Strategic Mangement Case Study Essay Example | Topics and Well Written Essays - 2500 words

Strategic Mangement Case Study - Essay Example This analysis is useful, because it helps to understand both the strength of current competitive position, and the strength of a position the company is looking to move into. At the early maturity of the industry's lifecycle, the number of new entrants into the smaller production end of the industry continued to grow. However, concentration was occurring among the medium and large players as a result of both local acquisitions and acquisitions by overseas purchasers. The newer producing countries, such as Chile, are perceived to be the bigger threat due to rapid advancements in production quality. The demand for the wine in the domestic market and in the international market was growing since the establishment of the company. We can see that from the fact that in 1998 from 120 tonnes of grapes crushed and less than 1 per cent export volume to 670 tonnes crushed in 1999 and greater than 49 per cent export volume, growth was achieved with minimal comparable overheads and infrastructure. The export figures testify that the growth of the buyer power is increasing over the time. Coopers Creek's own branded product was the winery's focus and, in 2000, it was anticipated that it would sell more in the USA than in the UK. The owner of the winery was concentrating on the development of a small number of markets and selling a broad range of higher margin wines in the on-premise segment. This focus allowed the company to reach consumers willing to pay more expensive prices as New Zealand wines became a permanent category on restaurant wine lists. Supplier power This factor defines the ability of a supplier to control the cost and supply of the inputs in the market. With the management of the quantity and quality of the grape supply proving to be a critical resource issue within the New Zealand industry, investment in plantings are important for the industry as a whole. In order to be successful and sustain profitability in the market, wineries are obligied to reduce costs of production by investing extensively in their own vineyard plantings. Over supply of the wine that takes place in the industry when the harvest is better than previewed, leads to production of lower-cost wines, either by growers forming a cooperative to utilise the excess grapes and produce their own wine or by wineries focusing on low-cost competition. It is anticipated that a low-cost competitor would affect the export market more than the domestic markets. Major decisions in the production of the wine are made at the supply stage and sometimes this involves the buying of bulk wine from other New Zealand producers to keep supplies going. For example, Tesco's in the UK wanted to do a summer price promotion in 1997 on a New Zealand wine. When one of the larger New Zealand wineries failed to respond, Coopers Creek took up the challenge, although it did not have all the wine to meet Tesco's requirements. The