Fuller and Gales Case Study

Fuller and Gales Case Study

1.Try to identify which of the reasons given above is relevant to the case that you are looking at. What evidence is there to support your choice?

Some reasons which are relevant to the Fuller and Gales Case are the following:

• Plugging a gap in the market – where the business may feel that its product portfolio is not sufficient to cater for different customer needs. Relevancy to the Fuller and Gale’s case is that the Fuller business wanted to acquire a business where Fuller’s and another company can complement Fuller’s product portfolio and in that, Gale’s is one choice that Fuller’s thought can help acquire consumers to their business. The Fuller firm’s range of beer seemed to be focused on winter sales whereas the Gale’s range of beer is given out during summer.

Fuller’s acquisition of Gales has been able to combine two or more products in the beer market. The beer market was made up of hundreds of small independent brewers each producing a distinct range of beer. The Fuller and Gales firm then gives them their advantage of getting more revenue from their sales, with the Fuller firm of range of beers given out during winter and the Gale’s range of beer given out during summer.

• Economies of scale – are the advantages of large scale production that result in lower cost per unit produced. A firm acquiring another increases its scale of operations; it has more labour and others. With the acquisition of Gales, Fuller then hopes that it will be able to use the benefits it gains from lower unit of costs to either boost up its profit margin to enable it to be able to compete with its rivals more effectively.

With the addition of 111 extra pubs to Fuller's existing 251 and helped profit at Fuller's Inns jumping to 65%. Gales has been able to boost up the firm’s profit margin and helped in the expansion of the business.

• Capacity – is the amount of output that a firm is capable of producing given its assets. Since the Gale firm is a local family brewery in Hampshire, UK. Small breweries are finding it increasingly difficult to survive. The benefit of Fuller’s acquisition of Gales is the fact that the name of the firm of Gale’s is still intact within the products of the Fuller firm.
Though the consequence of this is the conflict of some of the groups in the stakeholder groups, where an example is the Gales brewery which closed down in Hampshire and the production was transferred to the Fuller’s brewery and 21 people lost their jobs and 150 years of brewing tradition in the town of Hampshire disappeared.



2.Of the reasons that you have identified, which do you think is the most significant reason for the acquisition and why?

The most significant reason for the acquisition of Fuller of the Gale’s firm is that it is trying to pull a gap in the market. The range of beers that the Fuller Brewery has isn’t sufficient enough to sustain all of their customer’s needs. The Fuller Brewery then wants to acquire another business where it may be able to raise their profit margin and to be able to sustain almost every need of their customers. With the acquisition of the Gales firm, the usage of the Fuller firm’s range of beers which are given out during winter and the Gale’s range of beer given out during summer has benefited them well and almost gained all of the profits from two of the long and important seasons of the year. Besides the fact that the Fuller firm wanted to pull a gap in the market but they also want to gain a high spot in the market.

3.Discuss the extent of the impact on the different stakeholders of the business that you have selected.

• Employees – when the Gales brewery in Horndean, Hampshire, was closed down in March 2006 and production transferred to Fuller's brewery in Chiswick in West London. 21 people lost their jobs and 150 years of brewing tradition in the town disappeared. The employees from the Gales brewery became affected by the acquisition of Fuller of Gales. The 21 people who lost their job are locals working for the business, and the people who took away their job are people who own big businesses.

• Customers – the customers will have doubts about the closure of the brewery and the move to Chiswick on whether it will affect the taste of beer, whether the price of the beer will raise or fall, and whether it means that Gale’s beers are easier to access or become less widespread.

• The local community - Pressure groups like the Campaign for Real Ale (CAMRA) were not convinced. Other cases where breweries had been acquired by larger brewers had not only seen the traditional breweries closed down but also the beers they produced discontinued. About 5,000 people had signed a petition calling for the 158-year-old brewery to be kept open.

• Shareholders – the shareholders of the Fuller’s firm would be happy with the excellent raise of profit they are getting with the acquisition of Gales. Fuller reported that like for like sales for the estate, including Gale's pubs, grew 4.3 percent for the six-month period. Fuller saw a profit increase of 65 percent to 13.8 million pounds for its 362 pubs and hotels as it invested 6.6 million pounds in its estate during the first half. But probably not so much with Gale’s, since Gale’s is a local family-run brewer, where I doubt that there are even shareholders.