961 Beer Harvard Case Solution & Analysis

Degree of competitive rivalry is high

The competitive rivalry in the beer industry is high. The Lebanese beer market consists of large domestic competitors. These competitors compete head to head in the national markets. The main competing aspects are price, variety and quality differentiation. In Lebanon, cost of labor is low and people drink beer of around $40 million, which reflects intense competition in the industry.

Threat of substitution is high

The threat of substitution is high because there are so many other alternatives to the beer. People may consider using through the soft drinks and other liquids instead of beers and winesas a replacement.  Not only in Lebanon, but in the entire world these soft drinks are quite popular even more than the beer and wines which is advantageous for the people and can be considered as an effective substitute.

Pest Analysis

Political

Lebanon has experienced a great number of wars on both the civil and international basis. The political crises and country’s overall situation is quite disturbing since a long time, which creates gigantic issues for international and local companies to flourish. It is primarily a democratic republic country with an entire population of around 4.5 million people as of the year 2014. The direct election held after each and every four years, but due to the wars and unstable political situation the elections and the entire system has been surrounded by several unanswered issues. The overall security and political situation badly deteriorated back in the year 2013 with violence dropping out of Syrian conflict.

Economical

Beer brewing companies have played an average role the sector in terms of the overall turnover growth. This was evident as aggregate demand increased in Lebanon and abroad for beersofLebanon as Lebanesebeers are noted for good quality ata good price. The current economy of Lebanon is basically an emerging economy, with a 75% contribution is made by the private sector and the large banking sector that ropes this overall demand.For a company like 961 Beer, this economic situation has a relatively low role to play.

Socio-cultural

The Lebaneseculture is a significant aspect of the market. It is important to understand the culture in order to provide relevant products for the target market segments. Lebanese society is based on the cross culture of several civilizations. The people of Lebanon are quite good at hospitalityand take it as an honor when a certain guest arrives at home. People like to drink beer and other drinks, moreover, they serve it on the general gatherings and other events on a regular basis.

Technological

The technological infrastructure in Lebanon is underdeveloped. The industries need to be highly developed specifically when it comes to technological infrastructure. Lebanon does not have an excellent technology infrastructure to support the aggressive global industries. At this stage Lebanon accounts for 40% of overall web traffic in the entire Arab region and was known as one of the very first countries in the constituency to "go online".

SWOT analysis

Strengths

  • Aligned vision
  • Relatively strong existence in Lebanon
  • Range of products
  • Increasing market share
  • Excellent Pub based approach

Weaknesses

  • Outdated technology and capacity
  • Low brand image in front of old competitors
  • Huge reliance on Lebanonbased markets
  • Issue in selling beer in some countries

Opportunities

  • Opportunities in promising marketplaces
  • Increasing demand for beers in European side of the world
  • Increase in buying power of people
  • Change in living standards and promoting hospitality
  • Global export opportunities.

Threats

  • Changing consumer need for new beverages
  • Ø  Intense competition in local and international markets
  • Ø  Raw material and Supply cost
  • Ø  Government rules and regulations
  • Open more pubs

Alternatives

Opening new pubs can be a real feasible option because people, according to the case are appreciating this initiative by making their huge presence on it. This option will increase their brand recall which will eventually result in long term brand loyalty.

  • Increase production capacity

As of February 2009, 288,000 bottles were sold annually by the company without any doubt itwas a satisfactory figure, being relatively new. 961 Beer need to focus on enhancing their production capacity because a shortage of product mightsometimes make the customer angry which will eventually lead to brand switching...................................

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