Founded in 1998, the privately owned Sula Vineyards Company has penetrated the wine industry in India due to its unique value addition approach to the company’s grapes. The company has expanded over the years from the annual production capacity of 150,000 litres in 1999 to 1,600, 000 in 2007 (Lopez, Gilinsky and Shah, 2009).
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Through securing good funding, the company has been in a position to develop series of wine. The company has partnered with several distributors to support its business activities. The wide market area for the Sula Vineyards may be attributed for its quick expansion and success.
Nature of external environment
Threat to market entry
It is difficult for any aspiring wine manufacturing company to enter into the wine production industry in the Indian market and manage to break even easily.
In Indian and across the neighbouring countries, the Sula Vineyards’ business magnitude together with that of its main competitors are well established and would easily enjoy economies of scale to the disadvantage of a new entrant. The Sula Vineyards Company is well position to survive in the competitive market through gaining form economies of scale, competitive price tags, and strong customer base (Lopez, Gilinsky and Shah, 2009).
Threat of substitutes
The foreign and other local wine brands pose the greatest threat to Sula Vineyards’ existence and business performance. These brands have been in the wine industry for longer period and are well established than the Sula Vineyards which came into full operation in 1999.
The other foreign and local wine brands have the same products as the Sula Vineyards’. Besides, they are in a position to offer large discounts and sponsor expensive promotion campaigns unlike the relatively smaller Sula Vineyards. Therefore, the other foreign and local wine brands have the ability to offer an alternative perfect substitute to customers who may be unsatisfied with the wines offered by the Sula Vineyards Company.
Unsatisfied customers therefore have other alternatives from where they can get the wines. However, in order to remain relevant, the Sula Vineyards Company has established a unique market for its customer through tailored optometry wine products for the customers in the upper and lower economic ends of the Indian and neighbouring markets (Lopez, Gilinsky and Shah, 2009).
Power of suppliers
The wine distributions and raw material providers in the Indian market have more power owing to the existence of many wine production companies. This leaves the distributors and suppliers with the power to dictate on proceedings in the wine industry such the fees charged for each delivery.
However, the Sula Vineyards has endeavoured to use its dynamic promotion and supply chain as a strategy for balancing the institutional forces (Lopez, Gilinsky and Shah, 2009).
Power of buyers
Reflectively, the amounts of output in terms of customer consumption of the wines depend on their purchasing power (Wright, 2007). Sula Vineyards’ performance in the Indian wine industry depends highly on the power of the private consumers and the corporate segments.
Fortunately, the Sula Vineyards Company is geared to further penetrate the market since it plans to introduce more products and better funding (Lopez, Gilinsky and Shah, 2009).
There are several wine production companies operating in the same industry with virtually all of them dealing in a variety of the wine product. For instance, the foreign brand such as Guinness provides the biggest competition to Sula Vineyards due to its big market share and expanded network standing.
In line with this, the Sula Vineyards Company will have to counter this rivalry by introducing more interesting products in its products line (Lopez, Gilinsky and Shah, 2009).
Company’s internal environment
The stable management team comprising of two directors and several employees are instrumental towards providing necessary support and production of the quality wine in the Indian market. The Sula Vineyards Company has a solid understanding of the Indian wine market because of its series of products and distribution platforms. For instance, the company has different wine products.
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The Sauvignno Blanc, Chenin Blanc, Shiraz, Chilean Merlot, and Champagne Style Brut are some of its products that are created for the upper and lower economic ends market within and without India. The company has strong financial base which gives it a competitive advantage a head of its competitors.
The company has a strong presence in the wines production industry due to its wide network of distribution channels (Lopez, Gilinsky and Shah, 2009).
The Sula Vineyards Company has limited its market to the United India since its export strategies to China and Singapore among other countries has not been very beneficial to the company in terms of revenues. This has limited its scope of operations. Some of the products offered by the company are duplicated despite the brand names and signature.
This might cause confusion among the target clients. The company has not been in a position to monitor its growth or operation efficiency despite its long period in the Indian wine industry (Lopez, Gilinsky and Shah, 2009).
The business has an opportunity to expand since the wine production does not have limitations. The business also has the opportunity of developing more products and services for its global market and the Indian market since the demand for wine in India is higher than the annual quantity supplied by all the wine production companies.
For instance, the company may introduce a scotch or a ready to drink vodka brand. In addition, the company has the opportunity of introducing a lower alcohol content drink to target the women alcohol consumers market (Lopez, Gilinsky and Shah, 2009).
