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  • Essay / Coors Analysis - 842

    IntroductionAdolph Coors is one of the six largest brewing companies in the United States. The brewing company was founded in Golden, Colorado, in 1873 by Adolph Coors, Sr., manufacturing beer, malted milk, cement and porcelain from agricultural inputs. Adolph Coors was hailed in the late 1970s as one of the best investment opportunities in the market. He enjoyed great success after the repeal of Prohibition. Economies of scale resulting from controlling production costs by focusing on a single product, operating the fastest packaging lines in the industry, and operating the largest breweries have contributed to its success. In 1985, the brewing division accounted for 84% of Coors' revenues and more than 100% of its operating profit. Chairman Bill Coors recognized that the company's future fortunes had to be tied to the brewing business. Coors' performance has deteriorated since then. Competitive pressures forced the company to move from a single product set to multiple product sets. Why Coors' competitive position deteriorated Coors' production of beer was more expensive than other companies; that's because they canned most of their beer, unlike other companies, even though bottles were cheaper than cans. They also had a longer brewing cycle than other companies, which increased their capital. Coors aged its beer for 70 days, compared to an average of 20 to 30 days for other brewers. This increased beer costs when Coors did a national rollout. They had a competitive advantage because they had a limited distribution area, but as this increased their competitive advantage diminished compared to other major brewers. Unlike other major brewers, Coors did not pasteurize the beer, claiming that the intense heat harmed the beer's taste.... ... middle of paper ...... Coors family member companies . Coors should have a cash appropriation strategy since they want to roll out an expansion strategy nationally and later, globally. They are expected to start issuing additional shares which will be priced based on investor desirability. Should appropriate its financial accounts based on its capital requirements for domestic and global expansion. Due to Coors' financial demands associated with expansion and acquisition of domestic and global brewers. They will need to enter into a joint venture with other brewers in order to gain a greater market share in developing countries than their competitors. Coors should expand its production facilities in the United States so that it can meet its growth targets. Expansion must be controlled to eliminate high production costs and overheads that can lead to underutilization of resources..