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Case Study: Beringer Blass Wine Estates Against Globalisation And Increasing Competition

1520 words - 6 pages

Situation AnalysisEnvironmentEconomical factors such as exchange rate should be closely monitored by Beringer wine estates as it's involved in import and export activities. The exchange rate will affect the profit which the firm makes.On the other hand, government and state legislation and polices must also be complied carefully since it's different in states and countries. Fines maybe imposed for wrong doings of firms.Natural factors can also affect the business since rainfall, seasonal changes, soil status and global warming can affect the growth of grapes which are used during wine production.IndustryThreat of new entrantsThe threat of new entrants is moderate in wine industry. The technology in wine industry is common and independent business can have access to those technologies in regards of making wines fairly easy. On the other hand, there are vast numbers of brands in winery and moderate brand franchise which make it moderately easy for new entrants to join the market.Further, new winery producers can have some degrees of access to distribution channels. However, government and states policies can limit entrants to join the market.Threat of SubstituteThe threat of Substitute is low. Luxury premium and commercial premium wines are for special occasions and on dinner tables. It serves a different purpose compare to soft drink, beers and fruit juice which is more generic.Bargaining power of buyersThere two buying group which are customers (end users) and dealers (intermediary customers). Consumers have a relatively low bargaining power since they do not buy in large quantities and they are fragmented. Bargaining power of distributors (2nd tier) is high. As the case study mentioned, there are 6 major distributors cater for most of the distribution of alcoholic beverage to 3rd tier. These 2ned tier distributors control nearly 60 percent of all wine distributed in the United States (buyers are concentrated) while many smaller distributors had become marginalized or acquired due to the advantages of scale and scope afforded to the three largest distributors. Grocery and retail chain stores such as Wal-mart, Safeway have high bargaining power since they are major channels for most consumers acquiring wine. Wine & liquor stores and restaurants are more specialized and provide a better service to the end user, but they only consist of 23 percent sales in the wine industry which made a small segment of the market with less bargaining power.Rivalry among Existing competitorsThere is a high rivalry among existing competitors. There are two major types of businesses: stand-alone wineries and large multi-business conglomerates that had wine divisions. There is vast numbers of competitors within the industry where the market Beringer Blass has to competing against top firms holding substantial market share and those smaller players. Especially, the growth in winery market (while the overall alcoholic beverage consumption is slowly declining) has...

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