Taybeh Brewing Company Case Study

Taybeh Brewing Company (TBC) a nine year old Palestinian SME, setup in Taybeh a simple Arab town, is the first and only micro-brewery in the Middle East and is currently being run by motivated and customer focused owners who are working very hard on improving customer loyalty towards Palestinian products. "Taybeh" in Arabic means delicious. (Source 4)

Business Management Practices

Business Management Practices (Source 1) means the practices dealing with the processes, methods, and strategies of managing a business. It focuses on those sources that deal with management issues or business methodology from a practical approach. It comprises of planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal.

Image: Business Process Management (Source 2)

It mainly has the following functions

Planning: TBC has to decide what it has to do in the future (today, next week, next month,

next year, over the next 5 years, etc.) and generate appropriate plans for action.

Organizing: It should see what are the resources required for the above plans and then

making optimum use of the resources required to enable the successful carrying out of the

above plans.

Staffing: Another important part of the resources is Staffing. Job Analyzing, recruitment, and

hiring individuals for appropriate jobs to fulfill the plans need to be done. Till September

2000 TBC had fifteen full time workers but presently it has only seven full time workers.

Also TBC is presently working at 85% of its production capacity which for a new SME is

low and should hence be increased to be as good as possible.

Leading/Directing: TBC needs to determine what needs to be done in a situation and getting

the workforce to do it.

Controlling/Monitoring: Checking progress against plans.Motivation: Motivation is also an important practice because without motivation, employees

cannot work effectively. If motivation doesn't take place in an organization, then employees may not contribute fully to the functions of the organization. Also motivation for why the enterprise has opted for an organizational wide process initiative and what they are wishing to achieve. Motivation part of the framework shall include the following aspects:

a.    Vision - Vision of the initiative - what is the ultimate goal of the process modeling exercise and what the enterprise wishes to achieve in the long run

b.    Mission - Mission of the initiative - the short term goal that the enterprise aim to address using process modeling so that it can impress stakeholders with some short term achievements of importance

c.    Objectives - define the objectives of the process modeling exercise; what are the factors associated with/for ensuring success of the program; this will in turn help define the key performance indicators for the program/initiative

d.    KPI - performance indicators for the program; define what is considered success for process modeling exercise and in turn define the indicator that can help measure the same.

An understanding of business process is nothing but necessity for enterprise to build their

bridges

Image: Bridges in an enterprise (Source 3)

So TBC needs to know these bridges and bridge the gap between them

Problems faced by Taybeh Brewing Company

1. The present political situation and the instability in Palestine have greatly affected the ability of the company in achieving its goals.

2. Roadblocks, closures and siege are common since September, 2000. All Palestinian manufacturers are suffering from similar situations where they can only import raw material, equipment and supplies through the Israeli port by paying high fees to the Israeli authorities in order to clear imported raw materials, get the bottles checked up for quality standards and obtain the required health certificates every time the company' imports raw materials. Delays in these processes are always expected which adds up to the total costs and has negative consequences on the company’s operations and customer service.

3. The local mindset problem in Palestine which stereotypes all Palestinian made products as low quality.

4. The main challenge TBC faces is the infrastructure in Palestine where Internet connection is not always easy and affordable.

5. The cultural barrier in comprehending new methods such as paying with credit cards where privacy and legal protection are unavailable is another roadblock. The customers are not yet ready for this new view of buying or selling through the websites. Customers need to see the product before purchasing it and need to test it, all of this means that things will take some time to change customer's way of comprehending the new technology.

6. TBC has to consider the cost of software and training programs that should be provided to its staff and sa1espeople which is very large.

7. Coping up with the infrastructure requirement for the future growth and expansion that TBC is thinking of.

Solutions:-

The company having positioned itself as a high quality and low price product as compared with Israeli beer companies or the imported beer companies like Heineken, Amstel and Carlsberg should build on this status which could lead to its popularity.

Taybeh should use the unique characteristics of its beer of it being natural, unpasteurized and without any preservatives and additives. The beer should be promoted and positioned with these advantages. Also the ingredients of the beer and Taybeh beer being brewed in accordance with German Purity Law of 1516 should be highlighted during its promotions. It was due to this that TBC was able to educate local customers and upgrade their taste from drinking mass produced beer to micro brewed quality beer.

