“THE ONLY THING THAT IS CONSTANT IN TODAY’S WORLD IS CHANGE”- Dr. Mary Engelbreit (1983)
Looking at the world 20 years back, its a way too different place to live in today. Over the years numerous authors, writers and editors from the business world magazines have spoken about changes in organization. To survive in the competitive arena, one needs to be creative, organized, well equipped and most important he or she needs to be secure from the ongoing rivalry. It is not new that Information Technology has become one of the most important aspects in the business world. Its been talked about in most business houses across the globe since most of them have already entered off shore markets or are planning to do so. In short, we are witnessing a metamorphosis in which a business is being taken care off , handled or customised according to the market situation of the region of its existence
Going 3 to 4 years back one can easily gauge the trends changing in the business world, ( Lakshmi Mittal,2010). And trends setting in a very predictable and a monotonous fashion its discernible to the grandness and quality it carries. For any organization to expand its market share or addressable market, it is very important to have key and accurate information about the market , space or region it plans to hit.
Similarly United Breweries (Holdings) Ltd which is the centrepiece of this dissertation has been following the trend of vertical and horizontal market expansion. the company holds 63% of the market share for india in the beer business ( Annual Report, FY07-08). However having acquired the the scotch giant ( Whyte and Mackay) in the United Kingdom is a clear step towards the internationalization of the group at large. With Dr Manmohan Singh ( Prime Minister of India) forecasting a growth rate of 7 to 8.5 % in the economy it is very evident that offshore business are bound to flourish , ( TOI, 2010) .
Although according to Jan-Erik ,1997), in the last decade or so there has been a lot of appreciation for internationalization due to the intention to clear hunger for market expansion and increasing the addressable market share. Although theories and kinetics behind the concept of internationalization will be briefly discussed in third chapter titled literature review. However internationalization theories in India have always been parallel to the economies of scale in the industry. India’s culture for drinking beer has grown in the past few decades. Beer companies have come and gone but not to many have sustained as Kingfisher beer.
Kingfisher the King of Good Time is a classic brand with a net worth of Rs 50 billion. Signifying energy, youthfulness, and freedom. It is a brand formed United Breweries group. Kingfisher is the largest selling beer in India covering 28% of the market share in the business. The brain behind the beer is the current chairman of the UB group Dr Vijay Mallya. The brand has made a name worldwide spreading over 52 countries. It all started from Bangalore, India in the 1980’s leading to become the biggest liquor company in the world. The company’s marketing strategy was what made them big and keen interest from the CEO himself made a difference in the sales.
However, with high competition in the market the marketing strategy for Kingfisher beer to enter different market segments was essential. Being a large firm it would have been easy to enter markets by pumping in money, but a different level of strategy is required to sustain in the industry (UB Group, 2006).
To make any small or large firm successful, steps need to be taken towards advancement. Steps to expand, enter and explore will benefit firms looking for success. Literature indicates that more the steps taken the better the performance. Therefore, according to some literature review entering a new market and exploring it to the fullest brings about beneficial changes for the firm. However in this essay, the investigation into a Indian Liquor company United Breweries – Kingfisher beer, as to how it has managed to capture a huge market not only India but also worldwide.
In the next chapter the author will discuss the basics of the project intended. However the foundation of any such project that requires extensive research and critical evaluation of the data collected. It is very important to be ethical while researching, gathering and correlating data so that no half or incomplete data has been put down in this piece of work without proper citation provided. Proper care would be taken so that no information is leaked out the academic institution and determine the organization that is being critically evaluated.
RESEARCH QUESTIONARE AND RATIONALE
2.1 OVERVIEW AND BACKGROUND 概述和背景
India’s culture for drinking beer has grown in the past few decades. Beer companies have come and gone but not to many have sustained as Kingfisher beer. Kingfisher the King of Good Time is a classic brand with a net worth of Rs 50 billion. Signifying energy, youthfulness, and freedom. It is a brand formed United Breweries group. Kingfisher is the largest selling beer in India covering 28% of the market share in the business. The brain behind the beer is the current chairman of the UB group Dr Vijay Mallya.The brand has made a name worldwide spreading over 52 countries. It all started from Bangalore, India in the 1980’s leading to become the biggest liquor company in the world. The company’s marketing strategy was what made them big and keen interest from the CEO himself made a difference in the sales. However, with high competition in the market the marketing strategy for Kingfisher beer to enter different market segments was essential. Being a large firm it would have been easy to enter markets by pumping in money, but a different level of strategy is required to sustain in the industry (UB Group, 2006).
