Coors update 1985: Miller introduces Genuine Draft 1985: Miller introduces Genuine Draft 1986: Agreement with Asahi Breweries to brew and distribute Coors in Japan 1986: Agreement with Asahi Breweries to brew and distribute Coors in Japan 1987: Shenandoah packaging facility opened 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: Purchase of a Stroh’s brewery in Memphis 1990: Coors rises to #3 among US brewers 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 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 1996: A-B has captured 48% of US beer sales 2002: Coors acquires 2 nd largest UK Brewer, Carling 2002: Coors acquires 2 nd largest UK Brewer, Carling 2004: Coors outbids SAB/Miller for Molson, Canada’s largest brewer 2004: Coors outbids SAB/Miller for Molson, Canada’s largest brewer 2005: Molson Coors is world’s 5 th largest brewer 3 rd largest in U.S. 2005: Molson Coors is world’s 5 th largest brewer 3 rd largest in U.S.

Coors takeaways: Competition Need to understand industry and nature of competition to make good strategic decisions Need to understand industry and nature of competition to make good strategic decisions What matters for competition? Here, What matters for competition? Here, –transportation costs => geography –scale economies –advertising Market dynamics: what determines market structure in the long run? 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: 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 Strategy can be seen as link between firm and its environment External fit: how well do firm’s activities fit with external market forces? External fit: how well do firm’s activities fit with external market forces? Internal fit: how well do various activities fit with one another? 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 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 Try to quantify each, given available data Useful (but too simple) distinction: “cost” vs. “differentiation” strategy Useful (but too simple) distinction: “cost” vs. “differentiation” strategy

Sustainability of a competitive advantage Having a competitive advantage does not mean it’s sustainable! Having a competitive advantage does not mean it’s sustainable! Two kinds of threats: 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 Strategic decisions are often hard to reverse, due to –Sunk costs –Late-mover disadvantages –Delays in implementing changes –Organizational inertia Successful strategic planning requires thinking things through ahead of time 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 Others’ moves can quickly change your position in market, or force you to change it