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MUHAMMAD NOMAN BABAR YOUSUF MUHAMMAD AKMAL HUSSAIN KHAJA MUHAMMAD IMAD GHORI
Dramatic Solution
Joseph left his young sons Responsibility and decision making After the death of parents, Probition was repealed sons decided to move from grape growing to wine producing two pamphlet on wine making $36000 in hand
But!
o Gutter image o Further tarnished by the POP-Wine (Boones Farm and Spannada wines in 1960 to 1970s)
Image
at that time started upgrade its image Maintain its market share and sales It began Premium table wines zinfandel,Sauvinon Blanc, Ruby cabernet and French Colombard
Vertically Integrated
Truking companies Own bottles Midcal Aluminum Company Distributors
Key executives
Ernest was president Polite , but blunt Market and distribute Julio was chairman of the board Farmer at heart Producing wine
Internal operations
Gallo was tightly held and secretive Few loyal senior ran the divisions and reported to Ernest 300 pages training manual Diana Kelleher said I never saw a profit and loss statement
Coolers entry
Factors
1. 2. 3. 4. 5. Drunken driving laws MADD (Mother Against Drunk Driving) Fitness and health Legal drinking age Lobbying to remove liquor advertising from TV
competition
in first quarter of 1986, the world largest winery, brewery and distillery were vying for the top spot Cost of entry $10million just for advertising Estimated 60 to 65 million cases at end of 1987 More than 150 kinds of cooler were competing the top seven
TOP SEVEN
Wine coolers E & J. Gallo Winery California cooler Sun country White moutaint Calvin cooler Seagrams Golden Seagrams Premium Market shares (%) 22.1 18 13.1 12.4 8.3 6.9 5.5
Corporate strategy
Growth strategy:
They went for related diversification because distribution and other activities. Related diversification: Enter in new cooler industry Vertical integration: Forward and backward. Product development. Introduced premium wine to upgrade its image(ZINFANDEL,SAUVIGNON BLANC, RUBY CABERNET AND FRENCH COLOMBARD)
Distinctive competencies
Advertising and distribution: Fictional character, Bartley and James, creative ads, used extensive wine distributor ship, separate sales force.
Amount of fixed cost: It was low thus favorable for Industry. Capacity increased by any firm: No capacity constraint thus favorable. Height of exit barrier: Exit barrier were low thus favorable.
3) POWER OF BUYER
Power of buyer was high thus unfavorable for the industry. Because. Alternate suppliers are plentiful because
product is standard or undifferentiated. Switching cost of changing supplier low. The purchased product is unimportant to the final quality or price of a buyers product or services and thus can be easily substituted without affecting the final product adversely
4) Power of supplier
Power of supplier was low thus favorable for industry. The supplier industry is not dominated by a few companies The product or service is not unique. Low switching cost Substitutes are available.
5) Threat of Substitute.
o It was high thus unfavorable for the industry. It was high because. Aggressiveness of substitute products in promotion Switching Cost low Perceived price/ value
QUESTION # 3
Fallowing are same steps which GALLOS has taken to consolidate its position. EXTENSIVE DISTRIBUTION:
It overcome power of buyer rivalry among existing firms threat of new entrants .
SKILLFUL ADVERTISING:
It over come threat of substitute.
Question 4
JAMES and BARTLEY giving a strong response to current and expected key success factor in industry environment.
Question 5
QUESTION 9
RECOMMENDETIOIN
They should extend their product line in wine cooler. They should try to create back up for themselves. They should decentralize their power because educated and able manager have not part in decision making They should unveil secrets to employees in order to motivate them.
THANK YOU!