Foreign Market Entry and Diversification
Assignment #3 Foreign Market Entry and Diversification
Daniel S. Carrera
Dr. Kimberly Anthony
Strategic Management - BUS 599
Strayer University – Newport News
4 August 2011
Abstract
This paper will identify and discuss the trends in global beer markets. It will discuss how Modelo’s International expansion was made possible through strategic partnerships with experienced distributors in local markets. The paper will focus on how Modelo should enter in the foreign market and what is the best strategy. We will discuss various challenges Modelo will face from his competitors and whether he should diversify his business to promote growth.
During the past five years, on a pure alcohol-equivalent basis, beer has increased its share of total alcohol consumption by more than 200 basis points (bps) to 41.1% (Kaplan, 2003). In 2008 the trend slowed somewhat and beer’s year-on-year share of total alcohol consumption remained flat. In emerging markets, beer has generally shown higher growth than other alcohol categories as consumers gradually switch from local, generally high-alcohol, subsistence products towards attractively packaged, higher-quality, commercially produced beer.
In South and Central America, beer’s share of total alcohol consumption is now 51.5% with increases in Colombia partly offset by recent declines in Mexico and Brazil (Karrenbrock, 1990). In Eastern Europe, beer has been gaining share from spirits for some time and now accounts for 48.0% of alcohol consumption. The past five years have also seen consistent gains in Africa and Asia where beer’s share of commercially produced alcohol now stands at 49.0% and 32.8% respectively – thanks, partly, to a greater emphasis on quality and accessibility (Karrenbrock, 1990).
In more mature markets, a wider variety of alcohol products compete in a sophisticated marketing and retail environment. In North America, beer has been losing share as spirits have benefited from more extensive
Daniel S. Carrera
Dr. Kimberly Anthony
Strategic Management - BUS 599
Strayer University – Newport News
4 August 2011
Abstract
This paper will identify and discuss the trends in global beer markets. It will discuss how Modelo’s International expansion was made possible through strategic partnerships with experienced distributors in local markets. The paper will focus on how Modelo should enter in the foreign market and what is the best strategy. We will discuss various challenges Modelo will face from his competitors and whether he should diversify his business to promote growth.
During the past five years, on a pure alcohol-equivalent basis, beer has increased its share of total alcohol consumption by more than 200 basis points (bps) to 41.1% (Kaplan, 2003). In 2008 the trend slowed somewhat and beer’s year-on-year share of total alcohol consumption remained flat. In emerging markets, beer has generally shown higher growth than other alcohol categories as consumers gradually switch from local, generally high-alcohol, subsistence products towards attractively packaged, higher-quality, commercially produced beer.
In South and Central America, beer’s share of total alcohol consumption is now 51.5% with increases in Colombia partly offset by recent declines in Mexico and Brazil (Karrenbrock, 1990). In Eastern Europe, beer has been gaining share from spirits for some time and now accounts for 48.0% of alcohol consumption. The past five years have also seen consistent gains in Africa and Asia where beer’s share of commercially produced alcohol now stands at 49.0% and 32.8% respectively – thanks, partly, to a greater emphasis on quality and accessibility (Karrenbrock, 1990).
In more mature markets, a wider variety of alcohol products compete in a sophisticated marketing and retail environment. In North America, beer has been losing share as spirits have benefited from more extensive
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