USE ONLY THE DATA PROVIDED IN THE IMAGES: (no external sources)

BULLET POINT FORM ONLY (keep clear and concise)

Answer each question:

1) Size up Beau's all-natural Brewing Company. Who are they, and what do they do? What is the role and requirement in the case?

2) List the issues facing Beau's, and what is the core issue?

3) Use course framework(s) to assess Beau's approach to globalization

Pick which of the frameworks apply to this specific case and assess the companies approach using them: Pick the BEST one that applies the most to the case:

• Drivers of Globalization
• 4C Country Risk assessment
• Comparative Advantage
• Porter Diamond Model & National Industrial Policy
• Cultural frameworks (Hall's & Hofstede's)
• GME
• (E)MPI for market selection
• Market Entry Strategy continuum
• Value Chain (as foundation for Competitive Advantages or Global Sourcing decisions or functions to remain centralized vs decentralized)
• Global Sourcing concepts (outsourcing vs. offshoring, pros/cons)
• Marketing Standardization & Adaptation
• HR Frameworks: Global teaming /global culture / Global org structure
• Key areas of global talent management
• 5 Steps of Global Financial Management

4) Basedonly on the data provided, which global market should Beau's focus on first after Canada? What would be the second country to go to?

5) What market entry strategy does Beau's use today? As Beau's grows in scale, how should they evolve their market entry strategy and why?

These are the market entry strategies:

• Import/Export
• licnesing/franchising
• Joint ventures
• FDI

6) Using the key global HR concepts from the course, outline an approach Beau's should take to build their organization as they scale up and expand internationally.

HR concepts:

• Global teaming/culture
• Global organizational structure
• Global talent management

RESOURCES:

