The Wine Industry Case Solution
The Wine Industry
The most essentialdissimilaritybetween the old and modern wine industry is the climate. The modern wine industry producers tend to work in a more foreseeable climate that formed consistent grape harvestsas compared to the old wine industry. In addition to this, the winemakers of the modern wine industry invested heavily in technology and innovation that help them to produce a range of wine styles and ensure consistency that give them a competitive advantage as compared to the companies of an earlier age.
The most essential driver of competitive advantage in the modern wine industry to those of earlier eras isthe continued consolidation in the New World markets of wine. Secondly, in the modern wine industry another driver of competitive advantage isincreased in the brand segmentation that benefit new world wine as compared to the old wine world.
Furthermore, the emphasis of the modern wine industry on the innovative advertising isanother factor that drive the competitive advantage as compared to the old wine industry. Some other divers of competitive advantage includes new wine firms emphasis on global presence, creating brand recognition, stable distribution arrangements and focused advertising programs.
The value chain of the wine industry consists ofdifferent primary and supporting activities. The operation stage is grape production that consists of the agricultural operations and the transportation cost that occurs for the workers within field operation. It also includes the wine production that includes the operations such as stemming and crushing, the fermentation and storage. The sales and marketing includes advertising and promotional activities and services includes theactivities such as bottle filling, labelling and box filling. The procurement, technology and human resource management are secondary activities of the value chain process in the wine industry to distribute the products at local, regional, or international level.
The most important activity in the value chain process is the use of technology as mostly the competitive advantage in the industry is derived from the technological improvements and innovations in the business processes.
The wine industry is attractive for the new entrants because of the increase in the consumption demand of the wine across the globe. Additionally, the wine industry growing constantly that creating opportunities for the new entrants to enter the market inorder to satisfy the needs and preferences ofthe customers. Secondly, the increase in the globalization and technological development make the wine industryattractive for the new entrants. The change in the lifestyleand taste of the customers worldwide also creates chances for the new entrants to enter the wine industry by attracting the new and emerging market segments around the world.
Although the wine industry is attractive for the new entrants, but it alsocontains some challenges for the new entrants to enter the market. The most significant challenge is the economies of scales that exist in the market creates difficulties for the new entrant to enter the industry. Secondly, the high startup investment cost is another challenge for the new entrants to come into the market. The high level of product differentiation and access of distribution channels may be difficult are few other trials for the new entrants.
On a general note, the wine making is a global industry as the consumption and production of the wine are increasinglargely around the world. Secondly, the consumption and manufacturing of the wine has increased worldwide from the past several years. The demand of the customers for wine are increasing, creating new consumer markets that attract different wine companies to expand their production across the globe…………..
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This Note examines the wine industry wine industry as a basis for discussion as a competitive advantage is created as an advantage may be lost when the innovative strategies challenge the incumbent players. The wine industry in 2003 was in a state of transition. Historically, the number of products and fragmented international markets made it almost impossible for the company to establish a dominant international position. In addition, because the wine was of agricultural products and, depending on the weather, security of supply has been unpredictable. However, well-capitalized international winemakers are emphasizing global presence and brand awareness. The huge success of the new world producers experienced in markets traditionally dominated by European vintners were increases the emphasis on the creation of recognized brands, stable distribution mechanisms and targeted advertising campaign. Only time will tell if the wine industry remained one, where terror and mystery wine prevailed, or international brands crowd out local and regional wineries.
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by Andrew C. Inkpen, Rod Phillips 17 pages. Publication Date: January 9, 2004. Prod. #: TB0155-PDF-ENG
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