Harvard Case - Chairman of the Board Eric Molson and Corporate Strategy: Letting CEOs Do Their Job... or Not
"Chairman of the Board Eric Molson and Corporate Strategy: Letting CEOs Do Their Job... or Not" Harvard business case study is written by Anne Mesny, Michel MAGNAN, Sylvie ST-ONGE. It deals with the challenges in the field of Strategy. The case study is 16 page(s) long and it was first published on : Mar 3, 2021
At Fern Fort University, we recommend that Eric Molson adopt a balanced approach to corporate strategy, allowing CEOs to leverage their core competencies and strategic flexibility while providing strategic guidance and oversight from the board. This approach will foster innovation, growth, and sustainable competitive advantage for Molson Coors.
2. Background
This case study centers around Eric Molson, the Chairman of the Board of Molson Coors, and his approach to corporate strategy. Molson believes in empowering CEOs to lead their respective businesses, allowing them to implement their own strategic plans and business models. However, this approach has led to a lack of coordination and strategic alignment across the company, resulting in missed opportunities for synergies and value creation.
The main protagonists are Eric Molson, the Chairman of the Board, and the various CEOs of Molson Coors' different business units. The case highlights the tension between centralized control and decentralized decision-making within the organization.
3. Analysis of the Case Study
Applying Porter's Five Forces:
- Threat of New Entrants: The brewing industry faces moderate threat from new entrants due to high capital requirements and established brand loyalty.
- Bargaining Power of Buyers: Consumers have moderate bargaining power due to the availability of various beer brands and price sensitivity.
- Bargaining Power of Suppliers: Suppliers, including barley and hop farmers, have moderate bargaining power due to their importance in the brewing process.
- Threat of Substitutes: The industry faces a moderate threat from substitutes like wine, spirits, and non-alcoholic beverages.
- Competitive Rivalry: The brewing industry is characterized by intense rivalry among established players like Anheuser-Busch InBev, Heineken, and Carlsberg.
SWOT Analysis:
Strengths:
- Strong brand recognition and loyal customer base
- Global presence and diverse portfolio of beer brands
- Expertise in brewing and manufacturing processes
- Strong distribution network
Weaknesses:
- Lack of strategic alignment across business units
- Limited innovation and product development
- Challenges in emerging markets
- Increasing competition from craft brewers
Opportunities:
- Growing demand for premium and craft beers
- Expanding into new markets, particularly in emerging economies
- Leveraging technology and analytics for improved efficiency and customer engagement
- Investing in sustainable practices and social responsibility initiatives
Threats:
- Economic downturn and consumer spending cuts
- Increasing regulations and taxes on alcohol consumption
- Changing consumer preferences and trends
- Competition from international and local craft brewers
Value Chain Analysis:
Molson Coors' value chain includes:
- Inbound Logistics: Sourcing raw materials like barley, hops, and yeast
- Operations: Brewing, packaging, and distribution of beer
- Outbound Logistics: Delivering beer to retailers and consumers
- Marketing and Sales: Promoting and selling beer through various channels
- Customer Service: Providing support to customers and retailers
Business Model Innovation:
Molson Coors needs to explore business model innovation to address changing consumer preferences and competitive pressures. This could include:
- Direct-to-consumer sales: Selling beer directly to consumers through online platforms and subscription services
- Experiential marketing: Creating immersive brand experiences and events to engage consumers
- Partnerships with other businesses: Collaborating with food retailers, restaurants, and entertainment venues to expand reach and offer bundled experiences
4. Recommendations
1. Establish a Clear Corporate Strategy:
- Molson should work with the board and CEOs to develop a unified corporate strategy that outlines the company's vision, mission, values, and strategic goals.
- This strategy should be communicated clearly to all employees and stakeholders, fostering a sense of shared purpose and alignment.
2. Leverage Core Competencies and Strategic Flexibility:
- Empower CEOs to leverage their core competencies and strategic flexibility in developing and implementing business unit strategies.
- Encourage innovation and entrepreneurship within each business unit, allowing for disruptive innovation and product development.
