Spanish Vines: Case Study of Columbian Market Entry Strategies

This case study examines Spanish Vines' strategic considerations for entering the Columbian market. It begins with an overview of the company's objectives and the challenges involved in international expansion. The analysis employs various models, including PEST analysis to evaluate the political, economic, social, and technological environments of Columbia, and identifies potential market entry approaches such as joint ventures, franchising, and establishing manufacturing plants. The study further utilizes the Hofstede model to assess cultural differences, the STP model for market segmentation, targeting, and positioning, and the 7 P's model to develop a marketing mix. Benchmarking and Keller's equity models are also used to assess brand image and customer loyalty. Finally, Porter's generic strategies are evaluated to determine the best competitive approach. The study concludes with recommendations for Spanish Vines' successful entry into the Columbian market.

SPANISH VINES

Table of Contents
Overview of the case.......................................................................................................................1
Different Models..............................................................................................................................1
PEST Analysis.............................................................................................................................1
International market entry Approaches.......................................................................................1
Greet Hofstede Model..................................................................................................................2
STP Model...................................................................................................................................3
7 P’s Model..................................................................................................................................3
Benchmarking Model..................................................................................................................4
The Keller’s Equity Model..........................................................................................................5
Porter’s Generic Strategies..........................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

OVERVIEW OF THE CASE
Spanish Vines Company is focusing on expanding its business operations by the means
of entering into international market of Columbia. In this regard, the case study will perform, a
precise analysis of the hindrance and challenges faced by the Spanish Vines while making the
judgement regarding entering into foreign market. Therefore, researcher through the means of
different models and theories will evaluate different aspects that need to be taken care of by the
top level management of Spanish Vines while making the decision of entering into the
Columbian market.
DIFFERENT MODELS
PEST Analysis
Herein, PEST analysis is conducted to evaluate external environment of Columbia where
CEO of Spanish Vines is planning to expand its business operations.
 Political: Spanish Vines has to abide by the regulations framed by the Columbian
government related to acquiring license, duty payment like VAT, Tax etc(Warburton,
2010).
 Economical: Economy of Columbia is improving at a rapid pace which provides an
appropriate opportunity for the Spanish vines to establish business and generate better
outcomes.
 Social: People of Columbia are always in quest of different taste and preferences thus,
CEO of Spanish Vines has the opportunity to offer wide range of flavourful vines in the
market and acquire advantage of high purchasing power of people.
 Technological: Cited firm has indulged in latest technological equipment’s to carry out
production process which helps in saves time and costs effectively (Laxman and sari,
2011).
Findings:
On the basis of above analysis it has been identified that, Spanish vines has to abide
various rules and regulations in regards to Columbian government. Furthermore, constantly
improving economic conditions has increased the purchasing power of the people which is good
signs for Spanish Vines sales. Furthermore, advanced technology is helping the course of cited
firm in producing quality of wide range of Spanish vines to satisfy different needs and wants of
people.
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International market entry Approaches
There are different approaches through the means of which Spanish Vines can enter into
the foreign market of Columbia. Following are the approaches:
 Joint Venture: It is the most effective strategy for sharing the risks with similar company
in the foreign market. Furthermore, entry through this approach in international market is
much easier than any other method. But contrary to this, dispute in partners can lead to
devastating results for the operations of Spanish Vines in Columbia(Svensson, 2002).
 Franchising: It is another suitable option of entering into new market through the means
of licensing. Further, Spanish Vines can raise large amount of capital while opening its
franchise in Columbia. But, the major drawback of this approach is that, there is no
guarantee of investment.
 Manufacturing in foreign land: Spanish Vines can establish its plant in Columbia as well
as it can provide itself the tax benefit and create employment of the Columbian people.
But setting manufacturing plant may lead to incur huge costs for the cited firm (Lopez
and Fornes, 2015).
Findings: By analysis international entry models it can be said that, there are different options
available to the top level management of Spanish Vines to enter into Columbian market and
generate demand for its products and services. According to the given case study, Spanish Vines
should open its manufacturing unit in Columbia as it provides wide range of opportunities in that
sector. Further, this suggestion can be supported with the fact that, Columbian market has low
labour costs which reduces major costs for the company.
Greet Hofstede Model
Hofstede model of cross cultural management consist of four different dimensions which
distinguishes the values of one country from another. These dimensions are power distance
index, individualism vs. collectivism, masculinity vs. feminity, uncertainty avoidance and long
term orientation. However, applying this model helps in illustrating that, individualism vs.
collectivism helps Spanish vines in considering the actual relationship between people living in
different society(Taguchi, 2013). While power distance illustrate how individual accept different
level of power which is evident among them. Furthermore, uncertainty avoidance is the other
dimensions which take place when individual accept risk. While, masculinity and feminity is
another dimension which states that extent to which society embraces masculine values against
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the feminine value. Lastly, long term vs. short term is the last dimension which focuses on
difference between the thinking of society.
