Page 10 - AB INBEV 2018 Case Study 2

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Organisational Structure and Change Leadership

The AB InBev Board has updated its plans to integrate the two entities (Deal Valuation, Synergies &

Execution Risk) and unveiled its progress report (confident of the deal closing eventually, it had already
started executing on key aspects of the integration). The CharterQuest Professional Education Institute has
compiled the following data, pertinent to its updated plans and progress report:

Cost synergies:
Strategic cost Projected post- Progress Report & Stakeholder Reactions
engineering theme tax cost savings
(US$ million)
Procurement and 907.2 Established a US$5 billion Supplier Development Fund to assist local suppliers
A engineering: raw in South Africa. It has announced plans to impose its global supplier payment
materials and 5% achieved practices in South Africa –lengthening the payment terms by twice as much -
packaging. compared to local norms, contrary to its agreement with regulatory authorities;
this was done after AB InBev learned that regulatory authorities lack the oversight
mechanism to enforce the agreements. This has further opened up supplier
concerns that the once strategic collaborative/partnership-oriented approach
suppliers in South Africa had enjoyed with SABMiller will all be ditched!
Specifically, AB InBev has announced plans to import barley and hops (-raw
material ingredients), widely grown in South Africa -as the company believes
these are not only cheaper if imported, but the regulatory authorities can hardly
enforce its own local content rules.
Alignment of brewery, This is now tied to the Innovation Strategy -housed under Zx Ventures. Some
bottling and shipping major supermarkets, as a direct result of the Innovation Strategy being
B productivity. 6,801.6 considered by AB InBev, have however –in retaliation, started providing more
2% achieved shelf space to the group’s competitors. Makro has become the first to begin
reducing AB InBev’s shelf space, and there are concerns its parent company,
Walmart, which accounts for 18% of global sales will follow suit!
Staff cost management, 1,792 Although AB InBev committed to not retrench for 5 years, reports suggest AB
C best practice sharing InBev plans to adopt harsh methods to indirectly ‘force’ senior managers at
and efficiency 15% achieved! SABMiller to resign, or take up voluntary retirement. Morale is very low! Some
improvements. have voiced concerns about lack of opportunities for career advancement within
the new group and are showing signs of resisting any forthcoming changes -
especially on assisting AB InBev to identify possible areas of cost synergies.
Sweeping changes being considered have leaked before AB InBev published its
D HQ/Regional Office 299.2 strategy for the next 5 years; new leaders will be appointed from outside Africa to
Costs. 0% achieved! impose AB InBev’s ‘successful ‘culture and leadership style on SABMiller (See
Appendix 4(a), 4(b) & 4 c), p.14).
9,800
Source: Hypothetical construction of The CharterQuest Professional Education Institute

END OF CASE STUDY
(Appendices Now Follow)

The CFO Case Study Competition 2018 (Grand Finale Pack)
www.charterquest.co.za | Email: thecfo@charterquest.co.za