Introduction Seven strategists at the University of Missouri met for fifteen weeks during the spring of 2013 to analyze the past, present, and future of Boston Beer. They examined the internal strengths and weaknesses and the external opportunities and threats for this firm. The S.W.O.T. analyses included these: strategic position, Porter’s Five Forces, strategic history, business level strategy, super ordinate goals, degree of fit, macro-environmental analysis, organizational culture, organizational structure, value rare inimitable organizational framework (VRIO), and the strategic group. After considering the strengths and weaknesses in the S.W.O.T. matrix derived from these analyses, the authors then crafted a number of strategic recommendations for Boston Beer. The group selected four strategic recommendations that best took advantage of Boston Beer’s strengths, neutralized threats against it, minimized its weaknesses, and seized upon its opportunities. They suggested a presidential-themed line of patriotic beers. This idea employs a strengths and opportunities strategy from the S.W.O.T. matrix that capitalizes on Boston Beer’s strengths in order to seize upon its opportunities. Next the team suggested a renewed focus on Boston Beer’s status as a “real American beer.” This recommendation includes a strengths and threats strategy that uses a company’s strengths to neutralize threats. Thirdly, the group crafted a strategic recommendation of backward integration, a weaknesses and threats strategy that recognizes weaknesses in the firm and attempts to turn those weaknesses into a strengths that can help the company neutralize and avoid threats. Finally, the strategists recommended creating a less-expensive beer line under a different brand name. This beer would be sold in cans. This weakness and opportunity strategy focuses on turning one of Boston Beer’s weaknesses into a strength, thereby allowing the company to seize new opportunities. Strategic Recommendation #1 The first strategic recommendation for Boston Beer is the creation of a presidential-themed line of beers. This champion recommendation was crafted after strategically capitalizing on three particular strengths in order to best take advantage of three specific opportunities. The first strength was Boston Beer’s excellent brand recognition. This strength was distilled through the superordinate goals and value, rarity, inimitability and opportunity framework. Brand 1 recognition is the extent to which the general public is able to identify a brand by its attributes. Boston Beer’s wide range of brands is widely recognized across the United States, and its flagship brand, Samuel Adams, is recognized internationally for quality, “local” feel, and traditional brewing processes. The new premium line of ciders, Angry Orchard, has already become the most recognized line of ciders in the United States for some of these same reasons. Pairing this strength with one of the strategic history opportunities - the recent all-American trend -could help Boston Beer to leverage its strong positioning status. Boston Beer’s second strength is its broad product offering which was derived from assessing the company based on super ordinate goals. Their second opportunity, to reach more consumers with a broader range of appeal for new products, was derived from the company’s strategic history. The strength and weakness were then combined to create this champion recommendation. Boston Beer has experience in product differentiation and is able to adapt to changing consumer preferences. Because Boston Beer is already accustomed to adding new beers into its large range of beverages, the company is prepared to handle the challenges that come with positioning and promoting a new brand. Adding another brand to the product line would help the brewer take advantage of the opportunity to appeal to more consumers. Just as the company appealed to a new group of customers with the ciders and extreme beers, the presidential line would feature unique tastes that appeal to different consumers every year. Boston Beer’s culture, which is steeped in tradition and quality, is the last strength derived from Boston Beer’s strategic position. Boston Beer’s culture intertwined with the opportunity for broader product differentiation, as well as the large demand for new product lines, which is an opportunity derived from the Five Forces, creates the third building block for the recommendation of a presidential-themed line of beers. The presidential-themed specialty beer line would be released every year around July 4, tying the patriotic roots of Boston Beer to the theme of the beer line. The president featured on the beer would change every year. For example, 2013’s beer could prominently feature President Abe Lincoln, and 2014’s beer could highlight President Barack Obama. Each year’s marketing and packaging components would be structured around the specific president and the political and 2 patriotic times in which he lived. Bottle caps and bottle shapes could be changed in a creative fashion to further emphasize the patriotic ties of the specific president and beer. Finally, promotional merchandise could be released in conjunction with the beer line. A few weeks before the new presidential beer is introduced, Boston Beer could sell items that both promote the beer line and make additional profit. Red, white, and blue T-Shirts, baseball caps, bandanas, coolers, and barbeque accessories could be produced with designs centered around the specialty line’s president of the year. This merchandise would be perfect for taking advantage of the peak summer sales that are centered around Independence Day. This merchandise would also take advantage of the collectors who like having products that are only offered for a limited time. Boston Beer would be able to plan out restricted time slots for each president’s merchandise to be available to the public, thus allowing the company to better forecast demand for the product. Strategic Recommendation #2 The second strategic recommendation that the