The Management Strategies of Chateau des Charmes - Case Study Example

Strategic Management Considering the Decision to build the Chateau It is appropriate to consider the views expressed by those who work at the company since they may have some insight that may propel the business even further. However, this is a suggestion from the founder of the company and one individual. The ability of Paul Sr. to run the present wine company largely on his own with minimal management prowess exemplifies his knack in the wine industry. The suggestion to build the chateau should hence be considered since it comes from one of the most knowledgeable minds in the business. CdC’s Strategy CdC’s business strategy can be viewed as largely informal where its operations are not well laid out, and one that may be impeding effectiveness and much needed progress. There are numerous positive aspects to this strategy nonetheless. To begin with, Paul Sr. contends that making his own grapes is the genesis to quality wine and also to business success. This is the core reason 70% of all grapes crushed at the winery is grown under the supervision of the company. Another belief held by Paul Sr. is that customers should always pay relative to the quality of wine they purchase. Hence, the company would never charge exponentially for wine that does not match the price. The Boscs also view wine making as a lifestyle, and hence strive to form close ties with clients. This approach to business is very influential when it comes to making the decision since it might be the same approach adopted if the chateau is built. In this regard, it is appropriate to assess whether CdC’s business strategy is applicable in such a setup. Having CdC’s business strategy applicable in a chateau mean that the construction of the new premises is supported by the business strategy in use. CdC’s External Environment The external environment for CdC is very influential to the overall performance of the winery. The Liquor Control Board of Ontario (LCBO) is one of the political influences that impacts the operation of the company. The board is responsible for distributing most of the wine in the region and which all makers fall below. In many ways, the board is a controller of alcohol consumption in the region. Its lack of vulnerability from manipulation by wineries such as CdC means that the quest to upscale by the organisation is impeded. Although the revenues amassed in the wine business were surging, the amount of wine consumption was lessening over the last year. This is partly attributed to the economic recession that is being experienced in the region. This means that fewer people were taking wine and that the efforts by CdC to double its capacity may have come at an inappropriate timing. This is the economics bit of the external environment. However, it does not back the views of Paul Sr. However, the venture is aimed at amassing revenues from different sources. On social factors affecting CdC, the declining number of wine consumers is partly attributed to social responsibility that encompasses health consciousness. This development in the society has meant that consumption is minimised to desirable levels or avoided in other cases. It might be a bad time for CdC to effect the expansion plan, but the social factor is merely significant only when compounded with other factor such as the economic recession. Economic prosperity that is bound to come in the future is very effective in altering this social beliefs. Technology is essential in the production of wine particularly at the winery stage where the grapes are crushed to make wine. There are diverse varieties of machines used to execute this role in order to attain the anticipated results. Some of the machines produce more wine per tonne of grapes, while others produce less. The quantity of wine produced from each machine equally determines its quality. It is hence a quest to manage a balance between the two in a way that the utmost output is achieved. The present nature of the market demands quality rather than quantity, but that may not last since the economic aspect is bound to change. Both legal and environmental factors have little significance in this case. Assessment of CdC’s Resources, Capabilities, and Organization Over the years the winery has been in operation, CdC has massively added on the value of its assets in ways that many in the industry may find commendable. The company has acquired numerous properties that have acted as very beneficial in the production of the wine. The most important achievement of the firm is that they have been in a position to grow their own grapes, making up 70% of all that is crushed at the winery. When the winery began operations, its book value was worth $1.6 million but is now at $3.4 million, the estate vineyards’ book value was $160,000 but is now at $600.000. However, the organisation set up does not allow the company to perform at it utmost. The only resources that are in the possession of the company, and those that may be regarded as rare, are the massive vineyards that allows it to grow its own plants. Not many wineries are in a position to grow their own vines, which means that they cannot dictate the quality of their wine. The idea of the construction of the chateau is also another capability about CdC that can be regarded as a rarity. The acquisition of more property to grow more vines means that the concept of value in the VRINE criteria is increased considerably. In a way also, it bestows the winery with the accolade of inimitability. It is not easy for any other winery more so for many that depend on others to produce the grapes for them, to compete with this development. Although the company is not utilizing these properties to their maximum, it takes some time for the vines to mature and to be harvested. The vineyards that have mature plants are exploited of their worth and they prove to be very sufficient in exploitation. There are many flaws in the framework in a way that maximum is not exploited from the workforce. This assessment does not entirely dictate whether or not it is possible to build the chateau, but necessitates that some changes such as the organisation of the workplace and utmost utilization of resources to be executed. Financial Implications of the Decision The chateau is expected to cost approximately $5 million, but this figure does not indicate the amount that is going to be availed by CdC. There is adequate land that the new structure will be built on that would save $50000, and also save $840000 in purchasing of processing equipment that the company already owns. Ontario Development Corporation has also provided $2.2 million as grant to the completion of the project. The other amount has to be amassed by the winery, but this is very possible for a company with its capabilities. If in deed the chateau is build, new sources of revenues will emerge for the company to exploit. The winery is also likely to gain credibility in the wine industry for its unique approach, and a reputation is a key selling point in this industry. Doubling its output would mean that the company would become even more significant in the market among the dominant players. Advice to Mr. Paul Bosc, Jr. As stated earlier, the views of Paul Sr. regarding the expansion of the winery should be considered. The choice on whether to build the chateau or not is based on a number of factors. An organisation does not just expand to twice its prior size without considering major factors that are going to be regarded as significant. To begin with, Paul Jr. should work to build the chateau rather than shun the idea. There is much to gain from the venture than there is to downplay the idea. Another reason why Paul Jr. should toil in the direction of his father’s suggestion is that he (Paul Sr.) is very knowledgeable about the wine industry and is likely very aware of the best course of action. There needs to be a few changes however in order to make the transition effective. To begin with, a new and formal organisation structure should be conceived. A $5 million venture is not one to be run in an informal and disorderly manner. The land acquired for the grown of vines should exploit to achieve that objective. The goal is to double the output and this is surely going to use up more grapes. Finally, Mr. Paul Jr. is supposed to use his expertise in marketing to promote the new business to the possible customers. Reference Cruikshank, R. & Harling, K. (1997). Chateau des Charmes Ltd. Case Research Journal. Read More