The Winemaking Expertise of BRL Hardy - Case Study Example

BRL Hardy: Globalizing an Australian Wine Company and BRL Hardy: Globalizing an Australian Wine Company Background In the last two centuries, over 1000 wine firms have been in service in Australia. BRL and Hardy have been operating as archrivals prior to their merger to become the biggest winemaking firm in Australia.The increased use of contemporary grape cultivation and scientifically advanced wine-making practices to generate a maintained high-standard wine which not only affected rising Australian wine firms, but also the whole world. It was important that both wine-making organizations merge since they boasted of more than 22% market share of the Australian wines and 17% national wine export, besides being listed as public organizations (Bartlett 2). The winemaking expertise of BRL Hardy was incredibly boosted by easy access to fruits, sufficient funds, and proper distribution channel within Australia and beyond. Hardy, which had been their recognized and polite traditional winemaking firm, and the then BRL, an aggressive and business-oriented firm needed to win the target market, thus the need of raising their status to international level. Nevertheless, it the two firms had rivalry and power struggles within their management systems. After the merger, some challenges emerged, revolving around controversy over which leadership styles to employ by the management team; power struggles and need for autonomy; and small organizational issues. These issues paved way for conflict between the company executives; overlap of authority and power, and organizational system dysfunction (Bartlett 3). Apart from the aforementioned problems, the power struggles stood in the way of successful pre-launching and launching of some products. Since there was a link between launching these products and increasing the market stability and the organization’s overall growth, the organizational conflict destabilized its operation and market strength. In particular, the internal power struggles and leadership wrangles, coupled with continued obstructions to the process of strategic management and implementation, worsened the situation. These affected the process of decision making, regarding the need to either launch the new products or stay with the already existing wines (Bartlett 2). In order to address the internal wrangles and dysfunctional management system, a two-way communication system between the company employees and its executives was necessary. After the post-merger, challenges concerning BRL Hardy’s organizational culture, information flow, and the right way to share the most appropriate strategic approaches to conquer the market emerged. Consequently, the above problems increasingly turned into sources of tension, giving rise to conflicts in decision making, employees and products conflicts.Hardy was popularly known for its polite and traditional way, with an award-winning high-standard wine, while BRL placed its focus on an aggressive and commercial culture that accompanied its fortified, bulk and value wines (Bartlett 3). Hardy began as a strong family-owned enterprise that enjoyed recognition and respect as the first wine-making firm in Australia. As early as 1882, Hardy scooped its first international gold medal at Boudreaux. The organization’s goal was to manage a team possessing appropriate marketing expertise, brands, and winemaking knowledge. They placed their attention on international external brand awareness.BRL aspired to go the Hardy way of being proclaimed the second largest crush in Australia (Bartlett 3). The company’s success was notable in the 80s, when it began selling its bulk wine products outside the country, especially in Scandinavia. BRL enjoyed access to raw materials such as fruits, sufficient fund, and a devoted management team. Owing to the status acquired by BRL and Hardy in the wine industry, coupled with their aspirations and financial drawbacks within the companies, they saw it worthwhile to merge and hopefully give them the capability of upgrading their business and meet new opportunities along the way. The preconditions set by both firms are some of the reasons that enabled BRL Hardy to prosper in their post-merger periods (Santich 132). Factors that Led to BRL Hardy’s Post-Merger Success First, the organization focused on value creation, in which the firm would spend more effort in retaining their clients, creating and maintaining the brand image, cost savings and securing of revenue. Concerning value creation and addition, the company focused its attention on domestic markets, so as to lock in already existing customers. In addition, the organization worked on improving its brand image, by focusing on branded bottle sales for its progress, as envisaged in its slogan “Making Quality Wines for the World.”In his bid to reduce costs, Carson reduced the product line in the UK from 870 to 230 items, besides decreasing the organization’s headcount (Bartlett 4). According to Davies Mind, cleaning up the operational inefficiencies and causes of financial constraints was the first step.In an effort to secure the revenues, Steve Miller, knew that the first step to undertake