Abstract
In today's increasingly global economic world, it is hard to find a company focused only on its own national market and single product. The key word for global companies is diversification. Specialized newspapers such as “The Financial Times” abound with news of company takeovers, rumors of mergers, and analysis of how companies managed their growth.
As an example of this trend, the OECD published a document1 on June 2006 reporting that the Foreign Direct Investment into OECD countries jumped by 27% to reach USD 622 billion. Global companies are competing in international markets and as a result they are investing worldwide. At the same time, major global companies have recorded some of their best financial results.
- Example: companies featuring on the French CAC40 Index had a 34% increase in turnover in the first semester of 20052.
So, does a company churn out more profits as it becomes more global and diversified? Is it just to increase their financial results that companies diversify their activities? Is it a sustainable strategy?
To gain a better understanding of such an issue, it is easier to overlook this macroeconomic point of view and focus instead on a single market. The beer market is a very interesting and aggressive market. The five major players have adopted different strategies in a bid to increase their market share and stay one step ahead of the competition. Their presence in international markets is complemented by their diversification of activities. Not only are these companies competing with their products or marketing campaigns but also with their acquisitions and their growth strategies. In the current scenario, these companies are struggling in their domestic markets. SabMiller, Heineken, Carlsberg, Anheuser–Busch and Interbrew are all more or less dependent on the sales in their domestic market which is mature, saturated and not growing fast enough. So, in order to improve their growth ratio and revenue they have to expand internationally.
