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MNG 3702 ASSIGNMENT 1
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MNG 3702 ASSIGNMENT 1
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ASSIGNMENT 1
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, How a South African company turned constraints into global strengths On 28
September 2016, the shareholders of South African born international brewer,
SABMiller, approved the company’s acquisition by Anheuser-Busch InBev for
$104 billion (R1.5 trillion). The deal paved the way for the creation of what is
now by far the world’s largest brewing company. For a company that started
out selling beer to miners in Johannesburg during the gold rush of the late
1800s (SAB was founded in 1895 as Castle Brewery and became the first
industrial company to list on the Johannesburg Stock Exchange in 1897), it
has been quite a journey. How did a brewing company from a developing
country rise to compete with the multinational brewing behemoths from the
developed world? A series of interviews with senior executives and managers
who presided over the growth of what was then South African Breweries’
(SAB) rapid expansion during and after the 1990s are revealing. After building
up a monopoly-like position in the beer market in South Africa, the company
went in search of new markets. With a vision to be the most admired company
in South Africa; a partner of choice, an investment of choice and an employer
of choice, it used its experience in South Africa in its entry strategies abroad.
SAB’s path reflects the differences between multinationals from developed
and emerging markets in terms of location choices, sequencing, time horizons
and motivation. A two-phased expansion path emerges to explain the
remarkable success story. The first pillar to SAB’s international expansion was
a focus on developing markets. Coming from a developing country itself, the
company would cope better with emerging market conditions than brewers
from the developed world. These ventures became a powerful base for SAB to
take on developed markets. The second was to expand into developed
countries. This became necessary as it became clear the company was over
exposed to emerging markets. After a few early forays into South Africa’s
neighboring countries prior to 1993, SAB executives realised that the
company could exploit its knowledge of institutional shortcomings in its home
country. It would use this experience to adapt more easily than its competitors
to conditions in developing countries would. And so began the first part of its
internationalisation strategy: a rapid expansion into emerging markets
worldwide. Through a series of acquisitions and joint ventures throughout the
1990s, SAB gained a foothold in various countries in Africa, Eastern Europe,
and Asia. Although many were geographically distant (like Hungary, Czech
Republic, China, and India), they echoed South Africa in terms of their
socioeconomic development. Eastern Europe, for example, was still emerging
from political reform in the wake of communism, and infrastructural,
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