University of Missouri team suggests is to refocus the company image so that it is perceived as the only “ real American beer.” After reviewing Boston Beer’s biggest strengths, they believe that this recommendation champions the rest. This recommendation can utilize the strengths they distilled from the S.W.O.T. matrix to help Boston Beer neutralize some of the firm’s more imminent threats. The strengths that the company has and would be best suited to capitalize on include the following: brand recognition (distilled from a super ordinate goals analysis and VRIO framework), customer loyalty (distilled from a super ordinate goals analysis), and its perception as a local craft beer (distilled from a strategic position analysis). They found that these strengths would enhance our recommendation to neutralize the following threats: major brewers’ abilities to create similar products and steal market share (distilled from the Five Forces analysis), increased competition (distilled in the Five Forces analysis) and competing with brewers who have much greater bargaining power (distilled from a strategic group analysis). Based on this list of strengths and threats, the proposal to refocus the company image appeared to be an ideal option. The most important effect that this move would have would be that it would position the company as an aggressor. Now is the perfect time for Boston Beer to make a 3 play at improving its market share by attacking previously American and newly foreign-owned firms such as Anheuser-Busch Inbev and SAB Miller Coors. AB-Inbev and SAB Miller are two major players in the U.S. beer industry whose profits are being funneled out of America and into the pockets of foreign business owners. The general public may resonate with Sam Adams, one of the founding fathers. Buying Sam Adams beer could be seen as a patriotic act. To further support this idea, Boston Beer has the advantage of being locally founded and owned by Americans. Many American consumers support the American economy by buying only American made products; thus, being the only large all-American beer gives Boston Beer significant advantages. Being perceived as a quality product that is made by one’s neighbors instead of foreigners may not seem important, but it is something that AB-Inbev and SAB Miller can no longer imitate; this may give Boston Beer a sustainable competitive advantage. Boston Beer would need to run a positive public relations campaign which emphasized its products being American made and its profits going back into the American economy. Through this proposed strategic recommendation, the company would capitalize on its aforementioned strengths and lessen -or even neutralize - the major threats from competitors. Strategic Recommendation #3 The third strategic recommendation distilled from the internal weaknesses and external threats of Boston Beer is backward integration. Backward integration involves a company purchasing its suppliers to lower production costs. In this case, Boston beer would become its own supplier of barley, wheat, and hops. Boston Beer would be able to recognize weaknesses and avoid threats or turn those weaknesses into strengths by capitalizing on this strategic recommendation. The newfound strengths can now be used to neutralize the current threats in Boston Beer’s external environment. Strategists for Boston Beer paired three weaknesses with three threats to distill their strategic recommendation that Boston Beer backward integrate into the suppliers of barley, wheat, and hops. Out of all the recommendations that the strategists distilled by combining weaknesses and threats, they believed that backward integration would be most beneficial to Boston Beer. 4 After doing an analysis of business level strategy for Boston Beer, they saw that different laws across states may restrict or hinder contracts with distributors. By pairing that weakness with the threat that they found from the Porter’s Five Forces analysis that better farming techniques improve the input quality of products and give the suppliers increased leverage, the strategists believed that backward integration would help Boston Beer. Boston Beer’s restricted contracts with distributors create the need for Boston Beer to be more vertically flexible. By backward integrating and being its own supplier, Boston Beer’s restricted contracts with distributors would not hurt its business as much. Boston Beer would be able to compensate for the restrictions from state to state with cost savings that the company would gain from improved farming techniques. Secondly, after analyzing Boston Beer’s super ordinate goals, the strategists found that Boston Beer does not produce a line of low-priced beverages. The company is missing a large segment of the consumer market for which price is the main factor. Not having a low-cost product and the increasing prices of hops, barley, and other ingredients are problems for Boston Beer. By analyzing the macro-environment, strategists believe that backward integration would allow Boston Beer to offer a product in the lower price segment. The brewer would be in control of the limited natural resources and would be able to better forecast the cost of ingredients. This ability would allow them to offer a line of products at a lower cost. Boston Beer is known for offering seasonal beers. If Boston Beer were its own supplier, it would be able to forecast climate patterns, as well as examine the price of inputs to better predict a time that would allow the company to offer a product in the low-cost segment. Lastly, strategists at the University of Missouri examined Boston Beer’s super ordinate goals and found that one of Boston Beer’s main weaknesses is that it is hard to predict demand for seasonal beers. That weakness coupled with the problems that there are limited natural resources and an increased frequency of natural disasters that affects the prices of those natural resources, make backward integration a strong recommendation. Boston Beer would be in control of ingredients and would be able to adapt more quickly to the changing demands for seasonal beers. The company would not have to worry about its vendors supplying other brewers first in case of a natural disaster. Boston Beer would also benefit by not having to hold extra money on reserve for price increases by suppliers. 