MGT5STR Strategic Management : Treasury Wine Estates
Question
This assessment focuses on your understanding and appreciation of Strategic Management Inputs. You are required to identify a corporation in the Agribusiness food related sector of Australia. I selected Treasury wine estate limited report .
Answer
Introduction
This report is been designed to understand and appreciate the strategic management inputs of some Australia based Agribusiness food related sector for this report the organization which is been selected is Treasury Wine Estate Limited. Treasury Wine Estate is a world’s largest wine company, they mainly focus on growing and sourcing grapes, winemaking and Brand Led marketing. This report contains a brief background of company and its products, external and internal factor affecting business of the company and in the end, some recommendations are made to overcome those risks.
Company overview/background
Treasury Wine estates is a wine company that deals in winemaking and distribution. Headquarter of Treasury Wine Estates is situated in Southbank, Melbourne, Australia. The company is a Wine division of international brewing company Foster’s Group. In 19th century, Treasury Wine Estates established some new world wineries. The winery includes Lindeman’s and Penfolds in Australia and Beringer Vinyards in the United States. 1995 onwards, Foster’s group has started to build wine division. With the help of acquisition, the company has become world’s largest winemakers (Treasury Wine Estate, 2018a). In 2005, the Beringer Blass was stood as the largest producer of wine in the United States and in the same year Forster has purchase the Southcorp an Australian wine making group for adding a name of famous brand with Lindeman’s Penfolds and Rosemount. Treasury Wine estates is listed on the Australian stock exchange. Ever affords which company make is to their vision of becoming world’s most celebrated wine company. The business of company runs vertically, they focused on just three principle activities which are grape growing, sourcing, winemaking and Marketing/ brand-led. The company grow quality grapes which are the main sources of grower vineyards, leased vineyards and bulk wine market. The company is having more than 9000 plants in Australia and New Zealand. Company operates in more than 4000-planted hectares of Vibeyards in the US (Treasury Wine Estate, 20
18e).
Product lines
The company deals in growing grapes, sourcing, winemaking and marketing. The product line of company includes more than 70 brands such as Chateau St. Jean, 19 Crimes, Beaulieu Vineyards, Beringer Vieyards, , Blossom Hill, Etude, Devil’s Lair, Gre Norman Estates, Hewitt Vineyards, Jamieson’s Run, T’Gallant, Fifth leg, Leo burning, Matua, Heemsherk, Ingoldby, Annie’s Lane, Killawarra, Lindemans, Wolf Blass, Matua, Metala, Pepperjack, The walking Dead Wine, Meridian, Coldstream Hills, Yellowglen, Penfolds, Rawson’s Retrear, , Belcreme e Lys, Run Riot Samuel Wynn & co, shingle Peak, Rosemount Estate, Saltram, Seppelt, squalining pig, Stags leap winery, sterling vine yards, St huberts, Sledgehammer, Stellina di note, Wynns Coonawarra Estates, castello di Gabbiano, (Treasury Wine Estate, 2018b).
Revenue generating units
Revenue is been predictable when the reward and risk of the owner have delivered to the customer. Deals with general retails chains independent retailers, local distributors, autonomous retailers and on promise, outlets are typically recognized when products are transported. Sales to the global suppliers are based on the global market terms on which the goods are transported. Revenue is recognized when the relevant service has been completed (Treasury Wine Estate, 2018d). According to the data available in the Annual Report of Treasury wines and estate creates profits through the sale of exclusive wines, mainly as finished bottled products. The group of profits making wine portfolio comprises world’s foremost marketable, luxury and Massive wine varieties such as Sterling Beringer,Vneyards, lindemans, 19 Crimes, Beaulieu Vineyards, Wolf blass, and Chateau St Jean. The group distributes range of wine to the consumers across the world, with routes to market tailored by nation (Annual Report, 2017).
External Environment Analyses
PESTEL
PESTEL Analyses is consider to be a strategic tool that will help Treasury Wine Estate in knowing the macro or external environment, term PESTEL used for Political, Social, Economic, Environmental, Technological, and legal factors these are the factors that are going to provide impact on the external environment of Treasury Wine Estates Limited.
Political Factors: This factor plays a very essential role in defining the features that provide impact on Treasury Wine estate long-term profitability in certain market and countries. There are the political environments and political system of the countries where the products of the company were sold or exported are different and due to which there may be a chance the profits company may get affected (Fia, Canuti, & Rosi, 2014). Before entering the market of other country the company need to consider some policies and procedures recommended by the selected country government some are, Political stability, trade regulations and tariffs related to wines, pricing regulations, Anti-trust law, taxation etc (Song, Sun & Jin, 2017).
Economic Factors: the factor like foreign exchange rates, interest rate, saving rates, economic cycle regulate the aggregate demand and aggregate investment are consider to be a Macro environment factors. Treasury Wine Estates Limited use various economic factors of the country to forecast the growth of the company some factors are, inflation and industry economic indicators growth rate (Molnar & Lendvay, 2016). The economic factors the company can consider while conducting PESTEL are, government intervention, exchange rates, type of economic system operates financial market efficiency, infrastructure quality, comparative advantages, labor cost, business cycle, economic growth etc.