Notes on case study: Company: Beau's All Natural Brewing Company (Beau's). Leading the craft beer industry Successful launch in all 10 Canadian provinces Role and head: Mike Simpkin, Export manager Goal: to distribute Beaus internationally N ext step forwardintemational markets. As Beau's was Canada's largest producer of organic craft beer Decide on either European and American market to expand or Asian markets to expand Numerous distribution agencies had contacted Simpkin about the United States and Europe He was also considering Asian markets as an opportunity to get in on the ground oor of an emerging market. Asian market was less congested than the competitive European and American craft markets. Numeric data in Canada: Each year Canadians drank, on average, about 75 litres of beer beer sales had dropped over the ve years leading up to 2018 Despite this, number of brewers had grown by almost 1,000 new breweries Problem with Canada: Canada was approaching \"peak\" beer. With each new entrant came 1020 new beers, leading some in the industry to conclude that market saturation was inevitable The perception of interprovincial trade barriers; Responsibility for the regulation and distribution of alcohol was held by each province. The four types of trade barriers in each province, including distribution, charges and costs of service, access to points of sale, and pricing, made distributing craft beer outside of its home province challenging. Background on Beau's: Founded on July 1, 2006 Creation: created a premium organic beer, the rst allnatural beer in its region Beau's cofounders were a father and son duo, Tim and Steve Beauchesne. Beau's was a familyrun, employeeowned, and completely independent brewery, after the decision to make employees 5 to be stewards of the brewery's future Quote from the company: Independence from big brewers was important to Beau's, as it \"keeps our minds free to innovate, our hands free to craft, and hearts free to care. The beer we create and the choices we make are authentic, inspired by real people who work here, and who love craft beer just like you.\" Organic production was part of the company's commitment to sustainable practices, which also included, when possible, local sourcing. Steve attributed Beau's success to his father's strong business ethics background. The rst brewer to obtain Benet Corporation (BCorp} status, \"a thirdparty certication of businesses that prioritize social responsibility. The agship beer was the multiple awardwinning LugTread, and it continued to be its bestselling beer By 2015, Beau's had become the largest independent craft producer of organic beer in Canada 80 awards related to brewing, sustainability, and business practices. Rapid growth at a compounding rate of 45 per cent year over year, 160 fulltime staff who were typically famin or friends of the Beauchesnes Some changes and growth: In 2016, expanded beyond distribution in Ontario and Quebec Quote on why the move happens according to Steve: with only a small handful of national independent craft breweries, the whole industry is at risk of being commoditized. Our commitment to staying regional made us part of the problem. We've made this expansion to make sure that there are strong voices on a national level for craft beer in this country. By 2018, Beau's was in all Canadian provinces, though Ontario and Quebec remained its biggest projections for nancial growth Also in 2016, going to remain independent through an employee stock ownership plan (ESOP); implemented over a time frame of 2025 years The plan for the business in terms of ownership: 150 employees would be given annual opportunities to purchase shares of the brewery. The Beauchesnes called it a \"succession plan\" to leave the business in employee hands when each founder exited the business. Beau's shareholders put up shares for sale each year to make them available to employees for purchase Another part of growth is distribution in the US: (Exporting beer was a major change for the company, as it opened up new opportunities for growth) In 2014, Beau's signed a distribution deal with Remarkable Liquids, based in new york states New York State was within an hour's drive of the brewery, which allowed Beau's to remain a local brewery. Upheld their ends of the stick with keeping things local and making the company employee owned Note by Simpkin: \"how important it is to do your research on the agent you're looking at entry with. We were lucky that ours is established and has a good distribution chain, but for a new brewery, if your international agent drops the ball, it has far greater ramications than a localfinterprovincial one\". International markets and opportunities: Looking ahead, Beau's was considering growth in the United States, Europe, and China A) The US The border was less than an hour's drive from Beau's production facilities The US was already a key trade partner with Canada Americans loved their beer More than 90 per cent of all beer exported from Canada went to the United States. Beau's already had some experience south of the border, the market was large and well developed, and craft beer held 12.?I per cent of the market share in America. Craft beer sales were up by 5 per cent Consumers choosing craft beer more and more: In 2017 alone, consumers in the country purchased over $26 billion worth of craft beer, and growth of the market had been consistently at or over 15 per cent per year for the last ve years. This continued growth in overall market share in the beer market meant that more and more people were choosing craft beer over other options (Out of the Top 50 selling beer companies, 40 were craft brewers.) Difculties in alcohol distribution in the United States: Each state had an independent regulations board, meaning each state required its own distribution approval process. This made exporting to multiple states an administrative challenge Despite this distribution agents would address the import challenges while Beau's would have to manage things like Canadian export declaration, labelling, packaging, and shipping. Target to address: The ideal targets for Beau's would be the northeastern United States, as these states would have the lowest transportation costs and likely an afnity for Canadian products. Beau's already had a presence in the state of New York, although it was just a few stores in a very small area New York was a relatively large market, Massachusetts was a mediumsized market, and Rhode Island was a small market. One drawback to exporting to New York, was the distance between cities and towns. Spread out around the state, meaning a more concentrated penetration effort would not be an easy feat. In any of the states, craft beer was well established and beer consumers had a fairly high level of awareness. Beau's felt that besides regulatory challenges, the biggest drawback to working in the United States was the high level of competition. Europg: Europeans had a wellestablished love for beer. Germany, the United Kingdom, and Spain were the biggest markets for beer in Europe Per capita consumption of beer in Germany {93.6 litres} far exceeded that of consumption in Canada and