“Group- 6”

MGT489: Strategic Management

Section: 12

Submitted By
Bobby Hajaj (BHJ)
Senior Lecturer
Department of Management

Submitted By
Name ID
Sumaiya Habib 2013142030
Ishraque Mahmud 2014298030
Shakh Ghaffar Ahmed Utsho 2011039630
Farhin Islam Elme 2022005630
Aminul Islam 2012666630
Ashraful Arif 2022425630

Word Count – 1518

Submission Date: 17.04.23
 Vision framework

Key Issues
 Increase in competitors (the global wine industry continued to consolidate.)
 Declining US primary market economy
 Heavily Depend on US market
 Firms jug wine sales fall (US market)
 Rival wineries had merged
 Making it difficult for a single salesperson to support an entire product line.
 Effect on portfolio and revenue due to multiple businesses
 In Europe strict regulations control many aspects related to winemaking
 Woodbridge faces competition in the popular segment
 Aggressive acquisition strategies of competitors
 Mondovi introduced a coastal brand but this brand did not emerge as a market leader

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  Grape shortage resulted in loss of market share.
 The threat of emerging Australian wine producers.

Set goals
 maintaining a dominant position in the market.
 rising to the top of the global premium wine market.
 Growing the customer base.
 Reducing the influence of rivals.

Analysis

Internal

Resource-based view

Valuable Scarce Inimitable Non - Sustainable What is the

sustainable result

✅ ❌ ❌ ❌ ✅
Modern Competitiv
technology e Equality

✅ ❌ ❌ ❌ ✅
High quality- Competitiv
friendly wine e Equality

✅ ✅ ✅ ✅ ✅
Trademark Long-Term
Competitiv
e
Advantage

✅ ✅ ✅ ✅ ✅
Brand Value Long-Term
Competitiv
e
Advantage

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 ✅ ❌ ❌ ❌ ✅
Own Competitiv
cultivable e Equality

✅ ✅ ❌ ✅ ✅
Organic Short term
competitive

✅ ✅ ❌ ✅ ✅
Innovativeness Short term
competitive

X factors

 Adaption of new simple techniques.

 The company introduced a capsule-free, flange-top bottle for the customer.
 Mondovi’s efficient, better distribution and management.

Distinctive competence of Robert Mondavi Winery

Mondavi was experiencing competition from two major players: wineries were being acquired
by other international alcoholic beverage companies to supplement their beers and distilled
spirits businesses, and rival enterprises were producing enormous volumes of premium wines
aggressively.

They had brand clarity so that their products wouldn’t get clustered also it helped them to
maintain their distinct quality in the marketplace.
They tried to educate people about wine-rich culture so that people get more attached to
it, which plays a role as one of their distinctive competencies to achieve more Customers.
They initiated many global ventures to large their customer base to make their brand
globally recognizable

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What does Mondavi consider to be unique?

Instead of investing in acquisitions, Mondavi opted for organic expansion for its leading brands.
Having 16 distinct labels, they are the most inventive winemaker in their market, competing with
Woodbridge and other wineries.

Value innovation

 Industry: They brought a lot of innovative methods to the California wine business.
 Competition: Unlike his rivals, Mondavi welcomed guests to take a tour of the winery
and sample the new wines he had produced.
 Markets: To acquire clients in America, France, Italy, Australia, and other countries, they
partnered and entered into joint ventures with various winery businesses.
 Capabilities: At the time, none of their competitors had a flange-top bottle without a
capsule.
 Products: They tested several novel techniques.

External

Value Chain

Enforce sustainable agricultural methods and offer incentives to cultivators for complying with
environmental regulations. Allocate resources towards investments in vineyard management
technologies to enhance grape quality and maximize output. The objective is to enhance
efficiency and quality control in winemaking facilities through modernization. Allocate resources
towards research and development to foster the creation of cutting-edge winemaking processes
and product expansion. Establish and execute a quality assurance initiative to ensure uniformity
in the manufacture of wine. Mondavi's tourist center and tasting rooms provide tailored customer
service and wine education opportunities. To ensure advantageous pricing and terms for raw
materials and packaging, it is advisable to establish enduring contractual agreements with
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suppliers. Implement a variety of sourcing solutions to reduce supply chain risks and guarantee
uninterrupted operations.

 Improve productivity and quality control by modernizing wineries. To secure a high-

quality grape supply, strengthen grape grower connections.
 Implement sustainable farming and reward producers for environmental compliance.
Maintain wine production consistency using a quality assurance system.
 For better raw material and packaging prices, sign long-term contracts with suppliers.
Diversify sourcing to reduce supply chain risks and maintain operations.
 Promote Mondavi's legacy, craftsmanship, and sustainability via a distinct brand
positioning approach. Use digital and experiential marketing to reach target consumers.
 Collaborate closely with distributors, retailers, and e-commerce platforms to improve
distribution and promote Mondavi wines in target areas.
 At Mondavi's tourist center and tasting rooms, give each customer personalized service
and opportunities to learn about wine.