5 Overall, by backward integration, whereby Boston Beer would be its own supplier of the barley, wheat, and hops, would allow the company to improve the quality of its ingredients, increase inventory turnover rate, and improve customer satisfaction. Increased inventory turnover rate would allow Boston Beer to provide a fresher product to customers, which should lead to improved customer satisfaction. Backward integration would require Boston Beer to purchase farmlands and farm equipment and to hire agricultural experts and workers. However, in the long run, the price of these investments should be outweighed by the benefits of increased cost efficiency. Strategic Recommendation #4 The fourth strategic recommendation that the strategy group developed and championed is a less expensive and canned beer line under a separate name from the Sam Adams flagship brand. This recommendation would help Boston Beer seize on opportunities by countering some of the brewer’s weaknesses. Strategists found that Boston Beer’s first weakness is the fact that they are lacking a low-cost segment in the beer industry. Not having products in the low -cost segment has prevented Boston Beer from seizing the opportunity to expand their overall production. Strategists feel that if Boston Beer moves forward with a cheaper beer line, they will be able to enter the low -cost segment and seize the opportunity of expanding their sales and production. One key to entering this low-cost segment is for Boston Beer to sell this new beer line in cans. By canning instead of bottling, Boston Beer would have cheaper production costs. Under the rule of economies of scale which state that the average cost of producing a product decreases as the scale of production increases, Boston Beer would, theoretically, be able to produce more of this cheaper product at a lower cost per unit and, therefore, be able to seize the opportunity to expand overall production while not drastically increasing expenses. Having a lower cost per unit for production would allow Boston Beer to more effectively enter this low-cost segment by giving them the opportunity to charge less for the new beer line. In addition, strategists found that producing a cheaper beer line would help solve Boston Beer’s weakness of not appealing to the young, price-conscious consumers. A large majority of sales in 6 the beer industry come from that market segment, and, in the past, Boston Beer has only appealed to the high-quality craft beer drinkers. This, in turn, has limited their ability to reach these price-conscious customers. By offering a product appealing to the price-conscious consumer, Boston Beer will be able to increase its overall market. Reaching consumers at a young age would also help the company to create stronger brand loyalty that would help them to more easily introduce new consumers to their other brands. Boston Beer should create a new brand name for the lower-cost beer so as to keep it separate from the flagship brand, Sam Adams. The strategists propose that Boston Beer develop a new product name and line to accompany the new, cheaper brand image. This brand image would be significantly different from the traditional high-quality, higher priced, beer connoisseur-favoring brand image that the Sam Adams brand name represents. In order to not pollute Sam Adams’ reputation and brand image, the new beer should be promoted separately from Sam Adams and should utilize a completely separate marketing campaign. As stated above, the new product line would be offered in a can in order to further differentiate it from the higher-priced flagship brand. This would allow Boston Beer to differentiate its product offering without devaluing the perception of Sam Adams as a high-quality craft beer. Producing both a low-cost beer line and a high-quality beer line would allow Boston Beer to attract a more diverse range of consumers, which will help them develop long-term profit growth. Conclusion During the spring semester of 2013 at the University of Missouri, seven strategists met over fifteen weeks to analyze the past, present, and the future of Boston Beer. Over this time the strategist group examined the internal strengths and weaknesses and the external opportunities and threats that Boston Beer was facing. The strategist group used the S.W.O.T analysis from twelve different analyses. The group distilled many recommendations that would help make Boston Beer more successful in the future; however, they narrowed down and championed four main recommendations that they believe will make the company most successful. The strategists closely examined and reviewed their S.W.O.T. matrix to ensure that they had considered all of the important strengths, weaknesses, threats, and opportunities for Boston Beer 7 before combining them to distill thoughtful strategic recommendations. The matrix allowed the strategists to generate the four champion recommendations that are actionable strategies that Boston Beer can pursue. The four main recommendations are the presidential- themed line of patriotic beers, a renewed focus on Boston Beer’s status as a “real American beer,” backward integration into the areas of wheat, hops, and barley production, and the creation of a less-expensive beer line packaged in cans. The strategists believe these recommendations would help make Boston Beer more successful and profitable. The recommendations were carefully distilled from the beer industry and from Boston Beer internally. By following these recommendations, the University of Missouri strategists foresee a gain in market share, a stronger brand image, and an overall increase in profits. The strategists believe their four champion recommendations to be costefficient, and they strongly encourage Boston Beer to pursue them. 8