Chilean Wine Industry Essay Example
Organization success is dependent on its structure and culture. These two aspects determine the performance of an organization. Organization structure involves the methods used, which enable the success of an organization. This includes the way people and jobs are planned to ensure that the organization’s performance is maintained. Organization success in a firm is enhanced by identifying the correct people to undertake special jobs and ensure the success of the organization. This includes the key responsibilities that each employee has, who they have to report to, and the respective managers, who have control over them.
Strategic management involves the analysis of the initiatives that the management has set regarding the resources put forward and the performance of the company externally and internally. This entails the organization overlooking the mission, visions, and objectives. This is characterized by the programs and projects that the company has set and wishes to achieve after a certain period of time. These programs and project are used as a pathway for achieving the goals and objectives set by the company. A scorecard is the object that is used for checking the success and performance of the company. Many managers state that objectives should be based on what the stakeholders expect. Strategies are the plans that the business has set in order to achieve better product design and quality, better promotion, better distribution, and better pricing. This strategy should include the time span and goals of the business. The business should also consider targeting, segmenting, and positioning, all of which are strategies (Jeyarathnam, 2008).
Porter’s National Diamond (PND)
Strategic analysis is very important to a company. This is because this analysis focuses on an organization’s view including the resource-based and industry-based view. These views usually analyze an organization without any considerations taken involving the relationship that occurs between the organizational strategic choices. The national diamond model is a method that is used for the analysis of an organizational environmental task. This model states that the strategic choices picked should not only focus on the resource and industry view, but also on the industrial framework constraints. The analysis of an organization is very important, as it enters a new market, and tries to operate within the operational frameworks of the new institution (Sadler, 2003).
The national diamond model came about as a result of comparative advantage study patterns among the nations that were industrialized. This model resulted in integrating the other models of Porter’s five forces, competitive advantage, and value chain. This method is used to analyze a company’s capabilities to function and work in a national market, and the capabilities of the national markets to compete in the international markets. This model recognizes five pillars involved in research, which include demand conditions, firms strategy, factor condition, supporting and related industries, and rivalry and strategy. These pillars are well-structured to focus on the macroeconomic environment for the determination of production factors needed. Another pillar is based on the specific relationships, which support the industry with another firm in study, and another one focuses on the strategic response of the firm (Konsolas, 2001).
The factor condition includes the aspects, such as infrastructure and skilled labor, necessary for the competition in a market. Demand condition explains the home market demand’s nature of the product manufactured by a company. Supporting and related industry includes the absence or presence of other related industries, which are competitive internationally, and suppliers. The firm’s rivalry, structure, and strategy indicate the conditions available in a country with respect to the way the organizations are managed, created, and organized with the domestic rivalry involved. The demand for wine in Chile is very high. This is as per the growth that has been experienced in this sector. The sector is highly growing with many companies cropping up to compete in this industry. Chile is said to be the fifth distributor and exporter of wine in the world. The climate of this country is favorable for the growth of grapes. The common types of grapes used are cabernet sauvignon and merlot (Macchiavello, Centre for Economic Policy Research, 2010).
Any startup company needs to focus on the demand conditions. Demand condition explains the home market demand’s nature of the product manufactured by a company. The demand of wine, in comparison to other types of alcohol, is not very high in Chile. On the contrary, Chilean wine is a very highly-rated product in other countries. Many people aspire to have a taste of the Chilean wine, which makes it possible to start a wine business in Chile. The high demand is a strong factor that makes it possible for a startup business to sell and gain a competitive market share. The demand for Chilean wine is said to have a strong effect on other wines from different European countries. Spain is one of the countries that is facing competition in the wine industry (Markman, Phan, 2011).
The high demand of wine is an aspect that makes it possible for more competitive growth. More companies will join the industry as a result of the good market conditions. Another aspect that a startup industry should consider is supporting and related industry. Supporting and related industry includes the absence or presence of other related industries, which are competitive internationally, and suppliers. Any business that needs to start has to look at its competitors. The competitive nature of the Chilean wine has made it possible for many industries to crop and grow. The supporting and related industries in Chile seem to have a competitive nature; an aspect that has made them win over many people (Morel-Astorga, Ekonomisk-Historiska Institutionen, 2002). Many companies manufacturing wine are said to have a higher competitive advantage, which is worrying other producers of wine in the world.
