GOOD COMPANY, GOOD WINE, GOOD WELCOME, CAN MAKE GOOD PEOPLE.

- WILLIAM SHAKESPEARE (1613)

GLOBALIZING AN AUSTRALIAN WINE COMPANY

GROUP 3: HENDRY PAUL - VANIA
MULTINATIONAL CORPORATION MANAGEMENT

BRL HARDY:

OUTLINE
Industry Background
BRL Hardy Background Success in Europe If you were Steve Millar, what would you do? Any suggestions to your Dream MNC?

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

INDUSTRY BACKGROUND
1788 Introduced by Captain Arthur Phillip 1990 Consumption reached 18.5 liters per person 2025 Potential Exports Increased

US$360 million (3,5% worldwide) US$2 billion (16% worldwide)

1969 wine consumption was 8.2 liters

fortified wines table wines two-liter bag in a box

1995 27% of the Australian wine production is exported

United Kingdom / United States Germany / Japan

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

BRL HARDY BACKGROUND

Hardy BRL Hardy Ltd. BRL Berri Coop

Thomas Hardy & Sons Renmano Wine Coop

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

BRL HARDY BACKGROUND

Items
Founded

Hardy
Founded by Thomas Hardy in 1853 Win first international gold medal in 1882

BRL
Founded in 1916 as Renmano Wine Coop. Merged with Berri Coop. in 1982 Berri Renmano Limited (BRL)

Known for

Australias largest Fortified, bulk, value wines winemaker The oil refinery of the wine industry Award-wining quality wines Aggressive and commercial Cooperative (1916: 1st cooperative winery, 130 Italian grape growers) Huge-volume grape crush Bulk packaging operations access to fruit, funds, and disciplined management
If I were Steve Millar suggestions to Dream MNC

Polite and traditional , Culture/ Values Family ownership

Core competencies

Marketing expertise, brands, and winemaking know-how

MULTINATIONAL CORPORATION MANAGEMENT

Industry Background BRL Hardy Background Success in Europe

BRL HARDY BACKGROUND

Items
Export Experience

Hardy
Track record at export 1989: acquisition of Whiclar and Gordon

BRL
Limited international experience in Scandinavia

Goals

Looking for wineries in Struggling and looking for ways Europe to reach critical to expand and upgrade its mass + credibility to give business access to Europe. Looking for multiple sources of supply

MULTINATIONAL CORPORATION MANAGEMENT

Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

REASON OF MERGING

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

NEW MANAGEMENT

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

POST MERGER SUCCESS

Post Merger Success
500.00 450.00 400.00 Value (in 1,000) 350.00 300.00 250.00 200.00 150.00 100.00 50.00 0.00 1992 1993 1994 Year 1995 1996 Shareholders equity, 249.70 Total liabilities, 205.80 Operating profit 49,20 Net after tax profit, 28.40 1997 Total assets, 455.50 Sales revenue, 375.60

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

SUCCESS IN EUROPE
Involving 2 key people: Stephen Davies & Cristopher Carson

Stephen Davies Strategy:

Building strengths, starting with U.K. market
Make Quality Wines for the World slogan Initiated a program to rationalize product portfolio Repositioning a few key brands

Christopher Carson Strategy:

Implementing cost-cutting plan
Reduce the product line from 870 items to 230 Reduce the headcount from 31 to 18 Install strong systems, controls, and policies put him as key decisions maker
MULTINATIONAL CORPORATION MANAGEMENT
Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

SUCCESS IN EUROPE
BRL Hardy Europe Historical Data
100,000 90,000 80,000 70,000 45% 40% 35% 25% 20% 15% ROI Percentage 30%

Sales In 000

60,000 50,000 40,000

30,000
20,000 10,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 Year BRL Hardy forecast Net Sales ROI

10%
5% 0% -5%

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

STEPHEN DAVIES VS. CHRISTOPHER CARSON

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

STEPHEN DAVIES VS. CHRISTOPHER CARSON

Centralized Approach vs. Decentralized Approach
Centralized approach (Stephen Davies)
Central control of branding, labeling and pricing decisions Long-term strategy to become a global player centralize key decisions

Decentralized approach (Christopher Carson)

UK market is not influenced by branded bottles but by the pushing of commodities through retailer Labeling should not be a centralized decision due to local market condition

Steve Millar point of view

Handled their differences not directly through instructions Valued progress more and saw the conflicts as the constructive tool Instead they clashed together - resulting in a volume quadruplicating BRLH UK
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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

QUICKLY, BRING ME A BEAKER OF WINE, SO THAT I MAY WET MY MIND AND SAY SOMETHING CLEVER. - ARISTOPHANES (424 B.C.)

