Choice of Companies

There were two companies which were chosen as the basis of the case study with the main consideration being that they operate in the same industry. They are large multinationals which are expanding into emerging/frontier markets. There have been a lot of research firms internationalizing into emerging nations with particular emphasis on China.

The two companies are brewing giants with one (Diageo) being a western multinational with roots in the united kingdom while SAB Miller is an emerging markets multinational with its roots in South Africa. Examining their different approaches and performance in the markets provides important lessons that could be generally applied to expanding into new markets.

Data Collection Instruments

Collection of data was based primarily on secondary sources such as historical records, company reports, business reports, and journals. This was a preferred as the research sought to evaluate the strategy that is involved in expanding internationalization. It allows for the examination of motivations, entry methods, and expansion challenges.

Data Processing and Analysis

The data that was derived mainly from company reports and business journals was analyzed against the performance in the specific target international markets. They were illustrated appropriate using tables and charts. Analysis was supported by relevant discussion on the illustrated figures and cross-comparison undertaken between the adopted approaches.

Validity and Reliability

Validity ensures that information sources are extensive with depth and breadth (Fisher, 2007). Reliability is concerned with structural consistency of the research methods. This ensures that repeated research yields similar outcomes. The use of two case studies with predetermined topics and based on varying market entry methods assured of validity and reliability.

Chapter 4: Research Findings and Results

Introduction

This chapter presented data that was mainly sourced from secondary sources. The data sought to explain the modes available for internationalizing businesses. It details the expansion modalities involved in the internationalization of two brewing firms into specific markets through concentrated case studies with defined frameworks.

Case Study: Diageo (Kenya - EABL)

Company Background: Diageo

Diageo is the third largest integrated alcoholic beverages company in the world behind Anheuser-Busch Inbev and SAB Miller. In fiscal 2013, the company revenues in local currency rose by 6% to $17.9 billion. Volume rose by 1% while organic jumped 5% with net earnings rising 11% to $1.6 driven by demand in emerging markets (Diageo, 2013).

The group’s home market is in the United Kingdom but has since adopted a transnational approach to its market expansion. Diageo is often considered to be the largest spirits with such veritable brands as Smirnoff, Johnnie Walker, J&B, Captain Morgan, Jose Cuervo Especial, Tanqueray, Crown Royal, Ciroc, and Ketel One.

It has segmented its market regionally into; North America, Western Europe (includes United Kingdom), Africa, Eastern Europe, & Turkey, Asia Pacific, and Latin America & Caribbean (Diageo, 2013). Growth in North America has been robust mainly driven by strong demand in the premium spirits category with brands such as Ketel One Vodka.

In fiscal 2013, organic growth rose by 5% with volume trending up by 1%. Volume growth was supported by demand for Buchanan’s Ketel One Vodka and Ciroc. Western Europe volumes and sales declined by 3% and 4% resulting in net sales of $3.7 billion (Diageo, 2013). The market was largely constrained by economic conditions and competitive environment.

Africa, Eastern Europe, & Turkey experienced a strong demand influenced by a mixture of macro-economic factors. Net sales topped $3.8 billion, rising by 10% and volumes rising by a further 4%. Latin America & Caribbean and Asia Pacific had organic growths of 15% and 3% respectively in fiscal 2013 (Diageo, 2013).

Asia Pacific has declined especially with the imposition of anti-extravagance measures by the Chinese government. This has significantly affected demand for premium spirits. Latin America & Caribbean is experiencing mixed performance with modest growth in Colombia, Paraguay, Uruguay, and Venezuela while Mexico and Brazil are generally flat.

Diageo has already transcended its British heritage and is one the most integrated multinationals with widespread global operations. The company has implemented a balanced approach to growth through organic means, joint-ventures, and acquisitions. This has ensured that it keeps pace with its peers in a rapidly consolidating industry.