Strategic Management for Chateau Margaux

This presentation discusses the strategic management strategies used by Chateau Margaux, a leading wine producer, to sustain in the market and earn maximum profit. It covers the internal and external analysis, capabilities, opportunities, and threats faced by the company. It also explores the useful strategies and strategy statements of Chateau Margaux. This presentation is relevant for students studying strategic management and can be used for assignments and research.

Strategic
Management

Introduction
• Strategic management is a continues process which require planning,
monitoring, and analysing so that organisation can meet out its goals and
objectives for future. In the present presentation, Chateau Margaux is
undertaken which is one of the biggest wine producer in world. For
remaining at same position, organization focuses to follow some strategies
in market because now-a-days many competitors are present in external
and internal market (Hill, Jones, and Schilling, 2014). Therefore, company
has started following marketing mix strategies to become successful and
sustain in market for longer period. Strategies that are used by enterprise
are 4 P's of marketing I.e. product, price, place, and promotion to earn
maximum profit.

Continued
• Threats for traditional wine making countries are increasing due to
globalisation. In this presentation, it has been identified that
enterprise focuses on quality and taste of product because if taste
changes than that product will not run in market in the future.
Industry have to analysis determinants and market size to reduce in
global warming. Organisation have to analysis demand market so
that there sale can increase (Thompson, and Martin, 2010). With
help of strategic tool organisation can identify proper areas and
proper situation for selling their product.

Cont.
• Conducting an assessment on internal strength and
weakness of organization which may include basic
resources and competencies typically provide a clear
portrait of competitive edge of organization in respective
market. As opined by Hill and Jones (2009) conducting
resource analysis is best to perform internal analysis of
organization by considering its core competencies,
resources, tangible and intangible properties etc.

Task 1: Internal analysis
• Chateau Margaux provides various opportunities to their stakeholder so
that it could benefit them in order to run the operations effectively. Main
competitors of firm are China, Japan and Eastern countries. In the study
both external analysis and internal analysis has been carried out. They
provide clear competencies and portrait of competitive edges of entity in
respective market. In internal analysis, organisation consider from different
viewpoints i.e. from tangible and intangible and also indicates capabilities
of business. By this they will find core competencies and resources for
organisation. Industry analysis has also affected on sale of their wine
product therefore company diversify their product range in relation with
price and quality.

Internal analysis of Chateau Margaux using resource
analysis

Continued

Continued

Capability analysis
Capabilities Key indicators
Corporate  Large number of exporters
 Good strategic control
 Distributors
R&D  Frequent innovations
 Introduced new flavours
 Extensive market research
Marketing  strong marketing initiatives in China
 Strong distribution channel
Sales and fulfilment  Maintains strong global sales force
 Enhanced sales

Capability Analysis – Contd.
• From the internal analysis of Chateau Margaux, it can be identified
that, the splendid wine producer has strong historical background of wine
making and have solid core competencies in its both tangible and intangibles
areas. The internal analysis of Chateau Margaux reveals that the sales of wines
in Japan, US and France dropped when compared to the sales in China and
Hong-Kong. While analysing, it can be revealed that the financial aspects of
Chateau Margaux has been under threat due to price escalation executed by core
markets of Pavillion Rouge, the second wine from Chateau Margaux. The
unexpected price escalation was perceived as unduly high by luxury customers
and this has led the wine to get sooner disappear from global wine market.

Capability Analysis – Contd.
• Moreover, the internal analysis of Chateau Margaux also have
shown that the distribution channel of wine producer is strong,
but on the other hand lack of initialization to enter in to
emerging markets like Asian, may negatively affect financial
assets of Chateau Margaux. Furthermore, it has also been
identified from the above analysis that, the global exporting of
Chateau Margaux is dominated by EU markets. This hence
reveals that the wine producer has strong brand image and
customer base in European markets.

Capability Analysis – Contd.
• The internal analysis of Chateau Margaux recognized human
resources of the wine production is uneven to meet growing
demands in wine market. From the internal analysis of Chateau
Margaux, it is clear that the wine producer has employed nearly 100
people to handle production process of wine. This lowered figure of
employees hence indicates that the human resource of Chateau
Margaux has been under threat for meeting customer demands
timely.

