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Global Beer Case Write-Up

Essay by   •  February 22, 2011  •  Case Study  •  1,112 Words (5 Pages)  •  3,715 Views

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Global Beer Case Write-up

I. Problem Statement

In 1996, Barry Hirschfield and Steve Johnson established Global Beer, a company that uses vertically integrated direct sales and services to set up turnkey microbreweries for their clients, with the ultimate goal of owning their own. By 1997, Global Beer had already established five brewpub/microbreweries in Japan, with three more scheduled to be installed by the summer of 1998. The founders eventually wanted to leverage their track record and know-how acquired in their Sales and Service Divisions into future opportunities of establishing an international microbrewery and/or brewpub chain. With time as their scarcest resource, the company is faced with the difficult decision to either partner with a trading company or select amongst a combination of five other possible business opportunities.

II. Alternative Courses of Action

1) Establish a Microbrewery in Japan


* Potential client for Global Beer to integrate their sales and service network into the establishment of this larger microbrewery.

* Johnson has established connections with other Japanese discount liquor retailers and their presidents and could solicit them to purchase the company's beer.

* Competition for microbrewed beer bottled and sold in the open market was still almost non-existent. Low production levels prevented most from covering the entire country, which wouldn't be a problem for a larger microbrewery.

* No up-front financial commitment for the venture.


* Unclear how this venture furthers the objectives of Global Beer.

* Thin profit margins of around 1% to the manufacturer.

* Johnson would have to contribute substantial amounts of time to the venture, which would mean an opportunity cost in terms of lost sales of microbrewery installations to Global Beer.

* Johnson's salary was capped at $1 million and to be shared with the founders. This is only under the circumstance that the new company would exceed projections by a considerable margin.

2) Develop a Regional Japanese Tea Beer Brand


* The idea of making a tea beer is very novel and would bring a lot of press to the product.

* Hirschfield had intrigued Dr. Owades, a well-known beer formulator and scientist, to develop the tea beer, patent it in the U.S., and pay for any U.S. patent expenses.

* More business for Global Beer due to the initial marketing attempt targeting all of its already established microbreweries. Increased product sales would give Global Beer a positive reputation and increase after-sale services.

* Relatively low financial investment, mostly for R&D, and high IRR.


* The tea beer would not be ready in time for Mr. Tanaka's opening due to patent requirements and increased difficulty in product development.

* High risk that the product might not be successful and/or the beer might not be ready by the time the patent is approved (time sensitive).

* Potential patent infringement from competitors.

3) International Brewpub Franchise


* Appealing cash flow from owning brewpubs and an opportunity to build brand equity.

* Tremendous opportunity to open a chain of pubs with a well-defined marketing concept that segmented beyond the broad categories of tourists and locals and provided good beer in addition to great food and atmosphere (differentiating factor).

* Global Beer's vertically integrated Japanese model could be replicated anywhere in the world, which would mean tremendous international opportunities. The company had developed an equipment package that could be done at half the cost and space of a typical German brewing system with twice the capacity.

* Global Beer could help local partners with financing due to their track record in Japan.

* Could leverage and transfer



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