Best Entry Mode Into the German Wine Market Essay Example

Best Entry Mode Into the German Wine Market Essay There are opportunities in the German market for Goldenrods such as demand for non-alcoholic beverages and organic wines. At the same time there are challenges in the German market such as stringent overspent regulation, high competition and slow growth of the market. The advantages and disadvantages of the three entry modes- exporting, acquisition and joint venture are investigated and a recommendation is made on the best suited entry mode for Goldenrods. The first section of the report gives a brief introduction about the company and its background. In the second section, a detailed internal and external analysis of the company is done to understand its strengths and weaknesses, and the opportunities and threats that the company is likely to face in the German wine market. In the third section, three entry modes that are best suited for Goldenrods in its entry into the German wine market is analyses and the best entry mode is suggested. The report is concluded in the final section. 2. 0 Company Profile : Goldenrods Goldenrods is the third largest producer of wine in Australia, generating 5. 0% of the markets volume. The company produces, sells and distributes wine and beer and has its market in 98 countries around the world. The company operates in Australia, Asia Pacific, U. S, Europe, the Middle East and Africa. The company has its headquarters in Bill, Australia and employs around 5,900 people. Its products are supplied to around 29,000 customers including wholesalers, importers, hotels, bottle shops and restaurants. Goldenro ds revenues during the financial year 2008 was recorded to be A$ 2,900 million with a net profit of A$ 5,50 million. We will write a custom essay sample on Best Entry Mode Into the German Wine Market specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Best Entry Mode Into the German Wine Market specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Best Entry Mode Into the German Wine Market specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Strong manufacturing capabilities helps the company to achieve economies of scale, and enable it to maintain control over quality and respond quickly to changes in demand. Focus on product innovation Goldenrods has a strong focus on product innovation and believes that it is a ajar driver of business success. In response to the growing consumer trend for lifestyle alternatives (Denominator, 2008), Goldenrods launched a new range drinks with low carbohydrates, low calorie, reduces alcohol and reduced preservatives. The company also demonstrates innovation in its packaging style, packaging materials and wine bottles. A strong focus on product innovation allows Goldenrods to stay ahead of competition in the market. 3. 2 Weaknesses Inefficient operations The average inventory and receivables turnovers of Goldenrods were lower than its competitors during the five year period 2004-2008. The average inventory and average receivable turnover of the group stood at 2. 3% and 5. 5%, respectively, during 2004-2008, significantly lower than its competitors like De Portola and Misalliances Wine Pity. Ltd (Denominator, 2008). The lower inventory and receivables turnovers of endoscopes Annihilate ten lower productivity Ana operational Inclemency AT ten company. Further, due to lower inventory and receivable ratios, Goldenrods would require a higher working capital, which may limit the groups growth prospects. Goldenrods would have to thoroughly investigate how and why the productivity less ND would have to immediately eliminate or improve inefficient operations and units. If not resolved immediately, this can have a negative impact on its operations in all of the different markets around the world. Weak revenue per employee Fosters has recorded weak revenue per employee in the recent past. During 2004-2008, the groups average revenue per employee was A$313,653, significantly lower when compared to its competitors like De Portola and Misalliances Wine Pity. Ltd (Denominator, 2008). The weak revenue per employee of the group indicates its weaker productivity and operational inefficie ncy when compared to its competitors. This also have an impact on the net profits of the company and can hamper its growth if not resolves immediately. Efficient ways have to be devised in order to reduce operational wastage of money and to increase productivity. If these matters are not looked into immediately, then it can hamper the growth and the net profits from its entire markets spread around the world. 3. 3 Opportunities Increasing concern for health and wellness The average German consumer is getting old and there is an increased concern for health and wellness Nonsense, 2008). According to Remuneration market (2009) port, German alcohol consumption is declining in general as consumers are seeking to cut down alcohol intake due to health concerns. The ageing population will further worsen the situation, with older consumers typically consuming less alcohol (Remuneration, 2009). Still light grape wine, which is dominant in the market, is expected to particularly suffer, with consumers less likely to serve such wine with everyday meals (Denominator, 2008). Health and wellness is a growing sector in Germany and there is a growing trend for health and wellness products Nonsense, 2008). Though it might seem like a big wreath to Goldenrods, infant this is a great opportunity for the company. Goldenrods has already launched a range of products that are low in calorie content and alcohol content. Goldenrods would find a good market in Germany for its healthy wine segment. In addition to this, non-alcoholic beverages are becoming an important segment for wine and beverage distributors around the world (Denominator, 2008). As Goldenrods already distributes non-alcoholic beverages, it could boost its revenue growth by expanding further its portfolio of non-alcoholic beverage in the German market. Growing popularity AT Rose Ana organic well There is a growing trend towards rose wines in Germany and this is forecasted to remain popular within the German market and boost sales (Remuneration, 2009). Another product area that saw a good performance was low alcohol sparkling wine, which benefited from the health trend (Denominator, 2008). There is also a growing preference for organic wine in Germany and this is in line with the good overall development of organic products in Germany Owes, 2006). An increasing number of companies in the German wine industry have launched organic line extensions or new organic brands Owes, 2006; Remuneration,2009). There is a great opportunity for Goldenrods in the German market as it can find a good market for its already existing rose wines. Goldenrods can also diversify its rose wine by offering rose variants that suit the local German consumers taste. Goldenrods can also expand its portfolio and launch a new line of organic wines as there is a great opportunity to boost its revenue through sales in this segment. The geographic spread of Goldenrods would definitely help the company in sourcing good quality organic raw materials.