HO CHI MINH CITY UNIVERSITY OF FOREIGN LANGUAGES -

INFORMATION TECHNOLOGY
DEPARTMENT OF TOURISM AND HOSPITALITY

STRATEGIC MANAGEMENT

Group members:
1. Đàm Lê Quỳnh Giao
2. Lâm Dinh Lan
3. Nguyễn Thu Trang
4. Nguyễn Châu Mộng Tuyền
Mentor: Mr. Võ Hồng Sơn, MBA

May, 2019
Ho Chi Minh City, Vietnam
 CONTENTS
Introduction ........................................................................................................................ 1
1. Old Vision Statement ................................................................................................... 3
2. Revised Vision Statement ............................................................................................ 3
3. Old Mission Statement ................................................................................................ 3
4. Proposed Mission Statement ....................................................................................... 4
5. External Factor Evaluation Matrix (EFE Matrix, EFEM) ..................................... 4
6. The Competitive ........................................................................................................... 6
6.1. The competitors ...................................................................................................... 6
6.1.1. AB InBev ...................................................................................................... 6
6.1.1. ThaiBev ......................................................................................................... 6
6.2. Competitive Profile Matrix (CPM) ......................................................................... 7
7. Financial statement ...................................................................................................... 8
7.1. Income Statement .................................................................................................... 8
7.2. Balance sheet .......................................................................................................... 8
8. Historical ratios ............................................................................................................ 9
9. Internal Factor Evaluation Matrix (IFE Matrix, IFEM) ...................................... 10
10. Strategy analysis ........................................................................................................ 12
10.1. Strength-Weakness-Opportunities-Threats Matrix (SWOT) ............................ 12
10.2. Internal-External Matrix (IE) ............................................................................ 14
10.2.1. Internal-External Matrix by region ............................................................. 14
10.3. Quantitative Strategic Planning Matrix (QSPM) .............................................. 15
10.4. Strategy conclusion............................................................................................ 20
11. Recommendations ...................................................................................................... 21
12. Perceptual map .......................................................................................................... 22
12.1. Beer industry in Vietnam ................................................................................... 22
13. EPS/EBIT Analysis .................................................................................................... 23
14. Company evaluation .................................................................................................. 24
15. Projected financial ratios .......................................................................................... 25
16. Executive summary ................................................................................................... 26
References.......................................................................................................................... 29
 Introduction
• Name of company: Heineken N.V
• Industry: Beer Industry, Alcohol Beverage Industry
• Famous products:
- Heineken®
- Amstel
- Lagunitas
- Orchard Thieves
- Strongbow Apple Cider
- Tiger
• Performance highlights in 2018:
- Consolidated beer volume: 233.8 million hectoliters
- Heineken® volume: 38.7 million hectoliters
- Consolidated cider volume: reach 5.6 million hectolitres with more than 2 million
hectoliters outside the UK.
- Net revenue (beia): €22,471 million
- Operating profit (beia): €3,868 million
- Net profit (beia): €2,424 million
• History:
The Heineken company was founded in 1864 when the 22-year-old Gerard Adriaan
Heineken bought a brewery known as De Hooiberg (the haystack) in Amsterdam. In
1869 Heineken switched to the use of bottom-fermenting yeast. In 1873 the brewery's
name changed to Heineken's Bierbrouwerij Maatschappij (HBM) and opened a second
brewery in Rotterdam in 1874. In 1886 Dr. H. Elion, a pupil of the French chemist Louis
Pasteur, developed the "Heineken A-yeast" in the Heineken laboratory. This yeast is still
the key ingredient of Heineken beer.
The founder's son, Henry Pierre Heineken, managed the company from 1917 to 1940,
and continued involvement with the company until 1951. During his tenure, Heineken
developed techniques to maintain consistent beer quality during large-scale production.
Henry Pierre's son, Alfred Henry "Freddy" Heineken, started working at the company
in 1940, and in 1971 was appointed Chairman of the Executive Board.
With the part acquisition of Scottish and Newcastle in 2007/2008 Heineken became the
third largest brewer based on revenues, behind the Belgian-Brazilian AB InBev and the
British-South African SABMiller.
On 12 January 2010, Heineken International successfully bought the brewery division
of Mexican giant FEMSA, and also merged with the company, expanding its reach
throughout Latin America.

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 In September 2014, it was announced that Heineken would sell its Mexican packaging
business Empaque to Crown for around $1.23 billion. Also during that month, Heineken
revealed it was in talks to sell its Czech operations to Molson Coors.
On 10 September 2015, Heineken International announced it would acquire a 50%
stake in Lagunitas Brewing Company of Petaluma, California as part of an effort to allow
Lagunitas to expand its operations globally. As part of the deal Lagunitas will no longer
be considered a craft brewer as the Heineken stake is greater than 25%.
In January 2017, Heineken announced it was in negotiations to buy the Kirin
Company's 12 breweries in Brazil. The following month, Heineken closed the deal and
bought Brasil Kirin for US$700 million.
After previously acquiring 50% of Lagunitas Brewing Company, Heineken announced,
on 4 May 2017, it would be purchasing the remaining 50%—making it the sole owner of
Lagunitas.
In February 2018, Heineken officially opened their new brewery in Meoqui,
Chihuahua, Mexico. The brewery, their seventh in Mexico, has a production capacity of 6
million hectolitres per year and produces brands such as Tecate, Dos Equis and
Heineken® for the Mexican market as well as for export markets. The Meoqui brewery is
the largest greenfield project in Heineken’s history
In June 2018, Heineken named Maggie Timoney as the CEO of Heineken USA,
making her the first woman to become a CEO of a major United States beer supplier.
In November 2018, Heineken signed definitive agreements with China Resources
Enterprise, Limited (CRE) and China Resources Beer (Holdings) Co. Ltd. (CR Beer) to
create a long-term strategic partnership for Mainland China, Hong Kong and Macau. In
the context of this partnership, Heineken will become CRE’s 40% minority partner in
holding company CRH (Beer) Limited (CBL), which controls CR Beer, the market leader
in China – the world’s largest beer market.

