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Global Wine Wars New World Challenges Old A Case Solution
The case analysis pertains to the global wine industry in which a major shift has been taking place during the last decade. There is a gradual shift of competitiveness and market share from what are termed as Old World players of the wine industry to the New World players. Old World players of the wine industry are a group classified by the case consisting of France, Italy, Spain, and Germany which are traditional manufacturers of the wine and dominated global wine industry at one point in time. The second group, named in the case as comprising of U.S, South America, South Africa, Australia, and New Zealand, which have posed a serious threat to the traditional winemakers.
Following questions are answered in this case study solution
Resources-based View of Strategy
Institutions-based View of Strategy
Case Analysis for Global Wine Wars New World Challenges Old A
The case comprehensively covers different aspects of the issue and nicely contrasts traditional manufacturers’ hundreds of years of heritage against the new players’ will to experiment with novel methods, different packaging, and marketing initiatives. Regulatory infrastructure of the industry, for instance AOC regulations, is also a part of the case. The case also covers governments’ intervention in the industry and land holding patterns among different countries. This case describes the global development of wine industry as a whole and emerging consumers’ preferences is an essential part of the case due its significance for the issue. British market is chosen as the case in point to exhibit changes in competitiveness.
2. Resources-based View of Strategy
Resource-based view is an important framework for analysis of an international market because global businesses differ widely in terms of resource endowment and availability. According to resource-based view of strategy much of the success of an organization or a group of firms depends on their resources which are available to it. The central objective of using this particular approach for analysis is to explain the long-term performance differences between the Old World producers of wine vs. the New World producers in terms of efficacy based on the conditions of resource endowment. It must be mentioned at this point that resource-based view does not only take into account availability of resources, rather the performance differences between firms are also explained in terms of difference in effectiveness of resource utilization, which determines the best strategies to be adopted by a company.
There are key resources available to wine manufacturers of Australia, United States and South Africa which imparted a competitive edge to these manufacturers over their counterparts in France, Italy, Germany and Spain. The first resource-based advantage available to the ‘new world’ producers of wine was availability of land. Wine production is a highly land intensive industry and in countries with new wine industry ample amount of irrigable land was present to support growing of grapes. While large amounts of land were the available in Australia and suburbs of US for growing grapes, in the ‘old world’ a high density of population implied that land holdings were small and limited. Also, the climate of ‘old world’ lead to long cultivation time directly impacting the availability of raw material in France and Germany for wine production. In regions like California, the environment was highly conducive to production of grape crops. This entailed significant advantage to the industry of the region. In fact, this resource endowment can be attributed with the creation of the wine industry in the region, in the first place.
Of special mention are the climate and soil of Australian region which made for almost perfect conditions for growing high quality grapes. Agricultural process in Australia consisted of controlled-drip irrigation, while the climate of the region was warm and humid. Combination of these two factors generates conditions which lead to a decrease in the vintage variability of the crop.
Not only the wine producers in New World benefited from land resource, rather they also had access to labors and equipments to create excellent quality the wine. Wine manufacturing is also labor intensive since direct human involvement is required in the process of production and mechanization can only take place to a certain degree. Resource-based view of strategy in wine industry is also supported by the presence of specialized and user-friendly containers in the New World. This helped to produce the competitive advantage for producers in USA, South Africa and Australia, for their products can then be transported over huge distances. In other words, distribution network turned out to be a highly useful resource for wine industry of the ‘new world’. A complete infrastructure was present for manufacturers of this region for distributing their product over large geographical regions, while had a direct role in expansion of market share for wine producers in the region. Presence of low-cost glass containers and corks was the single most important packaging/distribution innovation which utterly transformed the dynamics of the industry. Resource-base view, therefore, has a direct relevance to explaining the phenomenon of growth of wine production in the ‘new world’.
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