Coopers Creek CaseEssay Preview: Coopers Creek CaseReport this essay1.0 IntroductionCoopers Creek, established in 1982, became one of New Zealands more successful medium-sized wineries by following a strategy of resource leveraging via networks of co-operative relationships with other New Zealand winemakers in the domestic and export markets. This strategy allowed Andrew Hendry, the managing director, to consciously manage the growth of the company to retain the benefits of small size. However, with increasing globalisation of the wine industry, the changing nature of export markets, the early maturity of the New Zealand industry and the constrained supply facing New Zealand wine makers, Andrew Hendry was faced with the decision of how to position a smaller company for the future. He had to decide whether the network-based strategies that served the company so well continued to be appropriate under conditions of industry concentration, increasing competition and emerging globalisation. (Robbins S, 2006)
1.1 The NZ wine industryWhen Andrew Hendry established Coopers Creek, the New Zealand environment was highly regulated. By 1984, the New Zealand government had initiated a programme of deregulation, which included devaluation of the New Zealand currency, exchange rate flotation and general anti-inflationary measures. (Porter M, 2001) The opening of New Zealands domestic market meant that businesses had to improve their efficiency substantially over a short period. The agricultural sector sought out new markets, to replace the loss of their traditional dependence on the UK market with its increasing commitment to its European trading partners, and new products, reflecting a growing awareness that much of New Zealands exports were of a commodity nature. This period saw growing exports to Australia, the United States, Japan and the rest of Asia and exports of predominantly sheep meat and dairy produce being accompanied by more fresh fruit, venison and wine. A further response to fiercer competition at home and in overseas markets was an increasingly strong focus on quality, a case in point being the New Zealand wine industry.
The New Zealand wine industry accepted the consequences of the liberalisation of the domestic economy and recognised the need to understand how on-going changes in the international economic environment affected its prosperity and how to plan accordingly. Building from a low international base in the 1980s ($4.5 million in exports in 1987), New Zealand wine exports achieved phenomenal growth and accounted for $168 million in 2007, comfortably exceeding the $100 million by 2007 target set in 1999. The UK market was the most important export market for the industry in 2007, and at $84 million it accounted for around 50.22 per cent of total exports by value and 54.28 per cent by volume. Europe accounted for 66 per cent of exports with 85 per cent of that going
The wine industry’s contribution to global growth at the time of the mid-1990s was to invest $1 billion in foreign subsidiaries to develop new markets in Latin America (G&C) and to acquire European and Australian wine companies to strengthen their existing domestic presence in the New Zealand market. In 2001 of the foreign branches operating in the US, US$19 million was invested and by 2002 the foreign subsidiaries in Argentina were in a position to earn $1.6 billion. The US$17 million for a New Zealand subsidiary in 1993 to 1997 and US$16 million for an Australian company in 1997 resulted in a net income of $7.7 million, and a net profit of $7.1 million in 1998, before any impact on New Zealand wine sales. New Zealand had an economic surplus of 5.5 per cent in 1997, which then had fallen to 0.5 per cent in 2000. In 2008 it was forecast to grow 2.1 per cent in new markets and a net decrease of 3.1 per cent in 2013, while other important aspects of its economy, notably tourism, increased the deficit by 0.7 per cent in New Zealand and was further exacerbated by the economic collapse.
The investment strategy was the best in the history [0.1 per cent decline], it would represent the single biggest factor in that trend. It was aimed at New Zealand for decades. After a huge failure at the start of 2000, it reached that peak at 6.7 per cent of net exports, or 9.6 million litres a year. In 2006 it reached 8.8 billion litres. In 2005 it reached the new peak at 7.8 billion litres. In 2014 it reached 7.4 billion litres. The UK investment strategy has been focused on export-oriented countries. It has relied on state-of-the-art equipment, including high-energy reactors. The first part of the Strategy was aimed at developing the New Zealand technology industry in the late 1970s with the government being part of this effort. The second part of the Strategy was to create a stable and diverse sector in the international market in order to help establish the industry. It started the process of establishing the first US-based WLP subsidiary in New Zealand under the WSPN. With that development to begin there was to be a concerted effort and the result was the start of our first WLP plant in 1994 and its initial operations were completed in 2005.
The WLP strategy also aimed to create opportunities for the international wine industry which benefited from its success and it encouraged new international collaborations. The first part of the strategy was very much aimed at the production of the world’s finest wines at a lower cost. This was achieved through a $3.8 million investment programme that resulted in a $3.5 million increase in gross domestic product which resulted in a $30 million increase in the price of wine in 2005. It allowed the development of new categories of products that could be enjoyed by all members of the market without limiting new products available
The wine industry’s contribution to global growth at the time of the mid-1990s was to invest $1 billion in foreign subsidiaries to develop new markets in Latin America (G&C) and to acquire European and Australian wine companies to strengthen their existing domestic presence in the New Zealand market. In 2001 of the foreign branches operating in the US, US$19 million was invested and by 2002 the foreign subsidiaries in Argentina were in a position to earn $1.6 billion. The US$17 million for a New Zealand subsidiary in 1993 to 1997 and US$16 million for an Australian company in 1997 resulted in a net income of $7.7 million, and a net profit of $7.1 million in 1998, before any impact on New Zealand wine sales. New Zealand had an economic surplus of 5.5 per cent in 1997, which then had fallen to 0.5 per cent in 2000. In 2008 it was forecast to grow 2.1 per cent in new markets and a net decrease of 3.1 per cent in 2013, while other important aspects of its economy, notably tourism, increased the deficit by 0.7 per cent in New Zealand and was further exacerbated by the economic collapse.
The investment strategy was the best in the history [0.1 per cent decline], it would represent the single biggest factor in that trend. It was aimed at New Zealand for decades. After a huge failure at the start of 2000, it reached that peak at 6.7 per cent of net exports, or 9.6 million litres a year. In 2006 it reached 8.8 billion litres. In 2005 it reached the new peak at 7.8 billion litres. In 2014 it reached 7.4 billion litres. The UK investment strategy has been focused on export-oriented countries. It has relied on state-of-the-art equipment, including high-energy reactors. The first part of the Strategy was aimed at developing the New Zealand technology industry in the late 1970s with the government being part of this effort. The second part of the Strategy was to create a stable and diverse sector in the international market in order to help establish the industry. It started the process of establishing the first US-based WLP subsidiary in New Zealand under the WSPN. With that development to begin there was to be a concerted effort and the result was the start of our first WLP plant in 1994 and its initial operations were completed in 2005.
The WLP strategy also aimed to create opportunities for the international wine industry which benefited from its success and it encouraged new international collaborations. The first part of the strategy was very much aimed at the production of the world’s finest wines at a lower cost. This was achieved through a $3.8 million investment programme that resulted in a $3.5 million increase in gross domestic product which resulted in a $30 million increase in the price of wine in 2005. It allowed the development of new categories of products that could be enjoyed by all members of the market without limiting new products available