia:: In ru rural ral are areas as cons consum umers ers are ver veryy pr pric ice e sensi sensititive ve an and d eas easililyy infl influe uenc nced ed by

Wholesaler’s recommendation. Distribution network also hampers in point of purchase.

Bargaining Power of Buyers: Buyers : Moderate to High Pressure Market Demand: There are many preferences of buyers in this industry and breweries try to cater 

with its product to justify the market demand. Product Differentiation: Market offers vertically differentiated products for a diverse consumer base,

which erodes the buyer’s power. Price: Even though there are no switching costs with high availability of substitute products, industry

leaders price its portfolio mix in relation to other industries with prevailing market price elasticity and competitive pricing. Suppliers: Low to Moderate Pressure  Bargaining Power of Suppliers: Switching Cost: The main inputs into the value chain of beer industry are malt and hops grown in

select regions which are standard inputs, which make the cost of switching between substitute suppliers, moderately low. Strategic Analysis of GB. Supplier Agreement: Carlsberg group with its size and scale, has the power to take advantage of its

suppliers but it maintains a fair-trade certified hops & malt. The suppliers in the industry also pose a low threat of competing against GB by forward vertical in inte tegr grat atio ion, n, wh whic ich h lo lowe wers rs thei theirr po powe wer. r. Gi Give ven n these these fact factors ors,, suppl supplie iers rs pos pose e a mo mode derat rately ely low low bargaining power. Intensity of Competitive Rivalry Rivalry:: High to Moderate Competitors Compe titors Concentration Concentration: The industry has a monopolistic competition, with GB having the

largest markets share and rest 11 competitors also having a significant market share, creates substantial pressure in industry.

 

Industry Growth Rate : Market growth rate is in increasing trend by which many new breweries are

entering in the market, which crates high intensity in rivalry. Differentiation of Products : Players try to differentiate products using emotional appeals & modern

brand management techniques which builds some competitive advantage as it differentiates beer  brands which creates competition in market. This industry does not have over capacity currently and all these factors contribute to the intensity among rivals to be moderately high. Look Lo okin ing g at Port Porter er's 's fifive ve forc forces es anal analysi ysis, s, we can ge gett an ag aggre grega gate te indus industr tryy an anal alys ysis is.. Indu Indust stry ry attractiveness is moderate, looking at the market share, growth rate & competition trend. New comer  can do well by capturing niche market at first and gradually grow by increasing production capacity. On the other hand GB can sustain in the PLC by introducing new variant in the economy market as the pull strategy in the competitive market to bounce back.

1.3 Key Strategic Issues

By performing external analysis with the concept of PESTLEG & Porter’s 5 forces helped to identify the Key issues that Gorkha Brewery is facing mentioned below

 

2. RES RESOUR OURCE CE BASE BASED D AUDI AUDIT T 2.1 Internal Analysis  Analysis  

 An internal analysis examines organization’s internal environment in order to assess its resources, competencies, and competitive advantages. Performing an internal analysis allows to identify the strengths and weaknesses of company. This knowledge then aids the strategic decision making of  management while they carry out the strategy formulation and execution process. (Mirkovic, 2019) Likewise all will create value to its end consumers. 2.2 Resource Based View Resources & capabilities determines true source of competitive advantage.

 

Resource

 A company's resources do not provide an advantage if it is not organized in such a way that it can adequately exploit and capture the value from them. GB therefore assembles and coordinate the resources effectively to win the market. (Osterwalder, ( Osterwalder, A., 2010) The for formal mal repo reporti rting ng struct structure, ure, str strate ategic gic pla planni nning ng and budg budgeti eting ng syst systems ems,, man managem agement ent con contro troll systems, system s, and compensati compensation on policies are among the organiz organizationa ationall compon components ents of Gorkha Brewery. Someti Som etimes mes hav having ing val valuab uable, le, rare rare,, and imp imperf erfect ectly ly imi imitab table le reso resourc urces es is not eno enough ugh to crea create te a sustainable competitive advantage. Therefore GB focuses on the proper organization to acquire, use, and monitor the resources involved. We can see that GB acquired VIRO on three factors, implying that all four resource attributes are present, and the company has distinct competence capabilities that can be used to gain a long-term competitive advantage in changing market situations. The skills and knowledge of a firm's employees, as well as their functional expertise, serve as the foundation of many competences. GB knows and an d re relilies es he heav avililyy on hu huma man n ca capi pita tall in te term rmss of de deve velo lopi ping ng,, ut utililiz izin ing g ca capa pabi bililitities es & co core re competencies but does not overstate the case. GB is committed to building people's capabilities in order to successfully utilize their resources.

