Business Strategy for Monarchia Matt International Company

This report analyzes the external and internal environment of Monarchia Matt International Company, a wine company of New York. PESTLE and Porter’s Five Forces analysis have performed to detect various threats and opportunities of the company. Strategic capabilities, financial analysis and weakness analysis have been conducted to perform the internal analysis. Finally, strategic choice analysis is performed along with providing recommendation to the company to overcome its issues.

Running head: BUSINESS STRATEGY
Business Strategy
Name of the Student
Name of the University
Author note

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Executive Summary
The purpose of this report is to analyze the external and internal environment of Monarchia Matt
International Company, a wine company of New York. In order analyze the external
environment of the company PESTLE and Porter’s Five Forces analysis have performed.
Various threats and opportunities of the company is detected with the above mentioned analysis.
In order to perform the internal analysis, Strategic capabilities, financial analysis and weakness
analysis have been conducted. Finally to overcome the shortcomings of the company, strategic
choice analysis is performed along with providing recommendation to the company to overcome
its issues.

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Table of Contents
Introduction......................................................................................................................................3
Q1) External Analysis..................................................................................................................3
PESTEL Analysis....................................................................................................................3
Porter’s 5 forces Analysis........................................................................................................8
Q2) Internal Analysis...................................................................................................................9
Strategic Capabilities...............................................................................................................9
Financial Resource Analysis..................................................................................................13
Weaknesses............................................................................................................................14
Q3) SWOT.................................................................................................................................16
Q4) Strategic Choice..................................................................................................................18
Q5) Recommended action........................................................................................................19
Conclusion.....................................................................................................................................20
Reference list.................................................................................................................................21

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Introduction
Wine can be considered as one of the most popular drinks in the world since time
immemorial. Wine has been produced in different parts of the world for thousands of year. Some
of the earliest known wine producing counties are Georgia, Iran and Sicily. In spite of the fact
that there are evidences that similar kind of a alcoholic beverages had been consumed by the
people in China, the earliest known wine industry is a 6,100 years old winery in Armenia
(Delmas & Grant, 2014). In this era of modernization, the global retail value of wine is
approximately 287 billion dollars. More than 240 million hectoliters are produced each year
across the world out of which approximately 23 million hectoliters are considered to be excess.
This report contained detailed external and internal environment analysis of a popular wine
company named Monarchia Matt International which is situated in new York. In order to analyze
the external environment of the mentioned company PESTLE and Porter’s 5 forces analysis have
been performed. To understand the internal environment of the company VRIO Test, Strategic
Choice and SWOT analysis have been done. Along with the above mentioned analysis various
recommendations have been suggested to the company to flourish in the US market.
Discussion:
Q1) External Analysis
PESTEL Analysis
PESTEL Explanation
(with supporting case
evidence)
Opportunity/Threat

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Political and
Legal
Considering the fact that level
of regulation in the US wine
industry is pretty high, in order
to gain prosperity in the wine
industry of US, Monarchia
Matt International (MMI)
needs to abide by the all the
rules and regulations. There
exist two types of regulatory
environment in US, namely,
open and controlled. While in
open regulatory environment,
industries are slowed to sell
wine directly to the
independent distributors, inn
controlled regulatory states,
and there exists monopoly
regarding retailing of their own
products. Along with that,
being an alcoholic beverage,
wine industry in US is
controlled by Alcohol Tobacco
and Firearms Division (ATFD)
Threats: Laws and regulation can act as a
barrier for the company.
Opportunity: Open Regulatory
environment of US can be an opportunity
for MMI.

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and as a result a high amount
of is implemented on the
mentioned industry (Pg 5, Para
2).
Economic In US, the wide industry has a
crucial contribution to the
nation’s economy by
generating approximately 100
billion dollars as revenue on
the early basis. More than 1.2
million individuals are
employed in the wine industry
of US working different sectors
like production, distribution
and sale of the wine. Besides
that taxes and duties
implemented on the mentioned
industry, is a major source of
income of the US government.
Opportunity: Readily available labors
Threat: High tax and duties
Socio-Cultural Being a highly developed
country, a majority of the
consumers have vast
Opportunity: Huge market and demand for
high quality wine

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knowledge about wine and the
spent a good amount of money
on buying premium wine. US
Consumers generally choose
wine based on four criteria
namely, price range, taste,
occasion and religion. While
the upper middle class and
elites put more emphasis on the
quality of the wine, middle
class consumers prefer wines
within a reasonable price range
(Pg 4, para 1).
Technological US wine industry uses highly
advanced technologies in order
to produce high quality wine.
Usages of stainless still
containers and instruments to
control temperature during the
fermentation process have
enhanced the quality of white
wine. Apart from this,
advanced technologies are used
Opportunity: Opportunity of enhancement
of the quality and productivity due to highly
advanced technologies.

