MBA501: Dynamic Strategy And Disruptive Innovation

Business Portfolio Analysis

The business analysis of Australian Vintage will be based on the BCG analysis matrix, GE – McKinsey Matrix and the Synergy Matrix.

a) BCG Matrix Analysis

The BCG matrix is essential for long-term planning. As Enz, (2010: 246) indicates, the BCG matrix helps businesses to take into account their growth opportunities through reviewing their product portfolios in order to determine where they can invest, or the products that they can discontinue to develop. Schermerhorn, (2010: 149) points out that the matrix is divided into four distinct quadrants. They include the Dogs, which stands for products that are in low market share or growth. The Question Marks are the products that are in high growth markets with low market shares. The Stars are products in high growth markets and high market shares, whereas the Cash Cows are products in low growth markets but with high market shares.

Australian Vintage has got three major products. They include McGuigan, Nepenthe and Tempus Two. McGuigan brand is a Star product considering that it is the market leader in Australia and the fourth in the UK, with a 12% increment in sales in 2017. Nepenthe and Tempus Two are the Question Mark product with increased sale of 35% and 44% respectively in the Australian market in 2017, even though they trailed their competing brands (Australian Vintage Limited, 2017: 10). 

b) McKinsey Matrix Analysis

The McKinsey matrix is essential for providing insight into the business units that a company needs to focus its investment energies on. Sutherland & Canwell, (2008: 284) notes that the Y-axis on the matrix indicates the industrial attractiveness of a company, which denotes the ease or difficulty that the company may face regarding competition in the market and thus make profits. It consists of elements such as industry size, industry profitability, macro environment factors, availability of labour and market segmentation. Capital Cube, (2018) points out that these elements include the low inflation rates that have brought stability in the market; the adoption of new technologies and the free trade agreements by the government, which provide Australian Vintage with the change of accessing new markets.

On the other hand, the X-axis on the matrix indicates the competitive strength of the company or products in terms of its strength as compared to its competitors. This is helping in determining whether a business has got a sustainable competitive advantage. It entails the consideration of factors such as the total market share, company profitability, brand strength, customer loyalty and level of product differentiation (Sutherland & Canwell, 2008: 284).  Shaw, (2018) notes there are gaps in the product range that Australian Vintage provides, which implies that they have some market segments left out. Besides, market development is bound to bring in new competitors for Australian Vintage. Lastly, the seasonality of the high priced products like those sold by Australian Vintage may negatively affect profitability in the short and medium term.  

Synergy Matrix

Notably, the total amount for allocation is 100. The net return (NPV) on McGuigan product depends not only on how much it gets but also on how much Tempus Two gets. If McGuigan is allocated resources and nothing is provided for Tempus Two, the net return for McGuigan will be nil. If some resources are allocated to McGuigan and at least 10 is given to Tempus Two, the new return for McGuigan will be 25. This indicates that there is a synergy between the two products.

Business Portfolio Recommendations

The BCG matrix has demonstrated that McGuigan is the only product in a high growth market and high market share. The other two products are in a high growth market but with low market shares. The synergy matrix demonstrates that McGuigan value is dependent on the allocation of resources to further develop the other brands. Therefore, it is recommended that Australian Vintage allocate resources to further develop Tempus Two and Nepenthe in order to build their favourability in the market.

The McKinsey Matrix demonstrate that the external environment of Australian Vintage is favourable considering government regulations, access to markets and new technologies. However, in order to increase its competitiveness, the company will address issues such as product differentiation and markets development through research.

Dynamic Capability Analysis

Organizational capabilities play a critical role in determining its competitiveness at the marketplace. Kumar, (2017: 46) notes that the dynamic capability framework is made up of key characteristics, which include path dependency, dynamic capabilities, and the external environment. In this case, the dynamic capabilities include activities such as sensing, seizing and transforming.

For one, sensing involves the identification and assessment of opportunities in the market. Kumar, (2017: 46) points out that sensing involves conducting research and development in order to understand the market needs, the strength and weaknesses of the suppliers and competitors and, the structural development of the market. Shaw (2018) notes that Australian Vintage investment in regard to research and development have been below those of the fastest growing players in their industry, which makes the company not able to compete with other leading players in terms of innovation.

Secondly, seizing consists of implementing the sensed opportunity through mobilization of resources in such a manner that it captures the targeted value. Harris, Kuivalainen, & Stoyanova, (2012: 65) notes that seizing of capabilities entails exploitation of new opportunities and retraining of staff.  Capital Cube, (2018) notes that Australian Vintage has a robust cash flow that provides it with the resources it requires for the expansion and implementation of new projects. The company also has teams of highly skilled staff and invest huge resources in training and development.

Thirdly, transforming includes the process of configuring resources in such a manner that the organization is renewed continuously. According to Kumar, (2017: 49) reconfiguring the resource base by changing the operating and resource capability as dictated by the prevailing changes. Capital Cube, (2018) notes that Australian Vintage has an impressive record of integration of numerous technology companies in the past with the intent of streamlining its operation and building a robust supply chain.

Dynamic Capability Recommendations

The Australian Vintage needs to invest more in research and development in order for them to come up with a competitive product that will ensure a sustainable market leadership for its brands. This will enable the company to effectively mobilize and leverage its human and financial resources in order to capture the values targeted through dynamic changes in the organization.

Bibliography

AustralianVintageLimited. (2017). December 2017 Half Year Results. Retrieved from https://member.afraccess.com/media?id=CMN://2A1066110&filename=20180221/AVG_01953184.pdf

CapitalCube. (2018). Australian Vintage Ltd. :AVG-AU: Earnings Analysis: 2017. Capital Cube. Retrieved from https://www.capitalcube.com/blog/index.php/australian-vintage-ltd-avg-au-earnings-analysis-2017-by-the-numbers-september-12-2017/

Enz, C. A. (2010). Hospitality Strategic Management: Concepts and Cases. Hoboken, N.J.: John Wiley & Sons.

Harris, S., Kuivalainen, O., & Stoyanova, V. (2012). International Business: New Challenges, New Forms, New Perspectives. New York: Palgrave Macmillan.

Kumar, K. L. (2017). Handbook on Dynamic Capability. ANCHOR ACADEMIC PUBLISHING.

Schermerhorn, J. R. (2010). Exploring Management. New York : Wiley.

Shaw, L. (2018). Australian Vintage’s profits rise by 79%. The Drink Business .

Sutherland, J., & Canwell, D. ( 2008). Essential Business Studies A Level: AS Student Book. Folens Ltd .