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Strategies Business-Level Strategy
Porter’s generic business-level strategies: Molson uses both a cost leadership and a differentiation strategy. For the cost leadership strategy the price wars have made this relatively basic for brewers on a mass scale. If you want to sell a lot of beer then you have to sell your beer at the minimum price. So it’s almost not a strategy anymore. As for differentiation brewers always try to find and develop new products so they can hopefully steal customers from other brewers and bring them to their side. Examples of this are Rickard’s white, Molson M and Bud Light Lime. Molson’s strategies are broad (broad differentiator) and not focused because they offer many different types of beer for pretty much all niches including microbreweries.
As for Miles and Snow’s generic business-level strategies Molson is much more of an analyzer than the other three options. They’re analyzer because even though they defend their own market shares they always try to steal other’s by analyzing what others do and competing against them.
Corporate Level strategy
On a corporate level Molson uses single-business concentration. They focus on what they do best and that is to brew beer, unlike other brewers like Anheuser-Busch who also own amusement parks. Molson has been selling beer for almost 250 years and are still very successful at it. They diversify their beer products to correspond to many niches but stay in the same type of business. The beer industry provides important and constant profits and a stable and ever increasing demand so it continues in the same direction towards the future.
International strategy
As mentioned earlier Molson has reaches in many countries other than Canada. With their merger with Miller-Coors they have operations present in the U.S. and in Europe with Carling. This allows not only for more profits and growth opportunities but also for new distribution networks for exporting their beer throughout the world. They also benefit from worldwide learning so they can benefit from new knowledge and skills to further improve their company. Globalization also allows new sources of profit in Canada for Molson because international brewers rely on them to distribute their products (licensing). The best examples of this are once again Heineken, who is present in 170 countries, and Corona. Molson Coors also benefits from a joint-venture with SABMiller to distribute Miller Lite, MGD, Milwaukee’s Best and their other products in North America. This joint-venture is known as MillerCoors.
However being a global company also opens the door for global competition. Molson Coors is the fifth largest brewer in the world so bigger companies like Carlsberg and SABMiller can steal sales away from them on their home turf.
Molson Coors uses a transnational strategy to better meet their customers’ needs. The brewer mostly sells and pushes Coors and Coors for example in the U.S. and Molson Canadian and Ex in Canada. However they also import each other’s different beer. They also centralize some functions of the company but decentralize others.
Functional level strategy
Marketing: Molson uses differentiated marketing to target several different segments by offering products that corresponds to those segment’s needs. As for positioning their different products have different positions. For example, premium beers are for everybody and super premium beers are positioned to have a more prestigious image. As mentioned before Molson also offers bargain type beers and ultra premium beers to that are positioned accordingly.
The product life cycle for beer products follow the same patterns as most products. At the emergence stage sales are low, then increase in the growth stage and attain a maturity stage where they top out and usually have a declining stage where sales decrease. But something that sets the beer industry apart is the fact some products never change for decades and still sell well. A good example of this is Molson Ex which was first brewed in 1903 and hasn’t changed. However brands can have really quick downfalls as experienced by the Dow brand. It was the number one selling beer by far in Quebec in the 50’s and 60’s and because someone died drinking it the whole brand disappeared.
Operations strategy
Cost: Molson standardizes their recipes for each one of their beers and produces them in large lot sizes. This allows for cost saving on a large scale. Each brewery brews a certain number of basic beers (Canadian for example) and some regional beers such as Molson Dry which is only sold in Quebec. They also might use the same recipe but sold under different names depending on the area where it is sold. An example of this is Blue Moon in the U.S. is the same as our Rickard’s White. Some say it is also true for Canadian and Laurentide but I haven’t found an answer to that yet! Molson also uses sequential automation to brew the beer, clean and fill the bottles and cans and to wrap them up and send them to the trucks to be delivered.
Quality: Quality is something immensely important for a brewer. It’s important for a beer to taste the same everywhere and not to have any defects because a brand can fall completely if a product batch isn’t up to standards.
Research and development strategy
On the research side of things Molson always tries to find new ways and procedures to improve their already existing products or to create brand new ones. They mostly use applied research to find these new technologies and procedures. A good example of this is the Molson M. As for the development side Molson always thrives to engineer more practical and better performing machines. Molson spends millions per year trying to find new ways to differentiate their products from the competitions’. If they can sell one more hectoliter with a new product then it’s one more than the competition.
Human resources
Employee flow function: Molson uses a mix of acquiring and developing internal personnel. Some very specific and/or important jobs require special skills so Molson sometimes hires people from outside the company. However, for most of their employees Molson usually trains them and moves them around to different jobs.
Compensation: Molson is a very competitive company. They usually pay their employees higher than average and also allow give them the possibility of bonuses and special offers. Of course it’s different from job to job but always stays very competitive.
Employee relations function: Molson uses a very family-like atmosphere. When you work there you feel like you’re part of the gang and it’s a great place to work. Most employees work there for their whole lives so it must be a good company to work for. Every job has a supervisor but still there’s a certain freedom to everyone’s work. There are certain standardized bonuses specific to each job and this acts as a good motivational force for workers.
Financial strategy
2009 Highlights-
2009 net income attributable to MCBC increased 90.2 percent to $720.4 million.
Underlying after-tax income(2) increased 40.7 percent to $707.4 million, or $3.81 per diluted share, driven by a lower effective tax rate, price discipline, and cost reductions.
Underlying pretax income(2) increased 11.9 percent to $718.5 million.
For the full year, foreign currency movements decreased consolidated 2009 underlying pretax income by approximately $32 million versus a year ago.
Molson Coors worldwide beer volume decreased 3.0 percent on a pro forma basis.
As of December 26, 2009, cash and cash equivalents totaled $734 million, and total debt was $1.71 billion.
Stock information-
Price (04-13-2010): 44.57
Volume: 2,151,230
52 week high: 51.33
52 week low: 34.27
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