SAN MIGUEL CORPORATION HISTORY
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Eduardo Cojuangco, CEO of San Miguel Corporation, is reassessing the company's business strategy due to slower growth of their flagship beer product, San Miguel Beer, which has a large market share. Cojuangco diversified the company into non-allied industries like energy and infrastructure, but credit agencies downgraded San Miguel's rating, lowering its stock price. Cojuangco must now evaluate if the diversification strategy was correct or if he should change the company's marketing approach to boost beer sales through new flavors, improved packaging, and celebrity endorsements.
SAN MIGUEL CORPORATION HISTORY
- 1. Contents: • Case • History • Introduction • General Problem • Specific Problem • Alternative courses of the action • SWOT Analysis • Recommendation SAN MIGUEL CORPORATION
- 2. CASE Eduardo Cojuangco, the CEO of San Miguel Corporation, is re- assessing the company’s business strategy. The flagship product of this century- old conglomerate, San Miguel Beer, is expected to post a slower growth rate in its volume share because of its large market share. The company has operations in only three product areas- food, beverage and packaging, and has a modest international presence. In this regard, Cojuangco announced in 2007 that the company would diversify into non-allied businesses in the Philippines such as energy, mining, infrastructure and other utilities. With the goal of establishing presence in industries that present fast and high-growth, it sold off its international assets and started acquiring shares in Meralco and Petron Corporation. The company also ventured into telecommunications and infrastructure. Credit rating agencies were uncertain about this new business model, and this resulted to a downgrade of San Miguel’s credit rating and lead to a fall in the company’s stock price. As of 2009, the company’s reinvention was far from complete and Cojuangco needs to evaluate whether or not San Miguel’s radical diversification plans were indeed the right step for the company.
- 3. OBJECTIVES For San Miguel Corporation ( and not exclusively as a beverage entity ), to expand the market share to multiply their current scope, to grow their products- services portfolio, and to increase sales. To assess whether the current business strategy is appropriate given the current business situation and the determine the right business strategy; To achieve business growth and ensure profitability of business operations.
- 5. HISTORY Established in 1890 as a single-product brewery, San Miguel Corporation (San Miguel) is the Philippines’ largest beverage, food and packaging company. Today, the company has over 100 facilities in the Philippines, Southeast Asia, and China. One of the country’s premier business conglomerates, San Miguel’s extensive product portfolio includes over 400 products ranging from beer, hard liquor, juices, basic and processed meats, poultry, dairy products, condiments, coffee, flour, animal feeds and various packaging products. For generations, the Company has generated strong consumer loyalty through brands that are among the most formidable in the Philippine food and beverage industry – San Miguel Pale Pilsen, Ginebra, Monterey, Magnolia, and Purefoods. Flagship product, San Miguel Beer, holds an over 95% share of the Philippine beer market.
- 6. In addition to its leadership in the Philippine food and beverage industry, San Miguel has established a significant presence overseas. The Company’s operations extend beyond its home base of the Philippines to China (including Hong Kong), Vietnam, Indonesia, Malaysia, Thailand and Australia. Through strategic partnerships it has forged with major international companies, San Miguel has gained access to managerial expertise, international practices and advanced technology, thereby enhancing its performance and establishing itself as a world-class company. San Miguel’s partners are world leaders in their respective businesses. Kirin Brewery Co., Ltd. is a major shareholder of San Miguel Brewery. The Company also has successful joint venture relationships with US-based Hormel Foods Corporation, Nihon Yamamura Glass and QTel, a telecommunications company in Qatar.
- 7. In the Philippines, San Miguel’s corporate strategy is at aimed capitalizing on new growth markets through acquisitions and further enhancing its competitive position by improving synergies across existing operational lines. The company has significantly expanded its participation in both its core businesses of food, beverage and packaging, as well as heavy industries including power and other utilities, mining, energy, tollways and airports.
- 8. INTRODUCTION Eduardo Cojuangco, a CEO of San Miguel Corporation is having a hard time in making his decision about the risk he will take for his product known as the San Miguel Beer. He is currently re-assessing his marketing strategies to know if he can expand his plans and make it a success. His current flagship product is well known as the ‘San Miguel Beer’, is taking its slow growth rate because of its large market share. Because of this he then decided to engage in businesses not in line with his profession. These businesses are energy, mining and infrastructure. There’s more but these are what he chose to look real close. But we all know that San Miguel Beer is a long-time product that was already familiar and be loved by the Filipinos. So, what would be the best decision for Mr. Conjuangco’s company?
- 9. GENERAL PROBLEM The San Miguel Beer slow growth rate because of its large market share . And also the credit rating downfall of the company’s stock price.
- 10. SPECIFIC PROBLEM What would be the result of the radical diversification of the plans made by Mr. Conjuangco to the company and what decisions and risks he should take to make his company get in shape again.
- 11. ALTERNATIVE COURSES OF ACTION Conjuangco must change his way of selling his products, especially the San Miguel Beer to make sure it returns his investment. He can use advising and counselling which will enable him to provide assistance to customers through information dissemination. He can also attend meetings and seminars for him to gain knowledge about new products uses and trends. He should also follow the steps of the Selling process. He can use the different approaches to get the attentions of different customers. Finally, he must be aware about what his market demands and meet those demands to maintain his customers.
- 12. SWOT ANALYSIS • Strengths • It is already globally and internationally known. • It is a large group of company. • The company is diverse into non-allied businesses. • Weaknesses • The company has a large market share. • The company suffered from a credit rating downfall. • Dynamic market environment. • Losing its international assets.
- 13. • Opportunities • New ventures for the company. • The company can merge into non-allied businesses. • The company can engage into more profit oriented businesses. • Successful diversion plans. • Threats • Effectiveness of diversion plans. • Large loss of money due to large market share. • Losing of other contracts due to credit rating downfall. • Wrong evaluation of plans. • Other competitors
- 14. RECOMMENDATION We therefore conclude, that Mr. Cojuangco should change his marketing strategy. Especially that his business had meet its slow growth rate. He can use ‘twists’ to make his product more presentable. Such as, the improvement of his product packages. Other example is to add some flavour to his current selling beers. Making new mixes to have new and attractive flavours. He can also use the gimmick approach to try if the response from the projected customers will be great. He can also use advertisements to catch the attention of people. Having celebrities on every advertisement can catch customer’s patronization.