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1. Old Vision Statement
“We brew great beers, we build great brands and are committed to surprising and
exciting our consumers everywhere.”

• Leading developer and marketer of premium beer and cider brands. Led by the
Heineken® brand, the Group has a powerful portfolio of more than 300
international, regional, local and specialty beers and ciders.
• Through "Brewing a Better World", sustainability is embedded in the business and
delivers value for all stakeholders.
• The passion of the Heineken family remains as strong today as it was in 1864
when we first started brewing beer.
• https://www.theheinekencompany.com/About-Us/Company-Strategy

2. Revised Vision Statement

We strive to the best global brewer that delivery the value of quality beers, build
award-winning brands and are committed to enthusing consumers everywhere.

3. Old Mission Statement

Heineken provides numerous information on their corporate website on its goals of
sustainability but does not provide a written mission statement.
1. Customer: “human” (at the age from 18 above)
2. Products or services: “premium beer and cider brands”
3. Markets: “every corner of the world”
4. Technology: N/A
5. Concern for survival, growth and profitability: “We are brand builders. The
Heineken® brand defines and unites us while our many local, regional and global
brands make our portfolio diverse and unique.”
6. Philosophy: “Brewing a better world.”
“We stand by our values: passion for quality, enjoyment of life,
respect for people and for the planet.”
7. Self-concept: “many local, regional and global brands make our portfolio diverse
and unique”
8. Concern for public image: “We are committed to our communities and strive to
consistently improve the impact we make on the planet”
9. Concern for employee: “Internationally diverse, dynamic, committed and
entrepreneurial team of over 85,000 employees and operate breweries, malteries,
cider plants and other production facilities in more than 70 countries.”
https://www.theheinekencompany.com/About-Us/Company-Strategy

3
4. Proposed Mission Statement
The Heineken® is a global (3) brewer of premium beer and cider brands (2) that is
shaped by a firm commitment to making our portfolio diverse and unique (7), also to
surprising and exciting our consumers everywhere (1) as well as improve the impact we
make on the planet (8). We have internationally diverse, dynamic, and entrepreneurial
team of over 85,000 employees and operate breweries, malteries, cider plants and other
modern production facilities and technology (4, 9). Through "Brewing a Better World",
sustainability is embedded in the business and delivers value for all stakeholders (5, 6).
(87 words)
1. Customers 6. Philosophy
2. Product or services 7. Self-Concept
3. Markets 8. Public image
4. Technology 9. Employees
5. Survival, growth and profitability

5. External Factor Evaluation Matrix (EFE Matrix, EFEM)

Weighted
Opportunities Weight Rating
Score
Vietnam's population is projected to reach 100 million by
1 2020 with working-age population accounting for 60% of 0.10 3 0.3
total. This group is a major market of beer industry.
Vietnam's gross domestic product grew by 6.88% year-
2 0.13 4 0.52
on-year in the third quarter of 2018
The growth in tourism helps increase the sale of beer
3 0.07 2 0.14
industry (Increase 6.5% than 2017)
According to FTA, from 2018 onward the import tax rate
4 materials for beer industry in VN has been reduced, with 0.12 4 0.48
the lowest rate being 0%
According to the Ministry of Industry & Trade, in 2016
Vietnam was ranked 16th amongst the largest alcoholic
beverage consuming countries in the world and 3rd in
5 Asia after China and Japan. In 2018, Vietnam's beer 0.09 4 0.36
consumption reaches 4 billion liters. By 2020,
consumption of beer is projected to reach 4.84 billion
liters.
In 2018, the high-end market segment of Vietnam's beer
6 0.08 3 0.24
industry has grown by 7.2 percent.

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 The global beer market was worth US$ 603.1 billion in
7 0.06 3 0.18
2018. It is forecasted to reach US$805 by 2024.

Primary Implications from EFEM (Opportunities)

The EFEM for Heineken presents major opportunities for the company going into the
future, especially in Vietnam. This country was rank 3rd and 1st amongst the largest
alcoholic beverage consuming countries in Asia and Southeast Asia respectively. The
domestic consumption is gradually increasing with 4 main beer brands, Heineken almost
dominates the high-end segment in Vietnamese breweries in 2018. Besides, thanks to a
sharp reduction of import tax in Vietnam from 2018, Heineken can save production costs
but still remain the high quality of raw materials. Furthermore, consumption of beer in
Vietnam is projected to reach approximately 5 billion liters by 2020, this is really a
potential market for Heineken.

Weighted
Threats Weight Rating
Score
Carlsberg is planning to increase its shares in Habeco,
1 Vietnam's second largest beer market from 17.51% to 0.04 2 0.08
61.79%
According to the Law on Special Excise Duty
No.70/2014/QH13, from 2018 onwards, special
2 consumption tax rates imposed on alcoholic products 0.07 2 0.14
with ABV < 20º, ≥ 20º, and beer, will be 35 percent, 65
percent, and 65 percent respectively.
Under the Law on Advertising No.16/2012/QH13, mass
3 advertising is not permitted for alcoholic beverages with 0.07 3 0.21
an alcohol content above 15%
EU-Vietnam free trade agreement (EVFTA), which
removes the import tax and expected to come into force
4 0.05 2 0.10
in mid-2018, increases market access of other foreign
beer companies

Under pressure from other replacement products: wine,

5 fruit juice... because of consumer trends towards alcohol 0.06 3 0.18
moderation and natural, health-conscious lifestyles.

In 2017, AB InBev buy its rival SAB Miller for £71

6 billion, effectively taking control of 30 percent of the 0.06 2 0.12
world’s beer production and sales
Total EFE Score 1.00 3.05

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 Primary Implications from EFE (Threats)
The EFEM for Heineken also reveals major threats the company will soon face. One is
Heineken’s competitors always want to expand their market by acquiring shares from
other beer businesses as the most dangerous threat. For example, ThaiBev purchased
Sabeco – the largest beer company in Vietnam – with ambition to usurp this market.
Furthermore, at global marketplace, AB InBev also buy its rival SAB Miller to take
control of 30 percent of the world’s beer market. On the other hand, people care more
about health-conscious lifestyles, so they gradually switch to use healthy products such as
fresh juice, fresh smoothies, etc… Besides, laws on Special Excise Duty and Advertising
Limited in Vietnam had a bit strong influenced to the development of Heineken.

