Robert Mondavi Case Study

Examine, from the perspective of Mondavi, the pros and cons of each of the three strategic options.

a. Organic growthb. Acquisition or merger with local wineriesc. Acquisition or merger with foreign wineries

Organic Growth: Organic growth is the process of businesses expansion due to increasing the customer base, output per customer, and/or through new sales.

Pros ConsOrganic growth

- Mostly for its premium brands

- Deliberate geographic expansion, high quality products, detailed consumer research and attention to customer needs and preferences

- Better control and coordination: Firms maintain controls whereas external methods lead to loss of control and ownership

- Relative inexpensive: Source comes from retained earnings, less risk as the amount of capital involved is relative lower than external

- Ability to maintain corporate culture: No problems related to culture clash that might rise in acquisition environments

- Safer as it involves adapting a familiar business model

Harder due to increasing competitive landscape, market consolidation, large market cap Diseconomies of scale: Hierarchical structures may increase communication problems, and there may be slow decision making. Need to restructure: When a firm grows, there is a need to restructure (requires times, effort, money), communications will need to be handled with more care, and there is a need for training/retraining/updating the set of skills for staff. Delegation of decision-making powers to managers (reducing control of original owners) will take place.-

Acquisition or merger with local wineries

- Domestic brand diversification (build brand portfolio in the premium wine market in terms of price points, niche)

- Economies of scale would help to reduce secondary costs

- Acquisition of more land

- Using long term debt to finance acquisition

Acquisition or merger - Greater market share

with foreign wineries - Able to develop global recognition for Mondavi brands

- Diversify revenue stream

- Able to grow its financials

References:https://www.boundless.com/business/textbooks/boundless-business-textbook/types-of-business-ownership-6/corporate-growth-54/organic-growth-268-5574/

http://www.slideshare.net/KRDickson/Mondavi

http://www.slideshare.net/fullmoonded/robert-mondavi-and-the-wine-industry-case(For resources on capabilities and tangible/intangible assets)

http://custom-essay-cheap.com/robert-mondavi-and-the-wine-industry/

http://metersolution.com/wp-content/uploads/2013/02/3835-15324-1-PB-1.pdf

http://www.slideshare.net/JohnnySchaefer/case-study-mondavi-winedoc - SWOT Analysis