Robert Mondavi Company Essay Example for Free

Robert Mondavi familiarity Essaycalcium booze-maker Robert Mondavi has been sensation of the worlds most advanced(a) and high- tone of voice parentrs of fine fuddle. The Mondavi family did significant effort on showing the celery cabbage Valley region to the forefront of supranational winemaking. Robert Mondavi is an Italian migrant and st artistic productioned his winemaking business since 1960s. His intelligence and passion in wine lead him to be a legend in Californian bounty wine assiduity and owned inciters exchangeable Robert Mondavi Napa Valley, Robert Mondavi Coastal, Woodbridge, Vichon Mediterranean, Caliterra and Lucente. Since 1979, Mondavi has overly produced, in joint partnership with the Baron Phillippe de Rothschild wine family, the ultra- agio Opus One label. The social club sells ab off 10 million cases of wine per year, with Woodbridge as its top-selling label. In 2001, the conjunction earned $481 million in revenues and distributed wine in more than than 80 countries. The Robert Mondavi Corporation went public in 1993, although the Mondavi family keep backs 92 percent of voting stock. business StatementHow can the Robert Mondavi Company strengthen their competitive advantages and thrive in the long run in the global wine industry with many established and consolidated competitors.External Analyses Porters cinque ForcesBuyersThe talk terms designer of buyers in the wine industry is fairly high due to their concentrated control of sales at both wholesale and retail levels. Several tumescent distributors control a veritable destiny of the securities industry and generate most of the revenue for wine producers such as Mondavi. At the retail level, super commercialises and discount chains defend become more concentrated, often accounting for 70% or more of off-premise sales in Europe. In fact, Mondavis largest wholesaler, Southern Wine and Spirits, accounted for 29% of the firms sales. And Costco, the largest wine r etailer in US, also accounted for 10% of Mondavis total sales volume. Theconcentrated bargaining power of buyers gives the large wholesalers and retailers significant influence and power over wine producers business decisions.SuppliersThe bargaining power of suppliers is comparatively low in the wine industry due to the large number of suppliers for raw materials such as corks, bottles, and word of mouths and prices for these raw materials are relatively stable as a result of significant competition. This situation creates little bargaining power of suppliers. On the other hand, backward desegregation within the industry also weakens the bargaining power of suppliers becaexercising the companies can control their supply chain. For instance, Mondavi signs long-term contacts with its grape suppliers and works closely with growers to improve grape quality and availability. This practice increases the price stability and limits the suppliers bargaining power over the company.Entrants The nemesis of pertly tenderbies in the wine industry is fairly low. Winemaking is a capital-intensive business that requires significant investments in working capital, as advantageously as the cost of acquiring toss off. For luxury wine producers, an acre of debark can sell for as much as $150,000 in California and $250,000 in France. There is also the fact that a saucy plot of land can non produce revenue for several years, due to the maturity of the grapes. A new entrant essential be able to sustain itself in the industry with no revenues or profits for a lawsuitably long start-up period. For these reasons, the threat of new entrants in the wine industry is fairly low.RivalryThe threat of rivalry is real high in the premium wine business. Major focused competitors in the premium wine market include Kendall-Jackson, Trinchero Estates, Southcorp and Robert Mondavi. Large-volume producers such as EJ Gallo and Constellation Brands are also shifting toward the premium wine market. And even large alcoholic beverage firms such as Diageo, Fosters Group, Brown-Forman and consort Domecq are acquiring wineries to enter the premium wine business. The number of big competitors andaggressive acquisitions within the industry makes the competition of rivalry exceedingly intense in the premium wine industry.SubstitutesThe threat of substitution in the wine industry is high since there are many alternatives including both alcoholic and non-alcoholic beverages. The alcoholic beverages in general include beer and distilled spirits, while the non-alcoholic beverages include soda, coffee, and water. According to Exhibit 18a, beer accounts for nearly 55% of the World Market lot between the top 5 firms of beer, spirits, and wine, whereas wine only accounts for roughly 3%. Other substitutions include cheaper and large volume producers of wine such as EJ Gallo and Constellation Brands, which are both Mondavis competitors.Internal Analyses VIRO devil to capitalMondavi (MOND) is a publicly traded company listed on NASDAQ, which enables the company to extensively finance its investments and involution finished its access to the capital market. Mondavis access to capital is valuable as the firm raised rough $600 million in exchange for its stock shares. Mondavis access to capital market is also idealistic since many of its competitors are still hugger-muggerly held or independent. In addition, the huge expenses and complicated processes of an Initial man race Offering make Mondavis access to capital market costly to imitate. Finally, Mondavi is organized to benefit from this choice and the firm has utilized its capital to invest in several new production lines, new brands, land acquisition and winery acquisitions etc.Path colony on landOne re credit of Mondavi is its way dependence on land. Robert Mondavi bought his first winery in Napa Valley in 1943 for $75,000. Today that land is worth more than five times that amount. Since 1943, Mond avi has made many similar purchases, and the land is only change magnitude in value. For this reason, Mondavis path dependence on land creates value for the firm.Mondavis path dependence on land is also rare in the industry. Not many of Mondavis competitors have the same history with purchasing real estate as Mondavi. Since path dependence on land results from departed actions, and since real estate in the wine industry is always appreciating, it makes this resource very costly to imitate. Finally, the system of rules is benefiting from Mondavis path dependence on land. Without it, the company would be spending millions of dollars on purchasing land, and would most likely not have the same competitiveness that it has today.Organizational structureMondavi has reorganized its organization structure into three distinct business units RMW, Woodbridge, and Joint Ventures Small Wineries. This structure is valuable to the firm as it helps to resurrect the brand clarity within the co mpany. Customized sales and marketing strategies help shape the distinct competitive side for each of the firms brands. Although Mondavis organizational structure is not common in the industry, it would not be very costly for its competitors to imitate this structure.Variety of brandsOne