6. The Competitive
6.1. The competitors
6.1.1. AB InBev

Anheuser-Busch InBev SA/NV (AB InBev) is a multinational drink and

brewing holdings company based in Leuven, Belgium. Over 800 years ago, AB
InBev found its humble beginnings in the experienced brewing hands of Belgian
monks. It was in their abbeys where one of our original beer brands, Leffe, came to
be. In 1860, in the beer-friendly city of St. Louis, Eberhard Anheuser took control
of the Bavarian Brewery. After partnering with Adolphus Busch, they formed the
Anheuser-Busch Brewing Association. Together, through their pioneering and
innovating spirit, they built a refrigerated rail car system that spread Budweiser
beer across the United States and eventually the world.
Around the world, more breweries like Mexico’s Grupo Modelo, South Korea’s
Oriental Brewery and SABMiller came to unite under the AB InBev umbrella.
They all shared a common goal — bringing people together to form lasting
relationships over great-tasting beer.
https://www.ab-inbev.com/who-we-are/heritage.html
6.1.1. ThaiBev

ThaiBev was established in 2003 to consolidate a number of leading spirits and

beer businesses in Thailand. The first liquor distillery on the bank of the Chao
Phaya River near the mouth of Klong Bangyikhan (canal) as a means of boosting
revenue in 1786. Beer Chang was officially marketed for the first time on March 2,
1995. From that moment on, Beer Chang has received tremendous support and
become the talk of the town with its attractive taste and a price that appealed to

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 consumers at all levels. The success of Beer Chang propelled the company to be a
market leader in domestic beer products.
In October 2003, altogether 58 related companies in the production and
marketing of alcoholic beverage group and related businesses merged into the Thai
Beverage Public Company Limited. Today, ThaiBev is not only Thailand's leading
beverage producer, but also one of Asia's largest beverage producers. The business
consists of four segments - spirits, beer, non-alcoholic beverage, and food.
http://www.thaibev.com/about-us
6.2. Competitive Profile Matrix (CPM)

Heineken AB InBev ThaiBev

Critical Success
Weight Rating Score Rating Score Rating Score
Factors
Quality (Products) 0.20 3 0.70 4 0.80 2 0.40
Advertising 0.18 4 0.72 3 0.65 2 0.56
Recipe 0.12 3 0.38 4 0.45 2 0.24
Customer Loyalty 0.15 4 0.60 2 0.30 3 0.45
Innovation of new
0.06 3 0.18 1 0.10 2 0.12
product
Adjustability to
0.09 2 0.24 1 0.15 3 0.30
demand
Efficient distribution
0.15 4 0.60 3 0.52 2 0.33
channel
Price 0.05 3 0.15 1 0.06 4 0.20
Totals 1.00 3.57 3.03 2.60

Primary Implications from CPM

From viewing the competitive profile matrix, Heineken ranks the highest out of
its two main competitors AB InBev, and ThaiBev in its total critical success factors.
In general, Heineken has a strong reputation for its high-quality products, although
the price is a bit higher than ThaiBev but still lower than AB InBev. Besides, they
also have more diverse products than their challengers in alcohol industry (beer, craft
beer and cider). Last but not least, their advertisings are really outstanding, they not
only put the ads on traditional TV or billboard or social media but also sponsor for
international sport tournaments such as UEFA Champion League, Australia Open and
some others community activities to promote their brand and image.

7
7. Financial statement
7.1. Income Statement
Income Statement overview
From viewing Heineken’s income statement, net income rose by over $2,000
million from 2017 to 2018. Revenues of the company increased but the cost of goods,
operating, interest and tax expenses went up along with it
Income Statement 31/12/2017 31/12/2018 Percent Change
Revenues $28,942,000,000 $30,026,000,000 3.75%
Cost of Goods Sold (14,851,000,000) (15,597,000,000) 5.02%
Gross Profit 43,793,000,000 45,623,000,000 4.18%
Operating Expenses (5,753,000,000) (6,095,000,000) 5.94%
EBIT 49,546,000,000 51,718,000,000 4.38%
Interest Expense (524,000,000) (552,000,000) 5.34%
EBT 50,070,000,000 52,270,000,000 4.39%
Tax (846,000,000) (848,000,000) 0.24%
Non-Recurring Events 0 0 #DIV/0! #DIV/0!
Net Income 50,916,000,000 53,118,000,000 4.32%

7.2. Balance sheet

Balance sheet overview
Heineken’s total assets experience minor increase by over $1,300 million from
2017 to 2018. Every asset category seemed to grow except for the company’s
accounts receivable which took a steady drop by 82%. As for the company’s
liabilities, it also experienced an increase of over $200 million during the time period
although there is a huge fall in Other Current Liabilities which account for 51%. Last
is Heineken’s equity which increased by over $1,000 million due to the rise in
retained earnings.

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Balance Sheet 31/12/2017 31/12/2018 Percent Change
Assets
Cash and Equivalents $29,513,000,000 $30,978,000,000 5%
Accounts Receivable 137,000,000 24,000,000 -82%
Inventory 0 0 #DIV/0! #DIV/0!
Other Current Assets 0 24,000,000 #DIV/0! #DIV/0!
Total Current Assets 29,650,000,000 31,026,000,000 5%
Property Plant & Equipment 0 0 #DIV/0! #DIV/0!
Goodwill 0 0 #DIV/0! #DIV/0!
Intangibles 0 0 #DIV/0! #DIV/0!
Other Long-Term Assets 0 0 #DIV/0! #DIV/0!
Total Assets 29,650,000,000 31,026,000,000 5%

Liabilities
Accounts Payable 1,261,000,000 1,148,000,000 -9%
Other Current Liabilities 258,000,000 126,000,000 -51%
Total Current Liabilities 1,519,000,000 1,274,000,000 -16%
Long-Term Debt 13,151,000,000 13,591,000,000 3%
Other Long-Term Liabilities 62,000,000 81,000,000 31%
Total Liabilities 14,732,000,000 14,946,000,000 1%

