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Your assignment is to prepare and submit a paper on modelo. Model Due: Modelo The beverage industry has had tremendous growth in 19th century with its sales doubling in thelast four decades. First it
Your assignment is to prepare and submit a paper on modelo. Model Due: Modelo The beverage industry has had tremendous growth in 19th century with its sales doubling in thelast four decades. First it was small scale production that was characterized by low and poor technology, lack of transportation systems to the market and low quality products. Then the introduction of superior technology and customer acceptance and loyalty increased the demand for its products driving up the sales. However, due to introduction of other substitutes like wines and spirits in the industry, the market is likely to experience downswings in its sales in the future.
Modelo’s expansion strategy was made possible through its strategic alliance with its two main distributors. Bartisor and grambrinus, experienced, creative and knowledgeable subsidiaries with knowledge about local customers in the US market. This strategy ensured that the risk of increase in taxes is hedged. These distributors were delegated with all the value chain processes of the activities except production which was being carried out the parent firm, Group Modelo back in Mexico. They had autonomous control on decisions regarding the marketing, insurance, transportation and creatively marketing captains, from which a campaign that leapfrogged the Grupo Modelo’s sales emanated from in 1986.
As pointed out in the report, wine is more competitive in Italy and Ireland unlike beer. Therefore, it will have an opportunity to attempt to enter these foreign markets by both mergers and acquisition from the local importers and distributors. They ca also adopt other strategic alliances with highly expertise- mature companies in this countries. It can be pointed out that, for the company to stand tall, it needs, a sharper differentiation, identifying and focusing on the key marketing that region and developing a creative Marketing development as a strategy
Some of the challenges it is facing is a cut-throat competition from a superior competitor, who have teamed up to ‘dethrone’ the company. It is also facing competition from other products that seems to have higher perceived quality than that of Modelo. A typical example is FEMSA, which has been leading in sales and market share since 2006.This enabled the sale of the group to dwindle leading to leaner profits. However, it can attempt a come-back focus strategy- by identify and narrowing its target customer s in the market. The company can utilize the cost leadership as a strategy in reducing all the operation’s cost and pursuing the customer excellence in all its customer services.
Another major challenge facing Modelo is the volatility in the Mexico economy which is down performing that has led to low incomes, for both government and the households and subsequent drop in their purchasing power. This has adversely affected the demand of the customers hence leading to dropped sales and loses of market share for the company.
Modelo should diversify its current business by taking advantage of opportunities of moving into newer markets encompassing the wine and spirits since it has enough experience in the industry. The reasons are that, first, its core competences like intangible resources are excellent especially the brand names, logos, experiences and expertise by its human resources in technology, production, research and development among other functional. It should also diversify to cushion risks that associated with waning market shares of the company especially it stronghold like in Mexico. The executives should reconsider changing the focus by clearly revising its customers segmentation to focus more in the unexploited regions other cities and rural places. It should strategically. articulate the kind of customers sit wants to serve: her psychographic, demographical and baying behaviors. These will serve as an impetus in pushing their sales upwards.
Lastly, it should revise its strategic plans to include the current and expected customers .This will enable it to focus more on the type of product produce so as to satisfy customer’s needs and exceed the customers’ expectorations.
References
Corona Beer: From a local Mexican Player to a global Brand, case 13. Ashok Com Business school.
