Executive Summary
Constellation Brands has gained a rather impressive status in the global food and beverage industry. The organization has been using the strength of its team as the primary asset and the competitive advantage that drives its development. However, Constellation Brands could use a change to adjust to new demands of the global market. Particularly, the firm needs to adopt the principles of multiculturalism and learn to cater to the needs of diverse audiences. For this reason, product and customer diversification should be seen as a necessity. In addition, Constellation brands will need to transfer its processes to the digital environment and learn to appeal to Millennials as one of its target audiences. A rapid increase in sales and profit margins is expected as a result of the identified alterations.
Company Description
With its high quality standards and a well-developed competitive advantage, Constellation Brands has warranted a special place in the global food and beverage industry. Defining itself as a visionary, the organization has been striving to expand the boundaries of the selected domain and invite customers to a journey of fascinating experiences (Constellation Brands, 2018). According to the Constellation Brands, the strength of the company’s team is its primary asset that drives the business forward (Constellation Brands, 2018). The company has cemented its image as a responsible and innovative organization that seeks to meet the needs of its increasingly diverse audience.
Food and Beverages Constellation Brands is primarily known owing to the wide range of beer and wine. The firm produces mostly alcoholic beverages, although the recent need for diversification of its products has encouraged the company to expand the range of its goods. However, despite the identified positive characteristics, the company has been experiencing certain challenges recently. For example, its market share prices have dropped to $213.3, which represents a 0.69% drop in market share price compared to the previous records (NASDAQ, 2018) (see Appendix A). Therefore, the organization could use a change in its current approach toward catering to the needs of its customers to gain their loyalty and increase its sales.
Company’s International Strategy
The current approach that Constellation Brands adopts to attract the attention of its target audience on a global level is centered on providing its customers with unique experiences and offering them luxurious products. The use of famous brands as the main source of income can be seen as rather sensible given the high demand for exclusive alcoholic beverages that can be witnessed in the niche chosen by Constellation Brands. Combined with the tendency to grow and the willingness to expand in other markets, the specified strategy is admittedly beneficial to the organization since it provides a chance to build loyalty among its clientele and at the same time locate new potential buyers.
The idea of purchasing its rivals is also likely to become the platform for Constellation Brands’ success in the global market. Although meeting the quality standards established by the organization in the specified niche of the global food market is an admittedly challenging task, the organization has several minor rivals (McDonald, 2014). The idea of using acquisitions as opposed to building the competitive advantage even further, however, seems questionable. On the one hand, by acquiring its competitors, Constellation Brands will gain an increasingly large influence in the target market and will ultimately become superior. On the other hand, the specified strategy shifts the perspective from introducing innovations and improvements to the firm’s production processes and quality management to financial rivalry. Therefore, a more coherent framework for keeping the quality of beverages intact may be required.
Company’s Marketing Approach
As stressed above, Constellation Brands strives to provide its customers with unique experiences and offers expensive and luxurious products to them. The strategy that the firm has selected for marketing its beverages to its clientele corresponds to the identified concept of luxury. Constellation Brands emphasizes the exclusiveness and exquisiteness of the experiences that its products offer. For instance, the company has been experimenting with beer flavors, thus rebranding Corona and elevating it to a new stage of product development. As a result, new products allow customers to experience luxury and high quality.
Furthermore, Constellation Brands has been focusing on diversifying its products to satisfy the needs of a larger number of buyers. For instance, its recent attempt at meeting the demand for female-oriented alcoholic beverages, particularly, beer, has proven to be a stunning success (McDonald, 2014). The focus on product diversification, which Constellation Brands seems to have been maintaining for quite a while, can be explained by the initial boundaries which the company has set for itself. While the idea of luxurious drinks is admittedly alluring, it does not allow singling out specific types of customers and celebrating diversity among them by tailoring products to their needs. Consequently, the organization has adopted an artificial method of consumer segmentation, which is gender-based in the specified example. Although the selected approach seems to be geared in the right direction, it is advisable that Constellation Brands should pay closer attention to other segmentation approaches, such as culture-oriented segmentation.
Constellation Brands has been deploying the principles of traditional marketing. The refusal to use innovative technology might be seen as a disadvantage that may lead to further drop in profit margins. The company needs to target new audiences, including Millennials. Consequently, the transfer to the environment of the online market should be regarded as a necessity. While having already designed the platform for carrying out online activities, Constellation Brands could make a more efficient use of social networks for maintaining the communication with their customers unceasing. Similarly, mobile applications which buyers can use to select products, purchase beverages online, and perform other online activities will need to be considered as a necessity.
Company’s Logistics Approach
Constellation Brands has established an elaborate supply chain (SC) within the global market. Specifically, the company has built strong partnership with its suppliers and other companies assisting it in the supply chain management (SCM) process. When considering the benefits of the current SCM framework used by Constellation Brands, one must give it credit for its procurement framework. The transportation of the necessary materials and items is fast, effective, and producing a very small amount of waste (McDonald, 2014). As a result, the organization retains its sustainability levels and complies with the principles of lean management, reducing the costs for production. A good understanding of the global infrastructure makes the procurement processes especially successful.
However, the current logistics framework lacks a proper information management system. Because of certain inconsistencies in its human resource management (HRM) strategy and especially the lack of coherent communication between its employees, Constellation Brands has been experiencing minor hiccups in relationships between staff members. As a result, cooperation between employees is disrupted, which leads to delays and problems in maintaining product quality at the required level.
