344833 - BUSINESS MANAGEMENT PROJECT: STRATEGIC AND OPERATIONAL ISSUESSecond Question- Identify two strengths The two strengths of Leeuwin Estate company are as follows: 1. Capacity to producing premium quality wine Producing premium qualify wine is sign of company that has long been there in business. It therefore symbolizes a name for the company that could entail wide and loyal patronage by wine drinkers. As wine gets more value as they age in years, so with the name of the company. This assertion is supported by the case facts that Leeuwin is one of the most advanced wineries in the southern hemisphere as it able to incorporate state of the art technology and old world techniques to develop world class wines.
The company is thus known for producing premium Cabernet Sauvignon, Shiraz, Sauvignon Blanc, Riesling, Cabernet Merlot and Sauvignon Blanc Semillon, it is Chardonnay, particularly the Art Series, which remains the flagship for the winery (Case facts) At the great quantity of wines produced at around 600,000 bottles per year, the company has really made a name of its own in the industry Although the amount of production per year is somewhat a negligible amount when compared to Australia’s largest producers such as Jacobs Creek, who in 2000 were exporting 48,000,000 bottles or Casella Wines which has the capacity to bottle 65,000 bottles of wine per hour (Case facts), it may be argued that being known to be one of the most advanced wineries in the southern hemisphere as it able to incorporate state of the art technology and old world techniques to develop world class wines, is itself an evidence of its strength to be performing better than competitors.
It may be argued that being a producer of premium quality wine in Australia, it may be inferred it has created its own economies of scales; hence its cost of production is lower than those of competitors. This strength has become more manifest in the light of the WET, an advalorem, which is enforced by the Australian government. As against medium small size wine companies, Leeuwin are more strategically positioned (Byars, 1991), hence its position as such is helping the company to perform better.
The fact of is strategic position as premium wine maker is further supported by the case facts that that Leeuwin Estate has the capacity to enhance the global standing of Australian wine and boost exports in an increasingly competitive global market. It was indeed provided that the company could bypass the WET issue altogether by selling 100% of its wine in overseas markets however the loss of the domestic market, which accounts for around 60% of Leeuwin Estates sales. That would of course be strategically risky decision but yet it may have the size and tax advantages afforded to the 20 largest producers in the domestic Australian market.
This latter advantage would make it advantageous for the company over small to medium producers which may find difficult to compete domestically (Case facts). 2.2 Strategic Location of its business The company appears to be located in or near the Margaret River, where wineries in Australia are best known. This strategic location is enabling the company to produce the quality of wine that matches that is described as of premium quality.
This is supported by the case facts that “Margaret River today is a global brand synonymous with the production of premium wine. The region produces some of the world’s finest Chardonnay, Semillon, Cabernet Sauvignon, Shiraz, Sauvignon Blanc and Merlot. ”