Competitive Strategies Adopted by East African Breweries Limited to Respond to the Threat of New Entrants and Substitute Products

Abstract

The objectives of the study were to establish the strategic responses adopted by EABL in response to threats of new entrants and to establish the strategic responses adopted by EABL in response to threats of substitute products. The research was designed as a case study of East African Breweries Limited. The study used an unstructured interview to collect primary data senior management and head of department staff at EABL. The data was analyzed through content analysis. The study established that East African Breweries Limited has competitive strategies to respond to the threat of new entrants in the beer industry. The strategies include effective corporate governance structure, increased its production capacity, supply chain optimization, ensuring environmental safety, human resources management strategies, financial risk management and segmental financial reporting. EABL has responded to the threats of substitute products by adopting strategies aimed at ensuring that the company‟s products remain the best sold in East Africa and beyond. The strategies to enhance competitive advantage of EABL products include product innovation, development and diversification through support for research and design programmes, advertisements on television, radio, print and billboard, consumer promotion , sponsorship of television and online entertainment programmes, upgrading the bar environment and promoting of cultural festivities through brand labels, popular cultural galas, market day activations and in-bar promotions. The strategies adopted by the company have been effective in enhancing its competitive advantage. The study recommends that regional trade frameworks such as the East African Community (EAC) and Common Market for Eastern and Southern Africa (COMESA) should come up with competition laws which regulate cross-border competition issues; beer industries should adopt various technological platforms for production and marketing of their products; local brewers should maintain consistency as a part of strategy to enhance competitive advantage. The study recommends further research on the effect of cross boarder competition on the performance of local beer industry.