Château Pontet-Canet Case Study Solution
Porter 5 Forces (analyse of the industry Chateau is in)
Bargaining power of buyer
The bargaining power of buyer is of high force, because there are no cost of switching associated with customers to switch from one brand to another. This increases the bargaining power of the customers.Customers have so many options available in the market. Selection is so high, making it challenging for any company to retain its customers. The demand of the products is based on quality and price of the items. The main reason for customers to swap are taste, priorities and style associated with the brand. Some customers even pay attention to the environmental factors as to whether the company concerns the environment or not, before they make any purchase.
Bargaining power of supplier
The bargaining power of supplier is high,because the entire production volume of the company is uniformly distributed over the range of critic stores. Additionally, the supply of products through merchants, increases the company’s dependency over them. The merchants are responsible for storing the wines until they are ready, hence holding on to substantial amounts of older vintages and representing a larger number of Chateaux.The wines are widely distributed by merchants, which plays an effective-part in perpetuating and maintaining the reputation of the classed growth.
Threat of new entrants
There area number of barriers for the new entrants to enter the industry, such as: knowledge requirement, licensing and capital investment due to which the threat of new entrants is lower in this industry. The new entrants would have challenges in having well established and active connections with distributors. This would help the min reaching a broader base of customers to compete successfully in national as well as international markets.
Threat of substitutes
Different companies are selling different types of wine in the market. These wines’ tastes are unique, and they are brewed using different methods. Substitute for a wine is another type of alcoholic beverage. The types of wine includes: craft wine, cabernet sauvignon,cabernet francmerlot, petit verdot and red wines etc. This means that the competitors need to manufacture appealing products for its customers and it should create values associated with the Brand. The industryas a whole, has more substitutes due to which the company must have versatile products to combat the threat of substitutes.
Intensity of competition
The intensity of competition is robust and rigorous in the wine industry. In particular, the market competitors are competing more effectively fora share of total alcohol by launching innovative products at reasonable prices.The competitors are growing significantly and are focusing on improving their market share in the business. The company is facing an intense competition from Bordeaux and new World Wines, including:Chile, Australia, South Africa, New Zealand, the US and Argentina.Thousands of small players are appearing, which are introducing new flavours that deteriorate the market share of the existing players.
PESTLE Analysis
Political factors
Wineis a heavily regulated product, which is profoundly affected by the political environment of each nation. INAO regulations for the AOVDQS andAOC wines complicate the dynamic regulatory environment and creates challenges for the company in maintaining a stable revenue stream. For instance: according to the INAO regulations; the minimum age of the wine must be 3 years and the minimum alcohol content must be 10 (10.5) vol. %, which means that the political factors has an impact over revenue-generating abilities.
Economic factors
Economic factors have a direct impact over the wine sales across the globe. Wine being a non-essential product means that the income level of the consumers influences the sales and market growth. In France, the wine industry is employing higher number of employees that provide an average annual wage equivalent to approximately 18100 dollars in France, and is growing at the rate of 2.5% per year. Hence the brewing companies are providing significantly greater economic benefits.
Social factors
Consumption of wine depends upon the culture and society, and it has a rich history in many regions. It influences the tastes and preferences of each market wine-being sold in these regions.The frame of Bordeaux was mostly grounded in the red wines, hence constituting 85-90 percent of volume. The demand for the unfiltered or unrefined wine and fruit-forward wine have increased the pressure over the market players to understand-the changing preferences, so that they could be in a position to sustain and achieve a competitive advantage in the market.
Technological factors
The rapid pace of the technological innovation and practices including temperature-controlled stainless steel tanks, better canopy management and green harvesting have lasted dramatic impact on the overall wine industry. Companies that are investing in clean technology and increasing their dependence on renewable sources of energy, will provide a better competitive position in the industry.
Legal factors
The sale of alcohol is heavily regulated at every location where-wine is sold.Besides focusing on fulfilling them; there are requirements for the organization to make changes to their businesses. For instance, safety is an essential legal requirement for a brewery plan (A.Olajire, 2012).Laws cover everything from labour, alcohol content, sugar content, maximum yield, nutrition labels and age of purchase to the approval of appellation status etc.
Environmental factors
There is an increased environmental awareness among public and customers.There. are various environmental factors that are involved in wine manufacturing (A.Olajire, 2012). Wine-industry has to pay closer attention to the residual waste, solid waste and excessive alcohol run-offs that need to be considered at water treatment plants.Consumers are paying close attention towards sustainable business operations, and they are keen on clean-technology-based products. Companies that are investing in clean technology and increasing-their dependence on renewable sources of energy, will provide a better competitive position in the industry. The organic farming provides the way of creating less water pollution and soil pollution, and would lower the greenhouse emissions, hence it is more energy efficient and is gaining huge popularity all around the globe. Additionally, the bio dynamic farming creates resilience in animals and plants against stress and extreme weather events, hence optimizing the growth cycles and balancing the atmosphere around the planet.
Solution proposal for Chateau
Taking under consideration the current situation of the company;it is recommended that the company should focus on customer satisfaction and marketing itself by using differentiation strategy and developing long term relations with its customer. It is important for the company to explore and capture the market opportunities, to determine the possible communication and distribution strategies through which the company would be able to be better marketed and better positioned in order to boost its sales.......................
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