Heineken is a strong company, as evidenced by their track record of success. They have built a simple core of strengths by focusing on the beer business, refusing to be sidetracked by any distractions. This has allowed them to develop a relatively simple growth strategy and maintain it. The core of Heineken's strength is its ability to execute simple strategies very well.

Weaknesses

Overleveraged…Heineken's expansions have left it with a balance sheet more suitable for a growth firm with high R&D costs, as opposed to a firm that derives the bulk of its profits from cash cow positioning in mature markets. This will hinder the company's ability to grow further through acquisition (Thomson Financial, 2008)

Minimal presence in the world's major growth markets. Heineken is strong in minor markets and the U.S., but has weakness in the world's best markets, with 3rd tier brands in China and Russia.

Heineken is the #3 global brewer. They are substantially smaller than the two larger companies, however, which puts them in a vulnerable position in terms of being a takeover target (Ibid).

Heineken's strength has been diminished by its acquisition and greenfield activities. The company is therefore relatively unable to grow further. This makes it more vulnerable and also more susceptible to adverse changes in the industry environment. Given its areas of geographic weakness, Heineken is probably not set up where it wants to be in terms of global strategic positioning. However, it may not have the financial capability to get there either.

Conclusion & Options

Heineken is the world's #3 brewer, and has built its success on the execution of simple plans. It has developed its core brands to extract premium pricing; it has saturated world markets; and it has been an aggressive player in terms of global consolidation. This has resulted in a consistently profitable company with both strong growth history and strong growth prospects.

The...

There is significant room to grow, including in key world growth markets. Heineken may not be in position to take advantage of these opportunities, however. That does not mean that they have no options, though. The first -- and boldest -- option is to merge with Carlsberg. The two are in bed already after teaming up to acquire Scottish & Newcastle. They have complementary operations, similar histories and similar strengths. They both need to get larger to thrive and both have high degrees of leverage that will inhibit traditional growth methods. The second option is to continue with the current greenfield factories and acquisitions. This "damn the torpedoes" approach entails significant financial risk, but is necessary for the long-term growth of the company. The third option is to stand pat and build out organic market share in core high-volume markets. These markets -- Eastern Europe, the U.S., and China -- all have upward growth room for Heineken and all are among the largest volume drivers in the world today. Overall, each option is workable, because of the strengths that Heineken has built up. Its weaknesses are obstacles that can be overcome, particularly in light of their strengths and the fact that the opportunities in the marketplace today are not going to exist in 10-20 years' time when even today's growing beer markets will be close to maturity.
Works Cited:

2008 Heineken NV Annual Report. Retrieved May 14, 2009 from http://www.annualreport.heineken.com/downloads/Heineken_Annual_Report_08.pdf

Tiverton-Brown, Andy. (2008). China Usurps USA as World's Largest Beer Market. Euromonitor. Retrieved May 14, 2009 from http://www.euromonitor.com/China_usurps_USA_as_worlds_largest_beer_market

Singer, Jason & Kesmodel, David. (2007). Why Consolidation Storm is Brewing in Beer Industry. Wall Street Journal. Retrieved May 14, 2009 from http://online.wsj.com/public/article/SB119262856498561983.html