STRATEGIC MANAGEMENT

Chateau Margaux

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Table of Contents

Introduction .................................................................................................................................................. 2
Internal Analysis ........................................................................................................................................... 2
Opportunities and Threats ........................................................................................................................... 3
Impact of External force to the company .................................................................................................... 4
SWOT Analysis report .................................................................................................................................. 5
Structure of Wine industry .......................................................................................................................... 6
Competitive environment of Chateau Margaux ......................................................................................... 6
Useful Strategy of Chateau Margaux........................................................................................................... 8
References .................................................................................................................................................. 11
Introduction

Chateau Margaux is Located in the Bordeaux region, which produces the most prestigious wines

in France. Chateau Margaux produced an average of 150,000 to 200,000 bottles per year.

Majorly there are 2 kinds of wine: one is known as Red Wine and the second one is white wine.

The initial production of wine is by using the discarded grapes. Chateau Margaux also sold grape

production to other wine merchants.

Internal Analysis

The Core Resources of Chateau Margaux extends 262 hectares (650 acres), of which 87 hectares

(210 acres) are entitled to the Margaux AOC declaration. 80 hectares (200 acres) are planted

with 75% Cabernet Sauvignon, 20% Merlot, along with 2% Cabernet Franc as well as Petit

verdot. Sauvignon Blanc is cultivated in a total of 12 hectares, i.e. 30 acres to prepare the dry

white wine. By the survey, the specialty and the weakness of Chateau Margaux brand are as

follows.

Speciality of the brand

 Well established prestige brand

 High Margins profit

 Strong and growing demand of wine

 Strong brand equity

 More Experienced in winemaking

 Strong financial position

 Promotion
Weakness of the brand

 Lack knowledge about customer behavior

 Marketing is outsourced to wine merchants

 No capacity to increase production without weakening brand

 Dependency on negotiates

 No experience on launching new wine

 Snob appeal

 Weak marketing Opportunities

Opportunities and Threats

 The luxury consumer rate in Asia and Russia

 New market demand growing

 Discovering new geographical markets

 Low level of risk on the wine market

 On-line sells
2.Impact of External force to the company

Impact values of external forces are as follows.

 Promote strategies of it

 Price distribution

 Analysis about the target customers

 The enough supply demand to ensure the quantities in the long run

 What should be the brand image and product positioning compared to the Chateau initial

wine production.

Market share report

SWOT Analysis report

By the SWOT analysis report Strength, weakness, opportunities and threats are as follows.

Strength

• Penetration Pricing

• State of the Art Winery

• Excellence Award for Finery

Weaknesses

• Low on Production Capacity

• Less Overseas Supply

Opportunities

• Cutting edge over foreign wine makers

• Expansion opportunities

Threats

• High competition rate from other countries

• Decrease in consumption of wine in France

• Emergence of substitute products

Structure of Wine industry

The structure of the wine industry is the determined by the national market size and the

identification of the major players on the wine market from Romania. To fulfill the quality

structure of wine industry seeks the answer of these questions:

• How important is the market share in diagnose of company status?

• What are the variables that give the importance to the company on the market?

• What are the chances for a new entrepreneur to enter on the wine market?

The analysis of the competitive wine market was carried out using three research methods,

namely: the rate method, the evaluation grids method and the scores method. They were

calculated the following indicators: the market growth rate, the absolute market share, the

relative market share, the market concentration index, the cost advantage and the price

advantage. The material used to calculate the indicators consists in: enterprise countable balance

and data sheets provided by the National Institute of Statistics and the National Employers of

Vine and Wine (NEVV). According to the NEVV, the wine market turnover had in 2010, the

value of 398 million euros, decreasing with 8%, compared to 2009 (432 million euro). The

turnover of red wine market represented in 2009, 39% of total turnover of the wine market,

namely 168.5 million euro, and in 2010, 35% of total market turnover of wine, respectively

139.3 million euro.

Competitive environment of Chateau Margaux

The variables which give the importance to the company on the market and the chances of a new

Entrepreneur to enter the wine market decide the competitive position with other brand.
 Chateau Margaux Summary Assesment Alternatives
Relative Weights Control Distribution Develop Tourism Increase Product Status Quo
Criteria Business Line
Market share loss to new world countries 0.2 4 3 3 3
Very limited company's structure (no marketing or sales) 0.1 2 1 2 4
Possible brand devaluation in case of expansion 0.4 3 3 1 5
Limited sales channels 0.3 1 4 2 4
Relative Index 2.5 3.1 1.8 4.2

The three competitors from the red wine market were analyzed through the following key

factors: market share, average price/1 liter of wine, average production cost/1 liter of wine. In the

behalf of Chateau Margaux summary assessment and success key factor the pros and cons are as

follows.

Key points Pros Cons

Sell in bulk for negotiates,  Simplest option  Narrow target market

merchant  Cost minimization  The main customer are

not accessible

 The final prices reduce

profits and loss.

Sell in bottle under own brand  Uniqueness &  No experience in

excellence marketing

 Target customers from  Many brands in market

tradition market  Risk factor

 Improved product

quality
  Increase

communication for

sales

Market survey report of wine production

Useful Strategy of Chateau Margaux

Useful strategy of Chateau Margaux is designed in basis of product, price, place and promotion

strategies

Product strategy

• It adopts latest technology to increase production.

• Attractive packaging for enhancing looks of the product.

Price strategy

• Low price of product to increase customer band.

• Penetration into the market with diversified products.

Place strategy
 • Wide areas reach in France.

• Company products are present in 5 continents

Promotion strategy

• Providing good offers and discounts

• Has the best in word of mouth promotion.

To define the main categories of marketing strategies used by Chateau Margaux consider some

key points.

• Chateau Margaux prides itself on providing quality wine to the millennial generation of

consumers at competitive prices through creative marketing techniques.

• The winery provides wine to its customers using a motivated, condition specific tasting

room staff. Cheateau Margaux offer products to their target customer with a facility of

unique tasting room.

4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
Control Distribution Develop Tourism Increase Product Line Status Quo
Business
Alternatives

Become an executive member of the Wineries Association to help promote the wellbeing of the

wine industry by Year 8 of operation.

By the above survey report the usefulness and importance of Chateau is dependent on the

Profitability, the financial strength, the company image and the commercial implementation. The

production is also aware the way where Development of e-commerce technologies also uses the

benefit of global consumption of wines. Chateau build a restaurant and/or a hotel, design guided

visits of wine caves, or develops specific touristic events related with wine producing activities –

such as wine festivals, To increased popularity of their own wine clubs in many countries.
References

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