Abstract
The case study discusses the growth of Bacardi Ltd. as a multinational corporation and traces in detail the critical aspects contributing to growth of such firms. The case mentions the various adverse changes taking place in its external environment and the strategic response and coping strategies employed by the firm to survive and grow throughout its history.
The study examines the case through various lenses like its strategic planning, in terms of the company’s mission and vision, and an examination of corporate-level strategies, business-level strategies, functional-level strategies and global strategies of Bacardi Limited. The case provides the readers with a deep insight of the context in which this company matured. Apart from the firm, the readers are also able to trace the history of the Bacardi family and understand the issues and dynamics in family businesses.
The case itself includes the framework of analysis and nudges the readers to use these frameworks for understanding the case better. The study mentions various aspects of the societal and task environment of the firm, its internal alignment of resources and capabilities and touches upon its structure, culture and processes. The study also focusses on the firm’s capabilities to manage innovation. The reader also can trace the history of the Caribbean region and Cuba in particular as the case includes this in particular as the backdrop of organizational growth amidst adverse circumstances like nationalization of assets by the Cuban government.
The case is divided into seven sections—the seven business eras of Bacardi Limited namely ‘The Beginning Years Era’, ‘The Products Creations Years’, ‘Bacardi Limited Starts Its Journey as a Multinational Corporation’, ‘During and After the Prohibition Years in the United States and Bacardi Limited’, ‘The Castro Era and Bacardi Limited’, ‘The Acquisition Era’ and ‘Bacardi Limited Today’. The case begins with a SWOT analysis as a framework. The readers after reading the case shall be able to complete this which the author hints at the beginning. The author also leaves clues for the reader to lookout for influences of the organizational strategy on the organizational structure, the organizational culture, the organizational processes and the organizational outputs of a company.
During 1862–1890s the company carried on as a single product firm and continued to produce a differentiated product—rum that was very different from its competitors because of its high quality. From 1890s onwards, the firm started creating new products related to its base product of rum which started opening up new markets, but the company was still operating only in Cuba. Later the firm started expanding its operations to other countries namely Spain, USA, Mexico and Puerto Rico. The author claims Bacardi at this stage to be a multinational firm but the reader cannot make a judgement whether the value chains are scattered across countries or similar value chains have been replicated across countries. During the prohibition years in the USA, the firm was successful in attracting its customers to Cuba by promoting Cuba as an attractive destination. Also in Mexico, the firm was successful in shifting a part of the tequila drinking population to rum. The firm’s creative idea of creating a network of holding companies and replicating its yeast strains outside Cuba helped it to survive even after confiscation of assets in Cuba.
Beyond its years of political turmoil the firm grew inorganically through acquisitions. The firm also brought into its portfolio a number of non-rum products to rapidly expand its market share and also to reduce its risk of relying on products related to a single core product.
The readers would be able to draw their own conclusions about the factors that were critical for the rapid growth of Bacardi though the author summarizes them at the end. The case mentions various factors—differentiation based on quality; strong leadership capabilities; capabilities to manage acquisitions; and other factors.
The case study does a great job of tracing out the growth of the firm, the family as well as the nation while leaving clues for the reader to infer their own conclusions about the reason of specific strategic decisions by the firm. Yet at the end, the reader cannot but feel that the case relies heavily on analysis of the external environment and understanding the strategic response of the firm to changing external environment to highlight the success of the firm. Taking a more balanced resource based view of the firm and understanding resource alignment within the firm could be of great help. Also the case could have focussed on understanding the process of building dynamic capabilities within the firm to facilitate competitive survival. An excellently written case, the readers will hopefully create their own mental maps about linking the external and the internal environment to draw their own conclusions about successful strategy formulations and implementation. The case would also be very useful for firms located in industries having a very unstable external environment or countries that cannot encourage the development of a stable societal environment around industries.