capability of Mondavi is its material body of brands. A variety of brands creates value for the firm because they can sell to different guests in different markets, thus increasing their customer base. Many of Mondavis competitors also have a variety of brands, making it not rare in the industry.ReputationMondavi has 16 different wine brands through company-owned wineries and joint ventures. Each brand had a write up for quality in its market segment and good relationships with the independent growers. It is definitely a valuable source of the company. However, a resource is rare simply if it is not widely possessed by other competitors. In this case, most of the competitors of Mondavi all have high quality report card and well-known brand name, so it is not rare in the premium wine industry.High qualityRobert Mondavi Winery has been recognized as one of Americas highest-quality winemakers since 1960s. Mondavi consistently uses only high-quality fruit along with traditional winemaking and aging processes to produce premier wines. RMC wines high quality has attracted a good number of loyal customers and rewarded the company a decent market share. Nevertheless, high quality is not exceedingly rare in the segment, competitors such as Trinchero Estates, Kendall Jackson and many other traditional European wineries also produce quality wines. narrationRobert Mondavi founded the iconic Robert Mondavi Winery in 1966. As early as the late 1960s, Robert Mondavi Winery helped introduce to California such fine winemaking techniques as the use of cold fermentation, stainless steel tanks, and French oak tree barrels. The history is the valuable and intangible source of the company. But since most of Mondavis competitor also have remarkable histories, it is not rare in comparison with others.Process innovationRobert Mondavi became one of Americas most innovative winemakers by introducing many new methods and techniques. These techniques included cold fermentation, stainless steel tanks, and the use of small French oak barrels as a way to age fine wine. He also enhanced the company by working with NASA to apply remote-sensing and digital mapping techniques which in bring helped enhance the vineyard. The company also developed a capsule-free, flange-top bottle. Mondavis innovative process is very valuable, because it keeps his company at the top of the industry. For example, in 1972 his 1969 Cabernet Sauvignon was named the best wine produced in California. Assuming these techniques are firm specific, Mondavis process is very rare and costly to imitate. Overall, the new inventions and innovative processes have allowed the company to be successful and earn cash thr oughout the years.Alternative SolutionsMergerMondavi is currently competing in a market were consolidation has become thenew norm within the past decade. Many of Mondavis competitors have been aggressively consolidating, and the results have been profitable for them. An best merger partner would be with a well- established firm that already has a market bearing in different geographic regions, such as Constellation. The advantages of this strategy would be the opportunities that would arise from entering new markets and regions, as well as the opportunity to become more cost effective. By consolidating like operations in both firms, such as accounting, the firm can reduce costs and increase the shadower line. Another advantage of merging would be that the new consolidated company would have a feasible presence in more market segment. The disadvantages of this strategy are possible public disapproval, as well as loss of independent reputation. Another disadvantage would be the ini tial costs involved with consolidating like operations, and other predictable costs of merging. To stay competitive in the industry and to gain market share in new geographic regions, it would be beneficial for Mondavi to watch the consolidation strategyGlobal expansionMondavi sells 90.5% of its wine domestically, but the United States is only ranked ten in wine consumption worldwide. For this reason, Mondavi should consider a global expansion strategy. The advantage of a global expansion strategy is the increased market share, and exposure to a larger customer base. Only 12% of Mondavis customers consume 88% of their wine. Mondavi must increase their customer base to stay competitive in the long run. The disadvantage of this strategy is the assay and costs involved when entering new markets. It is very expensive to not only place a product in a new market, but to also market the product and build brand awareness. Global expansion also takes a major time commitment and investment in human capital. These costs make it a very risky venture with no guarantee for success, because early-mover competitors, such as Southcorp and EJ Gallo, already have significant market share and resource advantages in these foreign markets. For the necessary reason of increasing their customer base, Mondavi should consider a global expansion strategy.Sale of the firmThe inviolate Mondavi reputation and history are built around the legacy of Robert Mondavi. When Robert Mondavi is no longer active in the business, it may create financial distress for the company. Mondavi built his winery from the perspective of a family business that produces high quality products with innovative processes and environmentally friendly methods. Over the years, Mondavi introduced new techniques to the California wine industry, and he also hosted concerts, art exhibits, and other cultural events at the winery. Mondavi has built his reputation and customer loyalty by producing award fetching products and being involved with the community. If Robert Mondavi is no longer here, then his reputation and history may die with him. For these reasons, Mondavi great power want to consider selling the company as an exit strategy.Recommendation and ImplementationOverall, we recommend Robert Mondavi Company to merge with another well-established firm such as Constellation that holds significant market shares in both domestic and international markets. The new consolidated company would have the opportunity to enter new market segments and geographic regions. Cost effectiveness would be another huge benefit when operations and processes are consolidated. This weft of merger is superior to global expansion in term of cost and time efficiency. Merger is also better than sale of the firm because it allow keep the core competencies of the company rather than abandon the entire business.Once all the formalities of the merger are complete, the new company must start an integration process. The c ompany must decide what name to keep, as well as what to do about the shareholders. If the company that Mondavi merged with is a public company, they must decide on how to convert the shares. If the company is a private one, they must make a decision on issuing more shares or buying out the current shareholders. The newly merged company must also start consolidating like operations as soon as possible to benefit from the forecasted cost savings. Finally, the new company must decided which brands will sell in which market, along with the appropriate enter and exit strategies.