 

Summarizing Summa rizing the VIRO analysi analysiss and assessment, assessment, Gorkha Brewery makes use of its core capacities to strengthen its worth and continue to deliver the promise of consistent quality and taste to consumers – as well as guarantee futuristic and long term gains in the industry. Capabilities

Organization's ability to operate resources to achieve a specific goal. Capabilities can be tangible, intangible, or tactic in nature. It is the initial act of any business for long-term competitive competence, and the capability can be identified using a functional classification approach.

 

GB’s resources are valuable and well organized in most areas & on the other hand there are selective capabilities struggling to find a way out to build capability. For Example: GB has asset to build the beer market by importing international beers and satisfying the consumers with new variants. As the change is only constant thing in the whole universe GB sticking to old thought process and wanting to lead market with same brands is backfiring the company’s share & profit. GB has the means to import Carlsberg Group’s Family brand and launch it in Nepal but is not doing so. New thought process is lagging in the company. Sticking to push strategy is now not working in favor of GB. Sustainable strategy for GB would possibly be in building capabilities which could add on to existing portfolio and transform company’s resources into core competencies which in turn produce competitive advantage. Else without possessing to provide value to its consumers, GB would end us losing more of its market share and will struggle to be market leader. 2.3 Capability Based Planning

Strategic capability refers to a company's ability to leverage all of its skills, capabilities, and resources in order to gain a competitive advantage and, as a result, survive and grow in value over time. GB has distinct capabilities in several function areas, and it can use capability-based planning to determine which of its capabilities may need to be changed or revised in order to achieve desired goals.

 

2.4 SWOT Analysis

2.5 Core Competencies

In today’s highly competitive market environment, core competency is a must-have factor. Core competency is a narrowly defined field or task at which a company excels. A firm's core competencies are difficult for its competitors to mimic, allowing the company to differentiate itself. Most cor core e competencies will apply to a wide range of business activities, transcending product and market borders. (Kenton, 2019) In the short run, a company's competitiveness derives from the price/ performance of current products. However, in long run, a company's competitiveness derives from the value-added core competencies. Gorkha Brewery’s through its evolution is still now a competitive company, success factors could be -

Quality Product: All the brands in the portfolio are brewed under strict quality control. Raw

materials are orders from specific vendors listed by global group. Gorkha Brewery won award ‘Carlsberg Golden Words Award 2000' for maintaining uniformity in quality. Also another achievement 'iTQi 2013' was awarded to Gorkha by International Taste & Quality institute Brussels. [ CITATION Gor18 \l 1033 ]

 

-

Stake Stakeho hold lder er’s ’s Welf Welfar are e as a Corpo Corporat rate e Obje Objecti ctive ve: GB has embraced Triple Bottom Line

strategy which has been building trust and being a part of making world better. Gorkha Brewery was awarded with 'NS Award 2005' from Department of Standard and Meteorology for  ensuring measure of energy efficiency and conscientious treatment of environment. [ CITATION Gor18 \l 1033 ]

-

Di Distr strib ibut utio ion n Netw Networ ork k & Prod Produc uctt portf portfol olio io: Gorkha Brewery has segregated 5 regions of

