An evaluation of the company’s strategy and its performance
The company’s strategy up to now has been backed by solid data and the availability of the parent company management at the vicinity. In addition Canada is closer and familiar with the culture of US, which made the entry into the market an easier one. In terms of the industry origins, which mention an increase in the consumption on the major wine consuming areas, the company should focus on its older market segments instead of pumping money into the newer ones. The newer venture could prove to be costly one given both the company’ resources as well as the risk involved.
The acquisition is a major venture at this point given that the statistics of the newer market i. e. Australia together with the Asian consumption counts for less than 10 percent of the total market consumptionThe market share for premium wine is 30-36% in both US and Canada, and it happens to be a specialty of Vincor which makes it an important focus area. An area which is very popular but not the niche area of Vincor is Jug / Popular wine. The company could slowly try to enter into this market by some joint alliances.
The other areas like ultra-premium or specialty should be the looked into before trying to expand because these areas have a less market share. However, the super-premium segment could be a possible focus area. Specialty Skill Transfer NA Skill Transfer Cost Sharing Cost Sharing NA Most of the product innovation schemes are done in-house by Vincor. Even the new acquisitions were w mainly for penetration purposes and for increase in sales and distribution force. The acquisitions however do help to increase the size of the product portfolio and ideas for newer research as they cater to similar customers.
Evaluation of acquisitions 1. R. H. Phillips – a. The Attractiveness test – The segment and area of operation of the company were of chief interest to Vincor as this were the targets decided by the company management at that time. b. The Cost of Entry Test – The cost paid for buying R. H. Phillips was 56. 7 million and in addition another 33. 7 million were used for clearing t debts. Considering the value proposition it was a good deal as there was no external borrowing being done c.
The Better off Test – Vincor had made a very good decision in buying R.H. Phillips. Not only it paved Vincor’s was into the American market and brought it straight to the exclusive wine segment, it also showed way for other profitable acquisitions. 2. Hogue Cellars – a. The Attractiveness test – The fact that the company was the maker of super-premium wine and also was the second largest producer of wine in US made it an excellent choice for possible acquisition b. The Cost of Entry Test – The cost paid for buying Hogue Cellars was 36. 3illion dollars which was an a reasonable price considering its value in the market. c.
The Better off Test – Vincor’s decision to buy out Hogue Cellars was extremely beneficial in terms of sales power addition and turnover. In addition it also led the company into an exclusive segment which was an added bonus Vincor should look for studying more about the Australian market and chart out alternative ways for entering the market like a strategic alliance etc. before deciding to buy the company. The strategic alliance or joint venture would give Vincor time to adjust to the newer market, prepare it for controlling a distant sister concern, and also would save the initial investment costs. By a large extent.