MGT3324 Strategic

Management

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 Introduction to Suntory Holdings Ltd
The Suntory Group is recognised as one of the most successful consumer goods companies around the globe (Palumbo and Herbig,
2000). The company develops and markets products that are used and appreciated by millions of people all over the world.
According to Clark (2016) Suntory was established in 1899 as a family-owned firm in Osaka, Japan. Since then, the company has
expanded to become an international conglomerate with operations in the Americas, Africa, Oceania, and Asia. The Suntory Group's
vision is to build a culture that celebrates the "excellence of living." Suntory's objective is "to find balance with humanity and the
planet," and the company aim to build an environmentally friendly community that is constantly mindful of cultural identities and co
- existing with the magnificent natural ecosystem. Suntory helps foster the development of a rich and prosperous luxury by
providing products and services that are of the highest standard. Suntory Holdings Ltd. announced unified net sales of 2.4 trillion
(roughly $22 billion USD) for the fiscal year ended December 31, 2020 (Panel on Genetically Modified Organisms, 2015). This
figure represents the company's total revenue for the period. Beam Suntory, Suntory Beverage & Food Ltd., and Pepsi Bottling
Ventures are some of the companies and brands under which the firm works. Altogether, the corporation is responsible for the
employment of around 42,000 individuals across the globe (Schaede and Shimizu, 2022).

As per research Jonesand Comfort (2019) the range of beverages offered by Suntory include a diverse selection of alcoholic and
non-alcoholic drinks, as well as whiskey, liquor, and alcohol. Pepsi, Gatorade, Orangina, Lucozade, Jim Beam, and Maker's Mark
are just a few of the business's other well-known brands. The corporation also produces Courvoisier. In terms of its business in the
United Kingdom, Suntory Holdings Ltd. conducts its activities through its wholly owned subsidiary, Suntory Beverage & Food
GB&I. This subsidiary is in charge of the advertising, production, and selling of Suntory's various drinks throughout the United
Kingdom and Ireland. In the United Kingdom, the range of the corporation includes well-known brands including Lucozade,
Orangina and Ribena (Choi, 2017).
 PESTLE Analysis
Political Factor Economic Factor Social Factors
Gkolemis (2016) depicted that Suntory finds Because of the solid and steady economy in the Because the population of the United
that the political climate in the UK is conducive UK, Suntory has potential for development and Kingdom is so multicultural and diverse,
to doing business. Yet, the industry's operations development in this market (Gkolemis, 2016). Suntory is afforded the opportunity to appeal
and supply chain may be affected by the Nonetheless, the industry has been hit by the to a wide range of customer preferences and
newfound uncertainty brought about by Brexit, COVID-19 epidemic, which has caused in a fall tastes in the country. Palumbo and Herbig
particularly in regards to contracts and laws. in consumer expenditure and interrupted supply (2000) added that there is a growing
chains. These effects have had a negative effect movement towards health and wellbeing,
on the overall economy. which may create potential for Suntory to
broaden the selection of health supplements
that it provides to customers.

Technological Factor Legal Factors Environmental Factors

The Uk is a highly industrialised nation, which Concerns for the environment and a Suntory finds that the dependable and open
means that there are potential for Suntory to commitment to sustainability are gaining nature of the judicial system in the UK makes
capitalise on new technology to improve both ground as priorities in the UK, notably in the for an advantageous environment in which to
its goods and its operations (Schaede and beverage and food sectors. The activities of conduct business. Nonetheless, there are rules
Shimizu, 2022). On the other hand, Suntory and the products it sells will be exposed and restrictions about alcohol use and
technological advances bring with them the to a greater degree of inspection and rules advertising that might have an effect on the
possibility of disruption as well as rivalry from connected to the preservation of the firm's sales and marketing efforts. In addition
new competitors. environment (Gkolemis, 2016). to this, the Brexit has injected some
uncertainty into the legislation and trade
agreements that are in place.
 Strengths: Weaknesses:
Range of products that encompasses a wide variety of categories, such as
Just a little portion of the market share in the UK in comparison to
alcoholic and non-alcoholic drinks, in addition to food items (Choi, G.G.,
other well-known brands.
2017).
reliance on the Japanese market, which is susceptible to economic
Solid distribution network as well as collaborations with many retail
ups and downs as well as other influences from the outside world.
establishments, drinking establishments, and dining establishments.
According to Tolstoy et al. (2021)In the marketplace of the UK, we
commitment to programmes relating to corporate social responsibility
have just a limited web presence and e-commerce abilities.
and sustainability, such as the reduction of the company's carbon impact
and the promotion of responsible drinking.

