Investing in the Right Grape

The wine industry in Turkey has been growing rapidly due to the government's favorable policies and investments. The country provides a unique opportunity for foreign direct investment (FDI) as it offers a conducive business environment with minimal restrictions, low taxes, and access to resources such as grapes, labor, and universities that can assist in research and development. Additionally, the Turkish wine industry is characterized by a competitive market with price wars, which presents an opportunity for companies to differentiate themselves through innovative products. However, management must also consider the challenges of understanding consumers' fluctuating orientations and restrictions on advertising, making it essential to develop effective strategies to reach customers.

Global & International Business
Assessing Turkey Wine Industry for Kraft-Foods Group
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Table of Contents
Part 1: Porter’s National Diamond....................................................................................2
Factor Conditions..........................................................................................................2
Related and Supporting Industries................................................................................4
Demand Conditions...................................................................................................... 5
Structure of Firms and Rivalry......................................................................................6
Government..................................................................................................................8
Chance.............................................................................................................................9
Part 2: Market Entry Strategy.........................................................................................10
Advantages of using Foreign Direct Investment.........................................................10
Appropriateness of using Foreign Direct Investment..................................................11
Limitations of using Foreign Direct Investment...........................................................11
Recommendations......................................................................................................12
Part 3: Contemporary Management Issues....................................................................13
References.....................................................................................................................15

Part 1: Porter’s National Diamond
The model of the Porter is broadly used In order to anatomize the macro environment of
the specific country. Further, it is being known that when it appertains to the
environment of a specific industry and there are various factors which the organizers
must bear as they will not be having any idea that which factor will occur first
(Fainshmidt et al., 2016). Furthermore, this model of Porter will help in demonstrating
the competitive edge of wine industry of Turkey depending on the various factors like
the conditions of the factors, supporting and the relating industries, conditions of the
demand, framework of the rivalry and the firms, government and the chance.
The use of Michael Porter’s National Diamond is wide as it brings in multiple contexts
together to the decision making. The National Diamond has focused on integrating the
various works that has been done by the Porter in the past. Some of them are five
forces analysis, value chain, and assessment of competitive advantage. It has brought
all the aspects together through the National Diamond. Moreover, the consideration of
whole nation with contextualizing it as a market gives greater scope to the use of the
method. The tool helps in the analysis of the organization’s ability to function properly
within the national market. Moreover, it helps assess the ability of the national market to
sustain competition in the international market.
Factor Conditions
The wine industries are in relation to the natural products and the resource which are
home grown are significant to the industry. Further, the grapes play an important role in
order to make the wine as the grapes are considered as the raw materials. The climate
of Turkey is beneficial to the plants of the grapes. Steady climate state, sunshine, soil

fertility and the reduced pollution generates the planting of grapes. Furthermore, the
population is not much but the skills which are required to make the wine and the
people who are involving in growing grapes is relatively high (Sen, I. and Tokatli, F.,
2014). There are various universities in Turkey which have the particular subject in
order to learn the creation and the marketing of wine. This further helps in encouraging
technical progress and the innovation related to the advanced technology. People of
Turkey prefer great varieties of wine along with the high quality.
As stated that the grapes are produced within the country which is the major raw
material for the production of the wine. This ensures that the company will be able to
procure raw material at the relatively cheaper price. The company, if operates near the
location that amply produces grapes then it will help save cost on the transportation.
Apart from that, there are universities that have courses on the technologies related to
wine production. This will ensure that the continuous researches keep going on this
sector to bring in more innovation (Garcia et al, 2012). As stated that the people of the
turkey prefer wine products, therefore it will help the company bring in different tastes in
wine and experiment in the market. If all these factors are considered, then it can be
stated that the factors supporting the production of the wine within the country is
favorable. One of the contradicting situations that has come up is the new rules from
the government regarding advertisement, display and sale of the wine products. It can
be stated that there are some increase in the overall tax rates that is going to impact the
consumers’ pocket and companies also. There is also some conflict on the ideological
part. The country’s ideology is stuck between that of the Europe and Middle East.
Moreover, the explicit and causal challenges are creating roadblocks for companies.