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for quality control during grape
harvesting, juicing and field
crushing for more quick and
vast.
Environmental According to American
Viticulture Area, at least 75
present of the grapes needed
for the production of wine
should come from the
particular state where the wine
company.
Threat: Lack of chances to export grapes.
Table 1: PESTLE Analysis of MMI
Source (Created by Author)
Conclusion
From the above PESTLE analysis, it can be concluded that US can be considered as one
of the best market for wine industries across the world. Due to its highly advanced technologies
and a huge demand for wine MMI can easily enhances its business in US.
Porter’s 5 forces Analysis
Threat of new entrants
Strength: Moderate

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The capital required to establish a winery is not high but it is really difficult for newly
found wineries to have access of industry distribution channels. However, for popular brands,
readily the distribution channels are easily available.
Threat from Substitutes
Strength: High
Considering the fact that the popularity of beer and spirits have risen among the
consumers of US, the threat from substitutes is pretty high in the wine industry of US (Pg. 4,
para 3). While wine is still a popular alcoholic drink to the elite class consumers, middle class
buyers are more likely to substitute wine with other alcoholic beverages like spirits and beers.
One of the chief reasons behind this is that substitutes of wine are available to the consumers at a
much cheaper price.
Competitive Revelry
Strength: High
Among hundreds of competitors in the US, three major competitors of MMI that held
more than 10 percent of the market share are E and J Gallo, Constellation and The Wine Group
(pg. 5, para 1). All the three companies offer a complete range of wine within a reasonable price
range. Considering the fact that there exists no switching cost has enhanced the revelry among
the competitors.
Bargaining power of the buyers
Strength: High

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Considering the fact that that there exists numerous wineries in US which offers similar
quantity of wine within a similar price range, the switching cost for consumers are very low.
Hence consumers can easily shift from one brand to another for the slightest dissatisfaction or
just for experimenting with taste.
Bargain power of the suppliers
Strength: Low
Due to existence of a large number of suppliers, the power of the suppliers in the wine industry
of US is considerably low (Pg. 5, para 2). Another reason behind this is the oversupply of grapes
due to favorable weather and usage of highly advanced technologies.
Conclusion
From the above analysis, it can be concluded that US can be considered as a potential market for
Monarchia Matt International due to high demand of wine and low power of the suppliers. In
order to deal with the above mentioned issues like tendency of consumers to shift towards the
substitute and high competitive revelry, MMI needs to develop unique strategies to differentiate
their products from the existing competitors.
Q2) Internal Analysis
Strategic Capabilities
Bundled Resources
(what the Company
has)
+ Competences
(how the Company uses
its resources)
= Strategic Capabilities
(what the Company is able to do
exceptionally well or do differently

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from its competitors)
The company produces
uniquely High quality
wine for a limited
number of consumers
(Pg. 7, para 4).
MMI offers the wine to the
consumers through some
special retailers and
restaurants. They do not sell
their product in the
supermarkets. Therefore,
wines produced by MMI
are available to the
consumers only through the
restaurants and retailers.
SC#1 – Considering the fact that the
quality of wines produced by MMI is
superior in taste, consumers who have
tasted the wine in restaurants often seek
out the same wine to the wine retailers.
Thus the demand for MMI gets
increased. The company has been
nominated as one of the best wine selling
group of US by a highly popular
magazine of Italy named Gambero
Rosso.
Availability of large
number of variation of
Hungarian wine (Pg. 10,
para 2)
Considering the fact that
Hungarian wine does not
have a good image among
US consumers due to
several misconceptions, the
company renamed the
wines to combat
misconceptions. For
instance, MMI renamed
Egri Bikaver which is
commonly known as Bull’s
SC#2 – The company has successfully
incorporated both red wine and
white wine manufactured in Hungary
in the wine industry of US.

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Blood as Rapsody in Red.
In order to maintain the
reputation of the company
regarding its high quality,
MMI along with its
Hungarian based team looks
after the selected wineries
in order to meet the ultimate
taste and quality
specifications.
Considering the fact that
the MMI company
imports wines from
major countries of the
world that includes
Hungary, Germany,
Austria, Italy, Spain,
France, US, Argentina
and New Zealand, MMI
is able a offer a large
variety of wines to its
consumers.
Due to the fact that the
company imports wine from
different parts of the world,
the number of consumers of
the company is high. This
factor results in the
enhancement of the overall
revenue of the company.
Another advantage of
marketing wines having a
wide range of variety is
that MMI can introduce the
popular wines of one
SC#3 – MMI is experiencing an
enhancement in revenue due to its global
importation. Considering the fact that that
unlike various wine companies, the
Monarchia Matt International has
diversified its products keeping
accordance with the local tastes, the
attraction of consumers towards MMI
wines has enhanced a lot.