Industrial Analysis
(SWOT)
Opportunities: Threats:
Increasing demand for premium and high-quality beverages, which In the UK market, there is significant rivalry from well-established
aligns with Suntory's brand and product portfolio (Sharma et al., 2019). beverage firms (Williams, 2015).
Growing trend towards healthier and low-alcohol beverages, which Unpredictability and turbulence in the world economy, both of which can
presents an opportunity for Suntory to expand its product offerings in have an effect on the amount customer spends and the demand for goods.
this area. alterations made to the laws and guidelines governing the sale and use of
Expansion of distribution channels and partnerships to reach a wider alcoholic beverages.
audience in the UK market. Supply chains and operations can experience disruptions, especially
Utilising technology to improve operational efficiency and enhance during emergencies such as those brought on by natural catastrophes or
customer experience, such as implementing mobile ordering and epidemics.
payment systems.
 Rare
Valuable
Some of Suntory's resources and capabilities are rare, making
As per research of Choi (2017) Suntory Holdings Ltd has a it difficult for competitors to replicate (Vegt, 2017). For
number of valuable resources and capabilities. Firstly, the example, the company's expertise in blending and aging
company has a strong portfolio of premium brands that are whisky has allowed it to create highly sought-after products
highly valued by consumers. Additionally, Suntory has invested such as Yamazaki, Hakushu, and Hibiki. Suntory's ownership
heavily in research and development, which has allowed it to of the only distillery in Japan that makes American-style
create innovative products that meet changing consumer bourbon, the Jim Beam distillery in Kentucky, is also a rare
preferences. The company has also developed a strong advantage.
Resources and
distribution network in Japan and overseas, which enables it to
reach a wider customer base.
capabilities
analysis(VRIO
Analysis) Organised
Imitable
Suntory's resources and capabilities are well-organized, which
Suntory's resources and capabilities are difficult to imitate allows the company to efficiently and effectively leverage them. For
(Vegt, 2017). The company's expertise in blending and aging example, the company has established a global supply chain that
whisky is based on years of knowledge and experience, allows it to source raw materials and manufacture products in the
making it difficult for competitors to replicate. Additionally, most efficient and cost-effective way. Additionally, Suntory has a
Suntory has a number of patents and proprietary technologies strong corporate culture that emphasizes innovation, quality, and
related to the production and packaging of its products, which sustainability, which helps to ensure that its resources and
also provide a competitive advantage. capabilities are used effectively (Liu et al., 2022).
 Competitor analysis
Key Variables for
Competitors Comparison Market Share Product Range Distribution Advertising

Direct The direct competitors Suntory has the Suntory has the Suntory has the Suntory has the
of Suntory Holdings largest market share in widest product range, widest distribution highest advertising
Ltd in the UK are the UK with a market offering a variety of network in the UK, budget of the four
Asahi Group Holdings share of 16.8%, alcoholic beverages, with their products companies, spending
Ltd, Kirin Holdings followed by Asahi including beer, spirits, available in an estimated £3.3
Co. Ltd, and Sapporo Group Holdings Ltd and liqueurs. Asahi supermarkets, million on advertising
Breweries Ltd (MARY, with a market share of Group Holdings Ltd convenience stores, in the UK in 2020.
2018). These 8.6%, Kirin Holdings has a wide variety of bars, and restaurants. Asahi Group Holdings
companies are all Co. Ltd with a market beer, spirits, and Asahi Group Holdings Ltd spent an estimated
Japanese-based share of 4.4% and liqueurs, as well as Ltd has a wide £2.4 million on
beverage companies Sapporo Breweries Ltd non-alcoholic distribution network in advertising in the UK
that produce alcoholic with a market share of beverages. Kirin the UK, with their in 2020, Kirin Holdings
beverages, including 4.1% (Henderson, Holdings Co. Ltd only products available in Co. Ltd spent an
beer, spirits, and Sheldon and Pick, produces beer and supermarkets, estimated £1.6 million
liqueurs. 2019). Sapporo Breweries Ltd convenience stores, on advertising in the
only produces beer bars, and restaurants. UK in 2020, and
and spirits. Kirin Holdings Co. Ltd Sapporo Breweries Ltd
and Sapporo Breweries spent an estimated £1.2
Ltd have a limited million on advertising
distribution network in in the UK in 2020.
the UK, with their
products primarily
available in
supermarkets.
 Continue..
Key Variables for
Competitors Comparison Market Share Product Range Distribution Advertising