Social factors: the social factors which treasury wine estate need to consider while conducting or analyzing PESTL are, leisure interest, attitudes, culture, education level, hierarchy, power structure, class structure, entrepreneurial sprites, nature of the society, health, environment consciousness, demographics and skills, level population, social conventions (Rastogi, & Trivedi, 2016).
Technological Factors: over past few years the industries is been transforming really fast. To analyses of technology in Australia and US and other part of world where the product of company goes for sale treasury wines estates needs to consider few points such as recent technology development by the competitors of the company, impact of technology on product offering, latest technology available for Food, Beverage and tobacco industry, effect of technology on the cost structure of the company, effect of technology on the value chain structure of the company and rates of technological diffusion (Li, & Bardaji de Azcarate, 2017).
Environmental Factors: There is a rule in the market that every market have different standards or environmental values that provide effect on the revenues and working of the company’s market. Every country consists of different liability law and environmental laws, even the states of the country apply different laws related to environment. Before entering to the new market, the company needs to evaluate carefully the environmental values that are required to function in those markets (Carra, et.al. 2016). Some environmental factors that Treasury Wines Estate needs to consider are climate changes, air and water availability, water and air pollution, waste management, attitudes towards ecological goods and renewable energy, recycling, weather, laws regulating environment pollution and endangered species.
Legal Factors: there are many countries in the world, where the legal outline and organizations are not powerful enough to defend the intellectual property rights of the company. Treasury wines Estates needs to evaluate the legal framework of the country before entering such market, which leads to the theft of the company’s secrets (Li, & Bardaji de Azcarate, 2017). There are some legal factors are been stated which the company has to consider before entering the new market, patents, intellectual property law, discrimination law, Copyright, e-commerce law and consumer protection, data protection, Anti-trust law, employment law, and health and safety law (Varsei & Polyakovskiy, 2017).
Internal Environment Analyses
SWOT
SWOT analysis is a tool that facilitates Treasury Wines Estates to classify the internal strategic factors, such as Weakness, strengths, and external strategic factors such as threats and opportunities.
Strengths· Treasury Wine Estates has the expertise in entering new market. The expansion of business has helped the company in generating revenues and in diversifying the risk. · Treasury Wine Estate has developed as a big brand in the market they have invested money in building strong brand portfolio. The brand portfolio is very useful in expanding the business (Annual Report, 2017). · Treasury Wine Estate is expert in execution of new project successfully in the new market and they can generate good return from the capital expenditure by building new revenue streams (Treasury Wine Estate, 2018b). · Expert in Product innovation · Highly skilled workforce through successful training and learning program. · Successful marketing strategies for the product
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Weakness· In comparison to other companies in the industry Treasury Wine Estates has a higher attrition rates and due to that they have to spent more on training and development of employees. · The net contribution and profitability ratio of the company is less in comparison to rest companies. · Treasury Wines Estates is not having ability to integrate firm with other work culture. · There is a product gap between the product ranges sold by the company. · The management of company is not much qualified to address the issues of demand forecasting and due to that, the company missed out the various opportunities (Prigge & Whatley, 2016). · Face challenges in moving to other product segment.
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Opportunities· Low inflation rate is bring stability in the market which is enabling the company in attracting more customers · The new environmental policies are providing advantage to the company to install new technology with the help of which the production capacity will be increased (Annual Report, 2017). · Customer behavior play a very important role in providing great opportunities to Treasury Wine Estates to shape a new revenue stream and expand new product categories (Chong, 2014). · Declining cost of transportation · New technology enables company in designing pricing strategy (Treasury Wine Estate, 2018c). · Low shipping rates · Market development leads to dilution of competitors advantage and enable company in increasing competitiveness · Loyal customers and great services
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Threats· Rising of pay level of the employees by different countries will reduce the profitability of the company · The online businesses are changing the buying behavior of the customers · Increasing trends towards isolationism · Shortage of skilled workforce · Imitation of the counterfeit and low quality products · New environment regulations |
Resources
Internal resources create a foundation for the company in 2017 more than 97% employees completed training in Alcohol policies. Treasury Wine Estate deals in more than 70 brands, providing employment to more than 3400 employees, having total area of 13000 hectares to cultivate grapes and for installing plant (Treasury Wine Estate, 2018a).
Capabilities
The business of Treasury Wine Estate was initially started in Australia but with their quality product and great success in Australian market, they now bring their 70+ brands of wine in an international market. The company is doing well in international market the customers are providing their preference to the taste and quality of the wine (Treasury Wine Estate, 2018b). The company has their expertise in expanding the business in international market.
Core Competencies
Treasury Wines estates consist of new technology, they are always remain updated and ready to adopt new and latest technology. The technology is the factor that will boost the production of the company and will help in delivering the products to the customers. The company is also having staff members who are skilled and fully trained (Treasury Wine Estate, 2018d). The company has developed a new strategy to produce a new green wine product.
