Coors Brewing Company Case Study

Miranda Dykes
MGMT 4513 Case Study
Coors Brewing Company Overall performance is closely linked to a company’s operations and how they meet objectives to obtain certain outcomes. The story of Coors’ performance is told in Exhibits 9-10 in the Strategic Management textbook ; despite increased capacity, operating income as a percent of sales declined by 11% in 1985. Even more telling are the changes in pure operating income across the industry. From 1977 to 1985 Coors declined by 14.7%, while others like Heileman increased 168% and Anheuser-Busch increased 358%. Other factors come into play like Coors having low growth in net revenue and the number barrels sold, but possibly the most influential change is Coors advertising expense, which is approximately
The high quality and uniqueness of the ingredients already exist, however customers are buying the beer based off the lower costs. If Coors wants to use differentiation and the same ingredients, they must create a high level of cost parity to ensure high revenues and reduce all costs not directly related to differentiation, such as in severely reducing the number of packaging lines (320). It would be best if Coors condensed their advertising costs and instead focused on producing creative and innovative ads in place of a high quantity. The connections with wholesalers and important customers should be strengthened through public relations and used to promote a luxurious perception of Coors beer. Furthermore, the plans for buying the production plant in Virginia would still be valid, along with the plans for railway and road
This would allow Coors to differentiate their product in a new way, while minimizing associated costs. Coors would still be required to integrate economies of scale and adjust “Rocky Mountain” water to be more inclusive—“Pure American Spring Water.” By using a new marketing slogan and using “locally supplied” ingredients, Coors could continue differentiating as a proud product using high quality ingredients and processes, only at a lower distribution cost. Keeping qualities of a differentiation strategy establishes higher entry barriers from customer loyalty and provides a cushion for profit margins. This would also help decrease supplier power from the integration of economies of scale and remove the associated operational risks. A combined strategy will allow Coors to adapt and grow in the future, helping to ensure the survival of the brewery. In 1985 the Coors Brewing Company experienced such changes from a lack of a specific industry analysis and strategy for the future that simultaneously would have allowed for flexibility. The lowered stock price and their financial information show operational issues are happening; the numbers don’t lie and investors will continue to react negatively to Coors unless their problems are mitigated. To develop a competitive advantage, a company must have superior resources and capabilities