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Coors update

Coors update. 1985: Miller introduces Genuine Draft 1986: Agreement with Asahi Breweries to brew and distribute Coors in Japan 1987: Shenandoah packaging facility opened Sent concentrated beer there and added water to it.

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Coors update

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  1. Coors update • 1985: Miller introduces Genuine Draft • 1986: Agreement with Asahi Breweries to brew and distribute Coors in Japan • 1987: Shenandoah packaging facility opened • Sent concentrated beer there and added water to it. • A‑B ran ads making fun of Coors for claiming Rocky Mtn. spring water when the water came from Virginia. • Coors sued & lost, and lost the right to claim “Rocky Mtn. spring water” in advertising.

  2. Coors update (cont’d) • 1990: Purchase of a Stroh’s brewery in Memphis • 1990: Coors rises to #3 among US brewers • 1993: New president and COO hired from Frito-Lay; first non-Coors family member to be president • 1996: A-B has captured 48% of US beer sales • 2002: Coors acquires 2nd largest UK Brewer, Carling • 2004: Coors outbids SAB/Miller for Molson, Canada’s largest brewer • 2005: Molson Coors is world’s 5th largest brewer 3rd largest in U.S.

  3. Coors takeaways:Competition • Need to understand industry and nature of competition to make good strategic decisions • What matters for competition? Here, • transportation costs => geography • scale economies • advertising • Market dynamics: what determines market structure in the long run? • Look at MES/market size • Here also: escalation of advertising expenditures

  4. Cross-functional perspective • Assessing a firm’s strategy and its options requires looking at all functions/activities: • Procurement • Production • Marketing • Distribution • Often also: organizational structure, HR policies, financial position etc.

  5. External and internal fit • Strategy can be seen as link between firm and its environment • External fit: how well do firm’s activities fit with external market forces? • Internal fit: how well do various activities fit with one another? • An activity system is an important tool to assess internal fit • 70s: good match between regional strategy and choices in production and marketing; • 80s: mismatch between activities and national strategy

  6. Assessing competitive advantage • Look at costs and (customers’) benefits; prices depend on those • Cost drivers (e.g. scale economies, transportation costs) => cost advantage? • Benefit drivers (freshness?, limited availability) => benefit advantage? • Try to quantify each, given available data • Useful (but too simple) distinction: “cost” vs. “differentiation” strategy

  7. Sustainability of a competitive advantage • Having a competitive advantage does not mean it’s sustainable! • Two kinds of threats: • Changes in the market (e.g. increasing importance of advertising) • Efficient markets principle at work: if you’re making profits, others will try to go after you!

  8. Strategy and commitment • Strategic decisions are often hard to reverse, due to • Sunk costs • Late-mover disadvantages • Delays in implementing changes • Organizational inertia • Successful strategic planning requires thinking things through ahead of time • Monitor/anticipate changes in the market. • Try to anticipate others’ moves • Others’ moves can quickly change your position in market, or force you to change it

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