印度的啤酒文化在过去几十年里不断发展。啤酒公司来了又走，但没有多少公司能像翠鸟啤酒那样持续经营下去。“美好时光之王”翠鸟是一个拥有500亿卢比净资产的经典品牌。象征着能量、青春和自由。这是一个品牌形成的联合啤酒集团。翠鸟是印度销量最大的啤酒，占据了该业务28%的市场份额。啤酒背后的大脑是UB集团现任主席Vijay Mallya博士。该品牌已在全球52个国家声名鹊起。这一切都始于20世纪80年代的印度班加罗尔，成为世界上最大的酒业公司。公司的营销策略使他们成为大人物，而首席执行官本人的浓厚兴趣也对销售额产生了影响。然而，在市场竞争激烈的情况下，翠鸟啤酒进入不同细分市场的营销策略至关重要。作为一家大公司，通过注入资金进入市场是很容易的，但在行业中需要不同水平的战略来维持（UB Group，2006）。
Beer drinking culture in India has been evident from a time where it was a colony of the British Empire. Although the roots of kingfisher can be traced back to United Kingdom where it originated and from there on got transported to India where it is currently headquartered.
2.2) RESEARCH QUESTIONARE AND RATIONALE 研究问题和基本原理
The author intends to critically evaluate the following question wherein coming out with precise and definitive answers would be the main intension through the literature review.
What is internationalization- A concept.
History of internationalization ? and its First traces of scholarly articles?
What sort of theories are there in internationalization?
History of UB group ? what sort of a product profile does it have?
How does organizational culture affect internationalization? ( A kingfisher Prespective)
What is the international and domestic marketing theory of UB group?
Internationalization strategy, Its annual accounting, public listing?
Kingfisher entry in different markets how and when were they done and how did it help them grow as a brand?
Financial development and economic growth of the company?
comparision between globalization , localization and Internationalization?
Conclusions with regards to organization, market trends, supply chain management and consumer behaviour.
The above set of questions are based on an overview of the concept of internationalization and the current market position of the organization in discussion. However it is said that there is no right or wrong answer to any question since the exsistence of knowledge and correlation of data. But the author intends to answer the above set of questions with precise knowledge and proper citation ( references).
2.3) IMPORTANCE AND PURPOSE OF STUDY 研究的重要性和目的
Internationalization is an ongoing and never ending process with regards to vertical and horizontal growth of an organization. For large and public enterprises it is necessary to enter the international market because of the growing competition in the local and regional market. And for any such decision for going international it very necessary to have adequate financial reserves, equally qualified man power and a management. And given the competition in the current domestic market that kingfisher beer addresses, it one of the pressing priority for such a step.
MARKET SHARE 市场份额
The above figure shows that the competitors are fast catching up with kingfisher and thus making it more evident from to foray for greener pastures with regards to new business initiatives. Although it still remains the market leader even in the current market share but comparing 63% in FY07-08 and 48% FY 09-10 it is clearly evident that the company is losing grip. The reason behind such a drastic change is because fosters and knock-out which subsequently new entrants hold about 37% of the market share , ( Yogin Vora, 2009).
This indeed is an alarming situation for UB group that is the parent company that owns many of brands like Kingfisher Beer. However earlier this decade, the business world saw the takeover of Whyte and Mackay Scotch Whiskey by United Breweries. And with all the other international beers like Fosters, Budwiser and Carlsberg entering Indian markets it has become substantially important for UB group and Kingfisher beer to look for greener pastures. Hence a very crucial assumption is that market knowledge is acquired and collaborated from the current business activities in the market. But then to counter this experimental knowledge it is very important to have accurate forecast or one has to be in a capacity to manipulate the market trends.
