SWOT, FSA ANALYSIS AND VALUATION OF HEINEKEN IN COMPARISON TO CARLSBERG

Abstract

Competition within the beverage industry, both locally and globally has been very high. However, with the emerging trends, it might even be more competitive in the upcoming years. For example, consumers are preferring products offering multiple benefits, maximizes value for money and those that do not compromise health (Edwards, 2023, pg. 5). Consumers are also preferring beverages with low sugar. The reason is that such beverages are healthier (Zhao, 2023, pg. 118). Therefore, as the beverage industry transforms, companies that will take advantage of new opportunities will thrive. In today's competitive business environment, the long-term success of companies is not just about survival; it is about thriving. It requires companies to keep changing their ways of doing things as changes occur in the market, and that is where strategic planning comes in. Strategic planning is a crucial tool for any company working towards achieving long-term success as it guides companies toward achieving their goals and helps them stay ahead of their rivals. According to Gurel (2017, pg. 994)), strategic planning is essential for successful strategic management. The author defines strategic management as a continuous process involving developing, implementing, and evaluating decisions that enable companies to achieve their objectives. According to Kumar (2019, pg. 102), strategic management enables companies to shape their future proactively rather than reactively. The process begins with evaluating where the company is heading or going and why. A company, therefore, sets its vision statement and long- term goals at this stage. Upon the company compiling a list of where it wants to go, the next thing done is to get a bearing on where it is currently. This analysis of a company's current situation is the second stage of strategic management and is commonly referred to as SWOT analysis (Gurel, 2017, pg. 994). SWOT analysis involves conducting internal and external analysis. The former helps a company identify its weaknesses and strengths, while the latter helps a company know its threats as well as opportunities. The SWOT analysis helps a company make sound decisions in an ever-changing business environment and most importantly help it acquire competitive advantage. Financial analysis is another crucial tool for a company's success as it enables stakeholders to make better financial decisions. Carrying out financial analysis enables a company to benchmark its business against rivals and industry standards. Comparing a company's financial performance with that of its rival can tell areas of a company that may be excelling or drifting. The information can assist a company in knowing the best practices and adapting its strategies to compete better with rivals in the industry. Financial analysis is so crucial for all the company stakeholders. According to Mehta (2023, pg. 108) lenders and investors, for instance, always want to be confident in a company's ability to repay debts and generate profits. Financial statement analysis is the central element of financial analysis that enables companies to know about their financial health, identify the areas that require improvement, and make sound decisions. The other important reason why analyzing financial statements is necessary is that financial statement analysis (FSA) is an essential element of business valuation primarily because it gives a snapshot of a company's financial performance. Many investors are struggling with deciding on the company they can invest because of business environmental uncertainty and grim future prospects (Almabekova et al., 2018, pg. 115). Business valuation is the primary indicator of companies’ reliability as well as investment attractiveness. This paper aims to find out whether Heineken, based on the company’s SWOT, FSA and valuation is a good company to invest compared to Carlsberg, its rival.