Summary

Sula Vineyards wasfounded by Rajeev located in India and it is operating in wine industry.Sula madehis first wine in the year and after that the companyachievedsignificant growth with respect to market share, sales and customers’ base. Moreover, it is expected that Sula is considered as leading premium brand in wine industry with having 18 different types of wines in its product range.

Sula is operating in both local industry and international wine industry and the percentage of exports isincreasing continuously due to its quality and Sula is attributing on the wine lists of some of the world’s best restaurants. However, thecompany is facing certain strategic and financing challenges andthe management of the company is considering that in order to expand and in order to meet the current market needs of wine, new external funds would be needed and company is current cash flows of the company are negative and inventory turnover is also very slow which creates financial distress for the company.

In order to overcome the current challenges and in order to generate more cash, Rajeev formulated a five year forecast in three different scenarios and claimed that there is a significant potential of growth and it will be beneficial to fund future growth.However,it is expected that along with this forecasted growth there are certain other factors thatthe management of the company should be considered inorder to formulate the future business strategy.

Sula Vineyards Harvard Case Solution & Analysis

Analysis

SPOT 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)................

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