Chateau Margaux Case Study:
External Analysis
• The best analysis model for conducting the company’s
external analysis is the SWOT analysis model. The model
focuses on the company’s internal strengths and weaknesses
and the external opportunities and threats (Olsen, nod). In this
consideration, Chateau Margaux enjoys the revenue from its
international market base brought about by the wine
company’s reputation build over many years but its
production and marketing is also faced with external
challenges (agoodnoose.com, n.d.).

Opportunities
• Externally, the company has an opportunity to widen its market and to increase its supply
globally. First, the sales of Chateau Margaux is projected to increase given the increasing
demand for wine in the international market (Ofek and Vogt, 2013). Furthermore, France is
known for best quality wine hence the brands from this country are better placed to appeal
to the wine market (chicagotribune.com, 1985).
• Besides, Chateau Margaux should explore the new type of customer in the wine market. As
such, the existence of a new group of luxury wine consumers in Asia and Russia is a great
opportunity that should be explored to increase the company’s sales.
• Besides, the wine company should utilize the new distribution channels, especially the
online sales platforms for local and international business. Such channels are a perfect way
of shortening the time taken to promote Chateau Margaux wine and the transaction
processes. Through this channel, consumers can place their orders online and have the
ordered goods delivered by the company.

Threats
• Despite the French wine having appealed to the world market for many
years, wine producing companies such as Chateau Margaux are faced
with loss of market share in the world market (Beyersdorfer and Dessain,
2011). The entrance of ‘new world’ wine producers like the American
countries and other European countries is an indication of a potential loss
of market share by the French wine producing companies (Bohmrich,
2014). Besides the loss of market share, consumer tastes for wine are
shifting towards wines produced using different styles especially the
heavy tannin that are not produced in the Bordeaux region of France
(thewinecellarinsider.com, n.d.).

Industry Analysis of Wine and impact on Chateau Margaux Company
• The existence of the wine industry in the world is from the time immemorial. It was existing
even during the times of the Kings and Queen with the different market structure existing at
that time. The wine production is considered as the process which has been passed on to the
generations of many families (Beyersdorfer, 2011). There are many countries which is
producing the finest wine in the world. France was the largest producer of the wine in the
world but the globalisation increased the competition. The eastern countries like Japan,
Australia which also entered the wine industry posed a great threat for the traditional wine
making countries. In the past decades the wine industry has undergone huge threats due to the
overproduction of the wines (Lorch, 2016).

Cont.
• The big wine markets in the Europe do not have the enough markets to
sell the wine. The increase in the wide variety of the choices like other
drinks is also one of the reasons for higher competition in the wine
industry. The changes in the climate is also one of the biggest threat
for the industry as this is creating changes in the taste and the quality of
the Wine which is produced. The compounds like anthocyanin and
tannins is giving the wine its colour and thus if there is a fluctuation in
the temperature this would alter the taste of the wine (Roland, 2013).
• The main cause of the concern is the global warming and thus the
producers have to face the consequences for this. The wine industry
structure could be determined on the basis of the market size. Europe
still holds their position as leaders in the world and this is led by
France, Italy and Spain but this has been changing with the emerging
wine producing countries like Japan, China (Howland, 2014).

Cont.
• Chateau Margaux is a well-established prestige brand in the world and
they have the higher profit margins and the demand for the first – growth
is strong and they are growing. One of the weaknesses for the company is
that the marketing of the company is outsourced to the Bordeaux wine
merchants (Howland, 2014). The demand for the wine is increasing and
there is much new type of the customers in the world mainly from the
eastern nations. There are also many new distribution channels present
through which the online sales could be made. The company also has
many threats as the French wines are losing its sheen in the market with
the emerging competition from the countries like China, Japan. The
changes like shifting of the tastes to the different style are also one of the
reasons for not preferring the wine of the French region (Roland, 2013).

Cont.
• The main competitors for the company are
• Lafite – Rothschild
• Mouton – Rothschild
• Chateau Latour
• Haut – Brion
• The company could try many new alternative methods for
distribution and take the complete control of the distribution channels and
they could also run a loyalty program among their customers.The company
could strive in making an expansion to the international arena by sticking on
to their tradition. This makes them unique by maintaining their tradition
with the touch of modern distribution channels (Roland, 2013).

