This paper investigates the challenges Carlsberg has gone through by using a qualitative approach in combination with a strategic analysis structure in order to come up with relevant and specific proposals of actions for the company to regain positive revenue growth. Hence, the two proposals of actions are a direct result of the analysis and findings and should be seen as the discussion part in a strategic analysis report. The qualitative approach involves a constructive and explanatory viewpoint which derives the primary data through a focus group and a semi-structured interview. Furthermore, extensive secondary data is obtained through academic articles, books, theories, and frameworks.
As a starting point, the findings from the focus group interview revealed critical insights into answering the research question. Despite the subjectivity due to the sample size and that focus group interviewees tend to influence each other’s opinions, two things became obvious.
The first thing was that there was a new type of consumers, namely the political ones that needed to resonate and identify with the brands they would consume. The second, and most essential part, was that there was a overwhelming perspective of the interviewees, that Carlsberg did not live up to its size in terms of sustainable responsibility, ecology or being a local player rather than a global corporation.
The analysis was divided into two main categories, namely an external and an internal
analysis. The external analysis was built on the framework theories from the PESTEL and the Porters five forces model. The internal situation was analyzed with help of Porters Value Chain model, the Brand Equity framework, and the Competitive Advantage theory. Both the frameworks used in the internal as well as the external analysis were utilized as strategic toolboxes helping facilitate the investigation of the respective situations.
In the external investigation, the PESTEL framework provided valuable insights into which macro or outer environmental aspects that has the most severe impact on Carlsberg. It became clear in the PESTEL, that Carlsberg suffers major macroenvironmental challenges that, if not dealt with correctly and in time, could influence their basis of existence long term.
As many other companies, Carlsberg is dependent on outside forces, both in terms of their beer production and transportation of goods, but also in regard to political, societal, cultural and economic variables, that can influence the company in positive as well as negative ways.
63 One of the major risk factors affecting Carlsberg, is the change of consumption preferences for Millennials and generation Y. It first became alarming in the focus group interview, where there was a clear tendency amongst the interviewees, that there was a new type of consumer, namely the political consumer. Upon investigating deeper, it became obvious that there is an increasing awareness for a need for sustainable production, healthy, organic and local food.
As a way of being able to fully understand the change of consumption habits and the new era of political consumers, Anthony Giddens (1996) identity theories were applied. His theories on the self-realization and self-development trends appearing in the late modern society that had shifted individuals need for creating their own identity, proved the findings from the focus group interview, as it was said that what you consume, defines how you are.
The Porters five forces revealed crucial insights into the fiercely competitiveness within the industry. Carlsberg is naturally one of the largest players, but in a market so price sensitive and with major power at the B2B customers where they can easily remove your products from the shelf, it is more important than ever that Carlsberg remains innovative.
The innovativeness needed to remain relevant for consumers in order to battle the threat of rivalry and substitutes in the Porters Five Forces, is also an essential factor within the internal analysis. It was analyzed that Carlsberg had to improve its Brand Equity by continuing to be in the top of mind of its consumers at the shelfs. The framework by Aaker also revealed that Carlsberg must improve their brand image by resonating more with the future consumers in terms of improving its sustainability efforts, whilst becoming a more local and ecological brand. All in all, Carlsberg had its strengths in terms of their brand equity but had to improve to remain a relevant brand to the political consumers. In the internal analysis, Porters Value Chain was also analyzed. The value chain analysis revealed Carlsberg’s’ ineffectiveness in becoming sustainable. It was shown that beer production in general has a severe negative effect on the environment due to the excessive amount of water used in the production, transportation, bottling and packaging process. Nonetheless, it was evident that the company was heavily focusing on reducing their negative carbon emission footprint. Carlsberg has full control of their value chain, which can be of great value in terms of introducing innovative products to the market, whilst remaining cost effective.
64 Moreover, the internal analysis investigated Carlsberg’s competitive strategy. It became clear that Carlsberg has succeeded in penetrating local markets globally by successfully executing mergers and acquisitions to achieve market leader positions. That has been a fundamental growth strategy from the company since the early 2000’s.
Based upon the qualitative strategic analysis of the company and its challenges, proposals of actions directly derived from the analyses’ findings were suggested to regain positive revenue growth. The first proposal suggested Carlsberg to introduce a low caloric beer with a large amount of alcohol percentage equivalent to the best-seller’s beers in United States. This would utilize some of the political consumers preferences, namely the health benefit, as it would contain less calories. The second proposal of action suggested Carlsberg to introduce a beer containing vitamin D with a sustainable packaging. This proposal would utilize the political consumers wishes to have sustainable bottles and a less negative carbon emission footprint, as well as having vitamin D included in the flavor, as many Scandinavians are in lack of Vitamin D.
Both proposals are directly aimed to regain positive revenue growth by responding to the abovementioned issues derived from the analysis.
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