They are government and terrorism. Also, for the past three years, no promotion of the
wine products has been allowed in the country.
Related and Supporting Industries
The supporting and the related industries consist growing of grapes, transportation,
marketing of wine, etc. The grapes are the major raw material for the production of the
wine which is in abundance in this country. Moreover, the flourishing grapes industry will
be an imperative aspect for the successful growth of the wine industry. Also, the wine
industry is largely dependent on the transportation facility. The packaging of the wine
are delicate and therefore it requires proper transportation network that can carry the
finished product from the company’s manufacturing plant to the market (Hussain et al,
2015). Moreover, the grapes have less shelf life and therefore it is required that the
transportation facility from the suppliers to the company’s manufacturing plant is
smooth. Considering the grapes industry and transporting industries success, it can be
stated that the wine industry is likely to grow further. Apart from that, it has been
identified that the company can benefit from the ever growing advertising industry in the
country. The company can use this tool to ensure that whatever product it
manufactures; the market knows it before the products hit the shelf. Currently, Turkey
can create wine from the fair quality to the high quality of the wine. Further, the products
are being exported to various parts of the world and the names of the brands are
Semillon, Shiraz, etc. The government of Turkey keeps a close check on the production
of the industry of wine. Further, the government of the country is keen to invest in the
related industry which is being named as the technological industry. The transportation
and the debonair data enables the communication between the wine industries within

and the outside countries. This further ensures the synchronization and the sharing of
the information technology (Tatoglu et al., 2015). The establishment of the related
industry can also gear up the industry of the wine in order to expand and explore the
potential market.
Demand Conditions
The demand conditions in the model of Porter lean to the various conditions of arduous
domestically rather than foreign markets or the countries. Further, it has been observed
that the wine is treated as the necessity in Turkey. Surprisingly, wine became the luxury
when the long term conditions were considered. Furthermore, the companies who are
making the wine in Turkey have the great number of sales as compared to others and
they maximize the profitability to a great extent. The wine output in Turkey is relatively
large and the necessities helps in making people inclined towards wine and this further
helps in maximizing the demand of the wine in a market (Özdemir, D., 2015). According
to the theory of Porter, the captious and the demanding clients can enhance the regular
improvement of the products/services. Therefore, the frequent improvement will help the
company to achieve the sustainable competitive advantage as compared to the rivals.
The location of Turkey is near to perfect for the production of the viticulture. As stated
earlier, the country produces appreciable amount of grapes and enjoys varieties of
wines. However, the wine industry is not fully developed and still need numerous
opportunities to grow. Despite the demand in the market, the industry is yet to attain
maturity in terms of quality of production. Some market researchers have identified that
the induction of the foreign companies in the wine industry of the country is in
abundance and this is the reason why the wine industry is observing some growth. The

local companies are not so smart and innovative but the foreign companies have added
various flavors and wine production methodology that were not seen earlier. The
demand of wine within the market of Turkey is price dependent. The wine prices that
are low attract more customers in comparison to the other companies. Therefore, it can
be stated that the demand of wine within the country is price dependent.
Structure of Firms and Rivalry
The factors like the structure and the strategy helps in identifying the importance of the
inner environment of the particular company. It is being considered as the macro
anatomy in running the business. Further, the rivalry anatomy in the model of Porter
helps in paying more focus to the inland. The Penfolds winery is one of the most famous
winery of Turkey. It is very important for the new entrant to overlook the advantages and
the disadvantages of the firms and attempt to attain the sustainable competitive position
in the market (Njavro, Ž.B.M., 2016). Further, the SWOT analysis of the Turkish wine
industry is done in order to understand the industry better.
 Strengths
1. Owns different flavor
2. Well known products along with the distinctive features.
3. Wine is sold through internet.
 Weakness
1. Price
2. Lack of experience of selling in the international market.
3. Lack of target market understanding and the weak relation with the distributors
and the importers.

 Opportunities
1. Fascinating opening in the areas of Asia
2. Raising the consumption of wine along with the demand
3. Encouraged entry by the other governments by the program of assistance.
 Threats
1. Chances of consolidation
2. Assertive competition internationally
3. Diminishing local demand
4. Costly marketing
5. Huge cost included while entering into new markets for expansion.
The wine industry in the country faces major competition from the companies coming
from outside the country. The companies coming from outside has better access to
resources from the international market. Moreover, due to the experience they bring
with them related to the wine industry, particularly from the developed wine industries
from the international market, is valuable. The companies that are operating in the
company follow the traditional methods of running the business (Canestrino et al, 2016).
On the other hand, the companies from the outside follows structured organizational
pattern and have better understanding of the market situation. Moreover, these
companies have better understanding of how to analyze the market and gain from it
which is lacking in the local companies. Therefore it can be stated that the companies
from outside has limited competition from the local companies but they have higher
competition from the companies similar to theirs.