the United States Opportunities: While the beer industry was well established, rapid consumer changes and interest in Americanstyle craft beer suggested opportunities. The craft sector was relatively fragmented Asia: With the largest population concentration in the world, the Asian market was huge Largest country of interest was China Potential market size: Combined with the large population, China generated the largest beer market in the world at over 40 billion litres, which was more than the United States The industry was dominated by ve large Chinese brewers, with about 75 per cent of the market. Competition with other craft breweries was small in the Chinese market, as the number of microbreweries and brewpubs in all of China totalled about 80 in 2017. - Target consumer: Craft beer, especially lagers, was attractive to young, urban consumers in Tier 1 cities such as Beijing and Shanghai. Issues they are facing: Consumers had little experience with craft beer and required extensive education about exotic avours and organic production. Thus, while it was a large and relatively untapped market, China would require a lot of marketing about the nature of craft beer itself. Administrative challenges around distributing beer in China could be quite prohibitive Simpkin knew that a good agent should be able to provide market evaluation support (see Exhibit 2). Thus, he was more focused on the strategic t of Beau's offering with the target market. The international dilemma: One question that naturally arose about the internationalization of craft beers had to do with strategy. 1) Craft beer meaning In comparison to largescale brewers, then, craft brewers were differentiated in terms of the products they produced and how they produced them. They also differed from largescale brewers in terms of their beer names and the stories associated with them, which were often derived from and important to local communities. Problem: With the growth in the number of brewers in Canada, there may have been some erosion in the craft differentiation. Differentiation for Bean's: derived from its certied organic process and products, its sustainable practices, and its BCorp status. Another aspect of craft beer strategy was local disllibution. Another aspect of craft beer strategy was: 2} Local distribution Typically, craft brewers distributed beer within local geographic markets, often within 160 kilometres. So it was generally agreed that craft beer was a product that beneted from a niche strategy of focused differentiation. Questions for simgkr'ns: Given the geographic focus of many craft brewers, Simpkin had to address the following question: Why internationalize beyond its local market? Did Beau's organic offering provide points of differentiation that offset the local geographic focus? If it pursued international markets, which ones t best with Beau's? Simpkin would also have to determine the best method for intemationalizing. In general, if trade barriers were low and the valuetoweight ratio was high, exporting products had advantages. In theory: Advantages of exporting: Exporting could be a fast and easy way to grow sales. It provided diversication from the home market It was relatively low risk in terms of resource commitment. Disadvantages: There were aspects of the craft beer industry that made exporting a challenge. In terms of trade barriers, there were generally few policies that impeded the shipment of beer across borders. However, Simpkin knew Beau's would still be required to declare exports, modify labels and packaging, and deal with some shipping issues. There are some challenges to exporting to a different country in general, specically with the labeling. ((The United States has different units of measurement, our Canadian labels do not cover the requirements. This leads to a big cost in bottle labels, but an even larger cost in canning (wrapped or printed} because the lid also has specications.)} Shipping internationally also presented some challenges for craft beer. In general, beer did not have an attractive valuetoweight ratio. Transportation costs resulted from many factors, including the mode of shipment, storage, handling, and administration; however, the weight of the product was a key factor. Beer had a low valuetoweight ratio, which meant it would generally be shipped internationally by lowcost sea freight, as air freight could be up to six times more expensive than ocean freight. Investigate how to keep the beer fresh over the long trip across the ocean and whether the premium pricing of craft beer could support faster air freight. He knew of several British Columbia craft brewers that were exporting to Asia. Even so, as an organic, sustainable brewer, Beau's had to consider whether shipping long distances t with the brewery's sustainable positioning. An alternative to exporting, Simpkin could investigate licensing Bean's beer recipes to foreign partner brewers. Licensing would overcome the valuetoweight limitations of exporting; however, it was dependent on nding lowrisk partners. Risk: Questions and concerns about the risks of sharing Beau's intellectual property. While exporting and licensing offered relatively fast internationalization options, Simpkin also knew that direct investment was an option. In fact, several Canadian breweries served foreign markets by producing in them. Problems: This presented signicant resource demands, the challenge of foreign operations, and, arguably, much greater risk. It also represented a scale of entry that was far beyond what Beau's had thus far contemplated. E gonclusion: Craft brewers had only recently begun undertaking export, and it was not clear to Simp_kin whether it was motivated by protable opportunities or necessitated by competitive congestion in their local markets. With the increased number of craft brewers in Canada, there were growing concerns that the industry had reached \"peak beer.\" Coupled with the declining per capita consumption rates, beer markets in Canada might have been approaching saturation. Moves by the Government of Ontario to open up grocery and convenience stores could offer growth channels, but the impact of the changes was yet to be seen. Each international market presented different potential advantages: the geographically close US market, with its similar beer preferences; the beer lovers of Europe, with their strong beer culture and history; and the potential for market growth in Asia. As Simpkin reected on the opportunities, he wondered whether the distinctive branding of Beau's as an employeeowned organic craft brewer would carry over into export markets. While most craft brewers were focused differentiators, part of Beau's advantage was its organic sustainability. Simpkin also wondered whether his existing market would react poorly to a \"local\" company selling abroad. {Some craft beer consumers \"punished\" brewers who appeared to \"sell out\") Note: Not many craft brewers exported beer, and Simpkin had to consider the trade0H between growth and upholding the tradition and positioning of craft beer. As he walked through rural Vankleek Hill, he knew he had to further mull over where Beau's should head next