Swot Analysis

SWOT analysis plays a significant part in any company. Any company has some internal
strengths and weaknesses, with some external opportunities and threats. It helps to
identify what are the capabilities and capacities of a company.

Strength: A company should be aware of its core capabilities and sources of

competitive advantages. Core capabilities are the critical skills and processes
that an organization executes so well that its reputation builds around it.

Weaknesses: An organization must recognize its limitations. Whether

limited by a poorly equipped production facility or a sales force that merely
quotes prices and delivery dates, a business that acknowledge its weaknesses
forces mangers to assess their processes and systems.
Opportunities:External and internal environments present both driving and
restraining forces. Opportunities may occur suddenly. Too slow or not well
planned response may change an opportunity to a threat.

Threats:Threats are negative external environmental factors which influences

an organizations decision. External factors are not controlled by the organization
and to survive every organization needs to be very alert about its threats and
how they can overcome this problem.

Strength

The recent improvement in standard of living in China resulting from the growth
of the economy has a direct positive impact on the beer consumption rate.
 [

China is the focus of the international market and every beer company wants to capture
it as it shows promises of increasing demand of bee. A market with appealing
demographics and steady upward development is the ideal scenario that investors look
for and China exactly meets.

In HRP Model this falls under:

Trend analysis
Product demand

Beer has a high demand in Chinese market according to the trend analysis done by
researchers. The growth rate of beer consumption has always been above 5%, which
can be related to the HRPP model via Product demand.

Urbanization and the growing pub culture in China has a direct influence in the
choice of beer and rate of consumption by the Chinese people.

The growing pub culture and urbanization has influenced the Chinese people in
consuming not only more beer but also the consumption of international beer brands
have increased due to this change.

In HRP Model this falls under:

Demographic change
Education in the workforce
Product demand

Urbanization and improvement in standard of living can be related to the HRPP model
via Demographic changes, which in return is educating the work force with improvement
and efficient technology, and increased income is effecting the demand international
beer brands.
 Harbin brewery is known to be the most efficient brewery. Along with clever
market penetration strategies and good reputation it also has a strong hold along
the Northeast region.

Harbin brewery evidently has a strong management and strategic team, which is
accustomed with the Chinese buying behavior.Harbin utilizes 90% of its capacity with a
great margin on cost. Its reputation along the Northeast region is highly beneficial to
Anheuser-Busch.

In HRP Model this falls under:

Management philosophy
Organizational growth
Technology

Harbins great marketing and management strategies can be related to the HRPP model
via Management philosophy and Organizational growth, where as the 90% utilization
of capacity shows a upper hand on Technology in relation to HRPP model.

Weaknesses:

Chinese problems have Chinese solutions this particular belief puts the foreign
 companies in a sticky situation while operation in the country, management
seems to get entangled in conflicts amongst their own selves.

Chinese people believe in fragmented high power-distance work relationships, where

everyone is commanding in every layer of management, which creates conflicts very
often among the bosses and the employees. .

In HRP Model this falls under:

Management policy

In relation to the HRP model, this internal conflict can be explained to be an absence of
management philosophy amongst the Chinese management set by the foreign
companies.

China is a very conservative country in terms of foreign company culture, which

is why foreign companies find it hard to understand Chinese culture of work and
according to Chinese business policies the host country, is in-charge of
management policies.

The JV companies setting up in China has a huge management gap between the
western and the Chinese partners, this creates confusions and slows down decision
making process and employee efficiency.

In HRP Model this falls under:

Goverment policy
Mangement philosophy

Chinas foreign investors policy is not flexible for the foreign partners and thus this factor
falls under the Government policy, and Management philosophy of HRPP model due to
the conflicts its creating.
 Chinese labor force have a very influential union, and is therefore strongly
supported by labor unions who are powerful by Chinese laws context, there for it
is really hard to control the Chinese labor force as they have strong union back
and no fear of losing jobs

Unions controls the whole work force of manufacturing companies in China and that
control is so powerful that even the management faces a hard time as unions can easily
manipulate the labor force and turn them against the management in order to achieve
their own goals.

In HRP Model this falls under:

Labor mobilty
Organizational growth
Absentism
Management philosophy
Sucession planning

Labor mobility,absentism, succession planning and management philosphy can be

related to this statementas all of them are effected by ineffecient yet powerful emloyees
supported by unions which result in poor organizational growth.

China has poor infrastructure and no means of mass distribution and to add up to
the difficulties beer has a very low shelf life and therefore has only a 500 miles
radius of distribution range, making it harder for international beer brewer to sell
massively all over the nation and capture the whole market.

Due to low shelf life, the Chinese drinkers prefer freshly brewed beer brought directly
from the brewery which gives the local brewers an edge over the international
brands.Thus the international brands are losing market share everyday.

