Strategic Management (MGT489)

Case-2: Robert Mondavi and wine industry

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Submitted to:

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Bobby Hajjaj

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SL Name ID
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1 Md. Jobaer Hossain 1120005030

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2 Sumaiya Khair 1310488030

3 Md. Najmul Sharkar 1320036030

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4 Md Monoare Hossain 1310117030

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5 Md. Balayat Bhuiyan 1310332030

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6 A.M Shahriar Amir 1310756030

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7 Md. Istiak Hossain 1320468030

8 Maliha Ferdous Chowdhury 1411239630

Date of submission: 2nd November 2017

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 Introduction:
Robert Mondavi Winery was founded in Oakville in 1966, since then it has been one off the
world's most innovative maker of fine wine. It is growing in a valuation of $130 Billion to $180
Billion in retail sales.

Vision:
Mondavi established his Napa Valley winery with a basic vision: "To do whatever it took to
make awesome wines and to put Napa Valley on the guide, appropriate close by the colossal

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wine making focuses of Europe." Keeping up the brands of the arrangement of high caliber

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alongside solid market position which upheld by superb administration.

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Key Issues: rs e
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Robert Mondavi and the CEO Greg Evans came up with the Five Porter’s Forces and value chain
analysis to overcome the issues mentioned below:
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 Wine industry across the globe solidified over the period.

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 Decreasing sales of wine.

 Increased competition from all kinds of competitors like importers from Australia
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became quite eminent and persistent.

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 Diversified alcoholic beverage companies were making an aggressive push in the

premium wine business.
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Goal:
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The main goal is to increase the profitability, develop strong market position and identifying
key competitors by implementing some tactics to match with market demand.
Diversification is also needed for future growth. They must concentrate on organic growth
rather than acquisition and to boost up their declining sales and focusing on brand equity
will be their prime goal and of course they must understand the value chain and focus more
on where value can truly exist.

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 Analysis based on Porter’s Five Forces

Barriers of New Entrants:

 The overall danger is low because of high cost however local is high easily of fare.
 Immense capital is required in entering wine industry as the cost of procuring land is
high.
 The 7 years' course of events to produce income keeps the new participants away.
 Customers have high brand unwaveringness; in this way new contestants have low

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achievement possibility.

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Since barriers of new entrants are high we can say that this industry is quite attractive to

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make investments on.
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Industry Competition:
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 The competition in this industry is high as there are lots of wine producers in the market.
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Although there is lots of wine producers but top 20 firms dominate this industry mostly.

 There are some big companies who produce at large volume and earn the economy of scale. For
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this reason, they can charge lower price. However, there are lots of small companies who follow
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the niche marketing strategy and focuses on the quality.

 Industry is still growing.

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Since the industry competition is high this industry won’t be attractive enough to deal with
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Power Relative to Buyer:

 There are 2000 wineries available in this industry and the level of competitiveness is
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high. Customers have less switching cost so customers have more bargaining power.
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 Distributor/Wholesaler is the primary customers in the wine industry and companies

depend on those few wholesalers, therefore more bargaining power.
 On the other hand, wine marketed a special occasion drinks and It is less power relative
to buyer for the end users comparatively to the primary customers.

According to bargaining power of Buyers, the industry is unattractive because Buyers have
more influence on the wine industry.

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 Power related to suppliers:

 Because of high switching cost the bargaining cost of suppliers is high.

 There are 100 of suppliers of raw materials because of this bargaining power of supplier
is low.
 Though there is long term contract established thus less chances to bargain.

Because suppliers have less power to the industry it is an attractive industry.

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Threat of Substitutes:

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 Excessive due to the fact of the developing competition from rival company’s massive
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quantity producers.
 Other beverages are clearly a substitute for wine as consumer is also consuming that
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alcoholic beverage (liquor, beer) and non-alcoholic beverage as an alternative than

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wine.
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 The risk of replacement is very excessive because of options like liquor and beer, and
non-alcoholic beverages.
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Since there are lots of substitutes so this is an unattractive approach

Barriers of New Entrants High

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Industry Competition High

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Power Relative to Buyer High

Power related to suppliers Low
Threat of Substitutes High

So according to our analysis in terms of porter’s five forces we can say that wine industry of
Robert Mondavi is unattractive.

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 Value Chain

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Research and Development

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 Experiments by madding some new processes for wine processing and grape producing.

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 Improvements in manual and automated work capabilities.

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Procurement
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 Assuring to procure best grapes for their best wines, focused on internal grape
production.
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Operation
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 Having both manual and automated grape procuring operation.

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 Cold fermentation operation.

Marketing
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 Conducts seminar, concerts and art shows to bring more people in the winetasting.
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 Creating more awareness among consumers offering wine testing, conducting functions
to influence the opinion leaders.
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 Tour to Oakville winery.

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 Having TV-adverts and Magazine adverts like in Wine Spectator, Bon Appetite and Food
&Wine.
 200 direct people sales team to influence wholesalers and distributors.

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 Distribution
 Over 100 independent wine and spirit distributors nationwide.

 Different upscale restaurants, fine dining and hotels both nationally and internationally
serve fine Mondavi wine.

Service

 Getting feedback from the consumers about the wine and what to change for a better taste.

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Conclusion

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With that in mind, we believe our overall analysis and further develop strategies will help to sustain the

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position and increase sales which they have lost in the past two quarters.
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