Coors update
 1985: Miller introduces Genuine Draft
 1986: Agreement with Asahi Breweries to brew and
distribute Coors in Japan
 1987: Shenandoah packaging facility opened
– Sent concentrated beer there and added water to it.
– A-B ran ads making fun of Coors for claiming Rocky Mtn. spring
water when the water came from Virginia.
– Coors sued & lost, and lost the right to claim “Rocky Mtn. spring
water” in advertising.
Coors update (cont’d)
 1990: Purchase of a Stroh’s brewery in Memphis
 1990: Coors rises to #3 among US brewers
 1993: New president and COO hired from Frito-Lay;
first non-Coors family member to be president
 1996: A-B has captured 48% of US beer sales
 2002: Coors acquires 2nd largest UK Brewer, Carling
 2004: Coors outbids SAB/Miller for Molson, Canada’s
largest brewer
 2005: Molson Coors is world’s 5th largest brewer 3rd
largest in U.S.
Coors takeaways:
Competition
 Need to understand industry and nature of competition
to make good strategic decisions
 What matters for competition? Here,
– transportation costs => geography
– scale economies
– advertising
 Market dynamics: what determines market structure in
the long run?
– Look at MES/market size
– Here also: escalation of advertising expenditures
Cross-functional perspective
 Assessing a firm’s strategy and its options
requires looking at all functions/activities:
– Procurement
– Production
– Marketing
– Distribution
– Often also: organizational structure, HR policies,
financial position etc.
External and internal fit
 Strategy can be seen as link between firm and its
environment
 External fit: how well do firm’s activities fit with external
market forces?
 Internal fit: how well do various activities fit with one
another?
– An activity system is an important tool to assess internal fit
– 70s: good match between regional strategy and choices in
production and marketing;
– 80s: mismatch between activities and national strategy
Assessing competitive
advantage
 Look at costs and (customers’) benefits; prices
depend on those
– Cost drivers (e.g. scale economies, transportation
costs) => cost advantage?
– Benefit drivers (freshness?, limited availability) =>
benefit advantage?
 Try to quantify each, given available data
 Useful (but too simple) distinction: “cost” vs.
“differentiation” strategy
Sustainability of a competitive
advantage
 Having a competitive advantage does not mean it’s
sustainable!
 Two kinds of threats:
1. Changes in the market (e.g. increasing importance
of advertising)
2. Efficient markets principle at work: if you’re making
profits, others will try to go after you!
Strategy and commitment
 Strategic decisions are often hard to reverse, due to
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Sunk costs
Late-mover disadvantages
Delays in implementing changes
Organizational inertia
 Successful strategic planning requires thinking things
through ahead of time
1. Monitor/anticipate changes in the market.
2. Try to anticipate others’ moves
 Others’ moves can quickly change your position in market,
or force you to change it