In HRP Model this falls under:

Technology
Product demands
We can relate this statement to technological impairment of Chinese infrastructure for
which mass distribution is not possible. This can also be related to the type of product
demanded by the Chinese people.

In china foreign companies can only invest through joint-ventures and that too
with companies that have been chosen by the government. Thus foreign partners
find it hard to adjust with the Chinese work culture and conflicts occur.

Chinese policies do not allow foreign investors to carry on with their foreign strategies,
as Chinese employees are very conservative and are reluctant to adjust with the foreign
company culture.

In HRP Model this falls under:

Government policy
Mangement inventory
Skills inventory

Here the problem is primarily created because of the governments active role in
selecting the local companies for the joint ventures and thus this weakness can be
related to the government policies of the external considerations.

Opportunities

Harbin brewer and Anheuser-Busch can consider an opportunity to plan their

future business strategies based on the fragmented market of china and trying to
get hold of the inland areas can be profitable.
Poor transportation and fragmented market has kept fierce competition away from
inland China which is a huge area of untapped market for Harbin and Anheuser-Busch,
where they can utilize their technology and strategies.

In HRP Model this falls under:

Product demand
Demographic change
Organizational growth

This statement can be related to product demand as the inland consumers would like
for high quality beer, and demographic change as Chinese people prefers freshly
brewed beer and the use of marketing strategies fall under organizational growth from
the HRPP model.

Hapi is a well known beer brand from Harbin brewers to Chinese people, which
can a very strong hold on Northeast region. Anheusers-Busch can take the
opportunity to make Hapi a national premium beer brand in China and penetrate
the untapped regions with the help of its already established reputation.

Hapi has great potentials in the Chinese market and Anheusers decision to take over
Harbin brewery has given them the opportunity to use this brand and take it to the next
level by branding it all over China.

In HRP Model this falls under:

Trend analysis
Organizational growth
Product demand
Trend analysis can be related to this situation through the fact that research shows Hapi
is a popular brand in Northeast through analyzing buys trends of consumers. Taking
Hapi to national level and creating demand both relates to the other two points
mentioned above.

WFOEs offered independent ownerships and control for new foreign investors in
China which is a huge opportunity for organizational growth as sole ownership
and control means management can plan effective strategies without much
conflicts.

Wholly foreign owned enterprises suggested the sole control and ownership for
various past incidents due to management and employee conflicts and cultural gap. If
this can be done than decision-making will be much smoother and effective.

Organizational growth
Management philosophy

The statement can be related to the HRPP model through organizational growth as
organization will flourish in such circumstances through new management philosophies
and company culture.

Threats:
 China has a huge and fragmented beer market, local breweries have a
strong hold on small pieces of market areas and as beer has a low shelf life
people prefer buying it directly from these local breweries.

A locally dominated fragmented market is a threat for international brands like AB which
does not give them enough foot space to even start their business in urban areas of
other local brand dominated markets.

In HRP Model this falls under:

Product demand
Demographic changes

This statement can be related to the product demand as people prefer a specific type of
beer and demographic changes also influence this statement as fragmented market and
locally dominated brewers are controlling different regions.

Chinese beer market price wars are brutal and bloody, and with locally
produced beers available at subsidized prices it is impossible for
International brands to even survive in such intense competition.

Local brands are subsidized by the local governments/municipalities and their for they
have a high cost margin and can offer very low market price which is a big threat for
international brands as Chinese people are very price sensitive.

In HRP Model this falls under:

Financial resources
Product demand

This threat can be related to the HRPP model as the profit margins are very high for
local brands and due to low prices offered by them Chinese people prefer buying local
beer as they are price sensitive which relates to the product demand.
 Local government interfere a lot in the business practices of the international
investors and thus create a lot of problem and conflict between employees which
effect smooth flow of work within the organization.

Chinese government is completely decentralized and local government has a lot to say
when foreign JVs operate in their areas of control. They intervene in work procedures
creating delays and problem in power distance relationships.

In HRP Model this falls under:

Govermwnt policy
Succession planning
Management Philosophy

This statement can be related to government policies which in turn effects the
succession planning of employees as influential employees have more advantages
which in turn effects the management philosophy of the company.

Chinese workforce is highly influenced by unions and unions are very powerful
and thus the workforce has unfair power over the management which makes
them lazy and unproductive without the fear of being fired
Chinese unions are very strong and are backed uo by local government and therefore
has a strong hold on the workforce.The employees are most of the them lazy and do not
do their work properly as they belive that the unions will save their jobs.

Replacement chart
Labor mobility
Management philosophy
Education of workforce

This statement can be related to all the points above as this highly violates a lot of
company rules effecting replacement chart , hampering labor mobility limiting the
education of workforce as they dont feel the need to improve and all of these result in
management philosophy of the company being effected negatively.