The company that has been chosen for the purpose of analysis for this paper is the Anheuser-Busch group of companies. The paper provides a comprehensive analysis of the company according to Norton’s balanced score card technique. The company synopsis and overview is provided with a more detailed SWOT analysis of the company.
This is followed by the balanced score card analysis of the performance of the company. The paper also provides justification for the appropriateness and the value that the balanced score card approach provides to the businesses.The reasons for the use of the balanced score card for Anheuser-Busch and its performance is specifically depicted. Overview of Anheuser-Busch The Anheuser-Busch company has been the industry leader in the international market for the brewing industry. The company has its main operations based in the United States however it holds the major shared of the market for beverage based products all over the world. The largest market for beverages exists in Europe and the Anheuser-Busch company has a strong presence as well as a leadership in the European market even though other string local players are present in the local European market.
The Anheuser-Busch brewing company has a 48 percent share in the market for beverages like beer. The total volume for the company however, pertaining to the sales of beers s 122 barrels on an annual basis. The main competitors which exist for the company in the global market include Inbev and SABMiller. The headquarters for the business are present in Missouri, United States.
However the company also owns and operates 12 pother breweries in the global market. Aside from this the company is present in 20 international countries where it manufactures, as well as markets and distributes its products to the customers.Initially the business sectors that were invested in by the Anheuser-Busch pertained to the beverage industry only. However with change sin the market dynamics.
The company has diversified its operations as well. The company now operates in business sectors like domestic and international beer, packaging as well as in the entertainment industry. The company has also provided international breweries with licensing for distribution as well as brewing of certain brands of beer which originally belong to the Anheuser-Busch company.“The company recorded revenues of $15,717. 1 million during the fiscal year ended December 2006, an increase of 4. % over 2005.
The increase in sales was primarily driven by strong performance of all the segments . The operating profit of the company was $2,719. 6 million during fiscal year 2006, an increase of 9. 4% over 2005.
The net profit was $1,965. 2 million in fiscal year 2006, an increase of 12. 7% over 2005. ” (Anheuser-Busch Companies Inc. , 2007) The claim to fame that Anheuser-Busch has had for its operations and success resulting in the current leadership position that they have in the market pertains to the innovation and the technology that they have employed for the manufacturing, storage and processing of their beverages.The company was the first one to come up with the refrigeration of the beer to store it, the pasteurization of the beer to keep it fresh and extend its shelf life as well as employ the use of technologies like refrigerated containers and railroad cars for the transport and distribution of the beverages.
The national beer brand f the United States more commonly known as Budweiser was also launched by Anheuser-Busch who have since its initiation have been able to make the Budweiser bad into an independent international entity.The beverage products that are produced by the Anheuser-Busch include the Budweiser family of beverages including malts, beers and lagers. Aside form this the Anheuser-Busch also owns the Michelob Family of beer products, The Busch brand of beers, the Natural family as well as specialty beers the likes of Rolling Rock etc. Other beverages, aside form the beers that are manufactured and marketed by the Anheuser-Busch company include non alcoholic beer, energy drinks, organic and malt beverages as well as malt liquors.
Additionally the international beer brands of Grolsch, Harbin Lager, Tiger Beer, Kirin, and Bass Ale are also manufactured and brewed by the Anheuser-Busch company. The following sections of the report provide information about the performance of the Anheuser-Busch company and its strengths, and weaknesses. The financial information form the company’s performance reports and annual books are used to support the balance score card analysis for the company. SWOT Analysis of Anheuser-Busch The Anheuser-Busch company derives its strengths form its established network and infrastructure as well as the established brands that the company owns.The specific strengths of the company include the facts that the company has a leadership position in the market.
The leadership position provides the company with an established network of contacts as well as access to the financial and investment institutions which allow it funding for the research and development of the new products and services. This is crucial for a company in the sector as the future of the market is depend on the research and development of service standards and procedures.The strong brand names that are owned and operated on by the company also add to the equity and the value of the Anheuser-Busch company brand itself. The net worth of the company increases due to the premium value of its brands. Additionally the string network of breweries that the company has also provides the company with the strength to be dynamic and better than its competitors in the international and the global market for beer and alcohol based beverages.