Equity
Common Stock 0 0 #DIV/0! #DIV/0!
Retained Earnings 11,078,000,000 12,439,000,000 12%
Treasury Stock 0 0 #DIV/0! #DIV/0!
Paid in Capital & Other 3,840,000,000 3,641,000,000 -5%
Total Equity 14,918,000,000 16,080,000,000 8%

Total Liabilities and Equity 29,650,000,000 31,026,000,000 5%

8. Historical ratios
Historical Ratios overview
Heineken seems to be in a good position in paying its current and short-term liabilities
from the growth in its current and quick ratio between 2017 and 2018. The company also
had a little decrease in its Total Debt-to-Total-Assets Ratio and Total Debt-to-Equity
Ratio between the years to further prove its ability to meet its obligations since it is using
less debt and credit to finance its assets and growth. The Total Debt-to-Equity Ratio in
2018 (0.93) is also less than those in 2017 (0.99). This results from the increasing of total
equity and total debt with the increasing percentage of total equity is much higher than
total debt (8% compared to 1%). The Accounts Receivable Turnover of Heineken in 2018

9
is six time higher than those in 2017 and the Average Collection Period in 2018 is about
eight times shorter than those in 2017. this means the average length of time it takes the
company to collect credit sales is shorter in 2018, and Heineken can shorter its credit sales
collecting. Gross profit margin and operating profit margin has decreased quite a bit along
with the company’s return on assets and equity revealing the company has not been doing
a good job of generating profit. Despite the returns generated on sales and investment of
Heineken in 2018 is slightly fall, but it still much higher than those of Alcoholic Industry
Ratios which is 30.15% for ROE and 13.25% for ROA (in 2018).

Historical Ratios
31/12/2017 31/12/2018
Current Ratio 19.52 24.35
Quick Ratio 19.52 24.35
Total Debt-to-Total-Assets
Ratio 0.50 0.48
Total Debt-to-Equity Ratio 0.99 0.93
Times-Interest-Earned Ratio -95 -94
Inventory Turnover #DIV/0! #DIV/0!
Fixed Assets Turnover #DIV/0! #DIV/0!
Total Assets Turnover 0.98 0.97
Accounts Receivable
Turnover 211 1251
Average Collection Period 1.73 0.29
Gross Profit Margin % 151% 152%
Operating Profit Margin % 171% 172%
ROA % 172% 171%
ROE % 341% 330%

9. Internal Factor Evaluation Matrix (IFE Matrix, IFEM)

Weighted
Strengths Weight Rating
Score
The Heineken® brand grew 7.7%, its best performance in
a decade. Heineken new brand extension, Heineken® 0.0
1 0.10 4 0.40
has been very well received and is now available in 38
markets worldwide
Heineken has a strong presence on social media with
more than millions of followers on the three most famous
2 social media platforms, a well-functioning and interactive 0.09 4 0.36
website that draws a large number of internet traffic and
sales

10
 Heineken have sponsored for a lot of entertainments
activities in the world. (Wimbledon, the US Open,
Australia Open and the Shanghai Open). Heineken®
3 expanded its portfolio of world-class sponsorships, 0.10 4 0.40
adding electric street racing series, Formula E, to a list
that already includes UEFA Champions League, Formula
One™, Rugby World Cup and James Bond.
Heineken understands the importance of having a diverse
workforce as a key driver of innovation, creativity and
business performance so they do their best to create an
4 environment for their employee to develop. For 2018, 0.06 3 0.18
their employee engagement scores continue to rank us in
the top quartile of companies against the external
benchmark.
Manufacturing processes are an automatic production
line. Therefore, Heineken’s operation system is labor
5 0.07 4 0.28
saving, energy saving, improve quality and high
accuracy.
The fund of Heineken is provided mostly by owners and
stockholders, creditors is just a part of its fund as the
6 0.05 3 0.15
increasing percentage of total equity is higher than total
debt 7%.
The average length of time it takes a firm to collect credit
sales is shorter in 2018, and the firm has high ability in
collecting credit sales. The Accounts Receivable
7 0.07 4 0.28
Turnover of Heineken in 2018 is six time higher than
those in 2017 (in 2018 it is 1251 while those in 2017 is
221)
8 HEINEKEN has more than 300 brands around the world. 0.08 4 0.32
Active in over 40 markets, Heineken’s consolidated cider
volume increased double digit. Strongbow Apple Cider is
9 0.05 3 0.15
outperforming in solid markets such as South Africa and
in new markets like Vietnam and Mexico.
Heineken were recognized for the second year running as
10 0.06 3 0.18
the most sustainable business in Vietnam

Primary Implications from IFEM (Strengths)

Major internal strengths for Heineken has been its sponsor for many entertainment
activities and has a strong presence on social media networks. Moreover, they are really
famous around the world with more than 300 brands. In addition, their new brand
extension - Heineken® 0.0 - has been very well received in 38 markets worldwide plus
increase the consumption of Cider Brand products. Furthermore, Heineken focuses on
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saving the energy, water source and wastes as well to protect our environment. This
project is a big step forward for Heineken to be more successful which presents another
internal strength for the company.

Weighted
Weaknesses Weight Rating
Score
The company always focuses on brand Heineken in all
1 their promotions and the rest of the brands are showcased 0.02 2 0.04
as sub-brands for each geography.
2 Inconsistency of marketing practices in foreign markets 0.03 2 0.06
The operating profit in 2018 is less than those in 2017
3 0.07 1 0.07
6.4%
Heineken’s products price is quite high because of the
4 focusing on above average income people. (For example, 0.06 1 0.06
24 bottles of Heineken beer costs around 350,000 VND)
In 2018, only 69/73 markets in scope (96%) invested
5 10% of media budget, or more, in dedicated responsible 0.04 2 0.08
consumption campaigns.
Heineken’s accident frequency in 2018 was 1.13, up
from 1.04 in 2017. In 2018, 49% of severe injuries
6 happened in secondary distribution – of which 32% were 0.05 1 0.05
related to manual handling and 19% to slips, trips and
falls.
Total IFE Score 1.00 3.06

Primary Implications from IFEM (Weaknesses)

Internal weaknesses for Heineken have been its high-price, which is suitable for
above-average income people. In addition, they only pay attention on the name Heineken
and reckless to other brands. This makes obstruct the development of other products. As a
result, the operating profit in 2018 is less than those in 2017 6.4%. Also, human resource
is a big issue when Heineken’s accident frequency in 2018 was 1.13, up from 1.04 in
2017, most of them were related to manual handling, slips, trips and falls.