LITREATURE REVIEW AND ANALYSIS
3.1) INTRODUCTION TO INTERNATIONALIZATION (A FORMAL APPROACH) 国际化介绍（正式方法）
This chapter will futher intend to put light and give detailed information on the said subject ( IE : Internationalization of Kingfisher Beer). But to start with it will explain the makeover shift in the way business has changed in the last decade after the industrial revolution hit India. And finally it will conclude with detailed example and critical evaluation of kingfisher beer’s current market with regards to entering the international markets. It will also try and explain how does culture play an important role in terms of expansion of business and setting up base outside home turf. However the literature review will also attempt to answer all the research based questions put forth for creating a base of the research.
The literature review also tends to put light on subject like comparisons between internationalization, globalization and localization.
Definitions are always abstract with regards to its relativity,( M Oviatt, 2000).
Looking at the current business scenario and geographic becoming practically non existent one can easily gauge out the importance of going international or changing regions for market expansion. This only happens when an organization is financially sound with regards to infrastructure, cash reserves, goodwill from financial institutions and proper vision. The alcohol market in western India alone stands at Rs 3,000 crore ( IE 1 £ = Rs 74.232) which makes it a million dollar business, (Yogin Vora, 2010). And even after beer not being a drink that originated in India the CAGR of the beer industry in India is at 14.3%, which is much higher than other countries, (FT.COM. Arp – 2010). Even yet ,according to the same source till date 90% of the market trend are still controlled by UB group and SAB Miller. However for entering international markets, it is necessary for any company to gauge the multitude of the events and actions (Jan Jhonson, 2001).
从目前的商业场景和地理位置变得几乎不存在的情况来看，人们可以很容易地判断出走向国际或改变地区对市场扩张的重要性。只有当一个组织在基础设施、现金储备、金融机构的商誉和适当的愿景方面财务健全时，才会发生这种情况。仅印度西部的酒类市场就有30亿卢比（即1英镑=74.232卢比），这使其成为一项价值百万美元的业务（Yogin Vora，2010）。即使啤酒不是起源于印度的饮料，印度啤酒行业的复合年增长率仍为14.3%，远高于其他国家（FT.COM.Arp–2010）。尽管如此，根据同一消息来源，到目前为止，90%的市场趋势仍由UB集团和SAB Miller控制。然而，为了进入国际市场，任何公司都有必要衡量各种事件和行动（Jan Jhonson，2001）。
To make any small or large firm successful, steps need to be taken towards advancement. Steps to expand, enter and explore will benefit firms looking for success. Literature indicates that more the steps taken the better the performance. Therefore, according to some literature review entering a new market and exploring it to the fullest brings about beneficial changes for the firm. However in this essay, the investigation into a Indian Liquor company United Breweries – Kingfisher beer, as to how it has managed to capture a huge market not only India but also worldwide. India’s culture for drinking beer has grown in the past few decades. Beer companies have come and gone but not to many have sustained as Kingfisher beer. Kingfisher the King of Good Time is a classic brand with a net worth of Rs 50 billion, signifying energy, youthfulness, and freedom.
要想让任何一个小公司或大公司取得成功，都需要朝着进步的方向迈出步伐。扩张、进入和探索的步骤将有利于寻求成功的公司。文献表明，采取的步骤越多，性能越好。因此，根据一些文献综述，进入一个新市场并充分探索它会给公司带来有益的变化。然而，在本文中，对印度酒业公司联合酿酒厂（Kingfisher beer）的调查表明，该公司是如何在印度乃至全球范围内占领巨大市场的。印度的啤酒文化在过去几十年里不断发展。啤酒公司来了又走，但没有多少公司能像翠鸟啤酒那样持续经营下去。Kingfisher the King of Good Time是一个经典品牌，净资产达500亿卢比，象征着活力、年轻和自由。
Kingfisher is the largest selling beer in India covering 28% of the market share in the business. The brain behind the beer is the current chairman of the UB group Dr Vijay Mallya although the business of beer making was bought by Mr. Vitthal Das Mallya .The brand has made a name worldwide spreading over 52 countries. It all started from Bangalore, India in the 1980’s leading to become the biggest liquor company in the world. The company’s marketing strategy was what made them big and keen interest from the CEO himself made a difference in the sales. However, with high competition in the market the marketing strategy for Kingfisher beer to enter different market segments was essential. Being a large firm it would have been easy to enter markets by pumping in money, but a different level of strategy is required to sustain in the industry (UB Group, 2006). Speaking about the marketing strategy, any complaints, disagreements and grievances can be directly mailed to the chairman of the organization (Company Report, 2009). The marketing strategies of the organization would be discussed in the sub chapters of literature review.
