Kingston Family Vineyards is a successful and growing wine maker in the Casablanca region of Chile. The company has grown because of the high quality of its hand-crafted wines. However, the company’s management team has run into an existential crisis because of the need for growth. It is time to either grow the wine business, focus more on the land on which the wine is grown, or create additional revenue streams to take advantage of the growing popularity of its home region. The company should consider a number of strategies to ensure its future success and continued growth.
In this instance, the management team needs to figure out the best way to grow the company after having significant success. The company has reached the point where it mas maxed out in its current approach and also become stagnant as a result. With this in mind, the goal is to figure out the best way to leverage what has already been done well while also taking advantage of future opportunities within the marketplace. The company runs into some structural growth problems because one of its strengths—the hand-crafted and specifically intended nature of its wine—could hold it back from future production at larger volume and levels.
The recommended strategy for the company should be as follows:
Creating both a hotel in the Wine Country region of Chile and creating an individualized wine tour experience to leverage the quality of the brand among wine lovers.
Expanding its production slightly to turn a profit while not losing the quality of the brand.
Increasing prices on its wine to maximize its current market appeal while also allowing for the expansion of production technology so that the quality of wine does not decrease while the company ramps up production.
These strategies make tremendous sense for a number of reasons. First, the company should be in an excellent position of take advantage of the popularity of its local region with tourists. Tourism is a second revenue stream that may seem outside of the company’s area of expertise, but it is truly aligned with the company’s purpose. Winemakers are an extension of the hospitality industry. The company does not have to extend into widespread hotel curation and operation, but it can run a small hotel to leverage its position as a market leader in the region.
Another reason the strategy makes good sense is because the company has the ability to produce more wine. At current, the company has focused on small batches, and this has made the company quite popular in nature. However, it can expand its approach as many distilleries have done in order to create a slightly larger amount of that small batch. The company will need to raise prices in order to ensure that it does not sacrifice quality while it is making this increase. A quality drop would be extremely harmful for the company.
One of the ethical issues that the company has to deal with is how to deal with the environment with the increased production of its wine and the addition of a hotel. One of the reasons why people choose to visit the region is because of the physical beauty of the environment there. This is a difficult thing to manage because expansion could degrade the environment and harm the local community. Balancing the desire for growth along with the dynamics of the environment is a critical element that must be kept in mind by the company. The management team should work closely with environmental leaders and local community leaders to ensure that its impact is not that negative.
- Bisson, L. F., Waterhouse, A. L., Ebeler, S. E., Walker, M. A., & Lapsley, J. T. (2002). The present and future of the international wine industry. Nature, 418(6898), 696-699.
- Cordano, M., Marshall, R. S., & Silverman, M. (2010). How do small and medium enterprises go “green”? A study of environmental management programs in the US wine industry. Journal of Business Ethics, 92(3), 463-478.