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country in another country.
This will provide further
competitive advantage to
the company since
consumers of the wine
industry is always looking
forward for experimenting
with wines of different
types and tastes. Apart from
that, in order to attract the
consumers of each country,
the company manufactures
varieties of wine that
keeping in mind the specific
choice of taste of that
country. For instance, in
order to capture the market
of Hungary, MMI
manufactures popular
Hungarian wines like
monarchia Tokaji Aszu,
Monrchia Pinot Gris an
others, while some of the

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popular wines of MMI in
Italian market are Sfida
Puglia Ross Igt, Geografico
Chianti Classico and others.
Table 2: Strategic Capabilities of MMI
Source (Created by Author)
Strategic
Capabilities
VRIO
Criteria
Results
Valuable Rare Inimitable Organizational
Support

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SC#1 –
Supplying
superior quality
of wine only to
restaurants and
chosen dealers
has increased the
demand of MMI
among
consumers.
Very few
amounts of
competitors
can match up
to the variety
and quality
of wine
supplied by
MMI.
This SC is not
difficult to
imitate by the
competitors.
The case
suggests that
MMI needs to
posses
appropriate
equipments to
enhance the
productivity of
the company
Temporary Competitive
Advantage
SC#2 – MMI has
successfully
incorporated
both red wine
and white wine
manufactured
in Hungary in
the wine
industry of US.
MMI is the
major source
of Hungarian
wine in US.
This SC is
not difficult to
imitate by the
competitors.
MMI needs
more
organizational
support to this
SC.
Temporary Competitive
Advantage
SC#3 –
Monarchia Matt
International has
Unlike its
competitors,
MMI has lots
This SC is not
difficult to
imitate by the
The
organization
support for this
Temporary Competitive
Advantage

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diversified its
products keeping
accordance with
the local tastes,
the attraction of
consumers
towards MMI
wines has
enhanced a lot.
of variety in
Hungarian
wine.
competitors. SC is sufficient.
Table 3: VRIO Test of MMI
Source (Created by Author)
Financial Resource Analysis
Comparative costs estimates: MMI Versus Single-Market Distributors
Factors MMI ( Dollar Amount in USD) Average Single Market
Distributors
Number of portfolio Labels 300 1000
Number of Wineries represented 60 100
Number of distribution states 26 1
Number of staffs 15 3
Sales 6000 350
Gross Margins 1992 88

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Gross Margin percentage 33.2% 25.1%
Table 4: Financial comparison of MMI with Average Single Market Distributors
Source (Created by Author)
From the above table, it can be clearly understood that MMI is enjoying competitive
advantage over the single market distributers of US. The business strategy of MMI to invest
more on enhancing the quality of wine rather than producing a vast amount of product can be
considered as the chief reason behind this success of the company.
Weaknesses
Some of the key weaknesses of the company are
1. One of the key weaknesses of the organization is image problem of Hungarian wine in
US. There prevails a miscomputation in US about Hungarian wine that the cheap bull’s
Blood wine of Hungary is tasteless and have very low quality (Pg. 10, para 4). Since the
company manufactures a good number of Hungarian wines, it will be difficult for MMI if
wine consumers of US stop buying Hungarian wines.
2. Another factor that has the potentiality of affecting the overall sales of the company
negatively is limited amount of production of wines ((Pg. 10, para 5). Considering the
fact that the chief target of the company is to produce a limited amount of wine that has
very high quality, the company may face issues of not able to satisfy the consumers due
to lack of production in near future.
3. In spite of the fact that MMI imports wine from a large range of global wine producers,
the company is only present in New York and Westchester County. Lack of presence in

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the global market associated with the wine industry, can be considered as another major
weakness of MMI.
4. Another weakness of the Monarchia Matt International that can be pointed out is the
absence of the company in the online market. Considering the fact that in this era of
modernization, several competitors of MMI has established online marketing along with
offline marketing of products, MMI should also expand in business in the online world in
order to enhance its revenue.
5. Despite the fact that the target of the company is to provide high quality wines with
niche appeal, the fact that the target consumers of the company is much lesser than that of
its competitors can be considered as another major weakness of the company.
Conclusion
From the above discussion, it can be concluded that the mentioned strategic capabilities
are providing sustained competitive advantage to the company. While production of a limited
amount of high quality wine is enhancing the demand of MMI’s wine to the consumers,
production of a good variety of wine in accordance to the local taste is attracting the consumers
towards the products of the company. In spite of the above mentioned advantages, the major
weaknesses of the company can impose a highly negative impact on its yearly revenue. In order
to fix the issues like misconception of the wine consumers about the Hungarian wine, lack of
production of wine and absence from online marketing, the company needs to develop effective
strategies like implementation of latest technologies to enhance the production to overcome these
issues.

