MNG3702 - Strategic Implementation And Control IIIB (MNG3702)
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MNG3702 Assignment 1 Semester 2 2023 (Answers)
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MNG3702 - Strategic Implementation And Control IIIB (MNG3702)
Institution
University Of South Africa (Unisa)
MNG3702 Assignment 1 Semester 2 2023 (Answers)
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Assessment 1, Semester 2
This assessment is based on lessons 1 to 5 in the study guide and the corresponding chapters
in the prescribed book, namely chapters 8 to 11.
How a South African company turned constraints into global s...
MNG3702 - Strategic Implementation And Control IIIB (MNG3702)
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, Assessment 1, Semester 2 This assessment is based on lessons 1 to 5 in the study guide and the
corresponding chapters in the prescribed book, namely chapters 8 to 11. 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, institutional, and economic weaknesses
persisted. 2 By expanding into countries that shared socioeconomic characteristics with South
Africa, SAB was able to make use of its experience to turn a perceived drawback – institutional
weakness – into a strength. As one respondent explained: ‘To be frank, we accepted that we
would live with the political risk and poor institutions. We did not really shy away from high-risk
countries unless, of course, there was a raging civil war that we would have to wait to subside.’
Once it had established this expansion plan, SAB diversified into developed markets such as Italy
and the US. As one interviewee put it: ‘Investors became skeptical of companies whose only
business was in emerging markets.’ In 2002, it took a step closer to consolidating its position as
a multinational brewing giant when it acquired US-based Miller Brewing Company. It became
SABMiller. The advantages that SAB gained from its experience in its home country are many.
One was employee aptitude. SAB employees had built up an extraordinary resilience, flexibility,
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