Business Industry Analysis: Carlsberg Brewery Malaysia Berhad

3.0 Industry Analysis

Carlsberg Brewery Malaysia Berhad (CBMB) can be analyzed using Porter’s Five Forces model which includes threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products and rivalry among existing firms.

New entrants are deferred by barrier of entry. Carlsberg is consider as beer brewing industry which has a high barrier of entry for new entrants. It involves a lot of capital to be invest in the production equipment which are special in term of technology. There are large economies of scale in the Carlsberg’s value chain especially when accessing the products, production, distribution and marketing. Carlsberg managed to grow its volume and production by brewing beers and

At the same time, Carlsberg’s suppliers include the bottling partners for their packaging materials such as cans and glass. Carlsberg is major customers for the farmers as they would purchase in large portion. This has benefits the farmers and bottling partner which secure their income in long term perspectives. It shows the threat of bargaining power from suppliers is low. Moreover, Carlsberg has 4 core functional areas in its supply chain which consists of planning, logistics, production and procurement (Carlsberg Group, 2018). By integrating these areas, they manage to maintain good relationships with their suppliers for mutual benefits. Although there are few suppliers for raw materials and packaging materials in the market, Carlsberg still have a strong bargaining power for their suppliers. This is because Carlsberg Malaysia is one of the leading global brewers with strong market positions across Western and Eastern Europe as well as in Asia, therefore, suppliers are more incentive and willing to maintain long lasting relationship with them. So, we can assume that the bargaining power of suppliers is low and it does not pose any threat to the

The substitute products are available in many regions in Malaysia. As mentioned previously, the switching cost is low, buyers can easily compare the price and their change of taste and preference is highly affected the profit and cash flow of the company. We also mentioned people are now concern on their health and the demand for alcoholic beverages is being fluctuated. There are some believe that red wine is healthier than beer as well. Although the trend of drinking the alcoholic beverages may different from time to time, Carlsberg still has its own competitive advantage over the substitute products especially during festival season. The demand for beer will exist for celebrating special events and festival. However, due to the undifferentiated product with the substitute products, therefore, the threat of substitute product is