Nepal into 8 regions for their easy operations and to develop a focus segment. Region: Central, Eastern, Far – Western, Mid-Western, Western GB’s Breakdown: Bagmati, East, Mid-East, Narayani, Lumbini, Center, West & Far-West This is the division made by the company to allocate manpower & resources as per the need. Each region’s demand is different as per R&D so to create focus GB divided the country’s region themselves. There is a stronghold in all the channels like dealers, wholesalers, retailers & local shops made by the sales team. The sales team has a route plan set in sales force automation (SFA) device, where they visit each outlet twice to thrice a week leading to build a strong relationship. The company has a full product portfolio that has helped to build a blockage in the market to block competitors. -

Pricing Strategy: Being the market leader of the industry, competitors take Tuborg’s price as

a par value that gives Gorkha Brewery benefit of advantage. GB’s product are there in the entire segment category i.e. premium, upper-main-stream, lower-stream & economy. Sometimes GB plays pricing strategy in the market to gain market share of their focused category segment. -

Key Resource: The Company since its existence has been focused & is building on key

resources that carry out business activities to create a value proposition. Key resources in term of human, financial, intellectual & physical partners.   -

Brand Equity: Each brand has its own demand space that they work on. A brand does

activities and promotions across all the mediums to build brand image & constantly hit consumers. By this GB has been retaining its consumers & giving them new thought processes of the same brand leading to trail generations.

 

-

Working Culture: Being a multi-national company Gorkha Brewery has a set of rules and

regulations that everyone must stay in which creates discipline in the working environment. The hierarchy of the organization is flat so that makes less competition in the role and building healthy relationships amongst co-workers.

-

Rese Re sear arch ch & De Deve vellop opm men entt : Gorkha Brewery highly depends upon R&D Data, till now which

has provided accurate data to the company. The R&D team is hired by Carlsberg Group,

Denmark itself, and all the questionnaire, tool guide, survey forms & data collection method brief are taught by Global itself. Therefore with the data team, Gorkha Brewery does planning.

3. BU BUSI SINE NESS SS MO MODE DEL L

Generally, a business model describes the rationale of how an organization “creates, delivers and ca capt ptur ures es val value ue”” (O (Ost sterw erwal alde der, r, 201 2010). 0). Th Ther eref efore ore,, the the Bus Busin iness ess mo mode dell can canva vass is a “st “strat rateg egic ic management” (Pigneur, 2014) tool that is made up of nine building blocks, each of which defines a different core fundamental element of business. The business model canvas enables organizations to have structured, tangible, and strategic conversations about new or existing businesses.

 

Key Partners

Key Activities

Value Propositions

Customer Relationships

Customer Segments

-

Strategic Alliance

Portfolio branding & availability is

-

Partnership Partners hip with Carlsberg

-

Brand Awareness

-

-

Joint

the unique strategy of GB

Group

-

Consumer Engagement

-

Recommendations

-

Mass Market

options

-

Dealership

-

Dealers

-

Taste

-

Retailer club

-

Wholesalers

-

Quality

-

Social Media chat box

-

Retailing customers

sustainability

-

Customer Satisfacti Satisfaction on

-

Advertising

-

Online stores

-

All eating & drinking

Venture

(Carlsberg Group)

-

-

Investors

-

Quality Control

-

Regular suppliers &

-

Production

buyers

-

Continuous

adaptation to

Brand

Portfolio,

wide

-

Distribution Networ Networkk

-

Technology

-

Branding, Marketing

-

Joy

-

Suppliers Sponsorships

-

Distribution Sponsorships

-

Easily available in any stores

-

Association

-

Serves need of buyers

External Innovators,

-

Tie-up’s with outlets

-

Key Outlets

-

Building distribution channels

Gorkha Brewery is a trusted

-

Dealers, retailers

for easy access to customers

name in the market since past

-

Hotel Associations

-

Policy Maintain (Inside HO)

32 years & it holds no 1 position

-

Local Authorities

-

Product

in the beer market.

-

Event Management

order,

payment

18-45 age group (M/F)

channels

balance

companies -

Delivery Company

-

Inventors

Key Resources

Channels

GB has been leading the beer

We are available in the mass

market and produces 5 beer

market, channel phase from

brands, cider & energy drink.

company to customer

Employee’s around 1000 people.