10.Strategy analysis
10.1. Strength-Weakness-Opportunities-Threats Matrix (SWOT)
This matrix shows possible strategies for the company. Condition was a
comprehensive analysis of internal and external factors and their influence on the
company.

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SO Strategies
1. Decrease the using of package by 10% to reduce portion of the brewer’s carbon
footprint, invest 25% in technology to reclaim and recycle water in our production
processes (S4 O4)
2. Maintain and enhance the good image of company with community activities
("Warm Spring", "When you drive, never drink" campaign). Invest 15% of the
program "warm winter" to support remote communities (S2 S3 O2)
3. Create new opportunities and invest 15% on total revenue through our B2C and B2B
E- commerce platforms and other digital commerce initiatives (S2 S3 O2 O3)
4. Invest $30 million in 2 years for building the brand image with specific attraction
elements in others big city in Vietnam (Hanoi, Danang, Nha Trang…) (S8 S9 S10
O5)
5. Contribute to the social and economic wellbeing of communities by investing in and
encouraging local entrepreneurship, education and community initiatives, giving
donations and undertaking volunteer activities (S4 O1)

ST Strategies

1. Maintain unique advertising, branding through meaningful activities besides

sponsoring entertainment events by investing $5 million in 1 year for Vietnamese
culture advertising (S2 S3 T1)
2. More advertising costs for Strongbow and current beers. Invest more $18 million in 3
years for Heineken beer 0.0 (S9 T5)
3. Maintain and drive customer loyalty by continuing the use of combined marketing
communication tools across mixed media such as informative websites, promotional
events, and media containing consumer testimonials to connect with customers in
order to compete to others brand (S2 S3 T1 T5)

WO Strategies
1. Invest $ 3 million in 2 years on equipment and protective gear for employees (W6
O1)
2. Invest $5 million in 2 years to promote Larue brands beside Heineken in Vietnam
market which focus on average income people (W1 O2 O3)

WT Strategies

1. Invest $1 million in 1 year to boost Heineken sales volume of the northern market
(W2 T1)
2. Invest 20% to promote other brand beside Heineken in global market. (W2 T6 T5)

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10.2. Internal-External Matrix (IE)

10.2.1.Internal-External Matrix by region

Legend
1. Red: Americas
2. Green: Asia Pacific
3. Purple: Europe
4. Blue: Africa, Middle East & Eastern Europe

Data Table:

Percent of Firm Estimated Estimated

Division
Division’s Revenues IFE Score EFE Score

Americas $7,595,000,000 3 2.3

Asia Pacific $3,270,000,000 2.9 3.5

Europe $11,590,000,000 3.5 2.5

Africa, Middle East &
$3,417,000,000 2 1.5
Eastern Europe

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Note:
As indicated by the positioning of the circles, grow and build strategies are
appropriate for Asia Pacific and Europe region. Americas is a candidate for hold and
maintain strategy of Heineken. Moreover, Heineken should use harvest and divest
strategy in Africa, Middle East & Eastern Europe and they have to decide if they still
want to be placed in there or if they should retreat from there

10.3. Quantitative Strategic Planning Matrix (QSPM)

The Quantitative Strategic Planning Matrix compares two different strategies that
can be the best option for Heineken to pursue in the future. The first strategy involves
extending market in other big cities of VN for available beer brands of Heineken. The
second strategy for the company focuses on investing for new global beer brand in
Vietnamese market. Both strategies are assigned a rating against each strength,
weakness, opportunity and threat of the company on a scale of 1 (not attractive) to 4
(highly attractive). If the factors do not applicate for the strategies, they are rated with
0. However, if one strategy was rated the other one needs a rating also.

15
 Extend market in
Invest for new
other big cities of
global beer brand
VN for available
in Vietnamese
beer brands of
market
Heineken
Strengths Weight AS TAS AS TAS
The Heineken® brand grew 7.7%, its best performance in a decade.
1 Heineken new brand extension, Heineken® 0.0 has been very well received 0.10 3 0.30 4 0.40
and is now available in 38 markets worldwide
Heineken has a strong presence on social media with more than millions of
followers on the three most famous social media platforms, a well-
2 0.09 4 0.36 3 0.27
functioning and interactive website that draws a large number of internet
traffic and sales
Heineken have sponsored for a lot of entertainments activities in the world.
(Wimbledon, the US Open, Australia Open and the Shanghai Open).
3 Heineken® expanded its portfolio of world-class sponsorships, adding 0.10 4 0.40 3 0.30
electric street racing series, Formula E, to a list that already includes UEFA
Champions League, Formula One™, Rugby World Cup and James Bond.
Heineken understands the importance of having a diverse workforce as a
key driver of innovation, creativity and business performance so they do
4 their best to create an environment for their employee to develop. For 2018, 0.06 2 0.12 1 0.06
their employee engagement scores continue to rank us in the top quartile of
companies against the external benchmark.
Manufacturing processes are an automatic production line. Therefore,
5 Heineken’s operation system is labor saving, energy saving, improve 0.07 2 0.14 1 0.07
quality and high accuracy.
The fund of Heineken is provided mostly by owners and stockholders,
6 creditors is just a part of its fund as the increasing percentage of total equity 0.05 1 0.05 2 0.10
is higher than total debt 7%.
The average length of time it takes a firm to collect credit sales is shorter in
7 0.07 1 0.07 2 0.14
2018, and the firm has high ability in collecting credit sales. The Accounts
16
 Receivable Turnover of Heineken in 2018 is six time higher than those in
2017 (in 2018 it is 1251 while those in 2017 is 221)
8 HEINEKEN has more than 300 brands around the world. 0.08 4 0.32 3 0.24
Active in over 40 markets, Heineken’s consolidated cider volume increased
9 double digit. Strongbow Apple Cider is outperforming in solid markets 0.05 4 0.20 3 0.15
such as South Africa and in new markets like Vietnam and Mexico.
Heineken were recognized for the second year running as the most
10 0.06 4 0.24 3 0.18
sustainable business in Vietnam