Cont.
• The entry of the company into the China market will give them a
great scope of the development of their business but this has to be
a cautious approach as the duplication of the products is high in
the Chinese market. The company has to safeguard themselves
from the cannibalisation (Beyersdorfer, 2011). The company
being in the market for long time with their rich old tradition and
the brand image must ensure that they keep their image at the
same time make an expansion to stay in the market. The company
could modernise their supply chain and have a modern distribution
channel to keep with the competition yet the traditional blend of
the manufacture could be retained to stay competitive and unique
in the market.

Strategic options those are
available to Chateau Margaux
• There are different strategies adopted for the marketing of Chateau Margaux. In the wine
market there are different competitors. In the market of wine there is the hard competition
(Brown, K. 2010). This makes the market for Chateau Margaux tough.
• The effective combination of these marketing mix strategies makes the Chateau Margaux
successful in marketing their products. The effective combination of the marketing mix makes
it possible to sustain in the market.

Conclusion
• From the above case it can be concluded that Chateau Margaux can
perform well if there is proper utilization of opportunities and they are
ready to explore them in effective and efficient way. By using of different
opportunities which are incurring at firm the manager of Chateau Margaux
has to maintain reputation that has built over many years therefore
manager does not use opportunities in negative way. Through carrying out
marketing mix strategies i.e. product, price, place and promotion
organisation may start incurring profit for company in efficient and
effective manner.

Useful Strategy of Chateau
Margaux
Useful strategy of Chateau Margaux is designed in basis of product, price, place and promotion
strategies
Product strategy
• Usage of different types of policies and procedures
• Usage of different types of techniques and the technologies.
Price strategy
• The bases of the consumers are increased.
• The diversified products are increased.

Useful Strategy of Chateau
Margaux
Place strategy
• Marketed to the market malls and super shops in France.
• Cost of transportation becomes less.
Promotion strategy
• Gives the consumers discounts, offers and the other rebates.
• Chateau Margaux can arrange different public relation and the other activities to reach most of
the consumers effectively.

Strategy statement of Chateau
Margaux
There are strategic statements of Chateau Margaux. They believe in these statements so that it
becomes easier for them to achieve the ultimate objective (StudyMode, 2016). Besides that these
statements give the Chateau Margaux the opportunity to serve most of the stakeholders within
the less possible time. The statements of Chateau Margaux are as follows:-
 Invest to accelerate internal growth: Chateau Margaux considers the investment to foster the
production of different types of products. As the production increases, the performance of the
human resource is also increased. This makes doing business easier for Bordeaux wine.

Strategy statement of Chateau
Margaux
 Develop the lowest cost position in all product categories: Chateau Margaux tries to lower
the cost of the production, though the product quality remains same. For this reason, the
product can be served to all of the consumers. The consumer retention becomes easier.
 Leverage brand names and strategically link businesses for synergy: Chateau Margaux tries
strategically to extend and develop the product brands. Bordeaux wine can be benefited from
the portfolio of the products.
 Pursue cross channel distribution for established products, brands, & positions: In the cross
channel distribution Chateau Margaux tries to control the supply chain over internet or the
other channels. Through the cross channel distribution the cost of the products also reduces.

Continued
• By identifying weak areas of business management have to follow some
strategies for their overall development at Chateau Margaux. With help of
using different techniques such as SWOT and PESTEL firm may try to
achieve goals and objective for their future achievement. By analysing of
internal, external and industry firm gets actual situation where they are and
where they want to be according to present market situation. From
evaluation of company structure firm may came to know about their
competitor in wine industry. Changes of climate is the biggest threat for
company and creating change in taste and Quality Company might incur
losses and lead to bankruptcy.

Continued
• Market Branding of product is very weak so for establishing of product
firm has to do marketing so that they can earn profit because consumer are
increases therefore by this, growth of organisation will also increase.
Organisation has to establish proper distribution network and channel so
that product can reach to consumer on time.

REFERENCES
• Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an
integrated approach. Cengage Learning.
• Thompson, J.L. and Martin, F., 2010. Strategic management: awareness & change. Cengage
Learning EMEA.
• Brostrom, G. and Brostrom, J. (2009). The business of wine. Westport, CT: Greenwood Press.
• Brown, K. (2010). The wine industry. Perth, W.A.: Curtin University of Technology, School of
Business Law and Taxation.
• Henry, A. (2011). Understanding strategic management. Oxford: Oxford University Press.
• StudyMode, (2016). Chateau Margaux by Kmjohnson. [online] Available at:
https://www.studymode.com/essays/Chateau-Margaux-212168.html?topic [Accessed 12
August. 2016].

Thank you