Nevertheless, the approach that Constellation Brands adopts to manage its logistics processes seems to have a generally positive effect on its performance in the target market. The organization owes its success partially to the Protek model that it has been using to enhance its SCM processes and improve its logistics. According to the definition provided by the organization, the Protek framework emphasizes the significance of quality management and reduces the threat of Constellation Brands’ products being damaged in the course of transportation (Anderson, 2014). With a unique quality management tool, the firm is likely to warrant a rather impressive following among its target customers.
Company’s Human Resource Management (HMR) Approach
Although the general performance level is rather high at Constellation Brands, it could use a more reasonable HRM approach. Because of the lack of focus on the needs of staff members, managers build a massive gap between them and the Constellation Brands’ employees. The resulting rise in the levels of mistrust is likely to affect the company negatively in a number of ways. A steep decrease in the levels of motivation among Constellation Brands’ personnel is the most probable outcome of the specified tendency. Without proper communication and a tool for addressing emerging conflicts, managers will find themselves isolated from the staff (McDonald, 2014). Consequently, the organization needs to rethink its framework for building a dialogue with its employees.
It could be argued that the specified problem is rooted deeply in the system of values and the corporate philosophy promoted at Constellation Brands. While the company should be credited for recognizing the needs of its managers, it should treat all of its stakeholders equally, employees being one of them. Therefore, the HRM approach adopted by Constellation Brands has to be altered for the firm to develop further. In fact, the upgrade in the HRM policies will lead to a boost in the quality of the end product since the staff members will be more motivated to perform well.
The current leadership framework, in turn, represents a rather successful choice of tools and strategies for keeping the company innovative and efficient. However, because of the lack of focus on the needs of staff members, the leadership framework requires a shift toward an employee-oriented perspective (McDonald, 2014). Thus, the levels of their engagement will remain high. Furthermore, Constellation Brands will have an opportunity to invest in its employees by promoting their professional growth and encouraging them to acquire new knowledge and skills.
Analysis
At present, Constellation Brands is performing rather well in its target market. Due to a well-developed leadership framework and the successful identification of a unique market niche, the firm has been enjoying quite a popularity. However, further adjustments will have to be made to its SCM and communication approaches. Specifically, the company will need to introduce new tools for performing data transfer, revisiting its strategy for managing HR issues, and approaching customer segmentation from a different viewpoint (Crawshaw et al., 2017). By taking the needs of Millennials into account, Constellation Brands will be able to embrace a much larger audience and thus increase its appeal.
In addition, the way in which the firm manages its human resources has to be changed. The specified issue is linked directly to the necessity to improve the communication process within the firm. Being unable to receive full feedback from its staff, Constellation Brands remains under the delusion that employees’ needs are met completely (Harzing and Ruysseveldt, 2017). Therefore, to address the demands of staff members, the company will have to alter its corporate philosophy and values by giving its staff members the ability to voice their concerns.
Finally, changes must be made to the organization’s products. Although the present-day idea of offering luxurious products remains effective, the needs of diverse audiences will have to be considered (see Appendix C). Constellation Brands has already started to diversify its brand by introducing the types of beer and other alcoholic beverages that might be of special interest to women. The organization could stretch this idea further to embrace a wider range of customers from different socioeconomic and cultural backgrounds.
Recommendation and Conclusion
Constellation Brands has warranted the title of one of the most popular organizations producing luxurious beverages, yet its willingness to follow traditions may cost it its customers. In order to change, the firm will need to introduce a more elaborate approach toward customer segmentation and product diversification. At present, it is highly recommended that the firm should use the principles of diversity to recognize the opportunities for customer segmentation. As a result, Constellation Brands will be able to enter new markets and establish strong presence in other states.
Communication issues should also be addressed within the firm. The lack of a coherent framework for obtaining and processing information may come at a high price for Constellation Brands. For instance, the mismanagement of the available data can trigger a rapid drop in the quality of the end product and the following loss of a range of loyal customers. Therefore, Constellation Brands will have to establish improved communication principles along with a set of innovative data management tools.
Operating in the global market is a challenging task even for corporate giants such as Constellation Brands. Therefore, the transfer to the digital environment and the identification of diverse customers’ needs are essential tasks for Constellation Brands to accomplish. The specified objectives can be attained by improving its communication techniques and updating its SCM strategies. As a result, a rapid increase in the performance levels and customer loyalty can be expected.
References
Anderson, R. 2014. Beverage Giant Keeps It Cool. Web.
Constellation Brands. 2018. What Drives Us. Web.
Crawshaw, J., Budhwar, P., Budhwar, P. and Davis, A. 2017. Human Resource Management: Strategic and International Perspectives. Thousand Oaks, CA: SAGE.
Harzing, A. W. and Ruysseveldt, J. V. 2017. International Human Resource Management: A Critical Text. Thousand Oaks, CA: SAGE.
Market Realist. 2017. Will Constellation Brands’ Sales Impress in Fiscal 3Q17? Web.
McDonald, G. 2014. Business Ethics: A Contemporary Approach. Cambridge, UK: Cambridge University Press.
NASDAQ. 2018. Constellation Brands Inc Revenue & Earnings Per Share (EPS).
Appendix A: Constellation Brands: Market Share Price
Appendix B: Constellation Brands: Sales (Market Realist, 2017)
Appendix C: Constellation Brands: Products
