1. Drawing on strategic capabilities models, conduct an internal analysis on Chateau Margaux. In your view, are any of the core resources and core capabilities under threat? Justify your answer?
2. Using relevant models, critically discuss the impact of external forces on the company.
3. Critically evaluate the structure of the wine industry and discuss any potential changes in the competitive environment and their the implications for the company.
4. a) In the light of your analysis, discuss the possible strategic options open to the company. Evaluate these options within the frameworks of qualitative and quantitative models, and recommend a suitable strategy option to the company.
b) Prepare a strategy statement that the Board of Chateau margaux may find useful.
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.
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
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.
- Penetration Pricing
- State of the Art Winery
- Excellence Award for Finery
- Low on Production Capacity
- Less Overseas Supply
- Cutting edge over foreign wine makers
- Expansion opportunities
- High competition rate from other countries
- Decrease in consumption of wine in France
- Emergence of substitute products
3. 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.
4. a) 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.
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.
Sell in bulk for negotiates, merchant
· Simplest option
· Cost minimization
· Narrow target market
· The main customer are not accessible
· The final prices reduce profits and loss.
Sell in bottle under own brand
· Uniqueness & excellence
· Target customers from tradition market
· Improved product quality
· Increase communication for sales
· No experience in marketing
· Many brands in market
· Risk factor
Market survey report of wine production
4. b) Useful Strategy of Chateau Margaux
Useful strategy of Chateau Margaux is designed in basis of product, price, place and promotion strategies
- It adopts latest technology to increase production.
- Attractive packaging for enhancing looks of the product.
- Low price of product to increase customer band.
- Penetration into the market with diversified products.
- Wide areas reach in France.
- Company products are present in 5 continents
- 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.
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.
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