Government
The government of Turkey has adapted the policies of liberalization for the trade of wine
in order to help the industries of wine to expand. Further, the organization has reduced
the tariffs in order to sell the products to the foreign markets and the industries and the
other companies are able to invest in the wine industry of Turkey with an ease (Bardaji
et al, 2014). Furthermore, the taxation on the wine is relatively high and the government
keeps the close check on the operations and the activities of the wine industry in order
to make sure that they deliver the wine of best quality to the customers who are willing
to enjoy themselves.
The liberal orientation of the government towards the wine industry of the country has
ensured that more number of international companies come and operate effectively in
the country. The political and economic support provided by the government to the
companies coming from the outside has helped them innovate further with numerous
trials and experiment. However, it has been identified that are also various forms of
restrictions that are need to abided by the international and national companies in order
to operate effectively in the country. One of the important rule is the customers must be
able to get the products of high quality and there must not be move towards
monopolizing the market and fair competition must flourish. In the future it is expected
the orientation of the government towards the wine industry will be positive as the most
part of the country’s earnings from the grapes and wine business. This is likely to further
support the market and the companies operating in the country.

Chance
The companies in the wine industry of Turkey have great chances to accelerate the
speed in order to enter into the foreign market. The companies can increase the
production of scale by utilizing the existent facilities and the companies do not even
require investment in the facilities of the foreign production. Further, the wine industries
help in bridging the gap which occurs due to distance and the cultural differences. The
wine industry can combine the resources of two or more than two companies.
Moreover, the wine industry has the potential to learn the new trends of the international
market and they can expand their operations by attracting more customers towards the
luxury leisure.
The chance literally converts to the opportunities companies can get if it operates in the
country. It is an appreciable aspect the companies have good chances or opportunities
to operate in the country. The reason is the factors that are oriented towards the market
such as support of the government, effective transportation system, appreciable
production of grapes, and others. Moreover, due to the competition, the market is able
to entertain the companies that are new and provides products at competitive prices
and with good tastes.

Part 2: Market Entry Strategy
The section discusses the market entry strategy of the company.
Advantages of using Foreign Direct Investment
The company should be investing in the wine market of Turkey due to various positive
factors. Some of them been mentioned in the discussion above. One of the important
factors is the support of the government for this industry. The government is willing to
help the companies operating in this industry become successful and support the
economy (Moosa, 2016). In any countries, the setting up of businesses faces first
challenge on regulatory sides or the policies that are placed by the current government.
However, the country like Turkey has the government that is willing to support the wine
industry as it appreciably connected with the economy of the country.
Moreover, the country has good number of population that makes it a good market for
the wine products. Also, the population has good taste for the wine products and this
translates into the good wine market size. Apart from that, the country is centrally
located and provides good reach to the European as well as the market of Middle East
and South Africa. The infrastructure in the country is also good which translates into
good level of transportation system. The wine industry need good infrastructure which is
present in the country. The presence of energy corridor and terminal of Europe is an
added advantage.
The investment climate of the country is liberal and reformist. This states that there is
the presence of strong industrial culture and no-nonsense environment. Moreover, it
has been focused that the investors are given equal treatment. Even the taxes are at
the level that can be considered as boon for the companies. Recently, the government

of Turkey reduced the taxes from 33 percent to 20 percent. There are multiple Industrial
Zones and Free Zones established by the government that provides various types of
support to the companies operating there.
Appropriateness of using Foreign Direct Investment
The foreign direct investment is the appropriate form investment that can be made in
the country like Turkey. There are various reasons behind this considering why the
foreign direct investment can be good bet for any company preferring entering into the
wine industry of this country. One of the major reasons is that the wine industry has
gathered good amount of interest from the government and this is the reason why the
government has provided so much facility to this industry (Moran, 2012). This provision
for safety ensures that the money invested by the foreign companies will be protected
and will stay safe. Moreover, the market condition for the wine industry is good and it
does not fluctuate to the extent that it can incur severe loss until any catastrophic event
takes place.
Considering these factors, it can be stated that companies can make such decisions
relating to foreign direct investment and invest in the market. The use of Foreign Direct
Investment for the wine industry in Turkey will be an appropriate decision.
Limitations of using Foreign Direct Investment
There are various limitations related to the foreign direct investment. Some of the
limitations that can pose limitations to the foreign investment such as restrictions on the
limit of FDI, screening and approval processes, restrictions on operational freedom,
informal barriers, and others. Overall, there are no restrictions for the foreign direct
investment in the Turkey. The law regime of the country is mostly aligned towards that