Since the business is a threat to its competitors, they might retaliate by providing the wine consuming market with similar wines at a lower price. This will hurt the revenues of the Sula Vineyards Company since it relies heavily on the revenues from the local market (Lopez, Gilinsky and Shah, 2009).
Besides, conglomerate diversification would be a threat to this company should the business decision environment conspire against its goals. For instance, changed preference for its wines is likely to affect the element of loyalty of the customers.
Strategic analysis of the Sula Vineyards Company
Since most of the models of management at the Sula Vineyards Company propose a linear format in decision making, responding to the issues raised by the customers often take a longer time than is expected by the clients.
Thus, the company should change the linear approach to a more insightful customer support system. In order to be more competitive, the Sula Vineyards Company should introduce more products and offer free samples and discounts to its clients.
Within the wine production industry in the India, the business magnitude of the Sula Vineyards Company is wide and well organized into different stores and has a strong presence in most of the stores and regions across India. The company has an extensive partnership network and very many products that will support its sustainability goals (Birdsall and Johnston, 2010).
The company has stratified its target market into upper and lower economic end segments. The Sula Vineyards’ wine products are further classified into premium and ordinary in order to maximise the returns from customers from different social and economic backgrounds.
Despite the relatively crowded market, Sula Vineyards has designed and integrated reliable and efficient distribution platform to ensure that they remain the most reliable provider of wine products across the regions of Indian and its neighbouring countries.
The performance of the Sula Vineyards Company within the expansive wine production industry in India is highly dependent on the buyer-power in terms of their purchases of the wines. For instance, the numerous products and quality assurance strategies have ensured that the business is geared towards maximising its returns.
Through competitive pricing, strategic expansion, and planned diversification, the Sula Vineyards Company has managed to establish a strong market niche in India despite the rivalry. At present, the company has a very responsive customer support and well organised distribution channel for its products.
Sula Vineyards Company has a great opportunity for expansion since the market is inclined to its advantage. For instance, its innovative approach to addressing consumer quality price concerns and convenience via a well organized distribution network is an assurance for rapid expansion into new market niches.
The Sula Vineyards Company has the opportunity of diversifying marketing beyond its current scope of operations because of its wide supply chain channel. Specifically the company has the potential of penetrating the foreign market segment such as China, Singapore and even Korea.
The company should entertain the idea of expanding its operations to all the countries in Asia since the wine production can be managed efficiently from a central point (Parente, 2006).
The company should change its approach to strategic insight in execution of strategic plans rather than the current linear approach. Besides, the company should partner with financial providers in order to secure sufficient funding that can support a five year expansion plan.
The company may also franchise its supply chain and human resource management in order to ensure efficiency in the use of factors of production and distribution channel (Roberts, 2005). Moreover, the company should introduce traditional marketing approach since the Indians are known to use products they can easily associate with their culture (Cheverton, 2004).
Sula Vineyards Company can host annual parties/events and invite target clients along with existing clients in order to enhance the company’s reputation. In terms of personal selling, Sula Vineyards Company can appoint trained sales executives to attend seminars and expos in order to approach target customers and generate business.
Wine has always been made in India. However, it has become a part of their culture and society ever since the wine glut was experienced by the Indian wine/viticulture industry. In modern day India and affluent society, there may be only two generations of significant wine drinkers.
This is largely due to the fact that the new culture of wine has only been a part of Indian diversity since westernisation (Parente, 2006). Thus, re-branding the Sula Vineyards Company’s wine products to suit the Indian drinking culture will give the company an upper hand in the Indian wine/viticulture industry.
Birdsall, C., & Johnston, N. (2010). Achieving brand-driven business success. Design Management Review. 19(2), 67-74.
Cheverton, P. (2004). Key Marketing skills: strategies, tools, and techniques for marketing success. London, UK: Kogan Page.
Lopez, R., Gilinsky, A., & Shah, J. (2009). Sula Vineyards. Case Research Journal, 30(1), 1-19.
Parente, D. (2006). Advertising campaign strategy: A Guide to Marketing Communication Plans. Ohio, Oh: Thomson South-Western.
Roberts, J. (2005). Defensive marketing: How a strong incumbent can protect its position. Harvard Business Review, 83(11), 150-210.
Wright, P. (2007). A refinement of Porter’s strategies. Strategic Management Journal, 8(1), 93-101.