Competitive Advantages
Treasury Wine Estate is having various advantages in comparison to the other competitors such as the company is having best grape planting science and technology for making wines, in addition they have the large distribution channel. The company is maintaining a good relationship with the neighboring wine makers and suppliers (Annual Report, 2017).
Recommendations/future strategy
To get success and to eliminate the external and internal risk few recommendations are made for Treasury Wine Estate
- Differentiation strategy: Treasury Wine Estate can develop a differentiation strategy. With the help of this strategy, the company can develop and design the products, which are different from their competitors (Duarte Alonso & Bressan, 2016). The Product can be different in various aspects like taste, packaging, labeling pricing and distribution.
- Pricing Strategy: the company has to develop a pricing strategy with the help of which they can decide the price for their product. The prices of the product of the company should be less than the prices of their nearest competitors.
- Market Analyses: the company has to conduct a regular market surveys to analyses the current statutes of the product and market conditions and customers buying behavior toward the product. With the help to market analyses, the company can change their policies as per demand of the market (Matt, Hess & Benlian, 2015).
- Keep eye on the competitors: it is important for the company to put their focus on the actions, policies, strategies and procedures of the competitors. While keeping eye on their actions the company can uplift their position in the market (Kowalkowski, et.al. 2015).
- Management strategy: the company has to keep on changing the management strategies as per the new marketing conditions. The management of the company is doing well but the strategies that they are implementing are old and they need to implement new strategies (Corsi, Marinelli & Alampi Sottini, 2013).
Conclusion
To conclude, the company is doing well in international market and it is expert in expanding business in the various parts of the world but there are some internal and external factors, which are affecting the business of the company. It has been suggested to the company to follow the above mention strategies and recommendations to diversify the risk and to generate revenues for the company.
References
Annual Report. (2017).Treasury Wine Estates. Retrieved from: https://www.tweglobal.com/-/media/Files/Global/Annual-Reports/2017-Annual-Report.ashx
Carra, G., Mariani, M., Radic, I. & Peri, I. (2016). Participatory strategy analysis: the case of wine tourism business. Agriculture and agricultural science procedia, 8, pp.706-712.
Chong, S. (2014). Business process management for SMEs: an exploratory study of implementation factors for the Australian wine industry. Journal of Information Systems and Small Business, 1(1-2), 41-58.
Corsi, A. M., Marinelli, N., & Alampi Sottini, V. (2013). Italian wines and Asia: policy scenarios and competitive dynamics. British Food Journal, 115(3), 342-364.
Duarte Alonso, A. & Bressan, A. (2016). A resource-based view of the firm and micro and small Italian wine firms. International Journal of Wine Business Research, 28(4), pp.349-368.
Fia, G., Canuti, V., & Rosi, I. (2014). Evaluation of potential side activities of commercial enzyme preparations used in winemaking. International journal of food science & technology, 49(8), 1902-1911.
Kowalkowski, C., Windahl, C., Kindstrom, D. & Gebauer, H., (2015). What service transition? Rethinking established assumptions about manufacturers' service-led growth strategies. Industrial Marketing Management, 45, pp.59-69.
Li, Y. & Bardaji de Azcarate, I. (2017). A new wine superpower? An analysis of the Chinese wine industry. Cahiers Agricultures, 26(6), pp.1-8.
Matt, C., Hess, T. & Benlian, A. (2015). Digital transformation strategies. Business & Information Systems Engineering, 57(5), pp.339-343.
Molnar, M. & Lendvay, E. (2016). possibilities to identificate action points in economic development of local management. Journal of Management, (1), p.28.
Prigge, J., & Whatley, A. (2016). Sustainability and regenerative leadership in the viticulture industry: a case study in the transformation of a leading California winery and vineyard. International Journal of Sustainable Economy, 8(4), 295-311.
Rastogi, N. & Trivedi, M.K. (2016). PESTLE technique–a tool to identify external risks in construction projects. International Research Journal of Engineering and Technology 3(1), pp.384-388.
Song, J., Sun, Y. & Jin, L. (2017). PESTEL analysis of the development of the waste-to-energy incineration industry in China. Renewable and Sustainable Energy Reviews, 80, pp.276-289.
Treasury Wine Estate. (2018a). About. Retrieved from: https://www.tweglobal.com/about
Treasury Wine Estate. (2018b). Brands. Retrieved from: https://www.tweglobal.com/brands
Treasury Wine Estate. (2018c). Responsibility. Retrieved from: https://www.tweglobal.com/responsibility
Treasury Wine Estate. (2018d). Media. Retrieved from: https://www.tweglobal.com/media
Treasury Wine Estate. (2018e).Investors. Retrieved from: https://www.tweglobal.com/investors
Varsei, M., & Polyakovskiy, S. (2017). Sustainable supply chain network design: A case of the wine industry in Australia. Omega, 66, 236-247.
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