Budweiser’s Internal Constraints

Budweiser is produced by Anheuser-Busch Companies (Anheuser-Busch), one of the worlds largest brewers silk hat known for its Budweiser and Bud Light brands. The conclave is a leading brewer and operates 12 breweries in the f whole in States (Company Website, 2007). As a company, Anheuser-Buschs internal constraints are as follows 1. high school dependence on house servant beer division Although the company operates through quad fear segments including internal beer, international beer, box and entertainment it is still dependant on the domestic beer segment for majority of its revenue enhancement.During the monetary year ending 2006, company generated round 74. 8% of its total revenue from the domestic beer segment. In contrast the other trey segments accounted for only 25. 2 % of the total revenue during the same period. Strong dependence on a particular segment increases the crinkle risk of the company thereby displace it in a competitive discriminate (Anheuser-Busch Annual Report, 2006). This is why Anheuser-Busch is currently battling for a presence in China, the worlds largest beer market, as state owned breweries look foreign help with privatization.In 2004, Anheuser-Busch outbid moth miller for the Harbin Brewing Group of China (Modern Brewery Age, hebdomadally watchword Edition, June 14, 2004). This year, Anheuser-Busch may acquire frugal & Newcastles 37. 5% stake in India-based United Breweries. 2. ) Poor liquidity position Anheuser-Busch has veritable outstanding long-term debt. As of declination 2006, the company had long term debt of close to $7,653. 5 million. The companys debt equity ratio is 2. 2 clock which is quite high as compared to industry average of 1. 3 times.The companys avocation coverage ratio is 6. 2 as compared to industry average of 10. 1 times (Anheuser-Busch Annual Report, 2006). This ratio clearly signifies that the liquidity position of the company is bad and this would disable companys credibility in the market and would be difficult for them to go up money from the market for their expansion plans. 3. ) High dependence on wholesalers Anheuser-Busch sells substantially all of its beer to strong-minded wholesalers for distribution to sellers and ultimately consumers.During 2006, near 94% of the beer sold by the company, reached retail channels through more than 600 independent wholesalers (Anheuser-Busch Annual Report, 2006). In 2007, Anheuser-Busch was appointed as the United States importer for a number of the agio European brands of InBev (International Herald Tribune, 4 February 2008). galore(postnominal) of the wholesalers of these brands have not traditionally been wholesalers for Anheuser-Busch. As independent companies, wholesalers make their own business decisions that may not always reorient themselves with the companys interests.Dependence of the company on the wholesalers may imply the bargaining power of the company in the market, thus affecting its financial performance. whole kit and boodle Cited Anheuser-Busch. About the Company. Anheuser-Busch Website. 7 Feb. 2007. http//www. anheuser-busch. com/Company. html. Anheuser-Busch. Anheuser-Busch Annual Report, 2006. 7 Feb. 2007. http//www. anheuser-busch. com/Stock/2006AR_Anheuser_Busch. pdf. International Herald Tribune. InBev cerebrate with Mergers, 4 February 2008. Modern Brewery Age, Weekly News Edition. Anheuser is Victor in Harbin Bidding War, 14 June 2004.