Foreign Market Entry & Diversification

Assignment 3 - Foreign Market Entry & Diversification

Q1) Identify & discuss the trends in the global beer markets.

The global consumption of beer is showing an increasing trend, as is evident from the fact that the World's Top 10 Beer Brands shipments globally, increased from 229.9 Millions in 2005 of Barrels to about 247.60 Millions of Barrels in 2006 (an Y-o-Y increase of 8%). Furthermore, the acceptability or the liking of the Top 10 Beer Brands across the globe did changed but that change was very minimal except in the case of "Snow" whose global acceptance increased at an impressive rate of 92.00 % (approx) from the period 2005 to 2006, thereby leaving all the other big brands far behind.

The acceptability of the beer is slowly and steadily picking up pace across various other global markets. In this trend, the role of developing economies like of China has been phenomenal, as can be foreseen from the fact that, it has been able to emerge as the largest beer market in the World by surpassing USA in the year 2003. Coming to the race for the global contenders of the consumption of beer (apart from USA & China) one can lead to a conclusion that in the years to come the countries like Brazil, Russia, Canada & Brazil will definitely be the potential markets for the beer brands as their consumption level is pegged at a range of 0.1 to 74.0 hectalitres (as per Exhibit 4). So, the potential of unleashing the same is more in these countries.

Furthermore, if we look at the Exhibit 3 which showcases the market leaders of the beer business across the globe, one can infer that the competition among this segment is quite stiff. This may be due to the fact that companies are not able to adjust themselves to the changing consumer taste & preference, fault in product positioning, etc. Due to which, the company's position in terms of their market leadership has changed very drastically. For example, InBev which could not make itself to the Top 6 beer brands in terms of market leadership in the year 2000 saw an upward surge and reached on the top in the terms of market leadership in the year 2005.

When we speak of the global presence of the beer brands, one can easily conclude that the top local beer brands are leaving no stone unturned to expand their horizon globally. To support this cause of theirs, the beer manufacturers are relatively dependent on the mergers & acquisitions with the beer companies which are located in the countries in which they are targeting. And the next level of growth is poise to come from developing countries in particularly.

Q2) Discuss how Modelo's international expansion was made through strategic partnerships with experienced distributors in local markets.

To succeed in the International Arena, it is essential that the timing of your entry is

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