翠鸟是印度销量最大的啤酒，占据了该业务28%的市场份额。啤酒背后的智囊团是UB集团现任主席Vijay Mallya博士，尽管啤酒制造业务被Vitthal Das Mallya先生收购。该品牌已在全球52个国家声名鹊起。这一切都始于20世纪80年代的印度班加罗尔，成为世界上最大的酒业公司。公司的营销策略使他们成为大人物，而首席执行官本人的浓厚兴趣也对销售额产生了影响。然而，在市场竞争激烈的情况下，翠鸟啤酒进入不同细分市场的营销策略至关重要。作为一家大公司，通过注入资金进入市场是很容易的，但在行业中需要不同水平的战略来维持（UB Group，2006）。谈到营销策略，任何投诉、分歧和不满都可以直接邮寄给组织主席（《公司报告》，2009年）。该组织的营销策略将在文献综述的子章节中进行讨论。
3.2) HISTORY OF INTERNATIONALIZATION AND TRACES OF THE FIRST SCHOLARLY ARTICLES国际化的历史和第一批学术文章的痕迹
It is very debatable for to discuss about managerial or operational practices because when one set a date about their origin a few years down the line someone comes up with an alternative thought or proof to change the dates or years of origin. For example, most people would say that information security first came into practice during WW1 (World War1) when the French invaded the Spanish empire after failing about 12 years ago due to cipher created by the Spanish military personal.
But then what explanation can one give about the messages created by Julius Caesar in C50 BC, who used the same theory in a nomadic manner for passing on secretive messages without getting leaked out?
Considering researched articles and the information on public domain which are open to end users like the author himself the first traces of scholarly articles about internationalization dates back about 30-to-50 years. In the year 1978 a few authors actually discussed and critically evaluated the theoretical line of internationalization which is not long back. This topic is fairly new has never been tapped on or discussed in detail with regards to modelling an organization at the size of kingfisher or for to mention UB Group.
Internationalization as a process has been viewed to enhance and expand the current addressable market and to start new business initiative outside home turf. Although there is no set definition for internationalization. Several authours in the past have discussed a lot of theories regarding international trade for example absolute cost advantage, ( A Smith, 1776) ,Comparative Cost Advantage, ( David R, 1817) to name a few. However in the sections below some of the relevant theories to kingfisher Beer and UB Group would be critically analysed. But looking at the current financial of this organization one can easily make out that even after having a deficit of 14% the company is still showing profits with regards to revenue, (Annual Report,2009).
国际化作为一个过程，被视为增强和扩大当前的目标市场，并在本土之外启动新的商业计划。尽管国际化没有固定的定义。过去，一些学者讨论了许多关于国际贸易的理论，例如绝对成本优势（a Smith，1776）、比较成本优势（David R，1817）等等。然而，在以下章节中，将对翠鸟啤酒和UB集团的一些相关理论进行批判性分析。但从该组织目前的财务状况来看，人们很容易看出，即使在出现14%的赤字后，该公司仍在显示收入方面的利润（2009年年度报告）。
Internationalization of the firm and organization of the first world are bound to happen since the industrial revolution has hit the Asian sub continent. This is because of the cycle which has been set in this particular motion. Today it is every evident for the service industry organizations to look for other horizons for revenue. For example TATA CONSULTANCY SERVICES have crack a $100 BN deal with a company that is backed by the Chinese government, (Company Report,2009). This gives the researcher a positive approach to the concept of internationalization. Though the concept of internationalization only sticks to an outwardly research and aspects. But in the retrospect it is very important to look at both sides of a situation. Although over a period of a few years, one finds a very positive evidence of linear integration of outwardly internationalization and the organization’s internal growth and performance.
