Molson Coors Brewing Company

Molson Coors Brewing Company

A decision is an important aspect of real-life. In an organization, managers are tasked to make appropriate decisions for the success of the organization since management failure to make proper decisions hurt the organization and its stakeholders. The paper discusses the importance of decision making, strategic and organization decision, decisions making methods, and sales forecasting. Throughout the Molson Brewing Company has been discussed concerning decision making.  Also, the paper provides the dynamics of the brewery industry. Finally, the article offers the assumptions and recommendations concerning the future development of Molson Brewing Company.

Importance of Effective Decision Making to an Organization

Decision-Making occurs where the management has to select a course of action among several alternatives to achieve the organizational goal. The success of the company relies heavily on the decisions adopted by the management. Managers to make effective decisions should have knowledge, expertise, and capability in achieving the organization’s goals.  The importance of effective decision-making includes achievement of the firm’s goals, selection of the best alternative, employee motivation, better utilization of resources, monitoring of managerial performance, and it is a core function of management.

An organization has long-term and short-term objectives, and it can only be achieved through effective planning. The employees are motivated once they have attained the organization’s goals, and it increases their performance, morale, and overall productivity of the organization. The management will better utilize the resources of the company if they make effective decisions; there is little wastage of the organization’s resources. The management will be evaluated based on the decision-making and the overall performance of the organization. The main functions of management are controlling, planning, directing, and organizing; such functions can only be attained through effective decision-making.

Strategic and Organization Decisions

The company chosen for the analysis is Molson Coors Brewery Company. The firm was established in 2005 as a Brewery manufacturing Company. The company has many branches across the world, and it’s ranked number seven in the brewing industry. The firm had acquired several companies since when it was incorporated.  The corporation plans to acquire more companies and to introduce other beverages in their product lines.

There are differences between strategic and organizational decisions. Strategic decision making deals with the long-term objectives of the firm. The plans are geared to achieve the firm’s mission and vision in the future. Strategic decisions assist the firm to have an overall plan for the organization and create business growth. On the other hand, organization decision making is concentrated on the change of an existing condition within the firm. The management has to select a course of action among the possible alternatives. Management has to incur either organizational or individual resources to realize the organization’s decisions. Organizational decisions are complex and consume a considerable amount of time to implement (Planellas & Muni, 2020).

Molson Coors firm to achieve their strategic decisions; they are considering various decisions to attain business growth.  The firm is planning to invest technology in brewery manufacturing to meet the increased demand in the future and achieve business growth. Besides, the firm plans to consolidate the management team of its branches for Canadian, MCI, Global, and MillerCoors; the new management will assume office in November 2020. The move will have an effect on sharing management expertise and improve the growth of the firm.

Molson Coors to achieve organizational decisions, various decisions have been adopted. The firm is planning to reduce its office locations and have its headquarters in Denver and Chicago. The decision will have an effect on reducing the size of the workforce from 500 to 400. Besides, the firm is restructuring the organization and elimination operations that have led to the duplication of resources.  The strategic and organizational decisions will help the firm achieve growth and survive in the dynamic competitive industry.

Decision making is a complicated procedure, and management may adopt several criteria to select the best alternative. There are several methods management can utilize to make decisions such as Multi-Criteria Decision-Making (MCDM) and decision trees. MCDM is a tool applied in decision-making from designing to manufacturing. The method can improve all the areas requiring decision-making. MCDM is widely applied where cutting-edge technology is used for product differentiation and enables the firm to achieve a competitive advantage. In decision-making, MDCM considers several factors, such as processes and materials simultaneously. Analytic Hierarchy Process (AHP)  is commonly used in MCDM decision methods. AHP considers multiple factors before making the final decision. Molson Coors could have applied MDCM to improve its manufacturing and achieve a competitive advantage. Moreover, the firm could have adopted MDCM to make a decision concerning the location of factories and the improvement of their supply chain.

A decision tree is a diagram that looks like a branched tree that helps the management to make decisions among the alternatives. The decision tree indicates possible outcomes, probabilities, and resources used. The different branches are evaluated based on their outcomes and associated probabilities and resources, and the best decision alternative is chosen. The management of Molson Coors could have used a decision tree to make several decisions. Currently, management is planning for expansion programs to achieve business growth. Decision trees could be applied to evaluate various investment decisions and the selection of an action that will have higher profitability or returns. Moreover, the firm is planning to manufacture new products and drop some other poor performing products.  The management should use decision trees to evaluate the products that are likely to be dropped in favor of better performing products.