Extend market in
Invest for new
other big cities of
global beer brand
VN for available
in Vietnamese
beer brands of
market
Heineken
Weaknesses Weight AS TAS AS TAS
The company always focuses on brand Heineken in all their promotions
1 0.02 3 0.06 4 0.08
and the rest of the brands are showcased as sub-brands for each geography.
2 Inconsistency of marketing practices in foreign markets 0.03 3 0.09 4 0.12
3 The operating profit in 2018 is less than those in 2017 6.4% 0.07 3 0.21 1 0.07
Heineken’s products price is quite high because of the focusing on above
4 average income people. (For example, 24 bottles of Heineken beer costs 0.06 2 0.12 4 0.24
around 350,000 VND)
In 2018, only 69/73 markets in scope (96%) invested 10% of media
5 0.04 2 0.08 3 0.12
budget, or more, in dedicated responsible consumption campaigns.
Heineken’s accident frequency in 2018 was 1.13, up from 1.04 in 2017. In
6 2018, 49% of severe injuries happened in secondary distribution – of which 0.05 2 0.10 1 0.05
32% were related to manual handling and 19% to slips, trips and falls.

Extend market in Invest for new

other big cities of global beer brand

17
 VN for available in Vietnamese
beer brands of market
Heineken
Opportunities Weight AS TAS AS TAS
Vietnam's population is projected to reach 100 million by 2020 with
1 working-age population accounting for 60% of total. This group is a major 0.10 4 0.40 3 0.30
market of beer industry.
Vietnam's gross domestic product grew by 6.88% year-on-year in the third
2 0.13 4 0.52 3 0.39
quarter of 2018
The growth in tourism helps increase the sale of beer industry (Increase
3 0.07 2 0.14 1 0.07
6.5% than 2017)
According to FTA, from 2018 onward the import tax rate materials for beer
4 0.12 3 0.36 2 0.24
industry in VN has been reduced, with the lowest rate being 0%
According to the Ministry of Industry & Trade, in 2016 Vietnam was
ranked 16th amongst the largest alcoholic beverage consuming countries in
5 the world and 3rd in Asia after China and Japan. In 2018, Vietnam's beer 0.09 3 0.27 2 0.18
consumption reaches 4 billion liters. By 2020, consumption of beer is
projected to reach 4.84 billion liters.
In 2018, the high-end market segment of Vietnam's beer industry has grown
6 0.08 3 0.24 4 0.32
by 7.2 percent.
The global beer market was worth US$ 603.1 billion in 2018. It is
7 0.06 1 0.06 0 0.00
forecasted to reach US$805 by 2024.

Extend market in
Invest for new
other big cities of
global beer brand
VN for available
in Vietnamese
beer brands of
market
Heineken

18
 Threats Weight AS TAS AS TAS
Carlsberg is planning to increase its shares in Habeco, Vietnam's second
1 0.04 3 0.12 4 0.16
largest beer market from 17.51% to 61.79%
According to the Law on Special Excise Duty No.70/2014/QH13, from
2018 onwards, special consumption tax rates imposed on alcoholic products
2 0.07 1 0.07 2 0.14
with ABV < 20º, ≥ 20º, and beer, will be 35 percent, 65 percent, and 65
percent respectively.
Under the Law on Advertising No.16/2012/QH13, mass advertising is not
3 0.07 2 0.14 1 0.07
permitted for alcoholic beverages with an alcohol content above 15%
EU-Vietnam free trade agreement (EVFTA), which removes the import tax
4 and expected to come into force in mid-2018, increases market access of 0.05 2 0.10 3 0.15
other foreign beer companies
Under pressure from other replacement products: wine, fruit juice...
5 because of consumer trends towards alcohol moderation and natural, 0.06 3 0.18 4 0.24
health-conscious lifestyles.
In 2017, AB InBev buy its rival SAB Miller for £71 billion, effectively
6 0.06 3 0.18 4 0.24
taking control of 30 percent of the world’s beer production and sales

Extend market in
Invest for new
other big cities of
global beer brand
VN for available
in Vietnamese
beer brands of
market
Heineken
Weight AS TAS AS TAS
STAS 5.85 3.96

19
 Note:
Heineken should increase the sale volume by Extend market in other big cities of
Vietnam for available beer brands of Heineken instead of Invest for new global beer
brand in Vietnamese market. Therefore, the company should invest in the research
and development department to refine their products to make them more unique and
to help raise customer loyalty.

10.4. Strategy conclusion

As seen above, the different matrixes have nearly the same result. All in all, Heineken
should care for their market penetration, market development and product development.
Thus, they can improve their market share in different regions as well as in the product
segments. By having a look at the regions Heineken is operating in, it shows that the
company has to decide how they want to handle their business in Africa, Middle East and
Eastern Europe because it does not work well. In contrast, they should expand their
business in Asia Pacific for getting a higher market share there.
The analysis also shows that Heineken has to improve their integration, especially in
the Americas, Asia Pacific and Europe in region segment. They can integrate in different
ways: backward, forward or horizontal integration. If they integrate horizontal, the
company should try to expand internationally to raise their market share as well as expand
their brand equity. Even increasing their capacity through new production plants or
producing without showing their brand is a possibility. For the vertical integration
Heineken can do it on one hand backward and on the other hand forward. With backward
integration, they can focus on the production process before their turn. However, if the
company prefers to integrate forward, then they concentrate on taking control of post-
production processes. Also, because they are relatively stable in their current markets,
they can use an aggressive strategy to progress, so they should never forget where their
strengths are and how they can improve their weaknesses. Meanwhile they should not
forget to keep an eye on the external threats and use the external opportunities in their
reach for expanding.