-

Awareness: ATL BTL

-

Purchase: Placement in all

 Annual beer production of 188.3K

channels 

Hectoliters

Supermarket, Retailers, Vending

-

Distribution Distributi on Network

Machines. Bar & Restauran Restaurants ts

-

Intellectual Intellec tual Property

-

-

Production Facilities

-

Distribution Agreement

-

R&D Team

Delivery: VP deliver by

building brand equity -

After sales: Post purchase

support, sales promotion.

Cost Structure

Revenue Streams

Business is more value driven , focus on value creation & premiumiz premiumization ation

Sales of product

-

Plant setup Raw Materials & Packaging

Distribution Agreement Brand value

-

Distribution & Production Cost

-

Quality Assurance

-

Tie up cost

-

Sponsorship Sponsorshi p & Innovatio Innovation n

-

TAX

-

Brand & Sales Promotions

-

Employees

 

The chart points toward the nine building blocks which a company needs to consider before commencing and completing their business canvas model. Customers: Key person of the business to run and to sustain.

 

Being operated in the mass market GB has separated its brands as per customer needs. Customerbased is compos composed ed of Dealer Dealers, s, Wholesaler Wholesalers, s, E-commerce, local stores, retailers retailers,, or can be anyone who purchases beer from the market. Value Propositions: Additional valuable offering along with the product.

While Whil e buying GB’s product the custom customer er feels trust trusted ed as they never compromise on taste taste,, quality & the brand value is premium as all the brands are international. Mainly it is available at nearby shops which solves customer needs at the right time with multiple brands to choose from. Channels: Medium to reach out to customer segments for delivering Value Proposition.

Operating in the mass market where there is all segment of people GB communicates thru ATL, BTL & TTL strategy channels. Customer Relationships: Building relationships with specific customer segments.

GB offers easy access to its product available for that GB maintains relations by building brand equity and offering schemes to its channel members to serve customers. Key Resources: Necessary assets required to make the business work.

Working in the mass market requires manpower, distribution, and technical support mainly. Followed by the R&D team to gain market insights and the production team to plan out the updates. Key Activities: Most important actions.

GB’s activity revolves around company’s strategy i.e. building a portfolio, availability in the market & to generate a trail to remain No. 1 in the market. GB accomplishes this by focusing on the quality product pro duction ion of brands brands also also foc focusi using ng on sus sustai tainab nabili ility. ty. Bal Balanci ancing ng out bui buildi lding ng bra brand nd ima imagery gery by marketing, R&D, sponsorship, trade schemes & mainly distribution network. Key Partners: Necessary suppliers and partners that make the business model work.

The most significant partnership of Gorkha Brewery is Carlsberg Group. And to drive the alliance GB’s partnership is with government officials, local authorities, event organizers, hotel associations, dealers, etc. Cost Structure: All cost incurred to operate business.

 

 As every e very action taken b byy a bu business siness has a cost attached to it. Creating value, maintaining customer  cus tomer  relationships all incur costs. GB's main costs are to maintain a relationship with channel members by giving tie-up fees, schemes deals for the exclusivity of Gorkha Brewery's product in their channel. Revenue Streams: Income that the company generates from their customer segments.

GB has targeted a customer base and tied up with them who generates value to company and makes the business more profitable. GB’s income drives from selling of beer which is of less alcohol percentage. So all the premium key accounts channels are tie-ups by Carlsberg which is the most premium brand in the portfolio.

4. STRATEGIC OPTIONS

Michael Porter in 1980 has presented three generic strategies use of which can create a strong position in the long run. Strategies are, either lower cost, differentiated, or focus. In the case of Gorkha Brewery, they must choose to pursue a competitive advantage by continue differentiating itself along dimensions valued by customers to command a higher price. A company also must choose two types of scope, focus (offering its products to selected segments of the market) & industry-wide, offering its product across many market segments. 4.1 Segmenting beer category

With the attractiveness of the market, many beers are entering making a cluster with no proper segmentation which confuses the end consumers. By segmenting the beer category it will make easy for both company & consumers. The company can segment its beer & target its focused segmented crowd with fewer disturbances. Similarly, consumers will be clear at the time of purchase regarding what type of beer it is & what they would want. Everyone entering the same segment will disturb the market & lose focus. In the case of Gorkha Brewery, there variants of products in each category. Segmenting each brand will increase penetration amongst the planned crowd. Premium and upper mainstream segment contributions are in decline state in the industry. Whereas lower mainstream seems to be growing with gaining highest contribution. There seems to have a very weak holding of GB in the economy segment which is the current growing segment. Offering products in the economy segment will provide a sustainability advantage to the company. GB must focus on the strategic part to introduce a brand to build a competitive portfolio set.

