Ahhhhhh........... Fosters!

Fosters Larger beer you can take it to an Australian party knowing, know one will drink it when it is left in the ice-tub. Secondly you know who is drinking your beer as know one in their right mind would bring Foster Lager to an Australian party besides yourself.

On the 17th of January 2009 Fosters Group Limited (FGL:ASX) announced the outcomes from its wine review. These outcomes are they same reasons why FGL merged with Southcorp Limited. Below are compared the as these media release on the 17th of February 2005 to the FGL statement released on the 17th of January 2009 to the market.

Wine business to be retained and reshaped over time (2009)

Australian multi-beverage business to be separated into Wine and Beer (2009)
It will result in a more diversified and balanced earnings stream for the Group. (2005)

Global supply operations to be integrated with demand regions (2009)
Retains Australian ownership and control of Southcorp’s icon wine brands in the hands of the logical acquire, and protects and strengthens Australia’s position in the global wine industry. (2005)

New and experienced leadership team to be appointed (2009)
Will also benefit employees, customers and consumers of both companies by providing a stronger and more competive business model with enhance global growth prospects. (2005)

Extensive operational performance improvement program to be implemented (2009)
Is a unique opportunity to create a pre-eminent global wine company, with unrivalled collection of premium wine brands furthering Foster’s global wine leadership strategy. (2005)

Australian tail brand portfolio to be rationalised (2009)
Positions the combined company as the owner of “Brand Australia” in the beverage category with portfolio of leading beer and wine brands……. (2005)

Non-core vineyards to be divested and winery network optimised (2009)
The acquisition will provide greater scale in key geographies & price segments for wine (2005)

Over $100 million per annum in cost savings in F11 (2009)
Synergy benefits are expected to result from reduced cost structure & maximising revenue benefits (2005)

The acquisition is expected to generate double digit returns by three years (2005)

FGL initiated the review in April 2008 as a result of its inability to capitalise on its objective and lack of market confidence it could for fill it objective with the mergers (including Beringer).
The reasons for company or organisational mergers are,
• Financial - Increase of market – sales revenue, share, volume, etc
• Market - Diversification – geographic, demographic, psychographic, ect
• Economic - Economy of scale – labour specialisation, management specialisation, efficient capital, use of by-products
• Psychological - We could, we can, we will, we did, we thought…..

Strategic management (Business policy) (SM) is a set of managerial decisions & actions that determines the long-run performance of a corporation. The basic model of SM consists of four basic elements, environmental scanning, strategy formation, strategy implementation, evaluation & control. The four basics phases of strategic management;
• Basic financial planning
• Forecast-based planning
• Externally oriented planning (strategic planning)
• Strategic Management

A Strategic Decision (SD) deal with the long-term future of the entire organisation & have three characteristics,
• Rare – unusual and typically have no precedent to follow
• Consequential – commitment substantial resources & demand a great deal of commitment from people at all levels,
• Directive – SD set precedents for lesser decisions& future actions


FGL CEO Ian Johnston stated in the review:
“However, the Review has identified that poor execution and an ineffective organisational structure and culture have adversely impacted operating performance. The business has failed to keep pace with a dynamic market where execution is critical. Innovation rates have been below market and the portfolio has not been sufficiently adapted over time to take advantage of growth segments and mitigate exposures within the markets in which we operate.”

The review lists numerous fundamental problems with the current business model due to the present and current personals inability to for fill the most basic reason for a merger. FGL share holders would be looking back and know the only reason for this merger was physiological, we could, we can, we will, we did, we thought.

Fosters REALLY IS know as the beer you take to an Australian party and know one wants to know about.