|Type of paper:||Essay|
|Categories:||Business plan Financial analysis Business strategy|
In the past decades, the wine industry during the great revolution underwent through a lot of challenges (Lai, 2017). A good example is the Robert Mondavi case is a good example that shows the strategies use by Robert, the son of a poor immigrant father that became successful in business after 35 years and how the market threatened his company at the start of the new millennium. When it comes to the making of wine, it requires an individual to have a touch of love, passion and a few drops of magic. When one hears about the Robert Mondavi case and how they planned to lay off 4% the employees to make the investors aware and the same time make the stock price to drop to show that the company is going through a hard time dealing with reconfiguring future strategies. In this essay will, therefore, elaborate the Robert Mondavi case using a five-porter analysis.
Based on this case, the size of the wine industry all over the world is approximately $ 130 billion to $ 180 billion in retail sales. The overwhelming share of the market is usually based on five categories; super-premium, significant premium, commodity or jug, luxury, and ultra. In the world, there are over one million producers. Europe is the first example known as the 'Old World', but the 'New World' is countries such as the U.S, South Africa, Chile, and Australia. For the past two decades, the new world increased its shares and made the market to grow by 2 percent due to the demand for premium wines.
Suppliers in the wine industry are vineyards that harvest and grow grapes. In Europe, for instance, wineries grew their grapes, but countries like California outsourced approximately 80% of the grapes (Fares, 2010). However, in late 1990, American wineries started acquiring more land to secure the premium grapes needed by the market segment. Clients that bought at wholesale prices later distributed to supermarkets and retailers, pubs, hotels restaurants, and liquor stores (Fares, 2010). Currently, a lot of consolidation that took place in the distribution and retail levels are expanding in the market. Even though their prices become relatively cheap, the new entrants that acquire wineries to complement their distilled spirits or beer are also making premium wines at large volumes.
The Five Porter Analysis
During the success of the company, Robert was in charge. This shows that RM was functioning well regarding rivalry and threats brought by the suppliers and buyers because the market was growing in the U.S. The company managed to minimise the risks of the suppliers because of the high quality of wine they acquired due to the high-quality vineyards, particularly in California. Even though there was high power by the new entrants and substitutes, the company still managed to decrease their forces by showing the variance of the luxury elements for the prestigious occasions (Clough, 2005). The emergence of the latest technology, in this case, enabled the company to market their product through education to allow the consumers to have an original image due to the competition of the substitutes and the new entrants.
The five forces during the success of the company
During the period of the case study 2001 was a year when the forces changed the Winery industry in the U.S market because of the RM's domestic market. Rivalry in this went up because of the consolidation of smaller companies and large firms that manufactured low-cost products. RV however, maintained its strategy because of the weakened position of JV who was a rival that wanted to overtake their approach. Even though the chances for the new entrants were hard because of the requirement of high investment, the bigger companies managed to enter the markets in America with full force. This increased the effects were increasing the had offers that made it easier to market their demands.
The era is seen in Mondavi's case
From this statement, it can be seen that the environment is different for Mondavi. Since the family operated the company, they always wanted to be around their homeland market to maintain their strategies because it made them successful. Even though the market force changes the entrance of the entrants plus the supply of the high-quality grapes made it difficult to distribute in the industry because the situation is tough. With this, the first move that RM initiated was to make themselves different from the markets by using the 'Using New Innovative Technology' in Aging win and Fermentation. As seen, the exhibits were used to make it pass all the tests of imitable, Rarity, Operable and Value.
In 1990 when Michael was made in charge things began to change. Later other companies also started using the way of technology to produce the wine. However, the technology was not unique and exclusive. This shows that Michael's moves were not smart enough to drive the company. The second move made by the company was marketing by education. Robert, in this case, targeted the opinion leaders that existed in the market to enhance their appreciation and knowledge of Mondavi wine. This concept worked very well to make products released by Mondavi different (Lai, 2017). This change also made the quality of their wine to be unique. However, this strategy failed after a short while because the wine was categorised as a luxury drink that should be used in individual events. The brewery near Mondavi Company later made beer that was used for special high public occasions.
The Blue Ocean Strategies
As described the exhibit for Robert Mondavi made the company successful for 35 years. The blue line which was the value chain of Mondavi differed from other industries thus making the operation fewer competitions to due to the difference of the taste of wine, the type of wine base on the vineyard's prestige and the declining quality of the wine.
Considering the five porters forces, the CEO would have expanded the market for the new markets because they had less buyer and supply forces (Arshed & Pancholi, 2016). For instance, nations like South America had similar features because they took over the companies in countries that were trying to compete with them. Even though the VRIO came up with a strategy that was perfect, operable, rare and valuable, the acquisition of South America's joint venture was complete because they used Distilled spirits and reputable beer. This can make the company be renown not only for its size but the quality of the product it produces. A re-evaluation of the company should also be helpful because it erases the wine's vinery, age quality, and complexity. When the price of wine is reduced not only do the customers enjoy, but the product also remains in the market for long.
Strategic management, in this case, was needed to allow the global wine industry become proactive instead of reacting as expected, In the Mondavi case, this management style not only did ensure their company was not limited but made it made an influence concerning initiatives were embraced. The firm's competitiveness, in this case, is measured through the consistency between the customer's experience and the expectation of the company. Therefore, for sustainability, the strategies of operation depend on the environment of competition and the consistency between the performance of the operation management and the expectation form the customer. This relationship, therefore, is vital between the two parameters because of the concept of creating a strategy that fits the company. The two elements are also considered as the foundation of the firm's competitiveness and the overall performance associated with the aim of growing the company
The Mondavi case developed during the great revolution when the wine industry was going through a lot of challenges. However, at the start of the new millennium, Robert the son of a poor man later worked hard to make the business successful. The company managed to minimize the risks of the suppliers because of the high quality of wine they acquired due to the high-quality vineyards, particularly in California. Even though the company was successful, the company underwent various challenges. By using the five strategy management, we were able to analyze the business, its problems and its success. Since Robert Mondavi was dealing with wine, the company had to make sure that their product tasted different from the competitors. This is the reason why the company became so successful.
Arshed, N., & Pancholi, J. (2016). Porters Five Forces and Generic Strategies. Enterprise and Its Business Environment. doi:10.23912/978-1-910158-78-4-2922
Clough, L. (2005). From Mondavi to Depardieu - The Global/local Politics of Wine. French Politics, Culture & Society, 23(2). doi:10.3167/153763705780980029
Fares, M. (2010). Brokers as Experts in the French Wine Industry. Journal of Wine Economics, 4(02), 152-165. doi:10.1017/s1931436100000778
Lai, M. B. (2017). Consumer behaviour toward wine products. Case Studies in the Wine Industry, 33-46. doi:10.1016/b978-0-08-100944-4.00003-3
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