 

4.2 Market Leader Strategies

Expand Total Market

1. Target Potential Consumers Every year new potential beer consumers are entering the age group. Tapping to them is the must so taking the benefit of portfolio GB has Cider category with which GB can develop the taste & environment of drinking moment. 2. New Drinking Moments Developing beer drinking moments by sponsoring events, promoting happy hours, special offers can engage consumers to make action call. With this, even in the slow moment time purchase chances can increase. 3. More Usage There are numerous brands so to make difference in the market innovation is required to retain consumers. Every now on then as GB has been innovating and creating value for its consumer, be it by changing the label or by introducing a pull-off cap (for easy usage, no opener required). This must be continued because it uplifts the brand image & makes it worth paying for. 4. Ensure Availability Stock must be ensured in all the channels especially in the competitor dominant market. Attack at regions where cheap beer is in high demand with Himalayan Dragon & attack at regions where competitor brands are dominating. Defend Market Share

1. Cost Control Establishing a brand requires full effort from all the area. R&D, finance, branding, trade activations, sales, finance, production, marketing, and so on. Each department has a lot of costs included in it. Department's goals are common so reducing the unwanted extra cost and saving budget leads to saving which can be used in sales promotions. Sales promotion will directly show the change in purchase patterns by offering value directly to end consumers. 2. Building Brand Equity – Value Differentiating products in the clutter markets is essential and brand name creates trusts which will retain consumers from shifting. Gorkha Brewery’s brand must hit the functional & emotional aspects to build brand equity. Maintaining relations with all the members of the channel and constantly

 

praising them for the support would build a stronger bond by which competitors cannot easily enter the market. Expand Market Share

1. Merger & Acquisition  Already GB is part of Carlsberg Group which gives an advantage in terms of brand value & innovation. GB must fully use the opportunity to widen its portfolio by importing family brands available in the Group. By which category expansion will happen and more consumers will fall under the portfolio funnel created by GB (Lower chances to land on competitor’s brand, low switching scenario). 2. Innovation Nepal’s Market is limited to fewer variants of categories. Innovation in the industry will attract consumers. For example, GB could come out of their comfort zone and introduce out-of-the-box ideas in liquid or in way of doing things. 4.3 Penetrating Strategy

In the economy segment, GB can launch Gorkha’s line extension because it is locally brewed and is gaining market share by which consumers will trust the new product of it quickly. Line extension will attack at regions where competitors are doing well & will follow on the availability.  Attack, grow & defend strategy can be applied while launching launching the product. By doing so Gorkha brewery will maintain a stronghold in the market with the combination of beer categories & can continue to remain the leader.

CONCLUSION

The beer industry is an attractive business; Gorkha Brewery has been the leader of the market but now to hold the same position company must penetrate the challenged market & continuously make competitors irrelevant. Market Leader strategies to expand the market, defend market & expand market share must be focused on. Even there are a lot of competitors and few barriers to entry into the market, it is a profitable business. Tapping on a small niche segment can provide greater ROI.

 

References (n.d.). Retrieved from Carlsberg Group. 2021. Nepal. [online] Available at: [Accessed 18 March 2021]. (n.d.). Retrieved from Carlsberg Group. 2021. Nepal. [online] Available at: [Accessed 18 March 2021]. (n.d.). Retrieved from Team, M., 2021. External Environment Analysis Definition | Marketing Dictionary | MBA Skool-Study.Learn.Share.. [online] MBA Skool-Study.Learn.Share. Available at: