Robert Mondavi Case Study

Examine, from the perspective of Mondavi, the pros and cons of each of the three strategic
options.
a. Organic growth
b. Acquisition or merger with local wineries
c. Acquisition or merger with foreign wineries
Organic Growth: Organic growth is the process of businesses expansion due to increasing the
customer base, output per customer, and/or through new sales.
Organic growth
- Mostly for its
premium brands
- Deliberate
geographic
expansion, high
quality products,
detailed
consumer
research and
attention to
customer needs
and preferences

Acquisition or merger
with local wineries

Acquisition or merger

Pros
Better control and
coordination: Firms
maintain controls
whereas external
methods lead to loss of
control and ownership
Relative inexpensive:
Source comes from
retained earnings, less
risk as the amount of
capital involved is
relative lower than
external
Ability to maintain
corporate culture: No
problems related to
culture clash that
might rise in
acquisition
environments
Safer as it involves
adapting a familiar
business model

Domestic brand
diversification (build
brand portfolio in the
premium wine market
in terms of price
points, niche)
Economies of scale
would help to reduce
secondary costs
Acquisition of more
land
Greater market share

Cons
Harder due to increasing
competitive landscape, market
consolidation, large market
cap
Diseconomies of scale:
Hierarchical structures may
increase communication probl
ems, and there may be slow
decision making.
Need to restructure: When
a firm grows, there is a need to
restructure (requires times,
effort, money),
communications will need to
be handled with more care,
and there is a need for
training/retraining/updating
the set of skills for staff.
Delegation of decisionmaking powers to managers
(reducing control of original
owners) will take place.
-

Using long term debt

to finance acquisition

with foreign wineries

Able to develop global

recognition for
Mondavi brands
Diversify revenue
stream
Able to grow its
financials

References:
https://www.boundless.com/business/textbooks/boundless-business-textbook/types-ofbusiness-ownership-6/corporate-growth-54/organic-growth-268-5574/
http://www.slideshare.net/KRDickson/Mondavi
http://www.slideshare.net/fullmoonded/robert-mondavi-and-the-wine-industry-case
(For resources on capabilities and tangible/intangible assets)
http://custom-essay-cheap.com/robert-mondavi-and-the-wine-industry/
http://metersolution.com/wp-content/uploads/2013/02/3835-15324-1-PB-1.pdf
http://www.slideshare.net/JohnnySchaefer/case-study-mondavi-winedoc

- SWOT Analysis