SWOT, PEST, and Porter’s five force models
Introduction
Organizational Overview
Pohutu Wines Ltd is a boutique winery producing high-quality wines. It is one of the top five tourist attractions of Rotorua in New Zealand that has its primary business of producing superb quality wines. Antonio Caprini commenced it, and presently the CEO of Pohutu Wines Ltd is Tane, son of Antonio. Pohutu Wines ltd is continually developing, with increasing numbers of the visitors as well as the revenue yearly for the last five years. The company delivers superior quality wines to the main-stream liquor outlets and supermarket as the distributor. It generated revenue of around $7,850,000 in the year 2010. The company has its primary aim of increasing the wines production to explore further market domestically and internationally as well.
The following study analyses different strategic management tools such as SWOT, PEST, and Porter’s five force models, which can aid the decision making for the leaders in their business. It also defines the core values of Pohutu Wines Ltd that affect employee motivation and customer relations in both the short and long term. This study also analyses the Mintzberg modes of strategic decision making that could be implemented for planning for business growth in the competitive marketplace. Don't use plagiarised sources.Get your custom essay just from $11/page
- Strategic Management Tools
The strategic management planning tools are used by the businesses for determining exactly where the organization is going during the upcoming years and beyond that and how to get there. The following discussion includes three analyses i.e., SWOT, PEST, and Porter’s five forces analysis in the perspectives of Pohutu Wines Ltd.
SWOT analysis: It refers to the strategic planning technique that is undertaken to assist the organization in identifying its strengths, weaknesses as well as the opportunities and threats relevant to the business competition. It is significant for the company to get its real position; otherwise, not focusing on the strategic role can affect its operations and work.
| Strengths: · Established a niche as a boutique winery · Offer superior quality wines · Diversified activities · Socially responsible business practice | Weaknesses: · Low price based wines · Water accessibility issue in different wine areas · High and low business activity · Emphasize on production rather than marketing |
| Opportunities: · Increased numbers of visitors · Market expansion to target more customers · Increased wine production and new market development · Acquisition of distribution channels and production services | Threats: · Increased competition · Government rules and laws regarding the wine production area · Need heavy investment for expansion · Rise of production cost |
PEST analysis: It is also a strategic business tool that is utilized by the organization in discovering, evaluating, organizing, and tracking the macro-economic factors that can affect its business at present as well as in the future. This analysis allows the organization to estimate the future threats of business and to take action to alleviate the impact. This process requires to be considered on a regular basis to become effective as the risk of collecting too much data may result in paralysis by analysis.
| Political factor: | The wine producers are impacted by the existing regulatory and legislative bodies. The wine company discusses with the government for taking assistance for the land and the water facility for developing the business. The paying of high taxes by wine companies also affects their position in the market. |
| Economic factor: | New Zealand is a wealthy and developed country where agriculture is the largest industry. The country has a strong advocate of free trade where the wine company can export and deliver the quality wine to the customers. New Zealand also has a relatively simple tax system as the corporation, and the companies are taxed at a flat rate of 28%. |
| Social Factor: | The wine company is socially and honestly responsible, where the consumers are satisfied with its wine quality. New Zealand is a culturally diverse country where it has around 4.7 million people in the country. The company has covered a large area by delivering superior quality wine to the customers. |
| Technological factor: | The country has an advanced and diverse tech sector, and the company emphasizes on organic production technologies for improving the wine business. The strong customer relationship and mobile marketing is used by the company to develop its business in the market effectively. |
Porter’s five forces: It is a business analysis model that is used to analyze the competitive environment of the organization in the market. It is often utilized for measuring the profitability, attractiveness, and competition intensity of the wine industry.
| Five forces | Level | |
| Bargaining power of buyers | High | The bargaining power of buyers is high in the wine industries in the market. It is because the customers have choices to select wine brands from different wine companies in New Zealand without paying switching costs. It can influence the company’s sales and revenue in the competitive market. |
| Bargaining power of suppliers | Low | There is low bargaining power of the supplier in the wine industry as the organization can purchase the grapes to make the final product wine by selecting an appropriate supplier. In the case of Pohutu Wines Ltd, the company has their own yards to grow the grapes and to produce the final products in the market. The superior quality wine attracts the customer at a large scale in the market. |
| Competitive rivalry | High | There is a high degree of competitive rivalry in the wine industry, as there is the availability of many domestic and international producers for the wine business. But Pohutu Wines Ltd. has established a niche as a boutique winery and gaining a competitive edge in the market. |
| The threat of substitutes | Moderate | The threat of substitutes is moderate in the wine industries as there are other alcoholic drinks that are available in the market as a substitute for wine such as beer. The availability of substitute products affects the company’s position in the market. |
| The threat of new entrants | Low | There is a low degree of the threat of new entrants in the wine industry because of including high investments, knowledge, and strong expertise in the industry. Pohutu Wines Ltd can increase profitability as there is a low chance of entering of the new company and can gain a competitive edge in the market. |
- Decision-making
The leaders of Pohutu Wines Ltd. implement strategic decision-making for developing the wine business at the global level. To increase profitability and sales, the leaders and managers focus on the business strategy to gain a competitive edge in the market among the competitors. Pohutu Wined Ltd. has set up a niche as a boutique winery that provides high-quality wines to its customers and also attracts more customers and visitors at large scale. The company’s leaders also focus on different strategic tools such as SWOT, PEST, and others to gain a competitive position and to increase the wine production as well as targeting or expanding new markets at both the domestic and global levels. Moreover, Pohutu Wines Ltd. also made a competitive position or company image by initiating integrity, honesty, and socially responsible practices of business in an effective way. The effective decision and plan are implemented by the leaders in the business to achieve a better result in both short and long term. The strategic tools are considered by the leaders of Pohutu Wines Ltd to develop its business at the international level.
A centralized or decentralized decision-making approach
The centralized and decentralized approach in decision making is important and effective in carrying out the business efficiently. The centralized organizational structure is relied on the individual for making the decisions and for providing direction for the organization, and leaders make the successful decision in the organization. Under this approach, upper management has the authority to manage the business activities as well as for understanding the process of decision making. On the other hand, the decentralized organizational structure relies on the team environment at various levels in the business. Under this approach, the individual has some autonomy at each and every level in the business to make the decisions of the business. The business activities are managed by the lower management level and are also effective where the profit and cost is measured independently.
In the context of the case study, the leaders of Pohutu Wines Ltd must determine the centralized decision-making approach for managing the business issues at the operational and strategic levels. It is more effective regarding the business decision as the owner of the organization develop the mission and vision of the company and also set the objectives for both the employees and managers to follow them while accomplishing the goals. Moreover, this approach is effective as if the team member does not have proper information and knowledge about the particular issue, then the team may not be able to understand the issue effectively and can make the wrong decision that may result in adverse for the company. As the organization wants to influence the tourists by offering them high-quality wine, so it is important to make sure to deliver the outstanding experience to all its customers as well as the visitors. The centralized decision-making approach should be focused by the leaders to commence the business at the international level where the company can promote its wine business in domestic as well as in other countries.