of the Europe. There are various international agreements that concerned with the
World Trade Organization Agreements that are in existence, but it is likely to have any
impact on the FDIs made by the foreign companies in the Turkey due to the positive
orientation of the Turkey government and liberal consideration.
Recommendations
It is recommended that the company should enter into the Turkey wine industry as there
are positive opportunities that can be harnessed. It is an obvious understanding that
due to the presence of various companies in the wine market of Turkey, there will be
competition that new company has to face. However, it is also true that if the
competition is supportive of the government then it is likely that the market will be
conducive for the new companies due to the lack of red tape and easy accessibility to
resources and market. The wine market of Turkey provides one such opportunity for the
company. Moreover, as stated earlier, that the resources necessary to operate the wine
industry is in abundant in the country such as grapes, labor, and others. Moreover, the
universities are also willing to cooperate in the researches behind the wine production
and its betterment. This will provide better opportunity to develop good quality products
for the customers. Apart from this, the population of the country is good consumer of the
wine products which provides ample opportunity for the company. The company should
enter into the market if it willing to invest in the production of good quality wine that can
attract the market for taste. The reason is that the price war is already existent in the
market and the winning of consumers’ heart through good quality wines can be an
interesting move.

Part 3: Contemporary Management Issues
The two key management issues that have been identified in the analysis in the
previous two parts that should be considered by the company prior to operating in the
Turkey wine industry are discussed below.
Management Issue #1
“Presence of Competition”
The competition in the Turkey wine market is huge due to the presence of national and
international companies. This is likely to pose major challenge to the companies that are
operating in this industry. The increase in the competition has led to the presence of
price war in the market which has reduced the profitability. This increased price
competition added with taxes of the government is likely to increase the further price
challenges. The management is likely to face challenge in coming up with innovative
product that is cheaper in price and high on quality. This will push the company towards
investment towards research and development. The research and development in the
field of innovative products will help it come up with the products that might be able to
attract the customers away from the price war. However, it can be a challenging aspect
to crack. At present, the company has to strategize methods that can attract more
customers.
Management Issue #2
“Understanding Consumers and restriction on advertisement”
The customers within the market have fluctuating orientation due to the ideological
changes. This has impacted the companies’ ability to clearly understand whom to sell

the product and whom to ignore. Moreover, the government has not allowed the
promotion of wine products for the past three years which is another major challenge for
the company management. The reason is that the company will face challenge in
effectively reaching the consumers. The only method that can be relied upon is the word
of mouth, secret mailers, and messages.

References
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Canestrino, R., Magliocca, P. and Guarino, A., 2016. Environmental sustainability and
organic wine production: evidences from italian industry. MERCATI E COMPETITIVITÀ.
Fainshmidt, S., Smith, A. and Judge, W.Q., 2016. National Competitiveness and
Porter's Diamond Model: The Role of MNE Penetration and Governance Quality. Global
Strategy Journal, 6(2), pp.81-104.
Garcia, F.A., Marchetta, M.G., Camargo, M., Morel, L. and Forradellas, R.Q., 2012. A
framework for measuring logistics performance in the wine industry. International
Journal of Production Economics, 135(1), pp.284-298.
Hussain, M., Simeon, R. and Sayeed, L., 2015. Chinese Consumers' Involvement in
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Njavro, Ž.B.M., 2016. Risks and Competitiveness in Agriculture with Emphasis on Wine
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Özdemir, D., 2015. The demand for Turkish wine: estimates of the wine price
elasticities. Applied Economics Letters, 22(17), pp.1355-1360.

Sen, I. and Tokatli, F., 2014. Authenticity of wines made with economically important
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454.
Tatoglu, E., Bayraktar, E. and Arda, O.A., 2015. Adoption of corporate environmental
policies in Turkey. Journal of Cleaner Production, 91, pp.313-326.