Indirect The indirect Suntory has the Suntory has the Suntory has the According to Jernigan
competitors of Suntory second largest market widest product range, widest distribution and Ross (2020)
Holdings Ltd in the share in the UK with a offering a variety of network in the UK, Suntory has the second
UK are Heineken N.V., market share of 16.8%, alcoholic beverages, with their products highest advertising
Carlsberg A/S, and followed by Heineken including beer, spirits, available in budget of the four
Diageo PLC. These N.V. with a market and liqueurs. supermarkets, companies, spending
companies are all share of 10.2%, Heineken N.V. convenience stores, an estimated £3.3
based in Europe and Carlsberg A/S with a produces a variety of bars, and restaurants. million on advertising
produce beer, spirits, market share of 9.0%, beer, spirits, and Heineken N.V. has a in the UK in 2020.
and liqueurs. and Diageo PLC with a liqueurs, as well as wide distribution Heineken N.V. spent
market share of 7.3%. non-alcoholic network in the UK, an estimated £2.6
beverages. Carlsberg with their products million on advertising
A/S produces beer and available in in the UK in 2020,
spirits, and Diageo supermarkets, Carlsberg A/S spent an
PLC produces beer, convenience stores, estimated £2.2 million
spirits, wine, and other bars, and restaurants. on advertising in the
alcoholic beverages Carlsberg A/S and UK in 2020, and
(Precieuse et al., 2018). Diageo PLC have a Diageo PLC spent an
limited distribution estimated £2.0 million
network in the UK, on advertising in the
with their products UK in 2020.
primarily available in
supermarkets (Barden,
2022).
 Debt-to-Equity Ratio
Return on Equity Ratio
The debt-to-equity ratio evaluates how much debt a firm has in
This ratio assesses how well a company's management makes use of relation to its total equity. If a company's debt-to-equity ratio is lower,
the capital contributed by its shareholders in order to create profits. The it means it is in a better financial position and can more easily pay off
performance is considered to be superior when the ratio is higher. its loans. During the past five years, Suntory Holdings Ltd's Debt-to-
According to Augusto (2021) over the course of the past 5 years, the Equity ratio has declined (Baldwin, 2020), indicating that the firm is
ratio of return on equity for Suntory Holdings Ltd. has shown a in a healthier financial position and uses debt for funding its
consistent upward trend, which indicates that the company's operations less frequently.
management has been capable of effectively utilise its equity to create a
growing amount of profits.

Financial Analysis

Operating Cash Flow Ratio Free Cash Flow Ratio

A company's capacity to create cash from its activities is After factoring in capital expenditures, this ratio indicates a company's
quantified by this ratio. If the ratio is high, then means cash is capacity to create cash flow. When this ratio rises, it means that a
being generated from operations at a higher rate by the firm. company's cash flow is better than it was a year before. A declining
Since 2013, the Operational Cash Flow ratio for Suntory Free Cash Flow ratio over the past five years for Suntory Holdings Ltd
Holdings Ltd has been on the rise, showing that the firm is suggests the firm may need to increase sales in order to continue
earning more cash than it did in the previous five years. operating at its current level.
 Business-level strategy
Suntory Holdings Ltd is a multinational beverage firm that sells a diverse selection of beverages all over the world. These
beverages include alcoholic beverages, non-alcoholic beverages, and health drinks. Customers who are at least 18 years old
and who take pleasure in drinking both alcoholic and non-alcoholic drinks make up the bulk of the company's target
demographic. Instead of focusing on becoming the company with the lowest prices, Suntory Holdings Ltd. competes based on
the quality of its products (Janewit, 2021).

Suntory Holdings Ltd. separates itself from its competitors by placing a strong emphasis on the innovation, design, and
quality of its products. The products of this firm are distinguished from those of its rivals by their exceptionally excellent
quality as well as their distinctive flavour. According to Shervani, Khan and Qazi (2020), Suntory Holdings Ltd. makes
significant investments in research and development in order to manufacture brand-new, ground-breaking goods that are
tailored to the ever-evolving preferences of the company's clientele. Customers that place a high value on the preservation of
the natural environment are likely to appreciate the fact that the firm places an emphasis on using natural products and
sustainable manufacturing processes.

When it comes to the various components that comprise quality, Suntory Holdings Ltd. places an emphasis on numerous
factors, including flavour, design, and packaging (Betancur et al., 2020). The distinctive flavour profiles and attractive
package designs of the company's products are a large part of the reason why consumers are drawn to purchase them. In
addition, Suntory Holdings Ltd places a strong emphasis on the quality and consistency of its goods. This approach ensures
that every product in the company's lineup satisfies the same stringent requirements for flavour and quality.

All things considered, Suntory Holdings Ltd. has been rather successful in putting its product innovation, quality, and
sustainability initiatives into action. These initiatives are supported by the substantial resources and competencies that the firm
possesses, such as its competence in the manufacture of beverages, research and development, and marketing. Suntory
Holdings Ltd possesses a robust presence around the globe as well as a dedicated client base, all of which further strengthen
the company's competitive position in the industry.
 Conclusion
In conclusion, Suntory Holdings Ltd is a prosperous consumer products firm that maintains a significant position in the
market in the United Kingdom. The firm is dedicated to the principles of sustainability and corporate social responsibility, and
it possesses a robust distribution network in addition to a portfolio of luxury food and beverage brands. Suntory Holdings Ltd
possesses a variety of unique resources and competencies, including a robust distribution network, competence in the mixing
and maturing of whisky, and a portfolio of luxury brands. In addition, the organisation possesses resources that are both scarce
and easily replicated, a corporate culture that is well-organized, and a dedication to both innovation and quality. Suntory is
now in a position to develop original goods, capitalise on emerging technologies, and successfully traverse the shifting
political and regulatory landscape of the UK market as a result of the resources and competencies described below. The recent
years have seen an improvement in the company's overall financial performance, as seen by rising returns on equity and a
declining debt-to-equity ratio. When taken together, all of these elements contribute to Suntory Holdings Ltd. being a
powerful and prosperous business in the UK market.
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