The weaknesses however that are suffered by the company take the form of it high dependence on its domestic beer division.While the Anheuser-Busch company is well established internationally as well, the company relies for 70 percent of its revenues on the national US sales of its beer products. This limits the perspective and the market for beer of the company to the US market only, putting the strain of restricted perspective on the target market. “During the fiscal year ending 2006, company generated approximately 74. 8% of its total revenue from the domestic beer segment.
In contrast the other three segments accounted for only 25. 2 % of the total revenue during the same period.Strong dependence on a particular segment increases the business risk of the company thereby putting it in a competitive disadvantage. ” (‘Anheuser-Busch Companies Inc.
’, 2007) In order to launch new products and brands the company has taken substantial amounts of loans and funds form various institutions this has increased the debt for the company, making the liquidity position of the company a very poor and unfavorable one. Aside from this the only other weakness that is present to the Anheuser-Busch company at the moment is that the company is highly dependent on whole sellers for its sales.A proper retailing solution for the company and its products is not devised, increasing the dependence of the company on its wholesalers. The opportunities that are available to the company include the increasing demand for beer in the Russian and the Chinese markets.
“The Chinese beer market generated total revenues of $24,584 million in 2006, this representing a compound annual growth rate (CAGR) of 7% for the five-year period spanning 2002-2006. Market consumption volumes increased with a CAGR of 6. 5% during 2002-2006, to reach a total of 29,722. 8 million liters in 2006.
The market's volume is expected to rise to 38,273. 3 million liters by the end of 2011, this representing a CAGR of 5. 2% for the 2006-2011 period. ” (‘Anheuser-Busch Companies Inc. ’, 2007) Aside from this there is also an increase in the non alcoholic market for beers and malt based beverages in the local as well as the international market.
This is an opportunity that can be exploited by the company as the company is already in the business of manufacturing alcohol free beers. The other opportunity lies in the energy drinks sector which is specifically high in demand in the Asian and the American regions.The threats that are present to the Anheuser-Busch company pertain to the changes in the preferences and the demands of the current consumers in the market. The presence of the various breweries both in the international as well as the local; markets have provided the customers with the facility of choice which they are readily able to exercise. This is a threat for the company as it can lose its market to the competitors if it fails to respond to the changing preferences and tastes of the consumers in the market.The stringent advertisement requirements in various countries also put a strain on the operation of the business for Anheuser-Busch as the advertising efforts are limited.
Similarly the governmental regulation for trading and marketing of alcoholic beverages and products is very stringent as well. They often tend to levy fines and high taxes on the business to compensate for the nature of the product being traded in. Balanced Score Card Analysis Mission The mission of the Anheuser Bush Company is to be able to provide the customers with the best quality beer available.The ‘here is to beer’ strategy and culture is adopted in the organization which is brand focused, specifically supports the mission of becoming the industry leader for bottling and packaging while being a socially responsible corporate citizen. a result the mission of the On the other hand the mission that is employed by making used of the balanced score card technique is to briefly and yet comprehensively view the performance of the company on the basis of its different business processes as well as its customers and capital strengths and weaknesses.
Objectives and Goals The objectives of the Anheuser Busch pertain to increasing the market share by increasing the consumption of beer in the international market. Aside from this the company also is striving to target and capture the majority in the South Asian/ East Asian market for alcoholic as well as non alcoholic beverages, malts and beers. The company simultaneously however is also focusing on its packaging and entertai8nment business.Anheuser Busch wants to further develop and establish its packaging and entertainment business outside the United States as well in order to introduce a steady level of growth as well as operative and cost efficiency in the company. The objective of the use of the balanced score card technique for measuring the performance of the Anheuser Busch companies through out its operations is to identify, and highlight the different rends in the performance of the company according towards the business, the customers of the company as well as towards the learning of the organization.Therefore the company is evaluated through its financial reports, its business processes, its performance ratios as well as through the perception of the customers and consumers in the market.
Financial Perspective: In the balanced scorecard approach the financials section provides a tool for the management to assess the performance of the company in terms of profits and revenues and uses financial indicators to check for the affects the innovation in the company are having on the operations, profitability and the productivity of the company.The cost efficiency is highlighted in this section. The first section of the balances scorecard analysis deals with the financial evaluation of the company. For the Anheuser Busch Company the operating cash flow before the changes was $2,520. 6. The ratio of cash flow to total debt was 32.
