961 Beer: launching a Lebanese brewing company Harvard Case Solution & Analysis

Question 1

It is suitable for Hajjar, his fellow founders and owners to tap a market like Lebanon with their traditional ways of making beer to attract the people of Lebanon due to its affiliation with the beer culture of Lebanon. Lebanon is currently experiencing a war crisis and its bamboozled infrastructure cuts down the opportunity for international beer brands to continue their supply in Lebanon with hazardous situation around its borders, while 961 beer can continue to produce and serve the people of Lebanon with a less risk of supply damages or it cut down supplies into the market due to the war at the borders and in the city.

If Lebanon is currently under siege several international brands, then it would automatically take a step backwards leaving a big chunk of beer market for Hajjar to capitalize on.Yes,it would be difficult for Hajjar to survive through times like these in which the country is being bombed and under air strikes on regular bases.

 Lebanon is known to be a country that survives and manages to stand up every single time it has fallen.It is a fact that its economic situation is dicey and affected immensely by its political affairs, but once it is balanced then even 961 can easily benefit from it as it has survived through the hard times. In the short run, this decision would not look as a feasible/economical decision, but in the long run it will have its rewards as well.

Question 2

Industry Analysis

Industry Rivalry: High

 The rivalry in the industry is high as 961 faces immense threat from international brands of beer like Carlsberg and Heineken and several other local competitors in Lebanon.Lebanon’s beer market accounts for $40 million, including alcoholic and non-alcoholic beers. Lebanese beer market was dominated by Almaza, and now acquired by Heineken. With this acquisition,Heineken became stronger in the Middle Eastdue to easy and convenient access to Beirut’s international airport, which is the exporting base in the surrounding countries.

Heineken also acquired another local beer maker and transformed itself into a 100% non-alcoholic beer maker, and produces different flavors. These acquisitions are turning out to be the most efficient way for companies to enter new geographical locations and strengthen competitive position in the global market.

Threat of Substitutes: Moderate

Lebanon is a huge market for the beer industry and the people have a wide range to choose from when it comes to choosing which beverage to drink. The economic situation of the country is not ideal, how ever the competitors have been in the country for quite some time and they know better ways to interact with the people of Lebanon under crisis and how the market would react after any unfortunate incidents.

Bargaining Power of Suppliers: Moderate

Suppliers are bound to the limited options in the country regarding the beer industry due to the unwanted war crisis of the country and they do not have many options to choose from as they only have a limited number of international beer brands to supply.Apart from this, there are many local beer producers that have got a fair share of the market for themselves and are the dominant parties as compared to the suppliers and there are imposed conditions by the local producers of beer, and they have less authority over the beer trade in the country.

Barriers to Entry: High

The economic conditions of Lebanon are very much under siege and the country is facing a war and air strikes on a continuous bases. These conditions are not very ideal for new entrants. The new entrants will majorly account the possible decline in the economic situation of the country and will take the possibility of further decline in it and the loss of investing offshore.961 Beer launching a Lebanese brewing company Case Solution

Bargaining Power of Buyers: High

The beer market in Lebanon consists of local and international producers and different styles of beer-making. The buyers are the sole reason for any business and the buyers of beer in Lebanon play a dominant role and the companies pay high amount of attention to satisfy the needs of the Lebanese consumers and they must reduce their prices to remain strong in the market.Moreover, companies are willing to sell beers cheaper so that they could survive in the current crises, and later on they could cover these expenses once the situation is economically sound........................

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