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Introduction
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Cont.
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The market is currently dominated by BGI Ethiopia of Castel Group, which is owned by French investor Mr. Castel and produces St.George brand with a share of around 50 percent nation-wide and even higher in Addis Ababa.
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Ethiopia is strategically important country in the Horn of Africa. The existence of international meetings and conferences creates a huge demand for investment at an international and domestic level, even an increase in such demand is expected in the future. However, the supply of beer is far below the level needed to meet the demand. Currently, there are only five breweries in Ethiopia namely :St.george, Dashen, Harar, Meta and Bedele beer Factories. Since this industry can create job opportunities for workers, the development of the beer industry benefits not only the investors but also reduce poverty.
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Encouraged by these factors, so many investors have planned to enter the market and more are still planning to do so like Raya, Zebider, Heineken and Habesha Brewery investors.
St. George brewery factory was established in 1922 for the sole purpose of producing first bottled beer in Ethiopia.
The St. George Brewery is located near the Mexico Square, Addis Ababa, and occupies an area of 20,000 square meters of land and has a sister company in Kombolcha and new plant built in Hawasa.
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General environment
Political environment
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The government allow a favorable investment opportunity for the industry. The introduction of a democratic multi-party system, enshrined in the Constitution of the Federal Democratic Republic of Ethiopia adopted in December 1994 by an elected constituent assembly followed the defeat of the Derg regime in 1991. Since 1995, periodic elections have taken place in Ethiopia every five years. On 23 May 2010. The violence that erupted after 2005 elections remained foremost in the minds of most Ethiopians. The existing Labor law of Ethiopia is referred to as the Labor Proclamation No. 377/2003. It has become the principal source of labor law in Ethiopia.
Economic environment
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The performance of the world economy represents one of the most destructive economic crises in the last few years, perhaps with more devastating effects than ever before.
The overall international economic system, almost all individual national economies are affected, including Ethiopia.
Problems are reflected in reduced demand, difficult access to export markets and particularly capital markets which are reserved for the recovery of those economies which caused the current (prime) economic crisis.
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GDP is broadly the economic worth of the country. It is the total consumption (private + government spending), investment and trade balance (exports - imports) together. The Ethiopian economy is dominated by service and traditional agriculture. Agriculture accounted for about 42% of GDP during 2009/10 ,the service sector contributed 45% while the share of industry sector averaged 13%. In 2009/10 fiscal year, service sector was leading the two sectors growing at 13 percent followed by 10.6 and 7.6 percent growth rates of Industry and agriculture, respectively. The industry sector of Ethiopia, which has been growing at a constant rate of around 10 percent for the past seven years, will grow by 14 percent this year (2010/11 fiscal year).
Inflation in Ethiopia
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The national bank of Ethiopia increase the minimum interest rate on savings and time deposits from 3 to 4 percent effective from July 4, 2007, in response to NBE, commercial banks revised their minimum deposit interest rates on saving and time deposits upward by one percentage.
Tax treaties to avoid double tax payment are signed with several countries, along with bilateral treaties for the protection and promotion of investments also implemented in Ethiopia. In Ethiopia corporate income tax (tax on profit) is 30%, 15% VAT is payable on businesses with a turnover above $54,000.
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Ethiopia is endowed with multi socio-cultural factors such as languages, religion, dressing, eating and lifestyles. Also the role of men and women varies from region to region. It has great impact on the economic development of the nation because most of the cultural practices do not allow women to participate in decision making process.
No reliable statistics exist on religious affiliation in Ethiopia. Still, clearly, by far the largest faiths are Orthodox Christianity and Islam. Each is thought to constitute perhaps 40 to 45 percent of the population.
Technological environment
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Changes in the technological environment have had some of the most dramatic effects on business made in Ethiopia.
A company may be thoroughly committed to a particular type of technology, and may have made major investments in equipment and training only to see a new, more innovative and cost-effective technology emerge.
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The introduction of factories using modern technologies have polluted both air and water and contributed to various environmental and health-related problems.
The Ethiopian government, in realization of the productivity enhancing effect of infrastructure, has pursued an ambitious infrastructure expansion program for the past fifteen years.
It is investing heavily in roads, telecom, power as well as social infrastructure in schools, health services and water supply.
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Task environment
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Assela malt factory crown and can manufacturing Industrial S.C and glass factory S.C plastic PLC
Ethiopian Bottles
Universal hops
and foreign purchased goods and items from the Check Republic, Germany. from Denmark are transported all the way from Djibouti port to the Factory.
yeast
Competitors
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Market Share of Ethiopian Breweries Brewery Addis Ababa National St.George Meta Dashen Harar Beadle Total 64% 12% 11% 5% 7% 100% 48% 16% 13% 11% 10% 100%
Customers
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The factorys major customers and clients are Hotels, Restaurants, and
Grocery, Bars
households.
Publics
In It
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Medias and news papers the factory has good will. uses agents to distribute products to final customers. it is owned by well known international beer factory it is very easy to access funds from financial institution.
