Adolph Coors Company is United State’s third largest producers, marketers and sellers of brewed beverages with more than 200 years in business. The company has struggled to grow its revenue over the past few years through the establishment of effective management strategies in order to achieve a competitive advantage in the brewing industry. The company recorded a 13% profit increase in beer sales during the time when the domestic beer production was grounded. In addition, the company’s revenue from beer sale and marketing rose by one billion US dollars. The following aspects made the company very completive in the brewing industry (Ghemawat, 1992; 1). The following discussion focuses on Adolph Coors’s competition in the U.S. brewing industry and its effectiveness. In addition, the essay analyses Coors’s stand within the brewing industry.
The beer industry faces many challenges caused by demographics, economical, technological, political and global factors. Production ad operations are two major processes that organizations use in the creation of goods and services. Management should make concrete decisions to decide the best way to follow in order to ensure production of quality goods for consumers. Coors faces stiff competition from the excising and upcoming brewing companies in U.S. calling for the management to introduce new strategies to ensure it maintains its competitive advantage. The cost of purchasing barrels of beer was extremely high. This was estimated at more than half of the company’s revenues. Procurement processes that involved acquiring of raw materials also contributed to high costs of beer production (Ghemawat, 1992; 3-4).
Using the “Five-Force” model by Michael Porter, Coors’s competitive advantage can be easily analyzed. Firstly, there is a moderate threat to substitute products. Beer comes in different varieties and with different consumption methods. Coors’s beer varieties are highly demanded because they contain mainly malt beer products. Secondly, there is a high rate of rivalry among existing firms. Beer industry forms one of the most competitive businesses in the globe. In order to ensure less rivalry among competitors, Coors management came up with different offering methods that included segmentation, advertising, and packaging strategies. The company ensured all containers were filled with beer and packed together in order caters for the increased scale of economies. Thirdly, there was low force of suppliers. Economies of scale and its scope are essential in the brewing industry (Ghemawat,1992). The company had an advantage because it was commissioned long time ago hence it had established production and distribution channels. In addition, capital requirements are a major factor that contributes to competition in beer industries.
On the other hand, a brewing industry should focus on the key success factors. Coors had four key success factors namely; different beer types, multiple production plants, brand segmentation (produced different beers for different groups and classes), and nationwide distribution. Firstly, a company must differentiate its products. Although Coors Company had a perfect product differentiation, most upcoming companies replicated their products creating a higher competition. Coors management ensured its products reached consumers by distribution through wholesalers and retailers. Other companies used direct distribution without using many channels (Ghemawat, 1992). However, the company had poor administrative system that made it unable to accomplish some of the key success factors.
Secondly, Coors had a high product segmentation that gave it a chance to attract many consumers due to different population segments. The major product segments used by Coors are premium, popular, light beer brands and super premium. The increased growth in Coors’s product segmentation strategies had a positive impact on sales since most customers choose their brands. Customers are always attracted to good-looking products with a perfect packaging, and that are well marketed both locally and internationally. This allowed the company to produce high transactions returns due to increased market prices in U.S.A (Ghemawat,1992; 5).
Coors had tried lowering the price of its products in order to compete favorably with the other companies. The illustration of strength in financial base of Coors has given it the ability to establish multiple production plants hence acquiring more capital to start up the new brewery. In addition, Coors deregulation and operation strategy improves the company effectiveness and market share ownership. Moreover, the ability of the company to concentrate on the customer needs, maintenance of high quality of its products and services, and effective participation of employees in service delivery, contributes to market share ownership. This results in gain of revenues from the services that aid in strengthening the financial status of Adolph Coors Company (Ghemawat, 1992).
Coors’s stand in the brewing industry
Coors being a high producer in the beer industry has had a tight relationship with the community that increases its strength. Beer consumption has many negative results that made the company come up with policies in support of social responsibility. The company management measures its success in both financial and social performances. Since its establishment in 1873, the company has committed its services to improving the quality of life of its consumers and their families. Moreover, the company is aware of many competitors trying to abuse their history that has resulted into the introduction of five policies. These five policies include community protection, advertising and marketing focus to beer consumers only, education and intervention, working within the market place that ensures responsible practices and collaboration with legislation (Ghemawat, 1992; 7-8)).
On the other hand, being the world leader in beer production, Coors holds a responsibility of acting as a good corporate industry. The company is committed to being the world’s leader in corporate responsibility through complying with the business laws and regulations, provision of ethical business standards, protection against risks, and holding human rights. Corporate citizenship forms the core operations for Coors’s marketing strategy regarding their interaction with the customers, government, shareholders, and the company staff. In addition, Coors has continued working with partners, customers, and leading environmental organizations in order to encourage technology advancement. In applying technology advancement, the company collaborated with the U.S. Environmental Agency who assists in accessing the important environmental information for the company. Moreover, the company uses social media in encouraging responsible drinking as they advertise their products (Ghemawat, 1992).
Coors forms a good example for other upcoming and already existing beer industries to follow. The company has achieved its competitive advantage by using strategic management practices that ensures high production at the lowest cost possible. In addition, the company had a strong financial background because its establishment made it achieves strong economies of scale that other companies in the sector had not reached. On the other hand, Coors demonstrated the best social responsibility management practices. The relationship between the government and the organization is high due to dynamics in these economic situations. The company business environment was faced with many dynamics although the company developed strategic implementation policies aimed at the provision of equal business opportunities (Ghemawat, 1992; 9-11).
Ghemawat, P. (1992). “Adolph Coors in the Brewing Industry”, Harvard Business School. 9-