SABMILLER PLC

SABMiller Plc



SABMiller Plc

Introduction

SABMiller (SAB) plc is the second largest brewers in the world with brewing interests or distribution agreements in over 75 countries across six continents. The group's brands include premium international beers such as Miller Genuine Draft, Peroni Nastro Azzurro and Pilsner Urquell.

SABMiller, the world's third-largest brewer, has agreed to buy Colombian Bavaria company by 5,600 million (4,800 million euros). The group from South Africa will pay U.S. $ 3,500 million shares to the Santo Domingo family, which owns 71% of Bavaria. SAB chief executive Graham Mackay said yesterday welcomed the prospect of growth in a market as important from a strategic standpoint. The acquisition includes the assumption of debt of 1,900 million dollars, and other interests worth 1,000 million. Thus, the purchase agreement is to SABMiller a total of 7,800 million (6,500 million euros). With this operation, the group hopes to save about $ 120 million annually over the next five years. SAB even raised the value of shares in terms of price by 7%, to 948 pence. The group wanted to stop focusing exclusively on Europe and South Africa to diversify the business in Latin America and accelerate sales growth. The operation was boosted decisively after his rival. In between pass from fourth to second place in the global ranking of the sector with the purchase of AmBev, it became the first brewer in Latin America, for 11,200 million dollars.

Exhibit below provides a summary scope of SABMiller operation today.

External Environment Analysis

Politically, SABMiller's strategy demands a great political sensitivity in dealing with governments, partners, local communities and the workforce, considering several acquisitions made by SABMiller.

Moreover, the competitive context of the macro environment should also be examined. It can be seen that there are two major trends in the brewing industry:

Globalization: companies operating in such an industry usually tend to establish strong presence worldwide. ( SABMiller operates in 75 countries across six continents)

Mergers and acquisitions: mergers and acquisitions are of the most important tools which organizations use in order to achieve globalization.

Furthermore, The SABMiller competitive position could be considered in near monopoly that has been achieved due to competitive advantages SABMiller has, these competitive advantages mainly are: economies of scale, low prices, and efficient distribution.

PEST Analysis

Following is the PEST analysis of SABMiller

Political Factors

The main political factors associated with the SABMiller are as follows. The local authority support for the beer is declining continuously. There is a great potential of withdrawal preceding the changes in the political control. The political factors have greatly influenced the regulation of beer industry in UK (Aaker, 2009, p. 137).

Economic Factors

There are some economical factors which can affect the market of SABMiller for UK. These are the factors through which the purchasing power of the potential clients is affected. The economy of UK has low inflation rate which is considered as the benefit and good sign for the companies. The rate or inflation has decreased to 1.3%. Another good factor for the SABMiller is that the unemployment rate of ...