Conchay Toro Harvard Case Solution & Analysis

Concha y Toro

Assessment:

Concha y Toro is awine producing company, which was founded in 1883 based in Chile. Chile is among world’s top ten producer of wine. The company has maintained its growth constantly and has metthedemand of wine in the Latin America.The consumption of wine is assumed to be a tradition in Argentina and other Latin American countries, which has resulted in significant attention of the global wine manufactures.

Symptoms:

Operating profit decline:

Concha y Toro is facing adecline in its operating profit.The decrease in the operating profit was 20.9% in the previous year.On the other hand, the reduction in operating profit margins is by 3.7% to 12.4%. The operating profit decline is due to theincrease in the number of the suppliers of the wine globally.This has affected adversely on the demand of the Concha y Toro’s wine and has resultedin a decrease in the export of company’s wine.

Currency issues:

The currency fluctuation has also madethe wine of Concha y Toro less attractive for itsglobal customers with respect to the price of the wine asthe currency of the Chile has significantly strengthened against the dollar.Therefore, thishas made the wine of Concha y Toro more expensive for the importers of the other countries.

 The currency rate of the Chile was 724 Chileanpesos per dollar in the year of 2003.However,now the exchange rates have been changed significantly, and the currency rate has declined as ithas become 526 Chilean pesos per dollar in 2006.

New world producers:

The market of the wine has been taken from the old producers by the new producers of the wine. This decrease in the market share is due to local cheap production of the wine with efficient pricing and marketing strategies, for example; by Australianproducer the market penetration strategy for offering the BOGOF (buy one get one free). Due to this, it has made it difficult for foreign companies to compete with local producers.

No taste differences:

The global brands have been losing image of their brands with respect to the taste offered by their brands. Therefore, this has made the old wine companies limited to charge higher for their brand..........................

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