Strategic Management in Turbulent Markets: The Case of the German and Croatian Brewing Industries*

By Niederhut-Bollmann, Christoph; Theuvsen, Ludwig | Journal of East European Management Studies, January 1, 2008 | Go to article overview

Strategic Management in Turbulent Markets: The Case of the German and Croatian Brewing Industries*


Niederhut-Bollmann, Christoph, Theuvsen, Ludwig, Journal of East European Management Studies


European beer markets are characterized by major changes that are forcing breweries to redesign their competitive strategies. In this paper, we analyze the changes in the German and Croatian brewing industries by referring to Porter's five forces model and generic strategies framework. The analysis reveals growing competitive pressures in both markets and a wide spectrum of competitive strategies. Whereas in Germany cost leaders have gained market shares, the Croatian market is strongly influenced by the differentiation strategies of multinational brewing groups and medium-prized local brands. A comparison of the market characteristics and firm strategies in Germany and Croatia and some theoretical and managerial implications close the paper.

Die europäischen Biermärkte befinden sich in einem tiefgreifenden Wandel, der Brauereien zur Anpassung ihrer wettbewerbsstrategischen Positionierung zwingt. Unter Bezugnahme auf das wettbewerbsstrategische Konzept Porters analysieren wir diese Veränderungen am Beispiel der deutschen und der kroatischen Brauwirtschaft. Die Analyse zeigt einen in beiden Märkten wachsenden Wettbewerbsdruck und ein breites Strategiespektrum, das Anwendung findet. Während in Deutschland in den letzten Jahren die Strategie der Kostenführerschaft besonders erfolgreich war, wird die kroatische Brauwirtschaft durch die Differenzierungsstrategien internationaler Braukonzerne sowie lokale Anbieter im mittleren Preissegment geprägt. Ein Vergleich der Charakteristika der Branchen und Strategien in beiden Ländern sowie einige theoretische und praktische Implikationen beschließen den Beitrag.

Key words: Brewing industry, Croatia, competitv analysis, strategic management

1. Introduction

For many years, the German brewing industry was characterized by low to moderate competitive pressures. A growing demand for beer in its home-market, strong consumer preferences for traditional local brands, forbearance of aggressive low-cost strategies and a lack of marketing and product innovations all created a very stable situation, guaranteeing high returns on investments for most breweries. This situation has been changing dramatically over the last decade. The market entry of large multinational breweries like Heineken, Carlsberg and InBev, shrinking demand due to changing consumer preferences, the emergence of more aggressive competitive strategies, growing concentration ratios and rapid changes in important distribution channels have created growing competitive pressures for German breweries. An industry that was used to stability must now find its way in an increasingly turbulent market environment.

In recent years, the Croatian beer market has also been in transition. Due, for instance, to the market entry of large international brewing companies, the industry structure has been characterized by dramatic changes. The aim of this paper is to analyze the ongoing changes in the German and Croatian brewing industries with reference to Michael E. Porter's five forces model and generic strategies framework and to sketch the current competitive strategies of breweries in both markets. This analysis leads to the identification of some theoretical implications and to some conclusions concerning the need for active strategic management in turbulent markets.

2. Theoretical framework and methodology

In his seminal work on strategic management, Michael E. Porter (1980, 1985) provides a powerful instrument for thoroughly analyzing environmental forces and market structures in an industry. Porter's five forces model provides a flexible framework for describing and assessing competitive pressures in an industry and industry attractiveness. Based on this analysis, a company can develop a competitive strategy for gaining and sustaining competitive advantages over rival firms and thereby generating above-average return on investments.

According to Porter (1980), five forces influence competitive pressures and industry attractiveness:

* Degree of rivalry among existing competitors: Rivalry among firms varies considerably between industries. …

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