- •Acknowledgement
- •Abstract
- •International Market Entry Strategies
- •Regulatory Environment
- •Challenges of International Expansion
- •Purpose of the Study
- •Research Objectives
- •Research Questions
- •Justification for the Study
- •Scope of the Study
- •Delimitations
- •Chapter 2: Literature Review
- •Introduction
- •International Expansion
- •Internationalization/Transaction-Cost Theory
- •Eclectic Theory
- •Resource-Based Theory
- •Uppsala Model
- •International Market Entry Strategies
- •Exporting
- •Licensing
- •Franchising
- •Joint-Ventures/Strategic Alliances
- •Acquisitions
- •Wholly-Owned Subsidiaries/Greenfield Operations
- •Figure 2‑1: Selecting Market Entry Mode: Risk Profiling
- •Regulatory Environment
- •Challenges of International Expansion
- •Research Gaps
- •Chapter 3: Research Methodology
- •Introduction
- •Research Methodology
- •Research Methods
- •Research Approach
- •Research Design
- •Choice of Companies
- •International Expansion
- •Host Country Overview: Kenya
- •Company Overview: eabl
- •Table 4‑1: Kenyan Beer Market
- •Source: Irungu (2012)
- •Market Entry Strategy
- •Regulatory Environment
- •Market Performance
- •Market Challenges
- •Case Study: sab Miller (Colombia – Grupo Bavaria)
- •Company Background: sab Miller
- •International Expansion
- •Host Country Overview: Colombia
- •Company Overview: Grupo Bavaria
- •Market Entry Strategy
- •Regulatory Environment
- •Market Performance
- •Market Challenges
- •Chapter 5: Discussion of Findings
- •Introduction
- •Case Analysis: Diageo (Kenya)
- •Case Analysis: sab Miller (Colombia)
- •Cross-Case Analysis
- •Chapter 6: Summary, Conclusions, and Recommendations
- •Introduction
- •Summary
- •Conclusions
- •Recommendations
- •Future Research
- •Chapter 7: References
- •Chapter 8: Appendices Table 8‑2: Common Size Analysis: Diageo and sab Miller
- •Source: Diageo (2013) and sab Miller (2013a)
- •Table 8‑3: Comparison of Market Entry Modes and Performance
- •Source: Diageo (2013a), eabl (2013), and sab Miller (2013)
Host Country Overview: Colombia
Colombia is the 30th largest global economy and 3rd largest in South America with a nominal GDP of $369.8 billion (World Bank, 2013). The country is considered as an upper-middle-income nation with a nominal per Capita income of $7,000. It is one of the most vibrant beer markets in Latin America behind Brazil and Mexico.
The country has a population of 45.7 million people who comprise of; Mestizo – mixed race (58%), whites (20%), mulatto (14%), mixed-black-Amerindian (3%), and Amerindian (1%), (CIA, 2014b). population growth rate stands at 1.1% and an urbanization level of 75% with major cities being; Bogota, Medellin, Cali, and Barranquilla (CIA, 2014b).
There is high literacy at about 93.6% boosted by the decline in regional violence. Colombia had a robust growth rate of 4% with the unemployment rate averaging 10.4% in 2012 (CIA, 2014b). The poverty level presently stands at 34.1% with the overhead inflation rate averaging 3.2% which is relatively low in the region (CIA, 2014b).
The Central Bank Rate stood at 4.75% with the commercial bank lending rate averaging 12.6% which are some of the lowest in South America. Colombia is slowly recovering from the effects of the more than five decades of internal violence as peace prospects gather momentum with the potential of re-integration of internally displaced people.
Political stability has been achieved leading to a stable economic environment that has attracted external investors. The stable macro-environment along with strong economic potential of the populace is increasing demand for discretionary products. Overall, Colombia is a relatively large economy that is growing quite fast.
Company Overview: Grupo Bavaria
Grupo Bavaria was established in 1889 and is the dominant and is a dominant player in the South American nations of; Colombia, Bolivia, Peru, Ecuador, Panama, and Costa Rica. It also has some market presence in Spain. The country has a large alcohol market that is estimated at $5.9 billion (SAB Miller, 2013b).
The company presently has 63% of entire alcohol market while its beer brands control an estimated 98% of the entire beer market (SAB Miller, 2013b). In general, Grupo Bavaria controls about 40% of Colombia’s drinks industry (including soft drinks), (SAB Miller, 2013b). It generated revenues of $3.7 billion in Colombia in fiscal 2013 (SAB Miller, 2013a).
Grupo Bavaria contributes about 1.24% to the country’s GDP and directly and indirectly employees 12,600 people. It has 6 brewing and 5 bottling plants located across the country. The company’s main competitors include; Cerveza Ancia, BBC Bogota Beer Company, Cerveza Colon, and Cerveza 3 Cordilleras.
Águila is its premier brand that has a brand carrying value of $1.5 billion (SAB Miller, 2013a). The other dominant brand include; Club Colombia and Poker (it currently commands a 42% of market share in the beer category in Colombia). In addition to controlling the Colombian market, Grupo Bavaria has a strong regional presence.
It is dominant in Ecuador, Peru, and Panama with market shares of 56%, 63%, and 74% respectively (SAB Miller, 2013b). The dominant brands in Panama are American including Miller Lite and Miller Genuine Draft. In Peru, the leading brands include Cristal and Cusqueña while in Ecuador, Pilsener Light, Club, and Club Roja lead in the market.