Foreign Market Diversification Essay

1469 Words Jun 7th, 2012 6 Pages
Foreign Market Entry and Diversification
Georgia Jefferson
Strayer University

Abstract
This paper will discuss and identify the trends in global beer markets. It will discuss how Modelo’s International expansion was made possible by building strategic partnerships with experienced distributors in local markets. The paper will focus on how Modelo should enter in the foreign market and what is the best strategy. Modelo will face many challenges from his competitors and make the decision whether the company should diversify the business to promote growth.

Identify and discuss the trends in the global beer markets.
The global beer markets have four main trends and they are consolidation, international expansions, mergers and
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(Thompson, Strickland III, & Gamble, 2009)
Brewing has historically been a local industry with only a few companies having an international presence in 2008, two major acquisitions took place in the global brewing industry: * The acquisition of Scottish & New-Castle by Carlsberg and Heineken. * The acquisition of Anheuser-Busch by InBev (Trends in the Global Beer Markets, 2008)
Discuss how Modelo’s international expansion was made possible through strategic partnerships with experienced distributors in local markets
Corona became the number one imported beer in America because of Modelo’s agreement with its distributors. Modelo entered into distribution contracts with local companies that had local knowledge of the market. Barton Beers was Modelo’s first distributor because they were the largest beer importer in the twenty-five western states. Barton Beers created the marketing image of “fun in the sun” which attracted the female audience as well. Modelo’s second distributor Gambrinus Inc. was headed by a former Modelo executive. Modelo gave this distributor independence to market the product fittingly, while maintaining an active involvement in decision making. (Thompson, Strickland III, & Gamble, 2009) The relationship between the distributors and Modelo was strong because the distributors were self-ruled to make decisions but Modelo took an active role involving the brand image of their beer. Modelo made

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