Figure 1: Columbia comparison with US
(Source: Hofstede Model, 2015)
Findings: On the basis of above analysis it has been identified that, all the dimensions of
Hofstede model affects overall functioning of Spanish vines. However, it is important for the
company to offer products after understanding behaviour and standard of living so that their
expectations can be met in an effective manner.
STP Model
 Segmentation: Cited firm has segmented its market on the basis of demographic
segmentation so that they can define target customers in the suitable manner. Adults are
legally allowed to drink wine thus; it is easy for Spanish wine to segment the age group
above 18 (Mazumder Miller and Naka, 2008).
 Targeting: Considering the range of products, senior authority of Spanish vines has
selected concentrated targeting strategy. Through this, company give main emphasis on
the niche market. The organization aim at evaluating needs of customers and accordingly
offer them the quality of vines.
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 Positioning: In context to establishing business enterprise in new Columbian market as
well as generating suitable business volume, positioning of Spanish vines will be based
on unique attributes and characteristics of different vine products(Alonso, 2015).
Findings:
Applying STP model helps in evaluating that, Spanish Vines is focusing on concentrated
targeting strategy which assists them to target niche market of the Columbia. Furthermore,
segmentation is based on the defined regulations of government that is company can target only
adult people or the people above 18. Lastly, unique attributes of vines will assist in attracting
large number of audience from Columbia and increase the sales volume.
7 P’s Model
Marketing mix of Spanish Vines assists in defining different aspects of the company
through the means of which management is planning to establish Spanish vines in Columbia.
Furthermore, core products of Spanish vines have wide range of quality vines which satisfy
needs of different customers. People of Columbia are the lovers of wine thus; it provides great
opportunities for the company to provide unique range of wines so that expectations of
customers can be met (Bishopand Pagiola, 2012). Furthermore, price of the product is based on
the purchasing power of the people in Columbia so that large number of audience can be
attracted. In terms of distribution, Spanish vines are focusing on opening retail stores in the
Columbian market so that products can be sold in the suitable manner. Along with this, company
will acquire skilful people who are educated in terms of selling such high class vines in the
Columbian market appropriately. The main process of the company is to carry out production
plant in Columbia so that satisfaction level of customers can be enhanced. Lastly, physical
evidence is that, vines will be showcase in different retail outlets of the company (Brouthers and
Nakos, 2005).
Findings:
By the means of applying 7 P’s model it has been evaluated that, wide range of vine
products so that different taste and preferences can be satisfied.Along with this, social media and
other latest method marketing has been used to create awareness about the products and services.
Thereafter, management will employ skilful employees so that they understand the ethnic
background of Columbia and accordingly treat the customers. By the means of this, large number
of audience can be attracted. Thereafter, through the means of physical evidence Spanish vines is
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planning to enhance the reach of people of Columbia. Lastly, establishing manufacturing process
in the country will improve the overall functioning of the cited firm.
Benchmarking Model
The main purpose of undertaking Benchmarking model is that it assist in planning, data
collection, analysing the collected information and accordingly adapting the strategy. In the first
step of this model, Spanish vines need to understand what to benchmark and the plan for the
different segments of the vines. In this process, internal data play significant role in analysing the
capability of own product range (Jetmarová, 2012). Thereafter, data collection process can be
carried out by the authority so that information regarding Columbian market can be collected
through external sources. Once the data is collected it should be analysed on the basis of internal
capabilities and them benchmark of the vines can be set. Lastly, strategy should be adopted to
carry out the benchmarking process in entering market so that desired level can be achieved.
Findings:
On the basis of above analysis it has been found that, benchmarking will assist the course
of Spanish vines while entering into the Columbian market. However, it will define the
benchmark that is require by the range of products of Spanish vines in order to enter into the
target market and sustain for the long term purpose. Through the means of external sources top
level management can collect information regardingwhich of the range of vines are best for
Columbian market so that accordingly branding strategy can be developed and suitable brand
value can be created.
The Keller’s Equity Model
keller’s equity model is also known as customer based brand equity model. The main
purpose of this model is to develop strong brand image so that people can be aware of. There are
four different step of this model that senior authority of Spanish vines has to undertake in order
to create brand image of the vines in Columbian market (Hackler, 2008). Firstly, Spanish vines
should have its own brand identification so that awareness can be created. Secondly, company
should understand the meaning of its own brand so that they can easily communicate the right
and accurate information to the target market of Columbia. Thirdly, Authority should respond to
the brand so that they can easily understand what customers and consumers actually thinks about
the products and services. Lastly, Spanish vines should focus on reaching to this level of brand
resonance so thatcustomer loyalty can be increased.
