Innovation and Entrepreneurship: A Case Study of Tohu Wines

This report analyzes the integration of Maori values within the business activities of Tohu Wines and evaluates the challenges and opportunities faced by the enterprise.

Running head: INNOVATION AND ENTREPRENEURSHIP
INNOVATION AND ENTREPRENEURSHIP: A CASE STUDY OF TOHU WINES
Name of the Student:
Name of the University:
Author’s Note:

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Table of Contents
Introduction................................................................................................................................2
Overview of Tohu Wines...........................................................................................................3
Integration of the Maori values within the business activities of Tohu Wines..........................3
Evaluation of Challenges and Opportunities..............................................................................6
Possible Solutions......................................................................................................................9
Conclusion................................................................................................................................10
References................................................................................................................................11

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Introduction
Zhao, Fisher, Lounsbury and Miller (2017) are of the viewpoint that the business
enterprises or ventures established by the entrepreneurs should be guided by the process of
entrepreneurial business opportunity identification which in turn helps the entrepreneurs to
establish the right kind of business ventures on the basis of the customer or the market
demand. This is important on the score of the fact that if the entrepreneurs during the process
of the establishment of their business ventures do not take into account the customer or the
market demand while identifying the right kind of business opportunities then this is likely to
substantially reduce or narrow down the business prospects of the concerned ventures
(Meyer, Neck & Meeks, 2017). More importantly, an important trend seen within the
cauldron of the modern-day business world is the fact that the business enterprises are
increasingly integrating the cultural or the social value, traditions, customs and other aspects
of the communities or the regions of their operation (McIntyre, Brady & Barnes, 2019). In
this particular context, mention needs to be made of the business enterprise, Tohu Wines,
which over the years had been able to integrate the Maori values within its product portfolio
as well as the strategies that are being followed by it. This report intends to analyse the
manner in which the different modern-day business enterprises are integrating the social or
the cultural values of the local communities to gain success in the particular context of the
business enterprise, Tohu Wines.
Overview of Tohu Wines
The business enterprise Tohu Wines, established in 1998 by Wakatū Incorporation in
collaboration with two other Maori enterprises, is widely known as the “He mātāmua
taketake” or more appropriately the first Maori-owned wine enterprise in the nation of New
Zealand (Tohuwines.co.nz, 2019). More importantly, during the time of its foundation it was

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seen that the wine manufacturing enterprise under discussion here focused on the
manufacture of wines from the grapes which were grown in the different premier vineyards
of the nation of New Zealand. In this context, it needs to be said that the philosophy of the
concerned business enterprise over the years had been to manufacture the kind of wines
which will not only retain the local flavours of the Maori land as well as culture but also will
respect and protect the land of the Maoris for the coming generation (Stuff.co.nz, 2019). On
the other hand, Paul Morgan, the Chairman of the Wakatū Incorporation said that “Our vision
in founding a wine company was to have a platform to share our culture, story and values
with the world” (Scoop.co.nz, 2019). The resultant effect of this is that the wines
manufactured by the concerned business enterprise from manufactured from the grapes which
are locally cultivated by the Maoris and also rather than following the modern methods of
wine manufacturing which as a matter of fact could have reduced the operations cost of the
concerned enterprise it is still following the wine manufacturing process that had used by the
Maoris since the traditional times (Williams, 2019). More importantly, for the year 2018 the
annual revenue generated by the business enterprise under discussion here was more than
$4.6 million while being the largest wine exporter of the nation of New Zealand
(Ibisworld.com.nz, 2019).
Integration of the Maori values within the business activities of Tohu Wines
Williams (2019) is of the viewpoint that one of the most important factors which had
directly contributed towards the success or the growth attained by the business enterprise
Tohu Wines in the past 20 years is the fact that it had been successful in effectively
integrating the values as well as the culture of the Maoris of New Zealand within the domain
of the wines offered by it to the customers. In this regard, it needs to be said that although the
different wine manufacturing enterprises of the nation of New Zealand are taking the help of
the recent trends and thereby substantially modified their manufacturing, operations, business

