Abstract

To introduce an analysis of the brewery industry, one point must be underlined: the European brewery market is mature, which is essential to understand its trends and its forces. We are now going to use the Porter’s model of the Five Forces analysis to develop this analysis. First of all, consolidation is a key trend in the brewery industry. It has consequences reaching into economies of scale and into the access to supply or distribution channels. Actually, it is more difficult to enter into a market when there are significant leaders, which are able to develop a competitive productivity on the one hand and to pressure supply and distribution channel on the other hand. As the five largest global brewers accounted for 30% of production volume in 2002, we can suppose that there are entry barriers de facto. Even in the UK, the recent independency of the public house chains does not contradict this trend since it forces the brewing firms to be more competitive, which is easier for an existent firm than for a new one.

Question1 (i)

Introduction

Though the average percentage is usually considered to be 4.5% alcohol by volume (ABV), this is however, not sacrosanct and may vary according to style, taste and preference across regions. Beer forms an integral part of many cultures and can be adopted as a lifestyle drink if consumed moderately and under restriction. Nevertheless, excess consumption of the same is likely to lead to various unremitting diseases.

As students of law and management, we have assumed the task of analyzing a case on European brewing industry, impacted by several global phenomenon, namely, Global Forces and European Brewing Industry.

As a consequence of these changes, the analysis of the external environment has become a key task within the process of creating strategy. An understanding of the nature of the environment is important, as is a familiarity with the tools and frameworks of analysis. The ability to understand the impact of the external environment upon an organization will not guarantee strategic success, but to ignore the external environment is highly likely to make failure a distinct possibility. The wide range of potential influences on an organization and their interaction, make the job of assessing the general environment particularly difficult. In addition, each organization is affected in different ways by changes in the environment. Factors that have a significant impact upon one organization will have little effect on another.

Using PESTEL analysis can help to highlight the biggest influences on the strategy of the organization, both currently and in the future. These influences can be both positive and negative. In addition, influences often cross the divide between the six headings; the important point is that they appear somewhere in the analysis. The key is to identify and concentrate upon those factors or trends likely to have the biggest impact upon the future of the organization.

PESTEL (Political; Economic; Social; Technological; Environmental; Legal) analysis provides a systematic technique for analyzing the business environment. It would enable us to: