The Boston Beer Company
The Boston Beer Company crafts high-quality beer. In its early years, it controlled the beer market. However, the company's performance has decreased as a result of industry competition and difficulties. Based on the factual data offered, the study assesses the strategic position of the Boston Beer Company. Based on the pertinent theories, concepts, and applications learnt, such as competitive advantage, resource-based view, market-based view, and porter's five forces approach, the issue or decision the organization is facing is described. The assignment offers a number of suggestions that other companies dealing with circumstances similar to those encountered by the Boston Beer Company can use in their next strategic planning. The Boston Beer Company case is based on the challenges facing the beer industry in the U.S. Since its inception up to the year 2010, the Boston Beer Company was operating in a competitive environment with fewer market challenges than the ones it is undergoing today. In the start, the Boston Beer Company was regarded as the leading beer company in the U.S market brewing about one million barrels of Boston Beer products. It also had many employees numbering to 520 (Hoffman 15-1). Jim, the CEO of Boston Beer wanted the business to remain independent since its inception. In the year 200, things began changing and the company became 6th among the largess brewing companies in the U.S. The company was affected by the problems evident in the beer industry in the domestic market. There were decreases in the sales of domestic beer because of low customer consumption of beer. Inflation was also growing towards up to the year 2012. There was competition from other wines and spirits that were more flavored. Gaining more share in market required Boston Beer Company to shift to the mass production of alcohol which led to the consolidation of the industry (15-2). The opportunity to grow required Boston Beer to produce light beer, better beer as well as craft beer which had given the industry an opportunity for the past decade and also growing annually. There were also increasing client base of women. The Boston Beer Company began doing well again due to producing these three brands of beer However, two main companies, the MillerCoors LLC and AB Inbev dominated the domestic U.S beer market (15-3). Other competitors were in the Craft Beer and Flavored Beer, accounting for the largest share in the international market. The current growing challenges are giving the business a tough platform to succeed in the beer industry. The proposal by United Airlines may give Boston Beer Company a new opportunity to thrive again.
Relevant Factual Information about the Problem or Decision the Organization Faced:
Boston Beer Company is facing the problem of competition from the emerging beer companies. There is an increased competition in the craft beer industry. The increase of sales by 20% of this industry has attracted more players to emerge in the market with companies such as Heineken and Corona flooding the beer market with imported products. Stiff competition is also from the two top brewers, the MillerCoors and AB Inbev (15-4). Boston Beer is also facing the competition from mergers and acquisitions who have a high bargaining power with the suppliers, the increased costs of production and renovation of the brewery at Breinigville (15-4). Further, Boston Beer Company is facing the decision challenge of expanding its business internationally. The company values the use of bottles and not cans in selling beer. However, going in the global market requires Boston Beer to sell in cans which is something the management has not been in support (Hoffman15-4). After the proposal by the United Airlines, the company is in dilemma of the decision of venturing in the national market by selling its beer using cans or declining the offer and remain local in the local market where it is not doing well at the moment (15-4).
Explanation of Relevant Concepts, Theories and Applications Derived from Course Materials:
The problem faced by the Boston Beer Company relate to achieving competitive advantage, venturing in the market fully and management decisions necessary for the business to operate nationally. It is the benefit of any business that has the capability of distinguishing itself from the competitors. Boston Beer Company distinguishes itself from the competitors by providing fresh and quality beer. It also does not want to merge with others in venturing the market. These limited decisions on expansion and market domination has caused the business to fall behind the major competitors in the beer industry. Boston Beer Company has not been keen in learning what other competitors are doing to achieve competitive advantage. To obtain a competitive advantage, a business requires doing extensive research; invest in marketing as well as taking a position in strategic planning.
Boston Beer Company CEO Jim seems to remain in the current and old position of the company in marketing and selling the business in other areas. The business has remained local and operating as a single unit. This is one of the major reasons it has been able to be overtaken by other emerging players in the beer industry. When the management of a company does not embrace change and take a strategic move, there is a high likeliness of the business to face the problem of stiff competition (Wheelen, et al., 163). Differentiation of the product has not improved except the fresh beer that the company offers. The current market embraces more than fresh beer where flavors are critical during production. It still sticks to operating alone while competitors have ventured the international market and utilizing mergers and acquisitions.
The Porters Five Forces approach has not been applied effectively by the management at Boston Beer Group. It is an approach that requires companies to learn their strength and weaknesses in the market by learning its buyers, suppliers, new entrants and substitutes (Zekiri and Nedelea 64, Wheelen, et al., 169). When other companies have a high bargaining power with the suppliers, Boston still strains to obtain expensive supplies from vendors. Boston is also not taking serious the power of new entrants and substitute beer products. They do not consider the power of the buyers who may also want beers in cans. The resource based view states that businesses should emphasize on acquiring resources that can help it in competing effectively in the market environment (Wang 35). The market based view notes that all businesses should always use a strategy that focuses on attention to the industry factors and external market influences that may impact on the firm performance (34). The operations of Boston Beer Company have considered less of these requirements when strategically positioning the business in the beer industry and market.
Recommendations
Looking at the current situation, Boston Beer Company requires learning its competitors, the areas that they are best in and where to improve so as to remain competitive in the beer industry. The management needs to change from its policy of working alone and join with other to succeed. There is the need for embracing diversity in packaging which is limiting Boston from reaching customers nationally. For example, packaging should be cans and bottles as different clients will need variety and a way of being able to reach many of them in other parts of the nation. Adapting to the wants and needs of customers is key here. Other businesses faced with a similar situation like Boston Beer Company can learn from this case by what a competitive business should do so as to achieve a high advantage in is future business endeavors and capturing the largest customer base. It is also necessary for other businesses to learn about predicting the future trends in the industry to be able to beat competitors or the new entrants in the market. Differentiation of the products or services and reducing the cost of production will help reduce the impact of losing business in the market due to competitors and lead to improved firm performance and achieving competitive advantage.
Alternative recommendations
To avoid the problem of not being competitive, in future, Boston Beer Company should address the market and industry demands of beer quality, type, distribution, packaging and mode of operation. Wang recommends that businesses should focus to obtain new ways of operating in the future. They should learn the changing trends of business and technology as well a customer preferences. Further, achieving a specific market position requires a firm action by the business to use both internal and external resources when planning strategies (39).
Conclusions
The assignment reviews the case of Boston Beer Company to evaluate the challenges it is facing in the market and industry level. It presents the synopsis of the company and how it reached to its level of operation today. The synopsis explains how Boston Beer Company came to become non-competitive in the beer industry and faced with many problems that it needs to overcome if it is too achieve its big market share. The paper provided the main decision that the Boston Beer Company needs to make so as to come out of its current situation. Joining the proposal by the United Airlines will be the option to go by. Declining will mean that Boston Beer will lose an opportunity to venture into the national market. There are also recommendations that other businesses faced with a similar challenge can apply to come out of that situation. The alternative recommendations are suitable for other businesses facing a simir problem to apply and prepare for the future.
Works Cited
Hoofman, Alan, "Case 15: The Boston Beer Company," Brewers of Samuel Adams Boston Lager (Mini Case)
Zekiri, Jusuf and Nedelea, Alexandru, "Strategies for Achieving Competitive Advantage" The Annals of The "Ştefan cel Mare" University of Suceava. Fascicle of The Faculty of Economics and Public Administration, Vol. 11, (2011), 2(14), 63-73.
Wang, Hui-Ling, "Theories for competitive advantage. "In H. Hasan (Eds.), Being Practical with Theory: A Window into Business Research (pp. 33-43). Wollongong, Australia: THEORI. 2014, The Web
Wheelen, Thomas., Hunger, David, Hoffman, Alan., and Bamford, Charles, "Strategic Management and Business Policy: Globalization, Innovation and Sustainability," 14th Edition, 2015, Pearson.
