Case Study: Robert Mondavi Corporation

Case Study: Robert Mondavi Corporation

1. EXECUTIVE SUMMARY……………………………………………..5

2. BACKGROUND OF THE CASE STUDY…………………………….6

3. ANALYSIS & IMPLICATIONS OF PORTER’S FIVE

COMPETITIVE PRESSURES……………………………………..7-17

3.1. The Potential Entry of New Competitors

3.2. Competitive Pressures from Substitutes Products

3.3. Bargaining Power of Buyers

3.4. Bargaining Power of Suppliers

3.5. The Rivalry among Competing Sellers

4. ANALYSIS OF THE STRATEGIC GROUP MAPPING……….18-20

5. KEY SUCCESS FACTORS OF THE WINE INDUSTRY………21-23

5.1. World famous growing areas

5.2. Larger growing market for premium wines

5.3. Favorable demographic and macro trends

5.4. Quality and affordable prices

5.5. Product differentiation

5.6. Different wine segments

5.7. “Open markets”

6. RECOMMENDATIONS…………………………….…………….24-27

6.1. Positive cash flows

6.2. Backward integration

6.3. Expanding to new geographic areas

6.4. Exploring new channels

6.5. Openings to extend quality and image to niche market

6.6. Further mix channels of export strategies

6.7. Clever advertising

7. CONCLUSION………………………………………………………...28

8. LIST OF REFERENCES…………………………………………..…28

1. EXECUTIVE SUMMARY

This report provides thorough analysis of the Robert Mondavi Corporation (RMC) in order to give a best solution to Michael Mondavi, the CEO of the company in terms of the problem face by the company.

It begins by examining the internal and external forces that greatly affect RMC by applying Porter’s five forces of competitive pressures to investigate the status of competition of wine industry in U.S. as well as their implications.

Analysis of the strategic group mapping is important in order to give a clear position of RMC’s competitor in the market follows by each company’s characteristic.

Next, it is essential to analyze the key success factors of U.S. wine industry that contribute RMC in considering its future competitive strategies and changes that should be taken by the company accordingly

Finally, recommendations are provided for RMC for its future expansion’s strategies.

2. BACKGROUND TO THE CASE STUDY

RMC is a leading producer and marketer of table wines, located in Oakville, California. RMC markets wines worldwide under the following labels: Robert Mondavi Napa Valley, Robert Mondavi Coastal, Woodbridge, Vichon Mediterranean, La Famiglia di Robert Mondavi, Byron, Opus One, Luce and Caliterra. RMC employs a standard three-tier distribution system where the company sells to wholesalers who in turn sell to retailers who sell to the public. The company finds its niche in the “premium” and “ultra premium” segments of the table wine market (Burns et al., 2001).

In January 1999, Michael Mondavi, the CEO of the RMC and son of its founder, Robert Mondavi, announced the reorganization of the company and the layoff of 4% of the workforce. RMC had experienced a shortfall in supplying its Woodbridge Chardonnay brand. Unhappy distributors had begun substituting competing Chardonnay brands on retailer’s shelves. Yet, some distributors remained reluctant to carry the brand even though Woodbridge production levels returned to normal and further reducing company sales (Thompson & Strickland