Analysing Brewing Innovation at Molson Coors Assessment Answer

Introduction

The decision that Molson Coors CEO Mark Hunter made regarding the company's strategic direction is examined in this report. It presents an analysis of the choice and three key arguments in favour of the analysis. Additionally, suggestions are offered to secure the company's future in light of the suggested choice. The report discusses two sets of external environmental trends, highlighting expansion opportunities and potential threats, and offers strategic changes to support the recommendations. Along with potential responses, the decision's impact on competitors' actions is also examined. 

Criticizing Mark Hunter's Decision

For the following reasons, Molson Coors CEO Mark Hunter's decision to broaden the company's focus beyond beer raises questions. Molson Coors' primary competitive advantage and brand is the beer sector. There is a chance of weakening the brand and losing patron loyalty if attention and resources are diverted from their main offering. Additionally, this choice might lead to more established non-beer alcoholic beverage producers entering the market, which would make it more challenging for Molson Coors to stand out in a crowded market (Reeves, 2019) . 

The choice to diversify into other beverages might necessitate sizable investments in R&D, marketing, and production capabilities. It's possible that Molson Coors lacks the knowledge and assets needed to compete successfully in these new markets. The business's success in the beer sector does not ensure success in related markets. Thus, this choice exposes the company to potential losses and financial risks (Safeer & Khuhro, 2022). 

Molson Coors may encounter difficulties in maintaining operational effectiveness and quality control as a result of diversifying its product line. Beer brewing requires specialised tools, procedures, and expertise.

Recommendations

To solidify the business's future in the face of the decision to focus on leveraging resources and capabilities, strategic changes are recommended based on the Porter's Five Forces framework: 

Bargaining Power of Suppliers

For Molson Coors to obtain favourable terms, guarantee a trustworthy supply chain, and cut costs, it is important to proactively manage its relationships with suppliers. Molson Coors can lessen reliance on a single source and lower the likelihood of disruptions brought on by supplier-related problems by diversifying its supply base (molson, 2011).

Threat of New Entrants

By investing in marketing and advertising efforts that showcase the business's legacy, quality, and distinctive value offer, Molson Coors can set itself apart from possible new entrants, reducing the threat of competition and safeguarding the company's future. 

Bargaining Power of Buyers

Product Differentiation: Molson Coors can differentiate its products and build a devoted client base by consistently inventing and developing new beer varieties that satisfy shifting consumer tastes. Consumer perception of the brand's offerings as distinctive and irreplaceable diminishes buyer power as a result of this strategy. 

Threat of Substitutes

Expand Product Portfolio: Molson Coors needs to make investments to expand the range of products it offers beyond traditional beer. To adapt to shifting consumer preferences, this may involve offering low- or non-alcohol choices, artisan beers, or flavoured variations (Reeves, 2019).

Competitive Rivalry

Continuous Innovation:To innovate in the beer business, Molson Coors should spend money on R&D. To be competitive, this entails experimenting with novel flavours, brewing methods, and package designs (Bonham, 2018).

External Environmental Trends

a) Growth Opportunities

Changing Consumer Preferences (Sociocultural - PESTEL): Health-conscious consumers are increasingly looking for non-alcoholic or low-alcohol beverage options. The possibility to create and promote such products within their current beer range creates a sizable growth opportunity for Molson Coors (Makgosa & Sangodoyin, 2017).

Sustainable Practices and Environmental Concerns (Environmental - PESTEL)

Concerns about sustainability and rising environmental consciousness are becoming important considerations for consumers. By embracing environmentally responsible practises and displaying a commitment to doing so (Makgosa & Sangodoyin, 2017). 

b) Threatening Factors

Regulatory Changes and Alcohol Policies (Legal - PESTEL): The company's reputation and sales may be threatened by changes in alcohol rules, laws, or taxes. Reduced sales volume might result from stricter laws or increased taxes on alcoholic beverages that affect customer affordability and consumption habits (Safeer & Khuhro, 2022). 

Intense Competition and Market Saturation (Competitive - PESTEL)

Beer and non-beer areas of the beverage market are both very competitive. Molson Coors is up against competition from well-established brands in the non-beer beverage sector in addition to other breweries. The company's market share and profitability may be threatened by fierce rivalry and market saturation (Bazoche et al., 2020). 

Impact of Competitors' Actions

The actions of direct rivals should be considered when deciding to refocus on the beer industry. Molson Coors may need to carefully evaluate the competitive environment and consider a balanced strategy that combines innovation within the beer industry with selectively examining opportunities in other beverage categories if competitors are successfully entering non-beer segments. Molson Coors will be able to respond quickly by keeping an eye on market trends and competitor activity, which will help them stay competitive and adaptable in a changing environment. 

Conclusion

Concerns about brand dilution, resource allocation, and operational difficulties are brought up by Molson Coors' decision to expand its focus beyond beer. Molson Coors can secure their future by refocusing on their core competencies in the beer industry, investing in innovation, and making the most of their current assets. This choice can be supported by strategic adjustments like tightening ties with suppliers, expanding distribution networks, and emphasising differentiation.

Reference

Bazoche, P., Giraud-Héraud, E., & Soler, L.-G. (2020). Premium private labels, supply contracts, market segmentation, and spot prices. Journal of Agricultural & Food Industrial Organization, 3 (1). https://doi.org/10.2202/1542-0485.1087

Bonham, S. S., Scudder, R., Morrato, B., & Pashak, J. (2018). The Molson Coors Operational Portfolio Architecture: A case study. Communications of the Association for Information Systems, 18 . https://doi.org/10.17705/1cais.01835

Makgosa, R., & Sangodoyin, O. (2017). Retail market segmentation: The use of consumer decision-making styles, overall satisfaction and Demographics. The International Review of Retail, Distribution and Consumer Research , 28 (1), 64–91. https://doi.org/10.1080/09593969.2017.1334690

Molson. (2011). Only here to put cheer back into Beer Market (interview with the chief executive and marketing director of beer manufacturer Molson Coors on the Company’s marketing strategies). Strategic Direction , 27 (3). https://doi.org/10.1108/sd.2011.05627cad.009

Reeves, K. (2019). How Molson Coors deals with the cultural issues surrounding its M&A activity. Strategic HR Review , 11 (1). https://doi.org/10.1108/shr.2012.37211aaa.008

Safeer, A. A., & Khuhro, S. (2022). Employee-based Brand Equity and competitive advantage. Antecedents and Outcomes of Employee-Based Brand Equity, 54–71. 

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