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Findings:
Through this model it has been analysed that, Spanish vine target customers are high
income and adults thus, it is important for the company to brand its products in attractive manner
so that large number of people can be reached. Along with this, Spanish vine should understand
its products in effective manner so that information can be communicated in appropriate manner.
Furthermore, management has to focus to responding the needs of customers so that business
volume can be enhanced. Lastly, practicing such strategies so that brand loyalty can be created
within the Columbian market.
Porter’s Generic Strategies
 Cost leadership strategy: It is one of the major generic strategy which focuses on low
cost producers in the industry. By the means of this, Spanish Vines in the Columbian
market either has to sell its products at average industry price to gain higher profits or
below average industry price to gain market share (Taguchi, 2013).
 Differentiation strategy: Under this, Spanish Vines Company can produce new range of
unique products of Vines especially for the Columbian market so that their needs and
wants can be met easily.
 Focus Strategy: This generic strategy concentrated on a narrow segment and within that
segment helps Spanish Vines Company to attain either cost advantage or differentiation.
Through this, cited firm can satisfy the particular target group in better and effective
manner (Alonso, 2015).
Findings:
On the basis of different generic strategies, Spanish Vines Company should focus on
using differentiation strategy. However, it will be feasible for them because establishing a new
manufacturing plant in Columbia will assist in making optimum utilisation of natural local
resources so that new range of vines can be developed according to the needs and wants of
Columbian people and desired demand can be generated.
SWOT Analysis
 Strengths:The main strength of Spanish Vines is that it provide good values for money
the customer while consuming, higher quality, better brand image, variety of wines,
presence at social media.
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 Weaknesses: Expensive in terms of target audience, less presence at local level,
ineffective marketing.
 Opportunity:finically strong leads to better expansion, elimination of duties taxes,
increasing spending power of people, increasing demand in US and Columbian market.
 Threats: Increasing competition is one of the major threat for the Spanish Vines in
Columbia.
Findings:
On the basis of above SWOT analysis it has been evaluated that, Spanish Vines Company
has suitable and reliable existing position in order to expand business in Columbian market.
Considering the strengths it will be easy for the Spanish Vines to establish its business in
Columbian market. While, weaknesses can create certain hindrance as senior authority has to
employ various strategies to mitigate those weaknesses. However, there are several opportunities
available for the company that encourages top level management of to enter Columbian market.
Lastly, despite of increasing competition, Spanish vines will enhance its market share as well as
business volume.
Porter’s Five Forces
 Bargaining power of Buyers: Spanish Vines are highly popular in the market it operates.
In case of Columbian market, there are very limited vines which are in competition with
the quality of Spanish vines thus, the bargaining power of buyers is relatively low as they
don’t have any similar quality of substitute.
 Bargaining power of suppliers: Being the lonely corporate entity of Spanish Vines in
Columbia, the bargaining power of Spanish Vines Company is relatively high.
 Threat of substitute products: There are no other wine companies operating in Columbia
offers Spanish vines thus, threat of substitute products is relatively low as compared to
the other market.
 Intensive rivalry: Competition is constantly increasing day by day in the vine industry. It
is because spending power of people in increasing which encourages them to spend in
leisure products thus, companies are entering in wine industry which indeed increases the
threat of intensive rivalry for the Spanish vines.
 Threat of new entrant: Government of Columbia does not implied strict regulations and
policies for the wine industry which encourage companies around the globe to enter into
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the market. Furthermore, recent elimination of different duties such as VAT, tax, tariff
duty etc. has increases the threat of new entrant.
Findings:
On the basis of Porter’s Five Forces it has been identified that, Spanish Vines can
establish its business in Columbian market as there is low bargaining power buyers because of
lack of substitute for the quality of vines as the Spanish vines. Along with this, company will be
the only entity to supply Spanish Vines has increased its bargaining power which leads to higher
business volume. Increasing spending power has grown the level of competition to another level.
But at present lack of companies offering Spanish Vines has shown limited threat of substitute
for the company. Lastly, Columbian government eliminating different rules and legislation
regarding duties and taxes has encouraged entrepreneurs from around the globe to enter into the
Columbian market and increase the threat of new entrant.
CONCLUSION
In conclusion to the above report it can be said that, Spanish vines company should
undertake various strategies and tactics in order to enter into the new international market of
Columbia. However, with the help of different models and theories, researcher has been able to
understand different aspects of Columbian wine market which helps in recommending suitable
strategies for the top level management of Spanish Vines Company in effective and efficient
manner.
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Online
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<http://www.bloomberg.com/ss/08/09/0908_2008_entrepreneurs/22.htm>. [Accessed on
23rd December 2015].
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for Benchmarking Application.[Online]. Available through:
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<http://www.ibimapublishing.com/journals/JOKM/2012/584166/584166.html>.
[Accessed on 23rd December 2015].
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