Sula Vineyards Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Sula Vineyards Case Solution

SWOT Analysis

Strengths

It is expected that the Indian wine industry is continuously growing and it is considered as the fastest growing market of wine, therefore being in the wine industry is a strong point for the company. The. experience of management and the skills of consultants like Kerry are an asset to the company. These components have played a major role in growth of the company. The availability of raw materials and good relations with local farmers will give the company a competitive advantage in the international market.In the past, the company used its marketing strategy to attract customers, which allowed the company to grow at stable rate. The company has shown prospects to become a leading wine manufacturing company globally. The company has resources and intention to become world leader; therefore it has high chances of achieving this position.

Weaknesses

The lack of capital can limit the company from achieving its growth strategy while the debt funds from banks might be too costly for the company.In order togrow globally, the company requires large amount of fixed assets which will result in lower turnover on assets. This might require large investment at lower rate of returns.

The company needs to develop strong controls over inventory as the inventory is highly perishable and require very high care for management.The company lacks a distribution network as compared to other global companies, which can result in the average price of the company becoming more costly for consumers.(David Williams, 4/7/2011)

Opportunities

The market in which the company operates has shown high potential and the overall market is growing, therefore the company hasopportunities to avail cash easily.The government policies promote companies to expand globally; therefore the company has the opportunity to avail subsidies from government for going global.

The Indian climate is very suitable for growing grapes which is a core component of wine. This will allow the farmers to reduce costs and sell it at lower price to the company. Moreover, thiswill allow the company to buy raw materials at lower costs.The living standard of people is improving, as wine is usually consumed in high standard societies, therefore consumption is expected to increase which will increase demand for wine in the future.(Jacob, February, 2008)

Threats

The most dangerous threat for the company is the threat of new entrants and competition due to established players. Companies like Diageo and Constellation Brands have a reputable brand in the industry globally; therefore theirentry into Indian markets will largely hamper the demand of Sula. Furthermore,new entrants can easily enter the market as wine licenses can be easily obtained in India.

Although the weather is perfect in India for growing grapes in the country however,the weather in India is not reliable and it has becomeunsuitable for crops very quickly.Government policies and attitudes regarding production and distribution of wine aredifferent in each state of India; therefore it will be difficultto develop a general policy of distribution across the country.

Financial Analysis

In order to identify the future growth and future needs of cash, Rajeev designed three different scenarios and he considered that there is a significant potential of growth in both local and international market. Moreover, by anticipating the future financing needs and by identifying the future cash flows he could convince the board of directors. Detailedanalysis of the each scenario is given below.................

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