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Heineken case

University/College: University of Arkansas System
Date: October 29, 2017
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Heineken case

Heinlein uses an International strategy that Involves using cross-border deals to increase their distribution of over 250 beer brands in over 175 countries. The company has also acquired many different small brewers all over the world to add to their portfolio and increase access to new markets. Due to this strategy, Heinlein currently operates over 125 breweries in over 70 countries and holds 10% of the global beer market.

The company’s main entry mode into foreign markets involves foreign direct Investment through acquisitions that give Heinlein a great degree of wineries and control. They gain control of the whole brewery, so they expand by way of wholly owned subsidiaries. Whininess’s international acquisition strategy allows the company to increase market share and presence in their industry across the world, and do not have to worry about the added costs associated with creating new brands.

It is difficult to pinpoint exactly what strategy for globalization Heinlein has used, since they acquire these brands with already developed and successful products and allow them to stay as their own brands. I would describe Whininess’s tragedy to be most similar to a transnational strategy. A transnational strategy is based on firms optimizing the trade-offs that go along with efficiency, local adaptation, and learning, where the pressures for local adaptation and lowering costs are high.

A company using this strategy, seeks efficiency but as a means to achieve global competitiveness, as does Heinlein. Heinlein has limited Its acquisitions to small national breweries, rather than gaining more growth through mega-acquisitions Like Its more aggressive competitors. The company’s reluctance towards acquiring larger breweries is in part due to the awakening of family control. The corporate culture at Heinlein, being that it started as a family business, is more of a low-risk taking and lengthy decision making type of culture.

The firm has since decided to break out of the habit and go after mid-to large sized breweries. With changes In their management structure, which Included cutting down the executive board, as well as the executive committee, while also creating management positions to oversee different regions and functional areas, the company was able to make faster and riskier decisions, specifically on acquisitions, in order to not fall behind their competitors and continue to increase their market share in the industry all over the world.

Their supervisory board consists of 10 members from different countries, which gives them an advantage to making better decisions. The reasoning would be because If Heinlein continued with their Dutch only legacy It would hinder their ability to make the best decision on which brewery to acquire in a certain country and then how to manage it to continue the success. By having people of different cultures and backgrounds, they have more international knowledge that can help them in making these international decisions.

Although I believe Heinlein uses a transnational strategy, they company tends to concentrate activities and decision making In a central location, within headquarters, and although they are slowly trying to change It, It has been a resistant change, so as involves having centralization in a few key locations where it would be most effective and efficient, something that Heinlein should do to disperse some of the decision making. They need to react fast to changes in the world, be bigger risk-takers, like heir competitors, and make fast decisions to acquire or conduct business in other countries before their competitors do.

Also, if they are not sure that the risk of a large or mid-sized acquisition is worth it, Heinlein should consider the entry mode of strategic alliances and partnerships. The company would not have full ownership but they would also not have to assume full risk, and they can combine resources with the other company, which can be a very advantageous thing to do when trying to globalize quickly and enter foreign markets that Heinlein might not be so informed about.

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