20
11.Recommendations

Recommendation Year 1 Year 2 Year 3 Total

$15 million for Extra $15 million
Building the brand image with specific research and for research and
1 attraction elements in other big cities in building building
Vietnam (Hanoi, Danang, Nha Trang…)
$15 million $15 million $30 million
Buying more beer
Buying protective
filter machine,
Develop more for modern equipment for gears for
2 mixing machine
employees in the next 2 years employees
and others.
$1,5 million $ 1,5 million $3 million
Promote other brand beside Heineken in Pushing Strong Pushing Heineken Keeping research
3 global market in Asia Pacific especially Bow in market 0.0 in market and development
Vietnam $2 million $2 million $3 million $7 million
Keeping running 2
Buying daily Research and
Create "Warm winter" program supports programs before
4 supply chain donate
the rural communities in Vietnam and this new on
$1 million $3 million $5 million $9 million
Contribute to the social and economic Provided over
Keep going
wellbeing of communities by investing in 85,000 direct jobs
provided direct job
and encouraging local entrepreneurship, paid in taxes
5
education and community initiatives, giving
donations and undertaking volunteer $15 million $15 million $30 million
activities
TOTAL $34,5 million $36,5 million $ 8 million $79 million

21
 Recommendation Overview
The recommendations for improvement of products and brands were derived from the
SWOT and QSPM, which contains the weighted factors to support the importance of the
recommendation. Recommendations for improving the company’s current systems and
marketing efforts to increase the company’s global presence and finances came about
from the SWOT, which showed employee turnover, sale drops in Africa, Middle East and
Eastern Europe. The recommendation to start promotion production for potential market
from the Internal-External Matrix by regions.
A few of the key recommendations for Heineken involve improving and growing the
company’s current brands and products by investing more money into the research and
development departments. Other recommendations involve improving Heineken global
presence and expanding operations especially Vietnam by investing more into the “Warm
Winter” program, developing three production plants in Asia Pacific and others region.
It’s also recommended that the company improve its current systems by developing an
employee retention program and investing more into improving the current data system of
the company. All in all, these recommendations in total advance to three years while some
only two, and the total cost amount to implement them in the complete timespan is over
$79 million.

12.Perceptual map

High price

1 3
High quality
Low quality

5
4

Low price

12.1. Beer industry in Vietnam

Legend:

22
 1. Heineken
2. Thai Bev
3. Anheuser-Busch Inbev
4. Carlsberg
5. Sapporo Breweries
6. Habecco
Note:
This perceptual map focuses on five major beer brands and a comparison of their
quality (X-axis) and their price (Y-axis). Compared to the other brands, Heineken and
Anheuser-Busch Inbev (AB Inbev) is the most popular out of all the three other brands
listed but Heineken falls short in its quality by AB Inbev) taking the lead. From this
information, it is important that in the future Heineken continues to maintain its products
in popularity and emphasize on research and development for its beer brand to further
enhance its quality to get a bump up in its position.

13.EPS/EBIT Analysis
Common Stock Financing Debt Financing
Recession Normal Boom Recession Normal Boom
EBIT $4,515,000,000 $53,118,000,000 $61,085,000,000 $4,515,000,000 $53,118,000,000 $61,085,000,000
Interest 0 0 0 3,950,000 3,950,000 3,950,000
EBT 4,515,000,000 53,118,000,000 61,085,000,000 4,511,050,000 53,114,050,000 61,081,050,000
Taxes 1,128,750,000 13,279,500,000 15,271,250,000 1,127,762,500 13,278,512,500 15,270,262,500
EAT 3,386,250,000 39,838,500,000 45,813,750,000 3,383,287,500 39,835,537,500 45,810,787,500
#
Shares 572,227,565 572,227,565 572,227,565 570,770,000 570,770,000 570,770,000
EPS $5.92 $69.62 $80.06 $5.93 $69.79 $80.26

Stock 30% Debt 70%

Recession Normal Boom
EBIT $4,515,000,000 $53,118,000,000 $61,085,000,000
Interest 2,765,000 2,765,000 2,765,000
EBT 4,512,235,000 53,115,235,000 61,082,235,000
Taxes 1,128,058,750 13,278,808,750 15,270,558,750
EAT 3,384,176,250 39,836,426,250 45,811,676,250
#
Shares 571,207,269 571,207,269 571,207,269
EPS $5.92 $69.74 $80.20

Data table:

23
 Amounted Needed $79,000,000
Interest Rate 5%
Tax Rate 25%
Shares Outstanding 570,770,000
# New Shares Outstanding 1,457,565
Stock Price $54.20

$90.00
$80.00
$70.00
$60.00
$50.00 Common Stock
Financing
$40.00
$30.00 Debt Financing
$20.00
$10.00
$0.00
$4,515,000,000 $53,118,000,000 $61,085,000,000

EPS/EBIT Analysis overview

As indicated by the EPS values of $5.93, $69.79 and $80.26 debt is the best financing
alternative for the Heineken if a recession, boom, or normal year is expected. Viewing the
EPS/EBIT Analysis, Heineken can obtain the needed capital for the list of
recommendations from either stock or debt since the EPS for the two financing options
have no difference under their EBIT ranges. Going into the future, the financing option
for Heineken will be 70 to 30 debt versus stock financing, with more debt than stock to
make sure there is little dilution of ownership.

14.Company evaluation
Heineken
Stockholders' Equity - (Goodwill +
Intangibles) $16,080,000,000
Net Income x 5 $265,590,000,000
(Share Price/EPS) x Net Income $30,935,734,000
Number of Shares Outstanding x
Share Price $30,935,734,000
Method Average $85,885,367,000
24
AB InBev
Stockholders' Equity - (Goodwill +
Intangibles) ($106,238,000,000)
Net Income x 5 $344,585,000,000
(Share Price/EPS) x Net Income $189,843,362,666,667
Number of Shares Outstanding x
Share Price $163,627,200,000,000
Method Average $88,427,227,416,667

Company Valuation overview

The Company Valuation section presents the value of Heineken with another beer
company Anheuser-Busch Inbev (AB-Inbev) included under the four corporation
valuation methods which are the net worth method, the net income method, the price-
earnings ratio method and the outstanding shares method with the method average
included. Compared to its top competitor AB-Inbev, Heineken is extremely down in its
value by over $88 billion. Moving forward, it is vital that the company commits to
enhancing its value.