was to address the financial constraints facing the organization. In this case, Miller did not focus on cost saving, but on reaching their targets and market expectation. Therefore, the approach was to protect the share of the bulk cask business and focus on the branded bottle sales growth (Bartlett 4). The company had enough resources to undertake the task of value creation. The organization was cautious within its cost-saving endeavor, to keep sufficient employees to operate, manage and execute the process of value creation. In particular, the company had people at the grassroots level, who were charged with the responsibility of conducting follow-ups on the consumers so as to showcase the organization’s consistency and devotion to serve them. On top of that, BRL Hardy properly managed the merging process. In that regard, the process was handled as an integrated program with clear-cut duties, thereby decreasing the possibility of the daily tasks being ignored. This increased the success of the merger (Bartlett 4). Human element might have played an important role in its post-merger success. To this end, the human aspect is of much significance especially in the value chain, and in areas where it can be linked to clearly defined duties and responsibilities within the company. In Miller’s opinion, it was important to transform the organization’s culture and management style.Therefore, he was looking for a more decentralized method, while at the same time holding the management team answerable. It is important to remember that Miller realized that the ex-Hardy management group was hesitant by being restrained in terms of resources and secluded from key decision making. He encourages representation for the small risks, with the objective of establishing a have-a-go attitude. Initially, many ex-Hardy workers felt like non-members, doubting if they would be let into the meetings (Bartlett 4). BRL was an organization that sold fortified wines and embarked on a bulk and volume approach, hence possessed its grapes as one of its valuable assets. Hardy, on the other hand, was an internationally recognized traditional award-winning brand wine that was endowed with marketing expertise and brand recognition. This basically indicated that Hardy had the innovative knowledge and skills, whereas BRL possessed the necessary funds and resources to actualize its goals and targets(Bartlett 4). The appointment of Steve Millar as the CEO of the newly integrated firms must have played an important role in the post-merger success of BRL Hardy. Millar’s management team emphasized on transforming BRL Hardy into an international powerhouse brand by focusing on the need to decentralize the perils and duties, while at the same time upholding the transparency and answerability of central management. Miller also embraced a rational strategy by centering on the Pareto Principle, which is the rule of the vital few in business. He acknowledged that nearly 80% of successes roughly came from 20% of the amount of duration and energy spent. As a result, he opted to center his operations on acquiring 80% success with about 20 projects, rather than 100% with merely one or two(Bartlett 4). The company’s success was also owed to the entire organization’s strategy. The organization’s central leadership set its mind on focusing on the majority of its sales in the local market, thereby leading to a stately local bottle share and rising organizational profitability. Furthermore, much weight was placed on reducing costs and seeking means to boost efficiency, like lowering the number of brands provided and employees by repositioning with merely a few stronger brands(Bartlett 4). Chris Carson, a long-serving and skillful manager of Hardy, also played a pivotal role to the post-merger success of BRL Hardy. He managed to resuscitate the faltering UK and the entire Europe’s enterprises by lowering the product portfolio by about 70%, and halved the employee headcount. Driven by the desire to make it an international company, the organization’s strategy of strengthening global distribution, allocating funds in the improvement and acquisition of new assets and resources related to wine production, and repositioning and labeling of international brands also catapulted the process of success and progress of the corporation. The organization managed to take a minimal risk strategy by sourcing their wines from many places.Finally, the decentralization approach, accompanied by maintenance of central accountability, was also beneficial in the sense that it attempted to place the responsibility of labeling, pricing and branding in Australia, while entrusting to external branch managers the duty of conducting distribution, product promotion and sales(Bartlett 5). Essence of Tensions between Steven Davies and Chris Carson The primary cause of conflict between Stephen Davies and Christopher Carson was the controversy over centralization versus decentralization in management and foreign branch autonomy. This problem came up in a post-merger situation owing to the fact that Carson was previously part of the Hardy team prior to the merger with BRL, and was by then used to working within a decentralized system. However, upon