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strategies and others on the basis of the same yet it is seen that to respect as well as uphold
the cultural values or the traditions of the Maoris the concerned enterprise is still following
the traditional methods (Stuff.co.nz, 2019). As a matter of fact, it is seen that the grapes
which are being used by the enterprise under discussion here for the manufacture of wines are
being obtained from the vineyards which belong to the Maori people. More importantly,
Tohu Wines is a part of “Kono, a Māori, whānau-owned company based in Te Tauihu , the
top of the South Island” and one of the best aspects of the business activities of the concerned
enterprise is the fact that through its business activities it supports more than 4,000
indigenous or more appropriately the Maori families of the nation of New Zealand
(Scoop.co.nz, 2019). As opined by Flint, Golicic and Signori (2016), the primary objective of
the Tohu Wines behind the usage of these business practices is not only to preserve the
cultural or the social traditions of the Maoris but at the same time to empower these people
who have been marginalised in the nation of New Zealand since the arrival of the European
settlers. It is precisely this aspect of the business activities of the business enterprise under
discussion here which not only distinguishes it from the other business enterprises of the
nation of New Zealand but at the same time had enabled it to gain a substantial amount of
success over the years as well.
Paul Morgan, the Chairman of the Wakatū Incorporation, in an interview with the
Scoop.co.nz (2019) said “From the beginning we knew how important our brand and story
were……For Māori, the koru symbolises growth, life and the natural world, and our logo
celebrates this iconic spiral…..This koru signifies our long-term intergenerational goals and
has become our tohu, our signature” (Scoop.co.nz, 2019). Furthermore, it is seen that the
official logo of the concerned enterprise that of the wine bottles of the enterprise carries is
derived from the Koru pattern which itself is a representative figure of the Maori culture and
value (Tohuwines.co.nz, 2019). In addition to this, it is seen that each of the wines offered by

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the enterprise is redolent with one or the other important aspect of the Maori culture or values
or way of life. For example, the “Tohu Nelson Single Vineyard Pinot Rose 2012” of Tohu
Wines is manufactured from grapes, vanilla, dried herbs and others that are predominantly
found in the Maori land and thereby highlights the uniqueness of the cultural traditions or the
values of the Maoris which as a matter of fact distinguishes them from the other people of the
world (Stuff.co.nz, 2019). On the other hand, the “Osawa Hawke's Bay Late Harvest
Gewurztraminer 2011” of Tohu Wines which is known for its unique aroma as well as silky
or sweet nature is also representative of the Maori values itself (Williams, 2019). This as a
matter of fact is representative of the Maori values of hospitality, thoughtfulness, kindness
and others which not only becomes apparent from the unique aroma of the concerned wine
but also from its sweetness or silky nature as well (Tohuwines.co.nz, 2019).
Morrison‐Whittle and Goddard (2018) are of the viewpoint that the usage of the
Maori values or cultural traditions by the wine manufacturing enterprise, Tohu Wines
becomes apparent not only within the domain of its product portfolio but also within the
cannon of the business activities used by it as well. As per Tohuwines.co.nz (2019), the entire
business activities or the operations of the concerned enterprise had been designed in
accordance with the three primary Maori values of “thoughtfulness, hospitality and kindness”
and this in turn accounts for the benevolent approach taken by the enterprise towards not only
the Maori people but also towards the other people as well. For example, the usage of
traditional Maori wine manufacturing process, the support which is being given to the more
than 4000 Maori families, the corporate social responsibility (CSR) practices followed by the
concerned enterprise and others are also indicative of this aspect of the enterprise.
Evaluation of Challenges and Opportunities
Aguinis, Edwards and Bradley (2017) have articulated the viewpoint that the different
challenges that a particular business enterprise in the business market of its operations as well