IF I WERE STEVE MILLAR

MULTINATIONAL CORPORATION MANAGEMENT

IF I WERE STEVE MILLAR

A mixed of centralized and decentralized structure is the right thing.

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

IF I WERE STEVE MILLAR

Set a framework to maintain a clear policy regarding the areas in which the headquarters would have control over and the areas which Mr. Carson can have independent control over. Let headquarter maintains control of the number of competing brands at a given time.
Allow regional operations a certain number of brands to capture local markets segments that do not interfere with a global brands

The two lines of reporting decision is pretty ambiguous Let Christopher Carson Stayed under Stephen Davies More fair

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

DISTINTO
Launch DIstinto Why?
Organizational Factors True Partnership, unlike Mapocho from Chile Does not target the same consumer as Stamp and Nottage Hill Financial Factors Cheap Launch ( 100,000) Good forecast of selling (made by Carson) Other Factors Diversify its suppliers (reduce risk) Providing more varieties to the retailers Brand for average consumer (3.49 to 6.99)
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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

KELLYS REVENGE VS BANROCK STATION

Launch Kellys Revenge Why?
Local responsiveness product for U.K. market
Backing of U.K. sales management team

Full fill the low range of Hardys brand since Nottage Hills and Stamps went up
80% of wine market in Europe was priced below 4.49

Launching Banrock Station Ignoring local knowledge and underutilizing subsidiary strength, also demotivating their managers Risk of currency fluctuation will be there if the company comes up with global product price standardization will be very difficult.
MULTINATIONAL CORPORATION MANAGEMENT
Industry Background BRL Hardy Background Success in Europe If I were Steve Millar suggestions to Dream MNC

SUGGESTION TO DREAM MNC

"FROM NOW ON I WANT EVERYBODY TO PUT THEIR EFFORTS TOGETHER AND UNITE IN FINDING A WAY TO MAKE SUPERIOR VEHICLES. - KIICHIRO TOYODA 1939 MULTINATIONAL CORPORATION MANAGEMENT

TOYOTA IN SOUTH AFRICA

Since June 1962, Toyota has been established a manufacturing operations in South Africa (Toyota South Africa Motors Ltd.)
Main Products: Corolla, Hilux, Fortuner, Dyna Average of 125,000 vehicles produce per year with 7,000 employee Main Supplier for Europe and Africa market

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

TOYOTAS APPROACH
Toyota is using a regiocentric approach to deliver its global product.
Toyota does not offer the same products across those regions as it would not be adapted to the local demand Offering products to continental regions with similar economies and culture.

Some report notes that Toyotas operation is too centralized

Major decision comes from Japan (recalls, communications, marketing, and vehicle design and development)

In North America Toyota doesn't have a single executive in charge each major department head reports to Japan. Dismissive of outsiders
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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

GLOBAL VS LOCAL

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

DECISION MAKING PROCESS (CURRENT)

Three-layer Decision making procedure
Executive Vice President Executive responsible for the operations involved Chief Officer

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Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

DECISION MAKING PROCESS (SUGGESTION)

Eliminating The executive between the Chief Officer and vice president
Two-layer Decision making procedure
Executive Vice President Chief Officer

By doing that:
Reducing Chance of conflicting ideas Swifter flow of information from Divisional General Managers to Executive Levels. Increased clarify in organizational responsibilities Decision making closer to frontline operations.
MULTINATIONAL CORPORATION MANAGEMENT
Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

PRICING STRATEGIES
Toyota offers similar products but there are huge differences concerning the price between some countries. Toyota Prius
Germany $34,000 South Africa $42,000

Its a difference of $8,000 considering that the purchasing power for Germany are much higher than people in South Africa.

Toyota should find the way to adapt not only their products to the each region but also its Price.
MULTINATIONAL CORPORATION MANAGEMENT
Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

KEY LEARNING
More need of cooperative effort and co-option of dispersed capabilities of national units instead of a very centralized direction and control by the parent company Need for global integration as well as local responsiveness Organization design is also a key factor in organizing global operations

MULTINATIONAL CORPORATION MANAGEMENT

Industry Background BRL Hardy Background Success in Europe If I were Steve Millar Suggestions to Dream MNC

THANK YOU
FOR YOUR ATTENTION
MULTINATIONAL CORPORATION MANAGEMENT