The wine Industry in Australia has significantly grown from minute plantings to a full fletched industry globally recognized for innovation, depth, and quality. In particular, Australia is over and over again one of the worlds’s best producing economies. Every outstanding wine style is found in Australia. The Australian wine industry has performed remarkably in the recent years. In the mid 1980s, Australia was a net importer of wine.
Currently, the country exports 32% of total production and holds 2.4% of the world wine market. The profitability of the industry has seen many companies enter the industry. One of such companies is the Treasury Wine Estates. Treasury Wine Estates is a unique global company with a leading portfolio of wines. Located in Australia, it is one of the largest distributors in the world. It operates in America, Europe, and Asia while utilizing employees located in 16 countries. This paper is devoted to the strategic analysis of Treasury Wine Estates. Treasury Wine Estates strategic analysis is useful since it emerged from Foster’s group in 2010 to become a standalone company that offers over 80 high quality brands globally.
Through the use of various matrices, the authors determine Treasury’s competitive advantage which is used in developing a plan to help increase growth in the global market. The plan addresses social, technological, economic, environmental, and political factors found in the wine industry and leverages Treasury’s strengths to strategically increase the company’s market share in emerging marketplaces. The paper ends with a conclusion where a summary and evaluation of the strategic analysis of the company is undertaken.
The main aim of this paper was to accomplish the strategic analysis of Treasury Wine Estates. There is strong evidence from the analysis that Treasury Wine Estates has an exceptional competitive advantage in the wine industry. The company has benefits from strong inventory management, strong and unique brand portfolio, innovation, and established strategic advantage which make it operate with lower debts. Essentially, these make it stand above its competitors such as the Constellation, Pernard Ricard, and Diageo.
Treasury Wine Estates capitalized positively on the opportunities created. However, as compared to its competitor’s, it is the least efficient company in using its assets to create earnings and records low net profit compared to the company’s assets. It has failed to perform better in Europe, Middle East and Africa. Some of the opportunities that it can acquire to improve its performance is the growth opportunities in China and U.S and continuous research and development to enable it offer innovative products with unique features.
This analysis also revealed growing competition in the wine industry both in the domestic and international market as a real threat to the growth of the organization as a whole. The IFE analysis presents the company as having stronger strengths. However, the weaknesses are likely to have greater impact if not well managed. Equally, based on the EFE analysis, the company does not take advantage of opportunities and is doing a poor job of avoiding threats. The strategic analysis also reveals a strong rivalry amongst firms in the industry. One reason identified is the lack of clear differentiating between wine brands.
Contemporary conditions make attention to knowledge and clustering especially salient. The most prominent of these are economic globalization as the source of economic opportunities, and innovation as the driver of competitive success. The theory and practice that currently mostly informs policy in Australia assumes domestic competitive conditions are primary. It assumes that, if the domestic competitive regime is relatively undistorted, and if a market is generally free from regulation, participation in global markets and innovation will ‘naturally’ germinate. Therefore, based on Treasury Wine Estates competitive advantage, it should increase its sales volume in China.