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Q3) SWOT
SWOT ANALYSIS
STRENGTHS
 One of the major strengths of MMI is the
high quality of wine produced b them.
 Considering the fact that MMI produces a
large variety of wines to choose from,
majority of which are Hungarian wines,
this can be considered as another
advantage of MMI.
 The fact that Monarchia Matt International
imports wine from a wide range of
suppliers that includes Hungary, Germany,
Austria, Italy, Spain, France, US,
Argentina and New Zealand, this factors
serves as a strength for the company.
OPPORTUNITIES
 MMI Company has the opportunity to
expand its business by initiating
online marketing of wine. Online
marketing will not only ensure a
larger range of consumers, but it will
also ensure the increment in the
overall revenue of the company.
 Considering the fact that US is a
highly develop country, MMI
company can implement highly
advanced tools used by its
competitors in the Hungarian
wineries in order enhance the
production of the wine.
 Considering the fact that the
competitors of the Monarchia Matt
International have extended their
business in different part of the world,
MMI should also spread its business
outside US to enhance the number of

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consumers which in turn, will
enhance the overall revenue of the
company.
 Since Wine industry of US serves as a
source of employment, the company
has the opportunity of employing
individuals at a much lower cost
(Mozell & Thach, 2014).
WEAKNESSES
 One of the major weaknesses of the
Company is the limited amount of
production of Wine.
 Another weakness of MMI is the lack of
global presence of the company.
 Absence of the company from the online
marketing can be considered as another
weakness of the MMI.
 Targeting a limited amount of consumers
is one of the major weakness of Monarchia
Matt International.
THREATS
 One of the major threats of
Monarchia Matt International
Company are its competitors in the
wine market of USA. Wine
companies like E & J Gallo, The wine
group and Constellation have
occupied almost 10 percent of the
market share of US.
 Considering the fact that US
implements a high amount onf tax on
the wine companies, this factor is a

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major threat for MMI Company.
 Since several consumers of USA are
getting inclined towards the
consumption of beer and spirits in
place of Wine due to their low cost,
this phenomenon is imposing a
negative impact on the yearly revenue
of the company.
Table 5: SWOT Analysis of MMI
Source (Created by Author)
Q4) Strategic Choice
 Business strategy
The company needs to focus on producing and importing a greater quantity of wine in
order to cope up with the increasing demand of the consumers. However the enhancement in
production of wine should not come at the cost of decrement of the quality.
 Corporate strategy and diversification
Considering the fact that the current target consumers of wines produced and imported by
MMI are upper middle class and elite class consumers who can afford high quality wine and
have no issues with the cost of the products, the company should diversify its products in
order to enhance the number of consumers. In order to reach the middle class consumers, the

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company should deal with more suppliers and dealers so that MMI wines can be available to
a greater mass.
 International strategy
Considering the fact that MMI has already gained popularity with its high quality wines in
New York wine industry, the company should expand its business in different parts of the world
to attract international consumers.
 Mergers, acquisitions and alliances
MMI, although a popular wine company in New York, may consider merging with top wine
companies of US like E and J Gallo or Bronoco Wine Company in order to enhance their market
value and gain competitive advantages.
Q5) Recommended action
Issue 1: How to enhance the production of Hungarian wine while keeping the quality of the
wines same?
In order to enhance the productivity, the MMI Company should invest on implementing
advanced technologies in the wineries of Hungary. Considering the fact that Hungary is still a
developing country, the wineries in Hungary cannot afford technologically advanced equipments
to produce wine and as a result MMI can import a limited amount of wine at one go. The
company can offer advanced equipments to the wineries in exchange of reduced importation
cost.
Issue 2: How to expand the business of MMI to international level?

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In order to expand the business to an international level, the company can merge with various
International wine companies. This strategy will not only ensure international expansion but will
also enhance the revenue of MMI.
Issue 3: How to start online marketing to enhance the yearly revenue of the company?
In order to get started with online marketing, the company should open its own official page.
This page will contain all the information about the quality and the variety of wines available. In
order to make consumers aware of its online presence, MMI should incorporate various social
media sites like Facebook and Twitter to promote its business.
Conclusion
From the above report it can be concluded that Monarchia Matt International being a
popular wine company of New York, has the potentiality to expand its business across US and in
the international market. From the external and internal analysis of the company’s environment
several issues and weaknesses are detected. Several strategies have being been discussed in order
to overcome the shortcomings of the company. Finally, it can be said that the company can gain
huge prosperity in near future by following the above mentioned strategies.