He used his existing soft drink network to sell, develop & market a new brand of beer.
Economies of Scale.
With the creation of AmBev, all the operations came under the single management. They have around 17000 employees, 50 factories and production of 8.9 billion liters of beer. Now they have superior technology, greater economies of scale, more capital, advance management systems and strong cash flows for expansion. But this merger also bring with it many challenges like: .
• Issues of scale, geographic coverage, profitability and growth potential.
• Realizing synergies, integrating operations.
• Needed to resolve unfavorable cost structure in local value chain because of high taxes & retailers margins.
• Whether to postpone its international expansion or should acquire other regional players to establish itself as major Latin American multinational.
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Formulation of Strategy.
Positioning the Company.
In the case of AmBev, after mergers, it was the biggest beer company in Brazil and hold the majority of the domestic market share. Though the merger its economies of scale was increased and the cash flow for financing expansion was stronger than before. On the other hand, the merger caused some weaknesses such as internal competition, which hurt Antarctia's traditional business style. So it had a dominating position but still with some compatible problems in the very first page.
Influencing the Balance.
The globalization, deregulation of the Import barriers, and the rapid innovation are the biggest reasons that drove the high competition in the Brazil beer industry, because the new competitors have superior technology, greater economies of scale, etc. (Textbook).
The mergers and acquisitions between Brahma and Antartica was a good decision adopting the trend globally. First of all, the merger strengthened two companies in terms of financial situation, which enable them to expand market both domestically and internationally.