Porters 5+1 forces

1. Barriers to entry
 In the wine industry there have high capital cost to entry. Due to the requirement
to purchase substantial tracts of land, Mondavi continued to function within the
confines of a capital-intensive environment.
 Besides in the wine industry there is no opportunity for small entry. And Mondavi
often benefits from economies of scale, established brand recognition, distribution
networks.
 But there is a threat of excess capacity. Because many rival winners have merged.
Besides this many large diversified beverage alcohol companies are making
aggressive pushes into the wine business. Because of this threat, Mondavi can
face problems and the wine industry can become unattractive to them.
Barrie to entry high. So the industry is attractive

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 2. Competitive Rivalry
 Wine producers in the United States and abroad compete fiercely.
 The wine business is extremely fragmented, with several companies competing
for consumers' attention.
 Competitive advantage is determined by variables including product quality, cost,
promotion, and distribution methods.
 In the wine industry the switching cost is low.

Competitive rivalry is high. So, the industry is unattractive

3. Power: Buyers
 Due to the availability of competing brands and products, consumers in the wine
industry frequently have a moderate amount of influence.
 In the wine industry there is no high switching cost.
 In the wine industry there are so many substitutes.
The power of buyers is high. So the industry is unattractive

4. Power: Suppliers
 In the wine industry there have a high number of substitutes.
 In the wine industry there have a high number of competitors.
 Winer companies rely on suppliers for grapes, barrels, packaging materials, and
other inputs.

Supplier power low. So the industry is attractive

5. Threat of Substitutes
 The threat of substitutes for wine includes other alcoholic beverages like beer,
spirits, and cocktails.

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  Additionally, within the wine category, various types and brands are competing
for consumer attention.
 Besides new technology is innovative for producing wine at a lower cost

Threat of Substitute high. So the industry is unattractive

6. Complementors
 wine accessories, gourmet food pairings, tourism, and wine education, can
influence wine sales and consumer experience.
 Seafood, BBQ

Complementary high. So the industry is attractive

So lastly by using this Porter's 5+1 force tool, we can say that the wine industry is moderate. So
Mondavi can operate in this industry if they formulate effective strategies to navigate the
competitive landscape and sustain growth.

KSF

Customer wants

 High Quality: Across all segments, there is a growing demand for higher-quality wines.
This is evident in the decline of jug wine sales and the growth of premium wine sales.
 Varietal Wines: Customers are increasingly interested in wines identified by the grape
variety used, such as chardonnay or zinfandel, rather than by region.
 Convenience: Consumers are increasingly purchasing wine at supermarkets, wholesale
clubs, and mass merchandisers. This suggests a desire for convenience in purchasing
wine.
 Brand Recognition: Consumers seem to respond well to established brands with a
reputation for quality, like Robert Mondavi.

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Competitive drivers

 Price: There is a wide range of prices for wine, from inexpensive jug wines to very
expensive luxury wines. Wineries compete within specific price segments.
 Quality: Winemakers are constantly innovating and experimenting with new techniques
to produce higher-quality wines.
 Brand Image: Wineries that can build a strong brand image for quality and innovation
can attract and retain customers.
 Distribution: Effective distribution channels are essential for getting wine to consumers.
The three-tiered system in the US creates challenges for some wineries.
 Marketing & Advertising: Wineries use a variety of marketing and advertising
techniques to reach consumers, with a focus on channel promotion for premium wines.
 Grape Sourcing: Access to high-quality grapes is essential for producing premium
wines. Wineries may own or lease vineyards or contract with independent growers.

Value net

Suppliers
 Own Vineyard.
 Local Vineyard.

Competitors
 Brown Forman 
 Allied Domecq 
 Canandaigua Wine 
 Kendall Jackson and so on.

Consumers
 Mass consumers.

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  Supermarkets.
 Clubs.
Compliments
 Concerts
 Clubs
 Art exhibitions

Financial Workings-
1. Current Ratio:
Formula: Current Assets / Current Liabilities
For 2000:
 Current Assets: $834,943

 Current Liabilities: $160,371

 Current Ratio = $834,943 / $160,371 = 6.3

For 2001:
 Current Assets: $864,358

 Current Liabilities: $169,098

 Current Ratio = $864,358 / $169,098 = 5.1

2. Quick Ratio (Acid-Test Ratio):

Formula: (Current Assets - Inventory) / Current Liabilities
For 2000:
 Inventory: $310,237

 Quick Assets = Current Assets - Inventory = $834,943 - $310,237 = $524,706

 Quick Ratio = $524,706 / $160,371 = 3.0

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 For 2001:
 Inventory: $322,404
 Quick Assets = Current Assets - Inventory = $864,358 - $322,404 = $541,954
 Quick Ratio = $541,954 / $169,098 = 2.7

Profit Margin:
Formula: (Net Income / Sales) *
100 For 2000:
 Net Income: $48,186

 Sales: $407,266

 Profit Margin = ($48,186 / $407,266) * 100 = 11.8%

For 2001:
 Net Income: $48,889

 Sales: $480,969

 Profit Margin = ($48,889 / $480,969) * 100 = 10.2%

NPV:

The cash flow:

Cash flow of 1998(CF 1 )- 317,308

Cash flow of 1999(CF 2)- 356,456

Cash flow of 2000(CF 3 )- 407,266

Cash flow of 2001(CF 4 )- 480,969

Initial cashflow(CF 0) - 175000

Number of years- 4
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Market rate of return- 16.1%

CF 1 CF 2 CF 3 CF 4
So NPV= 1 + 2 + 3 + - CF 0
( 1+ R ) ( 1+ R ) ( 1+ R ) ( 1+ R )4

356456 407266 480969

= 317308
¿¿
+ 2 + 3 + 4 – 175000
(1+10.17 % ) (1+10.17 % ) (1+10.17 % )

= 1037756

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