3.3) THEORIES OF INTERNATIONALIZATION AND OTHER BUSINESS MODELS 国际化等商业模式理论
The process and models of internationalization have been manifested in a lot of ways and processes. There has been two types of approaches in terms of evaluating the dynamics of an organization while stepping up to internationalization. This sub chapter will discuss different theories that are pertaining to UB Group and its brand kingfisher Beer.
The electric theory of internationalization which is the base of in most cases where a company or an entity expresses its desire to expand its operations in other territories, (Johanson and Vahlne 1999).
THE UPPSALA MODEL OF INTERNATIONALIZATION UPPSALA国际化模式
It is very important for any company or organization to have an adequate knowledge of the market it tends to enter. For this, one needs to have a theoretical model in place. Because such a model interprets into a fundamental interaction between the development of knowledge of offshore commercialized places while operational developments within the organization and on the other hand with the increasing commitment of the offshore markets. Although having a more specific model for a precise knowledge is very important keeping all aspects and sides of internationalization in consideration. However according to Johanson and Vahlne (1990), it is very authoritative to make a distinction between the change and aspects of the market which is also a very important part of Uppasala Model of internationalization. As far as the said model is concerned market knowledge and commitment are said to affect the strategy the most which in turn affects current activities and commitment decisions.
THE INTERNATIONALIZATION OF A FIRM.
SOURCE: J. JHONSON (1990),”The Mechanics Of Internationalization”, International Marketing Review, Vol 1 No 1, pp. 11-23.
The above figure clearly explains the model and its relation to internationalization. A critical assumption is always based on the data received on market knowledge which also include perceptions and problems, (J. Jhonson,1990).there two aspects to the theory that are change and state aspects. The state aspects comprise of market commitment and market knowledge, the change aspects are current business activities and commitment decisions. Initial leeds and critical analysis about a competition generates new business initiatives. According to the above model, it is assumed that market commitment and market knowledge are assumed to affect decisions pertaining to arrangement and agreement to supply resources to the off shore market. Making the cycle a part of the integrated business operations is very important to have business continuity.
The above model implies to a behavioural theory of the organization (Cyert and March, 1963). Further according to the same authors, a distinguishing feature of the internationalization process is that the organization is beamed as a vaguely bracketed classification in which different entities have a different part to play and follow a set protocol with regards to the progress and growth of the organization in the off shore market. The actors that are engaged in international market have different ideas, perceptions and concepts to place their products in the core running competitive market. The uppasala model denotes that experimental knowledge is also assumed as primary knowledge while predicting market uncertainty. This in turn generates business opportunities and subsequently a driving force in the international market. However to discuss the core competencies of this theory and model would take an entire article which would not be a profitable idea with regards to over viewing the entire concept of Internationalization.
Although the Uppasala Model is traded off as precisely a generic model which can be blended into any organization but the critical evaluation of the said model puts light on factors that cannot be over looked with regards to the profitability. A few drawbacks are that the model is too preordainative in nature, does not put much light on the interlinked economies across the globe. The model further does not work for service industries. This model cannot be applied to the UB group since it does not apply to highly internationalized firms. The demographic locations and country borders are no longer considered to be a hurdle with regards to expansion. This model is territorial with regards to data collection and collaboration.
THE TRANSACTION COST ANALYSIS MODEL (TCA) 交易成本分析模型（TCA）
To a different approach to models, TCA is more off a straight out model with regards to critically evaluating the same. While entering new markets it is important to have perfect competition since this could lead to an additional transaction cost while markets fail to comprehend the expenses in promoting products. To minimize costs it is important to employ a safeguard to which will explain the cost for irregular expectations to promote the product. Time is a witness for the frictions between the buyer and supplier with regards to the commercials discussed. The foundations to this are opportunistic behaviour which leads to self interest eventually. To safeguard this a corporate governance contract should be signed or agreed to protect the intrest of both parties. While the UB group is one of the most respected organizations in the Indian sub- continent this will work exactly in its favour.
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