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as the ability or the capability to mitigate the adverse effects of the same greatly determines
the growth or the success attained by the concerned firm. On the other hand, Engert, Rauter
and Baumgartner (2016) had argued that the ability or the capability of a business enterprise
to effectively utilise the business opportunities offered by the business market of their
operation also determines the financial returns or the success attained by the concerned
enterprise. It is precisely here that the need for analysing the external business environment
and also the organisational or the strategic capabilities of the business enterprises arises since
they guide them to formulate or design the kind of strategies which are likely to help them to
take advantage of the business opportunities and minimise the adverse effects of the business
threats (Ethiraj, Gambardella & Helfat, 2016).
Sautier, Legun, Rosin and Campbell (2018) are of the viewpoint that one of the major
strength points of the enterprise Tohu Wine is the effectiveness with which it had been able
to integrate the values as well as the cultural traditions of the Maori people within the domain
of the wines offered by it and also its business activities. This in turn had helped the business
enterprise under discussion here to establish the necessary emotional connection with the
people of New Zealand, especially the Maoris and the other indigenous people which had
enabled it to significantly enhance its customer base or target market and thereby its
profitability (Zahraie, Everett, Walton & Kirkwood, 2016). Another important strength point
of the concerned enterprise is the positive brand image that it enjoys in the wine industry of
the New Zealand. Woodfield and Husted (2017) have noted that an important trend which
had been noticed within the business world of New Zealand is the fact that the customers on
the score of the plethora of options that are available to them have become very concerned or
conscious about the brand or the market image of the enterprises whose commodities or
services they are using. In the particular context of Tohu Wines it can be said that the manner
in which it uses the Maori values, the different CSR activities that it uses and others have

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contributed in a significant manner to boost the brand or the market image of the enterprise
and thereby have greatly influenced the buying behaviour of the customers (Scoop.co.nz,
2019).
According to Williams (2019), one of the most important weaknesses of the
enterprise, Tohu Wine, is the fact that in its bid to follow the Maori values and cultural
traditions, the concerned enterprise had been incurring a higher manufacturing or operations
cost which could easily have been reduced had it taken the help of the modern machineries
and technologies. This is important because of the fact that the higher operations or the
manufacturing cost that the concerned enterprise incurs had substantially reduced the profit
margin of the enterprise over the years (Lewis, 2016). Another important weakness of the
concerned enterprise is the fact that the product portfolio that the enterprise offers to the
customers are very limited in scope or nature. This can be attributed to the fact that the
enterprise under discussion here offers only the kind of wines which could be manufactured
through the usage of the traditional Maori wine manufacturing methods. However, in the
recent times it had been seen that the demands or the tastes of the customers had changed
significantly and the inability of the concerned enterprise to fulfil this criteria act as another
major weakness of it (Woodfield & Husted, 2017). More importantly, it had been seen that in
the past 20 years the concerned enterprise had spent a substantial amount of its profit on the
development of the Maori community of the nation of New Zealand which could have been
used for the enhancement of its business prospects (Stuff.co.nz, 2019). This in turn had
become another major weakness of the concerned business enterprise which is adversely
affecting its business prospects or profitability.
An important business opportunity presented by the wine industry of New Zealand
which the business enterprise, Tohu Wine can utilise is the opportunity of product
diversification. Morrison‐Whittle and Goddard (2018) are of the viewpoint that because of

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the process of globalisation and others the contemporary customers have access to a wide
range of products or services and this turn had not only enhanced the demands of the
customers but at the same decreased their loyalty towards one particular product or service.
The resultant effect of this is that the modern customers often like to try out new services or
commodities and thereby generally do not stick with one kind of service or commodity
(Meyer, Neck & Meeks, 2017). The effect of this change in the buyer behaviour is also
noticed within the wine industry of New Zealand however when the product portfolio of
Tohu Wine is taken into account it is found that it is very limited in scope and lacks some of
the most popular wines that the customers generally like to consume. On the score of this it
can be said that the opportunity of product diversification is an important one for the
enterprise, Tohu Wine. Another important which Tohu Wine had, is to reduce its
manufacturing or operations cost through the usage of modern machineries or technologies
which in turn would help it to enhance the financial return earned by it. For example, within
the wine industry of New Zealand it is seen that the majority of the enterprises had been able
to significantly reduce their operations or manufacturing cost through the effective usage of
different kinds of modern machineries and technologies and thereby enhanced their profit
margin or profitability (Ibisworld.com.nz, 2019).
The high rivalry or competition which exists within the wine industry of New Zealand
is one of the major threats that the enterprise, Tohu Wine faces presently. In this regard,
mention needs to be made of the wine manufacturing enterprises of New Zealand like New
Zealand Wineries, Villa Maria and others which have not only monopolised the wine industry
of New Zealand but also hold the majority of the market share in the concerned industry of
New Zealand as well (Ibisworld.com.nz, 2019). Another important threat that the concerned
enterprise faces in the nation of New Zealand is on the score of the changing regulations of
the national government of New Zealand itself. As a matter of fact, it is seen that the national