7 percent in the year 2006. The return on Investment for the company was at 17. 6 percent for 2007. Additionally the return on the capital investment for the company amounted to 12. 4 percent while the return on equity of the company however was recorded at 59. percent for the Anheuser Busch Company for 2007.
The Cash per Share was recorded at $0. 41, the Cash Flow per Share was at $4. 21 and the Free Cash Flow per Share was at $1. 45 in 2007. Additionally the Price/Cash Flow Ratio for the company was at 12.
1 and the Price/Free Cash Flow Ratio was at 35. 3 for 2007 The aggregate financial performance indicators for the past five years relevant to Anheuser Busch Company were 64. 0 percent for Return on Equity and 12. 9 percent for Return on Assets.This depicts that the company has been performing pretty well in its market however as compared to the past few years; the performance of the company is declining.
The reduced return on equity and investment proved that the company was performing well and earning more revenues in its markets in the past five years than it has been in the current past year of 2007. There is a marked reduction of about 10 percent of return on the investment and the capital employed in the company as compared to the aggregate performance of the company for the past five years.This supports the fact that the company needs to invest in new markets and take hold of the opportunities that are available to it in order to increase its profitability in the market as well as sustain its strategic advantage over its competition in terms of leadership in the market. Customer Perspective: The customer focused evaluation of the Anheuser-Busch company pertains to the satisfaction of the customers and the indicators which depict the performance of the company for its customers.
This section provides the management with a performance perspective of how the innovation and the strategies employed by the company are being reacted to by the customers. The customer satisfaction for the products provided by the Anheuser-Busch company is extremely high as the customers are highly satisfied with the products of the company. The customers of the Anheuser-Busch who are loyal to the company make 18-20 purchases for its units of products in a month.This indicates that the customer satisfaction is very high per individual customer and consumer of the products manufactured and marketed by the company.
As a result the receivables per day sales for the company are $23. The receivables turnover was at 16. 82. The inventory turnover for these sales for the customers however was at 16.
10 for the year 2007. The company also has a high customer retention rate of 59 percent. However the future trends indicate that the customers will be impartial to established brands and will spend more on them than on the traditional beer brands.The innovated beer and beverage based products would be much in demand in the next few years. This will as a result effect the customer satisfaction of the company as well as the customer retention ratios for the company.
The company as a result will have to introduce innovative products to target then market with and increase their sales. Internal Business Processes Perspective: This section of the balanced scorecard technique provides the management with the performance of the different processes of the company.By using this information the company can improve its internal processes which are not performing up to the targets and goals set for them. The internal business processes for the company deal with the four sections of business activity of the business which includes domestic beer, international beer, packaging and entertainment. “The domestic beer segment consists of the company’s U. S.
beer manufacturing and company-owned beer wholesale sales operations, including vertically integrated rice, barley and hops operations.The international beer segment consists of the company’s export sales and overseas beer production and marketing operations, which include company-owned operations in China and the United Kingdom, administration of contract and license brewing arrangements, and equity investments. Principal foreign markets for sale of the company’s products are China, the United Kingdom, Canada, Mexico and Ireland. The company attributes foreign sales based on the location of the distributor purchasing the product. ” (Anheuser Busch Annual Report, 2006)The packaging business is specific for the beverage industry and provides packaging for both the company’s own products as well as the products of other companies in the market.
The entertainment business however includes the Sea World Resort and the Busch gardens which form the adventure parks managed by the company. According to the company the inter-segment and business sector sales are fully internally consolidated and no customer is responsible or accountable for more than 10 percent of the sales of the business. The accident ratios and the defect ratio for the company were unavailable.However the numbers of activities in the business are numerous and the business is a conglomerate of different operations across multiple markets.
As a result the exact number of the activities performed by the business cannot be provided. However the gist of the different sectors of operations has been provided above. The opportunity success rate for the company however is very high as the company has been able to profit form the investments that it has made in its business as well as in the different international breweries where the company has majority holding of shares.