acquisition, his former experience and achievements would be overlooked because of new management, and he would lose independence over his activities in the UK by being coerced to be answerable to Stephen Davies (Bartlett 8). Another cause of tension came from the fact that during pre-merger, BRL and Hardy took very divergent strategies to wine selling. While BRL operated as a bulk-oriented seller that focused on brand name significance and managing its own status from home, Hardy embarked on a more domestic strategy and stressed on the benefits of retailer relations when making decisions regarding brand positioning and labeling. This was a recipe for tensions and wrangles since the long run targets of BRL entailed achieving the status of an international player in the wine industry. This meant that they needed to have a firm and more centralized grip of foreign activities(Bartlett 8). Why Distinctoshould not be launched While launching Distincto was a great idea, there is worry that Carson may lose his attention on the strength of the European sales organization to carry another brand, especially when it was already struggling with Mapocho. In the case of U.K’s over-devotion to the launching of Mapocho, concerns were raised by Millar and other top executives, when they saw Distincto’s projected sales of 160, 000 in the first year increasing to 500,000 by the fourth year. However, in spite of the lighthearted exchange with his boss on Distinto’s potential, Carson himself began to show doubts. The financial investments in the branding, packaging and launching expenditures were considerably lower than 100,000 pounds. However, in a circumstance of constant challenge with Mapocho sales, even Carson knew that the actual financial risk could later emerge in the form of contract commitments and excess inventory (Bartlett 14). A launch of Distinto could have worsened the already existing situation by overloading the human resources already stretched thin as a result of the major expansions undertaken within the last five years. In addition, the brand would prove to be a high competitor of the managerial time and energy, organizational resources and the eventual consumer sales. This issue is further worsened by a dilemma Carson faced concerning the creation of a new product to expand the organizations existing list of brands (Bartlett 15). Recommendations Kelly’s Revenge and Banrock Station: What Carson should do Considering the extent of autonomy that Carson enjoys, it may seem worthwhile for him to abide by the ideas and projects of the managers he has hired. Nevertheless, irrespective of autonomy, an individual in the status of Carson ought to know that the organization’s objectives and aspirations are supposed to be taken into consideration before establishing or even talking about a new brand. For that reason, his eventual decision needs to be to support the implementation of Banrock Station while seeking a way working closely with his managers and leaders taking part in the creation of Kelly’s revenge (Stein 5). How Steve Millar Should Approach Kelly’s Revenge and Banrock Station Millar needs to acknowledge that he is to some extent responsible for the conflict that took place between Barock Station and Kelly’s Revenge, since he supported decentralization and Carson to delegate more duties in ways that he saw as fit for himself. As a result, he compromised the compromised central administration’s control of its own brand to its external affiliates. He should note that Banrock Station brand has already gained local and global success in various markets, hence the market testing and appeal of Kelly’s Revenge was poor among top administrators and customers (Fletcher and Pugh 81). Millar should communicate with Carson and jog his memory that the main objective of the organization is to become an internationally recognized brand. Therefore, Banrock Station has a higher prospect than Kelly’s Revenge. Millar also needs to distance himself from the passive behavior that he has had with respect to handling co0nflicts within his own organization, by giving Carson an ultimatum to iron out Kelly’s Revenge and emphasize on Banrock Station. This should be accompanied by bestowal of more power over marketing, sales and promotion strategies in his area (Quelch and Bartlett 188). Works Cited Bartlett, Christopher A. "BRL Hardy: Globalizing An Australian Wine Company." Harvard Business School Cases (2000): 1. Business Source Complete.Web. 21 Nov. 2014 Fletcher, Richard, and Pugh, Mary.”Green International Wine Marketing.”Australasian Marketing Journal 10. 3 (2002): 76-86.Web. 21 Nov. 2014 Quelch, John A., and Christopher A. Bartlett.Global Marketing Management : A Casebook / [Edited By] John A. Quelch, Christopher A. Bartlett. n.p.: Mason, OH : Thomson/South- Western, c2006., 2006. Harvard Library Bibliographic Dataset.Web. 21 Nov. 2014 Santich, Barbara. MclarenVale : Sea & Vines / Barbara Santich, Photographs By Christo Reid. n.p.: Kent Town, S. Aust. : Wakefield Press, 1998., 1998. Harvard Library Bibliographic Dataset.Web. 21 Nov. 2014 Stein, Georgia. “BRL Hardy: Globalizing An Australian Wine Company." Strategic Management (2014): 2-9. Web. 21 Nov. 2014. Read More