Strategic Analysis of Monarchia Matt International Wine Company

This report provides a comprehensive analysis of Monarchia Matt International (MMI), a New York-based wine company, examining both its external and internal environments to formulate strategic recommendations. The external analysis employs PESTLE and Porter's Five Forces frameworks to identify opportunities and threats within the US wine market, highlighting the impact of regulations, economic factors, socio-cultural trends, technological advancements, and environmental considerations. The internal analysis assesses MMI's strategic capabilities through VRIO framework, financial resources, and weaknesses, revealing its strengths in producing high-quality wines, incorporating Hungarian wines into the US market, and diversifying its product offerings through global imports. A SWOT analysis synthesizes these findings to inform strategic choices, recommending actions to address competitive rivalry and consumer preferences. Ultimately, the report suggests that MMI can leverage its unique capabilities and market opportunities to enhance its position in the US wine industry. Desklib provides students with access to this and other solved assignments to aid in their studies.

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.