Monthly Archives: October 2015

Beer Brands Merger

If InBev and SABMiller merged, the five above brands would be among the many iconic beers all owned by the same company. (Images via Shutterstock)

Five brands that will be a part of the Anheuser Busch InBev and SABMiller merger

In a recent merger, SABMiller was bought by Anheuser Busch InBev for 106 billion U.S. dollars. This merger creates the largest beer manufacturer in the world and will comprise 31 per cent of the global beer market. The closest competitor to that number is Heineken, with a mere 9 per cent market share. This deal is expected to come with scrutiny from the public as it causes a dramatic decrease in competition.

In theory, this massive conglomerate will benefit from economies of scale as they will be producing beer at an unprecedented level. These savings could be passed on to the consumer in the form of lower prices but it is also a possibility this will result in a less competitive market. That would mean higher prices for beer drinkers as competition decreases and alternatives disappear. When a company has such a large share of the market, there arises a fairly large barrier to entry. Setting up a brewery is a difficult process that requires a large amount of capital, machinery and goods such as hops and barley. I think this could also cause consumers to turn to smaller, local breweries such as Granville Island Brewery in Vancouver. Some consumers will be more inclined to support small businesses, especially because some of these beers can market themselves as trendy and different. Beer is becoming less popular of a choice for Canadians as an alcoholic beverage already, as it has seen its share of the alcohol market deplete from nearly half in 2003, to 43 per cent in 2013.

It is possible that governments will not approve the sale as it will give such a large share of the beer market to Anheuser Busch InBev. The U.S. Justice department is reportedly investigating the merger to determine if it would limit competition too much for approval.

Media Reference

http://www.theblaze.com/stories/2014/09/15/one-company-could-soon-own-almost-every-beer-you-know-and-love/

North American Free Trade At Risk?

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With primary election campaigns underway in the United States, candidates are already starting to make bold promises. It may be easy to watch from north of the 49^th parallel thinking none of it really matters for Canadians; this however, is not correct. Businessman turned politician, Donald Trump is gaining traction among voters. One statement of note for Canadians is his position on the North American Free Trade Agreement, or NAFTA for short, which he may cancel if elected or at least renegotiate. This could be disastrous for both Canadian and Mexican manufacturers that rely on exporting their goods to the United States.

If high tariffs are added to goods manufactured in Canada and Mexico, it may become impossible for businesses to stay profitable. Canadian markets just don’t have the size needed for many manufacturers, and closing off the massive U.S. market would be very detrimental to many companies. NAFTA has been responsible for greatly boosting trade between Canada, the United States and Mexico with $337 billion dollars of trade between the 3 countries in 1993, before NAFTA was ratified, up to $1.182 trillion in 2011. Moving towards protectionism in the United States would in theory, keep jobs in the country. This would come at the expense of Canadian and Mexican businesses, forced to close because it was no longer profitable to export to other North American nations. The United States has to think carefully of the consequences for business owners and workers across North America before making a rash isolationist decision.

NAFTA has caused a rise of employment in North America by nearly 23%, and the benefits of this agreement are not limited to Canada and Mexico. U.S. based companies such as Caterpillar Inc., and Mary Kay Inc. have seen sales skyrocket thanks to the North American Free Trade Agreement. Politicians may critique this international agreement in order to gain political points, but it has truly helped countless people across North America.

Media References

Figure 1:

https://commons.wikimedia.org/wiki/File:NAFTA_logo.png

Work Week Efficiency

In a recent article by Ananya Bhattacharya, the concept of a 6 hour work day in Sweden is brought up. I found this is a fascinating idea from both an employee prospective, and a managerial one as well. For managers, this can be thought of as a negative because it means getting less production out of their workers. It may in fact have the opposite effect, as employees will feel less fatigued at work and thus improving their productivity.

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Knowing that their work day isn’t as long and daunting can boost the morale of individual employees and have a great effect on a company’s performance overall. For fulltime employees, reducing the work from 40 hours to 30 would be desirable because it means they get to go home to their personal lives sooner and have more time to take care of themselves. In theory this means an employee can be productive in their time at the office. It extends beyond more personal time however, as a study published in the American Journal of Epidemiology found longer work weeks were linked to an increased risk of coronary heart disease.

It seems like changing to a shorter work week would have great benefits for a while, but in my opinion these benefits would not last long. Once an employee became accustom to a 6 hour work day it loses its novelty. Then it becomes just like any other day and an employee is likely to lose that efficiency gained from a shorter work day. It might be worth trying 3 to 4 days of the week as a typical 8 hour day, with the rest being shortened and see how productivity changes over time.

Media Resources:

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http://www.elainebaileyinternational.com/wordpress/2013/08/why-are-you-working-long-hours-and-feeling-exhausted/