LEADERS’ LAB
|
INTERNATIONAL STRATEGY
SABMILLER:
THE INTERNATIONALISATION
OF A BREWING GIANT
A recent study of MBA student Roark Nel, undertaken at the University
of Stellenbosch Business School, looked into the drivers, strategies
and critical success factors of the internationalisation of SABMiller, the
world’s second largest brewer.
Why this study?
SABMiller originated in South Africa and
a significant part of its success has been
attributed to the culture and history of the
organisation in its home market. The aim of
this research assignment was to uncover the
drivers, strategies and critical success factors
of SABMiller’s internationalisation move.
The company’s motivations, enablers and
modes of entry were further compared
to literature to determine which, if any,
theories are best suited to describe its process of internationalisation.
Research methodology
To conduct the research, a qualitative case
study methodology was employed, utilising
semi-structured interviews conducted with
29 current and former senior managers of
SABMiller or its investment partners, all
of whom were involved with the organisation’s internationalisation. The individuals
interviewed related experiences pertaining
to particular cross-sectional time-periods
within SABMiller’s internationalisation
process. Data was then examined using
thematic analysis.
What did the research find?
The role of SABMiller’s South African
home culture as a differentiator, as well
as the development of a deep talent pool
to enable rapid expansion, was telling in
its success.
Operating excellence was a competitive
advantage in the majority of markets the
organisation entered, while its in-house
mergers and acquisitions competence,
coupled with a distinctive partnering ability,
clearly demonstrated the advantage of building and maintaining strong relationships and
network positions when internationalising.
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AGENDA NO 1 | 2015 | www.usb.ac.za
SABMiller’s initial expansion sought to
counter the threat of becoming a takeover
target in its own right, and to open up new
markets that were both affordable and could
match the relative competitive advantages
it had developed. As the company grew, a
broader portfolio view was developed in order to balance risk and currency exposure in
emerging markets, with more stable profit
pool participation in developed markets.
To enter new markets, SABMiller utilised
a beachhead approach whereby its main aim
was to secure entry to a desired market from
which it would be able to expand – through
organic market share gain, increased ownership of its joint ventures or further acquisitions within the market.
Companies engaging in foreign expansion for the first time need to understand
clearly their relative advantages, to what
they owe that endowment, and to what
extent those advantages are sustainable in
the face of global competition. Furthermore,
locational advantages of a target country
must be viewed relative to the competitive
advantages they possess within the context
of their product class, industry structure,
nature of the knowledge to be transferred,
and where the value generation lies within
their structure.
Global government priorities and political
stability are varied and can have an overriding impact on a company’s choices and
ability to internationalise effectively. Investment in local communities and alignment
with priorities of social development and
environmental preservation are becoming
increasingly important. Therefore, internationalising companies need to factor this
into consideration to increase their chances
of success.
The significant impact of governments on
AFR
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USB LEADERS’ LAB
‘Roark Nel has succeeded in capturing the internationalisation
strategy of SABMiller in all its glory. As it is, the internationalisation
strategies of very few, if any, other South African companies have
been documented. In this very good effort by Nel, he has shown where
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SABMiller’s strategy correlated highly with existing theory, and where it
“created” new practices. In this regard, he has been able to demonstrate
how the SABMiller practices were aligned with the theory of Michael
Porter, among others. This work makes an invaluable contribution to
the case studies on South African companies that have implemented
internationalisation strategies.’ – Johan Burger
THIS RESEARCH WAS CONDUCTED BY:
internationalisation is particularly evident
in the case of SABMiller. With the added
importance of investment towards societal
goals, a study of the motivators and priorities of host governments may add value to
companies seeking partnerships to internationalise, particularly within the realm of
value chain development.
Conclusion
The analysis showed what competitive advantages SABMiller developed that enabled
its success – initially within its home market
of South Africa and subsequently as it
internationalised.
While the nature of ownership in the beer
industry often necessitated entry via joint
ventures, the manner in which SABMiller
constructed such ventures provided opportunities to shape the industry structure
beneficially in a number of cases.
Literature on internationalisation theory
offers useful frameworks to examine a company’s internationalisation global expansion,
such as Dunning’s “eclectic” paradigm and
Porter’s “diamond”. The analysis of SABMiller’s enablers, motivations and modes of
entry was effectively conducted within these
frameworks, though no individual theory
offered satisfactory explanatory power in
isolation. Hence, the literature needed to
be considered more holistically in order to
gain meaningful descriptive power, drawing
particularly on empirical research from other
emerging markets and their companies.
Thus, the initial deductive approach was
expanded to become more inductive as
various elements of the literature needed
to be applied to form the total picture.
While every company’s internationalisation process will be different given its
unique skill-sets, home markets and
opportunities, SABMiller’s case did provide
interesting insights.
Its diverse South African home culture and history assisted in developing
adaptable and resilient managers, while
significant investment in training and
skills development cultivated a deep talent
pool that enabled rapid expansion as opportunities became available. Operational
excellence was developed through vigorous
domestic rivalry and later encouraged with
internal competition and global benchmarking. SABMiller demonstrated the
advantage of building strong relationships
and network positions through its in-house
mergers and acquisitions competence and
distinctive partnering ability. However,
the precursory network development with
prospective take-over targets that this
competence enabled is an application not
generally covered by the literature.
Recommendations
While literature on internationalisation provides frameworks with which to analyse the
paths followed by an organisation, a more
holistic regard of literature is recommended
to analyse emerging-market multinational
enterprises whose history and culture play
a significant role in determining internationalisation behaviour.
The author further recommends research
on the impact of South African culture on
internationalisation success – particularly
where expatriation forms part of a company’s strategy, while the role of leadership
as a differentiator in successful internationalisation is an area not explored extensively within this study. It was uncovered
as a significant theme in SABMiller’s
expansion, however, and it is thus an area
that may warrant further exploration.
Roark Nel
Johan Burger
This is a summary of the MBA
research assignment written
by Roark Nel, supervised by
USB faculty member Johan
Burger. The research assignment titled SABMiller: The
Internationalisation of a
Brewing Giant is available at
http://scholar.sun.ac.za.
www.usb.ac.za | AGENDA NO 1 | 2015
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