Page 3 - AB INBEV 2018 Model Answer 2

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A. EXECUTIVE SUMMARY

1. INTRODUCTION

This is an update on the initial Board report of March 2018, in which we evaluated the strategic
opportunities, threats, weaknesses and ethical dilemmas facing the group. In particular, the SABMiller
deal we have been negotiating for years, the largest in our history, has just closed successfully. The

previous issues have however developed into pressing commercial challenges, some with embedded
ethical dilemmas; we again –today, present our updated analysis and strategic advice.

2. PRIORITISATION OF THE ISSUES

Taking account of the impact, urgency and SWOT (Appendix 1), we prioritised the issues as follows:

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1 Priority: Organisational Structure & Change Leadership
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As we begin to consolidate SABMiller into our business from this 4 quarter, the plans to overhaul our
global structure and infuse a new culture has just leaked. Managing the resulting uncertainty amongst
key stakeholders, especially key executives at SABMiller, will be crucial to sustain our single most
important competitive advantage: the strategic capability and track record for delivering results through
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successful M/As. This is 1 priority because it shapes our overall (global) strategic focus and direction
for the next 5 years (vision 2024) –and thus, it informs all subsequent strategic decisions. We must
immediately release a formal press statement on the new structure and changes -and take steps to
secure maximum co-operation.

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2 Priority: Deal Funding Strategy & Group Financial Performance
As we’ve decided to fund the deal with debt, this year completes 5-years since our group strategy and
financial targets was set back in 2014. Whilst issue 1 above substantially re-calibrates our group

strategy for the next 5 years (vision 2024), there is a danger that our overall financial strategy has
become outdated. First and foremost, we need to determine if we are likely to hit the 2018 and 2019
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targets -and meet short-term investor expectations. This is 2 priority because it is integral to our
group strategy –the subject of issue 1 above, and we have less than 3 months to begin implementation!

Going forward, we recommend a central piece of our group financial strategy should be to maintain
the current targets, but gradually reduce gearing!

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3 Priority: Human Capital Strategy (in Nigeria)
With SABMiller acquired, Heineken has now become the world’s no. 2 and our closest global rival. In
the Nigerian market, they seem to have seized the opportunity presented by our protracted
negotiations -and the resulting heightened job security concerns, to capture ‘our’ market share! This

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