15.Projected financial ratios

Projected Ratios Historical Ratios
31/12/2018 31/12/2019 31/12/2020 31/12/2017 31/12/2018
Current Ratio 48.39 72.41 96.43 19.52 24.37
Quick Ratio 48.39 72.41 96.43 19.52 24.37
Debt-to-Total-Assets
0.24 0.16 0.12 0.50 0.48
Ratio
Debt-to-Equity Ratio 0.32 0.19 0.14 0.99 0.93
Times-Interest-Earned
-54 -54 -54 -95 -94
Ratio
Inventory Turnover #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Fixed Assets Turnover #DIV/0! #DIV/0! #DIV/0! #DIV/0! #DIV/0!
Total Assets Turnover 0.49 0.33 0.24 0.98 0.97
Accounts Receivable
1251 1251 1251 211 1251
Turnover
Average Collection
0.29 0.29 0.29 1.73 0.29
Period
Gross Profit Margin % 100% 100% 100% 151% 152%
Operating Profit Margin
100% 100% 100% 171% 172%
%

25
ROA % 50% 33% 25% 172% 171%
ROE % 66% 40% 28% 341% 330%

Projected Financial Statements overview

Compared to historical ratios, Heineken will have better liquidation over the next 3
years from high growth of the current and quick ratios. Also, equity will grow more
compared to debt as seen from the drop of the Debt-to-Assets and Debt-to-Equity Ratio
caused by the major increase in the retained earning account. The company will hold
sustainable in ratio metrics such as Accounts Receivable Turnover, Average Collection
Period from 2019 to 2021. Heineken’s Gross and Operating Profits will drop from 2019
to 2021 at 100%. All in all, the metrics reveal that Heineken can successfully expand its
operations and improve its global brands, products and systems.

16.Executive summary
The first section in this strategic plan involved revising Heineken’s old vision and
mission statement, which lacked a future for the company and some of the nine
characteristics for a mission statement. The new vision statement focuses on what the
company wants to become, which potential brands need to develop, and putting it into a
customer perspective. The new mission statement places in characteristics that identify
Heineken’s customers, products and services, markets, technology, concern for survival-
growth-profitability, philosophy, self-concept, concern for public image, concern for
employee.
The next section was performing an external assessment for Heineken with an External
Factor Evaluation Matrix and Competitive Profile Matrix to identify the company’s
external opportunities and threats and to see how it ranks compared to its competitors.
The EFE Matrix reveals major threats the company will soon face because of the
expanding of competitors. However, the company is continuing to expand their market
because of the domination the high-end segment in and the sharp reduction of import tax
in Vietnam. From the CPM, it was shown that Heineken ranks the highest out of its two
main competitors AB InBev, and ThaiBev in Vietnamese market. Heineken has a strong
reputation for its high-quality products, they also have more diverse products (beer, craft
beer, cider), their advertisings are really outstanding.
After the external assessment, an internal assessment was created by looking at the
company’s Financial Statement, Ratios and creating an Internal Factor Evaluation Matrix
to identify the company’s strengths and weaknesses. From looking at the financial
statements, all of statements are increasing, but the company seems to be struggling with
account receivable, account payable, other current liabilities, total current liabilities and
paid in capital and others. The IFEM also reveals that the company was obstructed the
development of other products because of its high-price, which is suitable for above-

26
average income people. Moreover, they are really famous around the world with more
than 300 brands, their new brand extension - Heineken® 0.0 - has been very well received
in 38 markets worldwide plus increase the consumption of Cider Brand products.
A strategy analysis was then conducted by creating a Strengths-Weaknesses-
Opportunities-Threats Matrix, Internal-External Matrix and Quantitative Strategic
Planning Matrix. All of these Matrices give a deeper look at Heineken’s position with
each of its segments and create and show the best strategies that the company should take.
They reveal that Heineken should be more aggressive and focused on its market
development, market penetration and its product development and that it should improve
its integration, either horizontal or vertical focusing on production processes.
The plan also presents a Perceptual Map that shows Heineken’s position with 5 major
beer brands on two bases, which are price and quality. Heineken and Anheuser-Busch
Inbev beer is the most popular out of all the other brands, in the future Heineken
continues to maintain its products in popularity and emphasize on research and
development for its beer brand to further enhance its quality to get a bump up in its
position.
A Recommendation list that stretches over the next three years was then created and
entails investing into research and development for improving products and brands,
investing into Heineken’s “Warm Winter” program and marketing to increase its
domestic and global presence, expanding operation into Vietnam, producing other
companies without its brand name attached and improving current company systems.
In order to see how the Recommendations would be financed, an EBIT Analysis was
conducted to see whether the recommendations would be financed by common stock or
debt. Neither common stock nor debt show any differences in their EBIT, so the decision
was a 30% stock to 70% debt ratio for historical purposes and to make sure there was
little dilution of ownership.
Projected Financial Ratios tables for the next three years were made to see the effect
these recommendations would have on Heineken’s financial position in the future. The
result reveals that the operation metrics from the ratios are good so that the company can
successfully expand its operations and improve its global presence, brands, products and
current systems over the three-year time period.
Heineken's strategies are now focused on the world market and especially in Africa.
However, the strategies that our group has chosen are mostly concentrated in the
Vietnamese market, because our group finds that Vietnam has the most beer consumption
in Southeast Asia, and at top 3 in Asia after China and Japan. Hence, we proposed
additional branding and development strategies in Vietnam. Heineken also saw that, so it
has been developed more breweries in this country (Annual Report, 2018, P.24):
- “We also extended the capacity of four of our breweries and started the new
brewery build in Vung Tau.”

27
 - “In Vietnam, the double-digit growth of Tiger and Larue was driven by our
execution and distribution expansion strategy to secondary cities and rural areas.”
- “We successfully launched Amstel in India and Vietnam to strengthen our local
offering.”

All in all, this is the strategic plan for Heineken to take and the projections, but it is still
difficult to know that the future truly holds for this company since we are not part of the
board and because of uncertainties in the financial market.

28
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