3. Foster Collaboration and Knowledge Sharing:
- Implement mechanisms for knowledge sharing and best practice exchange across business units.
- Encourage cross-functional collaboration to develop synergistic initiatives and shared resources.
4. Invest in Technology and Analytics:
- Invest in technology and analytics to improve operational efficiency, customer insights, and decision-making.
- Utilize AI and machine learning to optimize manufacturing processes, supply chain management, and marketing campaigns.
5. Embrace Digital Transformation:
- Develop a digital transformation strategy to enhance customer engagement, expand online sales, and leverage social media for brand building.
- Implement digital marketing campaigns and e-commerce platforms to reach a wider audience and cater to changing consumer habits.
6. Prioritize Sustainability and Corporate Social Responsibility:
- Incorporate environmental sustainability and corporate social responsibility into the company's core values and business practices.
- Invest in renewable energy, water conservation, and responsible sourcing to reduce environmental impact.
- Engage in community initiatives and support social causes to build a positive brand image.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: The recommendations leverage Molson Coors' existing strengths in brewing, distribution, and brand recognition while aligning with the company's mission to provide high-quality beverages.
- External customers and internal clients: The recommendations focus on improving customer experience, enhancing employee engagement, and fostering a culture of innovation.
- Competitors: The recommendations address the competitive landscape by emphasizing innovation, digital transformation, and sustainable practices.
- Attractiveness ' quantitative measures: The recommendations are expected to improve profitability, market share, and brand value.
Assumptions:
- The brewing industry will continue to grow, driven by increasing demand for premium and craft beers.
- Technology and analytics will play an increasingly important role in the industry.
- Consumers will continue to embrace digital channels for purchasing and interacting with brands.
6. Conclusion
By adopting a balanced approach to corporate strategy, Molson Coors can leverage the strengths of its individual business units while fostering greater coordination and strategic alignment. This approach will enable the company to navigate the competitive landscape, capitalize on emerging trends, and achieve sustainable growth.
7. Discussion
Alternatives not selected:
- Complete decentralization: While allowing for greater autonomy, this approach could lead to inconsistent branding, fragmented marketing efforts, and missed opportunities for synergy.
- Complete centralization: This approach could stifle innovation and limit the ability of CEOs to respond to local market conditions.
Risks and key assumptions:
- Implementation challenges: Implementing the recommendations will require significant effort and commitment from all stakeholders.
- Changing consumer preferences: The recommendations assume that consumers will continue to embrace premium and craft beers, but this trend could shift.
- Technological advancements: The recommendations rely on the continued development and adoption of technology and analytics.
8. Next Steps
- Develop a detailed implementation plan: This plan should outline specific actions, timelines, and resource allocation for each recommendation.
- Communicate the strategy to all stakeholders: This will ensure buy-in and support from employees, investors, and customers.
- Monitor progress and adjust as needed: Regular review and evaluation are essential to ensure the strategy remains effective and adaptable to changing market conditions.
By taking these steps, Eric Molson can guide Molson Coors towards a future of growth, innovation, and sustainable success.
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Case Description
In 1988, Eric Molson became chair of the board of The Molson Companies Ltd. (TMCL). Founded in 1786, the company had focused on brewing beer until the mid-1960s, when it decided to diversify to promote its growth. In 1988, TMCL had four main divisions: brewing, chemicals, retail merchandizing, and sports (the Montreal Canadiens hockey team). Despite nagging doubts about diversification, Eric initially embraced the conglomerate strategy mapped out by his predecessors for the past two decades. He later realized, however, that it was time for TMCL's reign as a conglomerate to end. He firmly believed that Molson's future lay in going "back to beer" and becoming a global brewer. The case explains how, between 1988 and 1999, Eric and his board hired and fired several CEOs - John Rogers, Mickey Cohen, Norman Seagram, and Jim Arnett - in an effort to return Molson to its core business. Finally, in 1998, Molson's regained full ownership of Molson Breweries and, in 1999, Molson's sole focus returned to brewing. However, much remained to be done to secure Molson's position as a global player in the brewing industry. The case lays the groundwork for a discussion of strategy and corporate governance in the context of a large family-controlled business.
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