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government of New Zealand had made the regulations related to the quality, manufacturing
and others aspects of the wine industry more stringent keeping into perspective the health
concerns of the consumers (Williams, 2019). Furthermore, the frequently changing
regulations or the policies of the national government of New Zealand is adversely affecting
the growth prospects or the profitability of the concerned enterprise and thus it had become
one of the major threats that the enterprise is presently facing.
Possible Solutions
Three of the most important measures that the enterprise Tohu Wine can use for the
improvement of its business prospects in the nation of New Zealand are listed below-
 Product Diversification: The effective usage of the product diversification strategy,
which is one of the most important strategies of the Ansoff Matrix strategies, would
help Tohu Wine to substantially expand its product portfolio which in turn would help
it to cater to the needs or the demands of the different segments of the population of
New Zealand (Zhao, Fisher, Lounsbury & Miller, 2017). In this regard, it needs to be
said that the enterprise is presently focusing on the wines which are being
manufactured taking into account the Maori values however the effective usage of this
strategy would help the enterprise to offer new wines to the customers that is likely to
be appreciated by them. This finds support from the fact that the enterprise Villa
Maria had been able to attain a substantial amount of success over the years through
the usage of this strategy (Stuff.co.nz, 2019).
 Use of modern machineries and technologies: New Zealand Wineries over the
years in a bid to reduce its operations or manufacturing cost had taken the help of
modern machineries and technologies (Williams, 2019). Thus, it is likely that the
enterprise Tohu Wine would also be able to reduce its operations or manufacturing
cost and thereby enhance its profitability through the effective usage of this measure.

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This would be in alignment with the concept of cost leadership since the enterprise
through the usage of this method would be able to reduce average cost related to
operations or manufacturing and thereby earn a higher amount of profitability.
 International Expansion: The process of international expansion had become the
norm of the modern-day business world and it offers the opportunity to the business
enterprises to not only expand their existing customer base but their profitability as
well (McIntyre, Brady & Barnes, 2019). Thus, it is likely that Tohu Wines would also
be able to derive similar results through the effective usage of this measure.
Furthermore, the enterprise for the attainment of this end can take the help of Uppsala
Internationalization Model through which it can enhance the demand for the wines
offered by it in the wine markets of other nations and when it had been able to
establish a steady customer base or target market in the concerned nation then it could
undertake the actual process of internationalisation (Woodfield & Husted, 2017).
Conclusion
To conclude, the enterprise Tohu Wines is an important one in the nation of New
Zealand not only on the score of the fact that it is the first fully-owned Maori business
enterprise but also because of the business practices followed by it. For example, it is seen
that the concerned enterprise integrates the Maori values and cultural traditions within the
domain of the wines offered by it and also in the framework of the business activities
followed by it. Furthermore, the enterprise under discussion here in the past 20 years had
been able to attain a substantial amount of success yet there is room for more improvement.
For example, it is likely that through the effective usage of product diversification strategy,
use of modern machineries and technologies for the reduction of the operations or
manufacturing cost, international expansion and other similar measures the concerned

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enterprise would be able to attain a higher growth. These aspects of the business enterprise
Tohu Wine become apparent from the above analysis.

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