It would however require time to educate and change the Palestinian consumer’s perception towards their national industries and the products manufactured by Palestinians. This cultural barrier may influence local consumption negatively.

The company is also facing a high competition in areas currently under the Palestinian authority. The market is open for foreign and Israeli products such as the mass produced Israeli beer Macabee, which sells for lower prices than Taybeh Beer. Even though Taybeh Beer is not

competing based on price but on the quality of a micro brewed beer it is lacking in getting the attraction of the local customers. In 1997, Amstel Beer brewed in Jordan was able to enter the Palestinian Authority Territories with 76% tariffs, while TBC was charged 181% tariffs to enter the Jordanian markets. This limited TBC opportunities to export to Jordan or through it.

Although TBC was exempted from income tax for the first five years according to the Palestinian law that encourages investment in Palestine, it is now required to pay income tax and 40% production tax. In accordance with the Pans Economic agreement, the Palestinian authority is asking for a 40% production tax on beer produced with more than 3.8% alcohol to meet Israeli standards. This is expected to affect Taybeh Beer's prices and market share. So the best solution would be either to decrease the alcohol content in the beer or to raise the price of the beer variant which has alcohol content greater than the standard with the amount of tax TBC has to pay to the government.

TBC should build in the beer sector and diversify in other sectors only on getting a good market position in the home market i.e. Palestine. Even though it was successful when it diversified in 2003 in exporting olive oil to France as it had Food and Beverages License, it should concentrate on its main area of expertise.

Taybeh should increase the number of variants it has in beer with different qualities to compete with other beer brands. At present it has only 3 labels i.e. Taybeh Beer Golden, Taybeh Beer Light, and Taybeh Beer Dark catering to different needs of different customers.

The company has gained a lot of word of mouth promotion by its sales promotion through t-shirts, bottle openers, pens and neon signs with the company's logo and name on them. It should hence hold such sales promotion campaigns.

The main customers that TBC have identified are wholesalers, retailers, bars, restaurants, hotels and end customers who directly buy from the company. It is these segments that the company should target and position the product so that the target customers have Taybeh Beer name on the top of the ladder whenever they think of Beer of any kind.

Also the current uprising has affected Taybeh Beer and its relation. So if the present uprising comes to an end TBC could be successful in selling Taybeh Beer in the Gaza Strip by Al-Bahr Company through which it did it before the uprising.

The best strategy which TBC can undertake is through E-Commerce. It can come up with certain contests on its corporate website (www.taybehbeer.net) where it holds contests asking about the information which people have about its beer and also giving hints in the form of clues which basically act as a source of spreading awareness about their brand to the people.

Communicating or interacting with customers through e-mails, websites, telephones and cellular phones could also lead to spread of awareness and hence leading to the increase in sales of the

beer. TBC already has a lot of customer data in the form of Microsoft Excel. Also if the company buys Oracle Financial package which it is planning to buy would add value and provide it with ERP (Enterprise Resource Planning) solutions.

TBC could also come out with a new offer of providing custom labels for beers. TBC can help customers who come to its brewery to create the perfect beer label for any occasion...birthday, wedding, anniversary...or just for fun!

The company along with its partners have gained the following benefits from the limited ICT applications:

1. Fast customer service and improved customer care and problem.2. Minimised the cost and time of order filling and transportation.3. Increased profit.4. Retention and loyalty of customers.

The company should build on these benefits gained and hence lead to its goals.

Bibliography:-

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II.gif)3. Infosys Blog (http://www.infosysblogs.com/setlabs/2010/09/)4. Taybeh Beer (http://www.taybehbeer.com/2/faq.html)5. Shenandoah Brewing Company Homepage (http://www.shenandoahbrewing.com/)6. Taybeh Beer Homepage (http://www.taybehbeer.com/Home.html)7. Hicks, D. (1997). The Manager’s guide to supply chain and logistics problem-solving

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9. Nayyar, P. (1992). On the measurement of corporate diversification strategy: Evidence from large U.S. service firms. Strategic Management Journal 13 (3), 219-236.

10. Patino, H. (1997). Applying total quality to R&D at Coors Brewing Company Research. Technology Management. Washington: Sep/Oct 1997.Vol.40, Iss. 5; pg. 32, 5 pgs