Strategic Analysis of Robert Mondavi Inc.
Essay title: Strategic Analysis of Robert Mondavi Inc.
Robert Mondavi Corp. Analysis
Summary
Company founded in 1966 by Robert Mondavi in Napa Valley, California
Company vision to make California a recognized wine producing region alongside great winemaking regions of Europe
Major focus on technology and wine growing techniques
Production of premium to super ultra premium wines
Mondavi focuses on personal sales, wine competitions, and lavish parties to promote the wines rather than conventional advertising
Mondavi has a portfolio of premium to super ultra premium wines to fill various price points and niches in domestic wine market
1981 Opus One joint venture with Baron Philippe de Rothschild
Through 1980’s and 1990’s, Mondavi acquires many wineries and vineyards throughout California
Mondavi develops national following
Phylloxera (vine killing insects) begin to infiltrate California vineyards
1993, Mondavi, in need of capital due to extensive acquisition expenditures in previous decade plus the replanting costs, issues public shares
In the mid-1990’s, Mondavi begins 3 joint ventures with a Chilean, an Italian, and French firms
Wine production in California accounts for more than 70% of wine consumed in America
Wines in America are sold through a three-tier distribution
100’s of wineries emerge in California,
90% of Mondavi’s revenues generated domestically
II.
Case Profile
Problem/Issues in Case
Managing multiple brands in the global markets
Maintaining domestic market share while foreign competitors enter U.S
Accurately forecasting demand and acquiring necessary wine grapes
Supporting Statements
By 1998 Mondavi has about 4% domestic market share (fifth largest)
U.S. wine exports make up only 4% in the international market places despite being the fourth largest producer of wine in the world {exhibit 1}
By 1999, Mondavi is managing 13 brands (6 international)
In 1999, Mondavi experienced major shortfalls in supply resulting in reduced sales, stock price drops 60%
January 1999, Mondavi lays off 4% of workforce
Management is divided on future strategy:
Focus on Domestic Brands, 90% of revenues
Continue to Diversify, Global partnerships and acquisitions
III. Situational Analysis
External Environmental Analysis
General Environment
Globalization:
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By 1999, 20% of wine consumed in America is imported while the U.S. share of world export wine is a low 4% – The global markets provide tremendous potential {exhibit 2}
Technological:
Mondavi’s success in creating world class wines is often attributed to their advanced technology
Sociocultural:
In general, the wine consumer’s preferences don’t change quickly, but firms must look for opportunities to lead when the changes occur, additionally firms must adapt to foreign market preferences
Political/Legal:
Restrictions in some countries have made it difficult for U.S. wine firms to enter markets- Domestically the wholesale distributors have lobby power and control of the regulations overseeing the industry resulting in restrictive distribution
Industry Environment
Rivalry Among Competitors:
Rivalry is intense and expected to remain so in at all product levels- 10 large domestic producers