The demand of Chilean wine has made the companies come up with the strategies, which have made it possible for them to manufacture something that people want. The suppliers of Chilean wine have ensured that their wine is never ending and always maintain high quality (Morel-Astorga, Paulina, 2002). Start-up companies should ensure that they have clearly understood all market players and identified their competitive advantage as an aim to know the strategies to put in place. Another aspect is the infrastructure and skilled labour necessary for the competition in a market. Any start-up business should ensure that it holds the best manpower that possesses the right skills to ensure that it produces the best products. Many Chilean wine industries possess the right work force, which is able to understand what quality is and what is necessary to be offered. This labour force is given the ability to form unions, an aspect that shows that they receive the best wages, and are well-heard in case they present their views. However, the government always protects them, and stipulates that compulsory or forced labour is against the rights of the employees. Additionally, this law created by the government has the stipulated time and hours that an employee has to work. This is a clear indication that the government understands the value of the Chilean wine, and also of the people, who are working towards its production. This has made it possible for these companies to clearly maintain quality and ensure constant sales.
A company should ensure that the labour force they employ possesses the right skills. This makes it possible to coordinate and lead these people. This is because a skilled labourer understands the regulations; thus, is able to work without supervision. Chilean wine industries uphold skilled workers, who help them to produce a product that satisfies a customer’s need. Another aspect is infrastructure. A company should ensure that it holds the right development necessary for wine production. Chilean wine industries are well built and possess the right technology necessary for production. The companies should always consider technology in order to ensure that they manufacture products that satisfy the needs of consumers. Chilean wine industries are also well-equipped with necessary machines and tools. Proper technology and development ensure that a company produces only the best products (Huneeus, Hicke, Bancroft Library, 1996).
Another aspect is the firm’s rivalry, structure, and strategy, which indicate the conditions available in a country in respect to the way the organizations are managed, created, and organized with the domestic rivalry involved. The structure that company chooses determines the success of it. There are different types of organizational structure: matrix, divisional, and traditional one. These structures bring success to an organization, if applied in a correct way. The correct structure for this organization is the divisional structure, because in the wine industry, the production involves different divisions. This enables each division to correctly identify its problem and handle it using the correct measures. This enables the organization to meet the demands of the different divisions in a more specific way without intertwining the issues of different divisions (Lamont, 2002).
Market Entry Strategies
A market entry strategy is required when a business wants to trade in a new market. A market entry strategy denotes the intended method for delivery of services and goods to a target market and ensures their distribution there (B, 2013). There are various methods, which a company can use, in order to enter a market. Some of these strategies include mergers or acquisition. The occurrence of mergers happens after a domestic company merges with an exporter in the targeted market; thus, leading to the creation of a new entity. The importance of these mergers includes reduction of capital cost and increased revenue, as well as creates tax gains. This method will ensure that the company stays in the market longer than expected. There are various advantages that are associated with mergers and acquisition including decreased time to penetrate and access the targeted market, as the existing company has a production line that is established and can be exploited, and also has a distribution network (Dhar, 2006).
The advantage of having a production line makes it possible for the start-up company to gain a comparative knowledge regarding the market. Another advantage is the prevention of the competitors in the market (Forum for International Trade Training, 2008). This makes it possible for the company to establish itself while facing minimal competition. Another advantage is that a company enjoys the prevention of entry barriers restrictions, such as material, skill, technology, patent, and supply. There are, however, various disadvantages of using this entry method. One of them is increased risk. The financial commitments may be large, but may face market and political risks. Other disadvantages are post-merger may be slow or poor, optimism in the appraisal of synergies, possible incompatibility of culture (Helm, 2004).
Another market entry method is joint venture. This is the aspect of a domestic company and exporter joining in the targeted country with a motive of forming a new incorporated company (Larimo, 2007). Both parties involved must provide resources and equity to the joint venture and should also share the losses, profits, and management. There is a couple of advantages associated with this method, such as market penetration. It is usually gained in a fast mode. This makes it possible for the product or service to gain popularity and earn a market share. Some more advantages include quick payback and faster entry and acquisition of skills and competencies, which are not available in-house. This model, however, has various disadvantages: disagreements (quite common case in terms of markets of the new exports), partners’ lack of the full control regarding management, possibility of having difficulties in the recovery of the invested capital, and different views regarding the expected benefits (Lymbersky, 2008).
Each organization must clearly identify the correct structure and culture. This aspect ensures that the organization has the focus to achieve the set target. The success and performance of an organization depend on the type of structure used. The kind of structure applied should be well thought of in order to ensure that the organization attains the long-term goals. However, better sales and growth of a business depend on marketing. Poor marketing leads to poor sales, while better marketing leads to the increased sales. Conducting a full market research and analysis of the target market enables the business to know its target. Good procedures should be set in order to help to increase sales. Concrete policies lead to concrete sales. Consumer acceptance enhances increased sales as well.
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