Dynamics in the Brewery Industry

Currently, the brewery industry faces challenges resulting from declined consumer demand, strict legal requirements, increased competition, and difficult market access, as well as craft brewers. Due to changing demographics trends, consumers have decreased liquor consumption that has resulted in a decline in the sales revenue. Many countries are passing legislation requiring brewers to meet stricter legal requirements. Brewers may find it challenging to adhere to new legal legislations. Many companies do manufacture beer, wines, and spirits; a company should have to be efficient to survive the competition.  Alcohol products are highly regulated in many countries, and accessing the global market becomes a challenge. Besides, many craft brewers who manufacture alcohol at a low scale have an effect of taking a considerable number of customers from large manufacturers.

The Molson Coors Brewery Company fails to meet the current demand, and they have to increase the production volume. Besides, the firm faces a problem in pricing premium brands. The majority of the customers would prefer low-priced and high-quality alcohol. Moreover, alternative beverages for liquor such as soft drinks, health drinks, cinder, and wines;  consumers may prefer to take substitute drinks instead of alcohol.  Lastly, there is a global economic recession that has an effect on decreasing the sales revenue of a firm.

Due to the above challenges facing the brewery industry, Molson has made some decisions to curb the adverse consequences. The firm is intending to invest in manufacturing to meet the current and future demand.  The company to reduce competition is planning to merge with other brewing firms. The merger will also reduce the impact of craft brewers. Moreover, the firm is planning to introduce new non-alcoholic beverages to minimize competition.

Forecasting Molson’s Coors Sales Revenue

The above calculations have been calculated using a simple regression model. The method assumes there is a linear relationship between time and sales revenue.  The twenty-four most recent quarterly sales revenue have been selected as a sample; the most recent past is assumed to be a good predictor of the near future. The quarterly sales revenue for 2020 has been indicated above, below the table.

Assumptions and Recommendations about Future Developments

Molson Coors Company has to undertake appropriate, effective decisions to achieve growth and competitive advantage. The firm was established over a century ago, and consumers well know its brands. The management should consider investing in products that have been profitable in the past. Besides, the firm should introduce and market new brands to boost the sales revenue of the firm. In the past, the firm had acquired several companies, and in the future, it should consider global partnership alliances to increase its market share globally.

The management should consider the use of franchising, where the firm has no factories. Franchising is a form of arrangement where the one firm allows another firm to operate under its trademark and sell its products; royalties are paid to the franchisor. In such an agreement, Molson Coors will increase sales revenue and reach consumers worldwide.

The management is contemplating to reduce the number of offices and lay off about 100 workers. The decision was necessitated by lower sales revenue in 2019 as compared to the previous. Laying off the workers is an inappropriate decision to be made by the management. The management should conduct aggressive marketing and meet the current demand. Besides, laying off experienced workers is a loss to the organization and decreases the employees’ morale.

The firm also expects to invest in technology and introduce non-alcoholic beverages. The decision will tap more consumers and increase the sales revenue of the firm. However, traditionally the firm has been known for the brewery. The management should be cautioned to concentrate on producing well-performing brands, and other non-alcoholic drinks to be introduced for portfolio purpose and risk minimization.

As mentioned previously, the brewery industry is dynamic and many challenges. The firm should be prepared to meet new legal, social, and economic challenges. The introduction of new legislation may have adverse impacts on the operations of the organization.  Changes in social trends may increase or decrease the demand for the firm’s brands. Economic challenges may pose risks and uncertainty on the company’s growth projections.

The firm has difficulty in supply chain management. Delay in the delivery of raw materials to factories or consumer reduces production volume and sales revenue of the firm. The management should consider arranging with various parties involved in the supply chain. Besides, management should consider a vertical merger to simplify the supply chain process.

The firm should make decisions considering all the relevant factors to achieve proper decisions. The decision models tools such as decision trees and Multi-Criteria Decision-Making should be adopted. Despite the complexity of decision-making in light of risk and uncertainty, the management will always be expected to make proper decisions that maximization of shareholders’ wealth.

References

Planellas, M., & Muni, A. (2020). Strategic decisions: The 30 most useful models. Cambridge: Cambridge University Press.