Business Problem Description
After a half year of hard work at NP-service I was remoter to the position of sales representative, and In another two months my team was transferred to another company- Olivia Brewery. The Olivia Brewery in Minsk was established in 1864. It has 580 employees and a brewing capacity of 940000 Hal. The company’s main brand – ‘Olivia’ – is one of the most recognized brands in Belabors with a market share of approximately The European Bank Reconstruction and Development had been a major shareholder in Olivia since 2005 and was looking for an international partner to help develop the business.
It now holds 21% of the shares, while the Scrabbles Group holds 67. % of shares’. Thus nowadays SC Olivia Is a part of an international brewery company working on the Ballerinas market for 1 50 years. But as MEN Alveolar started Its actively only In 2006. So why Calibers Group has decided to enter the Biliousness market through the acquisition of an existing market player rather than developing its own local presence from scratch? The answer is specific and challenging condition of the Biliousness market.
To start with, apart for the employees and some Journalists nobody knows that Alveolar Brewery
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If Scrabbles Group makes the decision to strengthen positions of its global brand in the Ballerinas market it has the flexibility to do so by decreasing the positions of Olivia brand since Scrambler’s brand recognition is much stronger than the ones of Olivia). However, at the moment the Group gives a chance to a native brand to strengthen its positions in the domestic market. Probably it will still take some time to make Library’s brand the number one brand in every region of the country because of tough rivalry with two other largest domestic brewery firms.
But Scrabbles Group is using variety of promotion tools such as sponsoring open-air festivals (Global Gathering in Minsk and Mayday with Arming Van Burden as headliner) and returning an amicable team ready to work in tough conditions in the beer market. Recently I was on the excursion in Olivia museum of their history and products. An old lady guide who was working at Olivia for 40 years told us one interesting phrase: ‘Bulgarians don’t have a culture of drinking beer because they only drink it when they are thirsty.
If we look at the statistics we’ll see that deference between Ballerinas market and markets of western countries in consumption of beer is lesser on 30-40%. Average index of beer consumption in Belabors is 51 liter per capita while n neighbor Poland it reaches 96 liters. I see it as a big challenge for Scrabbles Group to develop a culture of drinking beer as a product for pleasure and not only for thirst quenching in summer time among Bulgarians. On my opinion this quest partly could be solved by investing in small cafes and trade points next to places of youth gathering during summer season.
A lack of small outdoor cafes in many cities of Belabors doesn’t left a choice for people to rest with comfort and pleasure after work during summer time. Ballerinas youth (not from Minks) doesn’t have a lot of places in their cities to go in warm summer evenings and weekend. While I was working at Olivia Vive mentioned that firm starts to show interest to this tool of promotion but the market is still undeveloped and it needs a lot of investments. Also Olivares competitors already made an effort in this direction.
They’re investing in huge amount of summer outdoor cafes and lure clients with free Wi-Five. Olivia should also take this marketing ploy into account and not to lose a time and potential consumers. Another peculiarity of the Ballerinas market which Scrabbles Group has faced with – specific approaches of managing business in Ballerinas reality (different to those it has on a global level). Certainly, every country has its unique market rules, but the Ballerinas model of making business often shocks Western investors and entrepreneurs.
This business model even has its own non-official name “Canonical”vi. One of main features of the model – corruption which is certainly exists in one or another form in the majority of countries, but in Belabors bribes usually come as an “entry fee” for new companies, particularly foreign cuisines (usually due to various administrative obstacles). Even small entrepreneurs are often forced to deal with corruption on different governmental levels.
During 20 years of the presidency of Alexander Leaseback the situation have been worsen: in 2013 the Ballerinas authorities identified 1,319 cases of bribery, which is on 41. 4% more than in 2012. Abuse of official authority – 299 cases, which is on 30. 6% more than in viii. The head of United Civil Party A. Elevated have commented the situation: “About corruption of government opponents said a lot, but facts and evidences presented ext to nothing.
Any accusation must be confirmed with proofs”viii. The same goes with economic crimes. There are very few evidences presented and the majority of trials were covered by the media only to show that law enforcement authorities have done some activity. No doubts Scrabbles Group was warned about this model of doing business in Belabors. Albeit it hadn’t changed the decision to enter this market, it was a challenge to understand all rules of business processes and how not to fall in trap.
Although bribes are common practice they are still illegal and nobody feels safe while articulating in the “Economics”. The majority of ex-Soviet countries suffer with similar problems. But if we start to think about who is responsible for that, in my opinion, the answer – everybody: politicians with low and questionable moral standards, law enforcers working with unbidden negligence to their constitutional duties and obligations as well as ordinary citizens who are politically passive and indifferent to the developing situation in their country.
With regard to the latter, such mentality of a destructive selfishness based on “l have nothing to do with it” and “It isn’t my pigeon” principles leads the economy in a pickle as well as to unrealized government commitments and its unwelcome interference on every level of the society’s life. These are the reasons which, for example, predetermined Ford’s decision to exit the manufacturing business in Belabors in xx, as well as KEA and Baltic did. It’s almost impossible for one firm to deal with such problem in the market by itself. To get rid of the corruption in Belabors the whole system should be reformed.
And transformations would take a huge period of time. Than what would be the best solutions for Scrabbles group to not to fall in trap and not to lose their business? I see some tips that would be better rather than to come to grips with the regime and system. First of all it would be a clever decision from Scrabbles Group shareholders doesn’t change CEO of Olivia Brewery or to entrust this position to local manager who knows this system from inside. Manager from abroad could be better educated and experienced but local manager would know better peculiarities of the market and how to work with authorities.
Another tip o Scrabbles shareholders is to be prepared to play in the Ballerinas market by the rules of Ballerinas market. This means to form the budget with articles of expenditure for these bribes and take into account fact that almost every firm in Belabors do it. For sure it couldn’t be an official balance sheet, because it is illegal to order to calculate profitability and other indexes. In conclusion I would like to add that it should be fundamental decision of each firm or to play by the immoral and not fair rules of the market or to fight against the system and build healthy economics.