Constellation is one of Foster’s major competitors in the world alcoholic beverages market, what do you see as the relative strengths and weaknesses of these 2 major competitors? Introduction: Strength and weakness are the two major components which attached to the internal environment analysis, internal analysis are relate to competencies, capability and resources within the organization.
In this essay I will demonstrate the two firms’ strengths and weakness, by explores the quality and quantity of the capability and sources available to the organizations (Hill et al 2006, pa). Foster’s Group Ltd is one of the leading companies within the alcoholic beverage industry, it is the provider of premium wine, beer, cider, and spirits and non-alcoholic beverage; overall with more than 200 premium brands sales across the globes including Australia, Asia Pacific, America, Europe, Africa and Middle East. Fosters have supplies over 38,000 customers and 1 50 countries (Fosters’ official website, 2009).
The most importance thing is Foster’s Company have announced to become the world’s leading premium alcoholic average company and the Australia’s leading beverage business by taken over the South Corp. Company in 2005( Fosters’ official website, 2009). Foster’s Company has numerous strengths offer the company a competitive edge over other competitors, and this essay will also demonstrate the weakness of Fosters while in comparison to the strength and weakness of another leading company name as Constellation brands.
Constellation brands is another leading brands within the alcoholic beverage industry, it operates in the US, Canada, I-J, Australia and NZ, it has a portfolio of 200 rand’s across the imported beer, wine and spirits products (Constellation brand’s official website, 2009). Section 1: The strength of the Foster’s brand Fosters Company has a strong group of passionate, innovative, high-performance workforce, which will build a good future for the Fosters Company, and committing to help strengthen the Fosters in the market.
Moreover the Fosters Company have created an inspiring workplace to attract and retain highly skilled talent people, also they are focusing on the diversity of workforce which means hiring peoples from different experience, backgrounds and regions. It aims to enhance their innovative concept and produce high quality products as a result drive more sales (Fosters’ official website, 2009). Fosters always focus on developing its people, as the people of the company are deeming to be one of the most important assets and the foundations of the company.
Forester believes in developing its people will driving Fosters to quickly achieve its business goals and the profit growth. Fosters is has a strong brand name within the market which is one of their significant (Fosters official website, 2009). Some brands within the Fosters has exported their rodents to the key market such as Japan, China, and India, that leaded the Fosters to grow quickly to becomes a leading alcoholic company in these countries.
This is an important strength because gain the market share in these countries means to gain wider customers bases support will help to increase the sales. The Chief Executive Officer of the Fosters was interviewed about the Fosters product, and he said: “it is still a star performer, smooth, it has always been a great beer, in blind tasting (Terror O’ How, 2006). The Yellow Label sparkling wine has gained listing in Major retailers of
I-J and has become famous among consumers (Fosters official website, 2009). The Fosters have got a strong financial performance in the beer market, the most famous brands from the Fosters is well known by the public is IV beer, it has the large markets in Australia and has broad customer bases to support the Bib’s sales, it built quality brands with favorites, as described above that Foster’s strong brand name will help to increase sales and growth profit swiftly.
The ‘Annual Report 2009’ within the Fosters Company shown that the total net sales revenue of the Beer, Cider, ND Spirits in year 2009 is greater than year 2008 (Fosters official website, 2009). After Cider have launched new spark product in Australia has contributed to excellent results that increase the sales volumes by 17. 2% and raised the sales revenue by 23%. On the other hand, Fosters also perform well in the overall company, they got 4% increased in the net profit to 741. Million, 4. 6% increased in the Earning Per Share, and increased 2. % in the sales revenue (Fosters official website, 2009). Section 2: The weakness of the Foster’s brand: Foster’s wine product are not conducting a good sell at the last period there is earplugs in the wine inventory, showing a slump in wine earnings due to the economic challenged and declined in luxury wine consumed. For instance, net profit fell 13. 5% to 355. 7 million Australian dollars; the wine earnings in the US market declined to 62% from earning because numerous consumers were trade down to bought cheaper wines and consumer less at restaurant and bars (Reuters, 2010).
Furthermore, as shown in I-J newspaper Nathan, 2008), it states that the Foster Company paid too much to acquire wine assets but the wine does not make any acceptable returns to the company. Section 3: The strength of the Constellation brands Similar to the Foster Company, The Constellations Company’s strength also is a leading international producer and marketer of the alcoholic beverage industry. Becoming a dominant marketer is value creation for the company (Hill et al 2006, pop). Let is the largest company of wine in the world and the largest exporter in the I-J.
This leading market positions gives the company importance strength over other competitors. The Constellation Company got both the leading position and strong brand will carry out large amount of consumer and stable revenue for the company. The Constellations Company has strong manufacturing capabilities (Constellation The company operating 21 wineries in the UK and the company also have some good facilities for production, packaging of its products (Constellation brand’s official website, 2009).
Thus this capability will help the Constellation Company to response quickly when there is changing in demands, also it can help the company to achieve production more effectively and efficiently which will lead the company to achieve higher economic of scales. Section 4: The weakness of the Constellation brands Constellation’s poor sales and margins in the wine market will results in decrease earnings in the wine products, for instance sales fell 15% to 791. 6 million( Reuters, 2009), this consequences occurred because consumers seek to buy lower price drinks due to the economic downturn and the government tax imposed.
This weakness will imposed a big effect on the confidence of investors to invest in this company. This will also threat to the company if their customers in a position to demand lower price or turn to other competitors, due to the bargaining power of customers. (Hill et al 006, POP) Constellation does not operate its company in the Asia market as I mentioned in the introduction, in contrast to the Fosters strength to operated in the Asia Market, However, the Constellation was lose large amount of consumers by lose the Asia markets such as Japan, China, and India because all these countries are economic stable than I-J or the USA.
Constellation inventory turnover is low, one of the reasons contributed to this case is because the company lose large base of consumer as they are not operating in the strong economic Asia market, and this matters will puts the many at the risk of losing sales in the future. Also there is a shift away from soft alcohol beverage to hard alcohol which means weakness sales in beer but strengthen sales for the wine in nowadays.
Conclusion In conclusion, the situations of the Foster’s Brands and the Constellations Brands are similar relating to their leading brand positions and strong brand portfolio, and they are both weaken at the financial performance during the economic downturn. Therefore it is difficult to measure which brand is better or stronger as they have similar and some aspect of the company is hard to compare. Nevertheless, they have their own strengths that illustrated in the article.