miller final doc
Table of Contents
Introduction 4
Employees 4
Positioning of company 4
Diversification 4
Hotels and gaming 4
Environmental 5
Group strategy 5
Government 5
Porter’s Five Forces of Competition 6
Barriers of Entry: The United States Beer Industry 9
In the United States Brewing industry barriers to entry for newcomers are extremely high. In other words, in order for a new brewing company to enter the market there are many hurdles that they must overcome, and often times these barriers make it almost impossible for competition to enter the market. 9
One of the first factors that must be considered when researching whether or not one should enter a certain market is cost: What will the cost of investment be? What will the fixed costs be? This is a major barrier of entry in the United States beer industry: The high initial cost of entrance, the equipment, materials, proper technology and experienced personnel, needed in order to effectively produce a quality beer is very high, making it difficult for others to enter the market. For example, a modern brewing facility cost approximately $250 million dollars, for capacity of four to five million barrels annually, and the optimal quantity to achieve economies of scale is eight to eight and a half million barrels per annum. In comparison, Coors Brewing Co., the third largest brewer in the United States, produced over 31.8 million barrels of beer in 2002. Budweiser sold over 101 million barrels in 2002, Miller Brewing Co. sold over 39.6 million barrels, 2001. 9
Another factor that one must examine is how to comply with government regulations concerning the distribution, labeling, advertising, credit, container characteristics, alcoholic content, tax rates, and litter assessments of their product. The Bureau of Alcohol, Tobacco, and Firearms mandate these federal regulations. Then once the BATF is done, each state has a complex set of laws and regulations governing its industry. 9
Marketing costs
Introduction 4
Employees 4
Positioning of company 4
Diversification 4
Hotels and gaming 4
Environmental 5
Group strategy 5
Government 5
Porter’s Five Forces of Competition 6
Barriers of Entry: The United States Beer Industry 9
In the United States Brewing industry barriers to entry for newcomers are extremely high. In other words, in order for a new brewing company to enter the market there are many hurdles that they must overcome, and often times these barriers make it almost impossible for competition to enter the market. 9
One of the first factors that must be considered when researching whether or not one should enter a certain market is cost: What will the cost of investment be? What will the fixed costs be? This is a major barrier of entry in the United States beer industry: The high initial cost of entrance, the equipment, materials, proper technology and experienced personnel, needed in order to effectively produce a quality beer is very high, making it difficult for others to enter the market. For example, a modern brewing facility cost approximately $250 million dollars, for capacity of four to five million barrels annually, and the optimal quantity to achieve economies of scale is eight to eight and a half million barrels per annum. In comparison, Coors Brewing Co., the third largest brewer in the United States, produced over 31.8 million barrels of beer in 2002. Budweiser sold over 101 million barrels in 2002, Miller Brewing Co. sold over 39.6 million barrels, 2001. 9
Another factor that one must examine is how to comply with government regulations concerning the distribution, labeling, advertising, credit, container characteristics, alcoholic content, tax rates, and litter assessments of their product. The Bureau of Alcohol, Tobacco, and Firearms mandate these federal regulations. Then once the BATF is done, each state has a complex set of laws and regulations governing its industry. 9
Marketing costs
Bibliography: 1 http://www.quickmba.com/strategy/porter.shtml 2 http://www.millerbrewing.com/aboutMiller/aboutMain.asp 3 http://seattle.bizjournals.com/seattle/stories/2003/01/06/daily44.html