Since,
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Internal environment
Corporate Culture Production Function Personnel Function Market Function Distribution and market facilities Finance
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Cont
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Porters Five Forces are the factors that can influence sustainable profitability within the industry five forces are:v intensity of rivalry v availability of substitutes v bargaining power of buyers Click to edit Master subtitle style v bargaining power of suppliers v threat of entry
Rivalry
compete with one another for customers. Rivalry can be price-based or non price-based.
Price-based
not have evidence of price wars. Beer prices have increased, but that is mostly due to inflation. The increased prices are industry wide and not company specific
Cont
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Non-price based rivalry- The beer industry primarily competes with nonprice based rivalry.
product
innovations- throughout beer brewing companies such as low carbohydrate beer, light lager that is brewed with salt and lime, features. differentiation- Different breweries use various beer styles to meet consumer preferences. Beer styles can vary depending on the color,
Product
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may choose a substitute well over this product. substitutes Therefore, for the
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Suppliers have high bargaining power in the industry. In this industry supplier concentration is low, which can possibly decrease the sustainable profits of the industry.
V. Threat of Entry
When
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a new firm enters into an industry it can affect all of the firms that are currently in that industry. describes this threat of entry as new entrants to an industry bring new capacity, the desire to gain market share, and often substantial resources. can be bid down or incumbents cost inflated as a result, reducing profitability.
Porter
Prices
contd
Some
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factors help reduce the threat of entry as they act as barriers that prevent new firms from entering into this industry. factors include economies of scale, product differentiation, company goodwill, capital requirements, access to distribution channels, and government regulations. When these factors reduce the
These
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Marketing Plan
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Executive summary
Ethiopias beer industry is currently comprised of five major brewery factories in Ethiopia. St. George is the leader of the market with market share of 48% at national level and 64% in Addis Ababa. The company plans to maintain its postion by expanding its plant capacity to exploit the uncovered demand. Its business objective is to produce quality standard beer and sale to customers with a view to satisfying their needs.
Cont
The
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perpuse of the compny is to have superior financial performance by addressing social and environmental issues. level of its operation in terms of production and sales has increased quite significantly over the years. has undertaken major expansion programs until now. Currently its production capacity is over 1,700,000 hectoliter (is the unit of measure used in the beer industry, 1 hectoliter equals 100
The
It
Mission
To
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provide convenient beverages and offering opportunities for growth and enrichment to their employees, their business partners and the communities in which they operate.
Vision
St.
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George has the vision to be the world's premier consumer product company and continually improve all aspects of the country in which they operate environment, social, economic - creating a better tomorrow than today.
Marketing objective
To
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produce quality standard beer and sale to customers with a view to satisfying their needs. maintain the leadership in all target markets
To
Specific objectives
Increase To
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continue to use geographical segmentation and it has nine target markets. of well organized geographical market segments which has 5 segments in Addis and 1 outlet for each region.
Application
Marketing Strategies
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market shares
Situational Analysis
Competitors Political
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Economic Socio
cultural environment:
Technological
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SWOT Analysis
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The factory shall have a production capacity of 1,700,000 hectoliters and it will increase by 30% when Hawassa plant work at its full capacity The main branch is located at the center of capital city.
Click to edit Master subtitle style q Introduction of new organizational practices like providing machinery and training for customers, branding cars, and pasturalized draft beer.
cont
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It is market leader in brewery industry of the country. Purchase share of new entry beer industries like Raya. Participating in social activities like, building schools and parks, sponsoring concerts ,sport events and graduation bulletins
Weaknesses
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Lack of innovation in complacency with the need of some customers such as developing variety products to cope up with current demand of skilled technical personnel and raw materials
Unable
Shortage
Opportunities
Conducive
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investment condition in the country second most populous country in Sub-Saharan Africa. economic growth in the country development in the
The
High
Infrastructure
Threats
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Shortages of resources such as bottle, malts and power Increase in inflation rate Increase in petroleum and other input material price New entrants like Zebider, Raya, Heineken and Habesha brewery factory The weather condition is not favorable for the growth of hops.
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Product
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The factory will continue to offer the products (St. George beer, castle beer and draft)
Maintaining the product quality, design, features, branding and packaging in line with customer requirements.
As part of product offering, the factory provide various services like offering, installing and repairing machineries and related materials
Price
considers following factors:
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The
Place/ Distribution
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Promotion
The
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promotional strategies using Medias and public relation depending on the demand and supply.
With
Cont
Regarding
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will continue to offer the society with educational, healthcare, afforestation and agricultural facilities and sponsoring different programs such as concerts.
Generally,
promotion is intended to
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Marketing Implementation
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Shortening
the lead
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Financial Projections
The projection is done in terms of
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Twelve-month Projections
Sales Cost of Goods Sold Gross Profit Margin
Total operating expenses
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Control carts
Activity
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Performed by Marketing Manager Marketing Manager Frequency Quarterly Quarterly
Performance evaluation of marketing staff Review performance of agents Measure financial results against projections
Monthly
survey to determine customers' satisfaction with the product quality Diagnose any gap Take corrective action
Internal Audit
Quarterly
As necessary As necessary
Others
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THE END