1. Prepare a clear statement of issues confronting the company. Prioritize issue
ID: 373650 • Letter: 1
Question
1. Prepare a clear statement of issues confronting the company. Prioritize issues.
2. Prepare a "problem statement" for the company. A problem statement is a clear description of the issue(s), it includes a vision, issue statement, and method used to solve the problem.
The wine market began as consumers started to develop a greater appetite for it and a thirst for premium wine. Along with the growing health awareness and the increased dynamism of the domestic wine producers the Chinese people were enjoying higher incomes which they could use to spend on prestigious brands. The domestic wines occupied the low to mid-end of the market, while the important brands took the high-end customers. The more prestigious wines were able to get their foot in the door a lot easier. French wines, for example, were seen to be associated with luxury and status. Also, the French made a joint venture with VATS, a Chinese company, to be able to provide wine to the Yunnan Province. Stemming from that, in 2009 there were 20 joint venture agreements as a way for countries to get their feet in the door. New distribution outlets and wine education facilities began to spring up in China which led to a growing market for new wines.
Golan Heights used distributors as they had little experience in the market and needed to make sure to build strong relationships with the Chinese in order to grow. Working with distributors is easy and it helps in building brands especially in China, it was crucial to establish a solid relationship with the right people from the get go otherwise it is very difficult to get your product into the stores and into the Chinese homes. The biggest part of doing business in China is building rapport, if they don’t like you they will not buy from you, that is why having a distributor is the best way to go.
The distributors were broken up by region, each one requiring a different marketing approach. It was crucial for Golan Heights to draw up profiles of each region to be able to locate potential prospects. For a small sized company like Golan Heights it was recommended that they concentrate on one region and then maybe build from there. The connections that Golan Heights made with the distributors allowed them access to select companies, industries, or individuals that gave them special access that would be hard to get without the relationship with the distributor.
Along with the region, Golan Heights also had to look at what distributors had the best connections and which ones were the best at making sales. Golan Heights made sure to pick a distributor that had solid knowledge and experience of promotion techniques and had a great credit rating. They also had to be willing to cooperate with Golan Heights and the local government. I’ve already kind of alluded to them earlier, but the main pitfalls Golan Heights will need to avoid are making sure that it is contractual and making sure that Golan Heights is of great importance to the to the distributor should be of great priority. Also it is essential for them to establish their relationship up front and their goals for selling, along with that Golan Heights must never take relationships for granted, especially in China.
Market Selection
Golan Heights used more of a reactive approach when first going into China. They did not have much experience and were kind of just going with the flow and acting very passively because they didn’t have much experience. Recently they have been working more of a proactive approach now that they have stepped back and taken a look at what they need to change and are looking to approach the Chinese markets much more systematically now. Their way of selecting their markets is very expansive, being that they pick a distributor in a certain region to build brand loyalty and then they expand from their when they are able. In China the expansive process is the best way to go to build strong relationships. Lastly, Golan Heights was very concentrated with their markets as to make sure they built up the trust they needed to do business and be successful. This allows them to build strong positions and create a foundation to build from to become a mainstay in China.
3. Make a set of recommendations supported by your analysis. a. Describe exactly what needs to be done. b. Explain why this course of action will solve the problem.
Recommendations
Now, Golan Heights should proceed in making sure they fully understand the Chinese customer. There are two tools that can help them along the way, PESTEL (political, economic, social, technological, environmental, legal) and CAGE (cultural, administrative, geographic, economic). Golan Heights decided to price itself in the premium segment of the market, meaning it meant status which was a big thing for the new generation of Chinese buyers. In China, promotion depends on the location of the distributors and as I already mentioned it is important that Golan Heights picked out the best distributors for their strategy so their brands could flourish. Another promotional way to go was events. By having events it got the name out to a broad variety of people and helped for building brand recognition across the region, which was important to Chinese consumers.
Moving forward Golan Heights needed to best understand the unique characteristics of the Chinese market and to gain knowledge of the local business environment. They needed to have a clear vision and approach to allow them to survive long-term. With these things in mind Ms. Rushansky should have a better shot this time around.
Explanation / Answer
1. Prepare a clear statement of issues confronting the company. Prioritize issues.
2. Prepare a "problem statement" for the company. A problem statement is a clear description of the issue(s), it includes a vision, issue statement, and method used to solve the problem.
3. Make a set of recommendations supported by your analysis. a. Describe exactly what needs to be done. b. Explain why this course of action will solve the problem.
Nan Alon, Jennifer Dugosh and Meredith Lotrwasser wrote this case solely to provide material for class discussion. The autriors ao not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Westen University, London, Ontario, Canada, NOG ONT: (1) 519.661.3208; (0) caseSQivey.ca; www.iveycases.com. Copyright © 2014, Richard Ivey School of Business Foundation version: 2015-02-23 “The recent transformation of China into a wine-drinking nation is an astonishing phenomenon." - Anthony Rose, 2012 Golan Heights Wines wanted to take advantage of the Chinese market. It was 2012 and in recent years, China had demonstrated incredible growth in the wine market (see Exhibit 1). Consumers' growing interest in wine products had made wineries and vineyards like Golan Heights hungry for entry. Anat Levi Rushansky, CEO of Golan Heights Winery, had gone to China with her products in 2009, She had chosen distributorships as the mode of entry because of their knowledge of and experience in the Chinese market, something Rushansky did not possess. Since she had entered the market, however, she had learned of the seemingly disappointing demand for Israeli wines. Given the size of the market, sales were rather limited. Most Chinese consumers who sought imported wines wanted them from Europe, particularly France. Also popular among the Chinese were Australian and Chilean wines. In addition to the disappointing demand, vendors and distributors did a poor job of pushing Israeli products. Rushansky contemplated the conditions of the Chinese beverage market and what her next steps should be. She knew that leaving the market was not a smart business move, given its size and growth potential. She thought of her past efforts in China. Had Rushansky approached the Chinese market correctly? Was distributorships the best way to get Golan wine products in front of the Chinese consumer or was another distribution model more favourable? Were her marketing and advertising efforts, or lack thereof, sufficient and appropriate? Finally, what was the best way to approach the market competitively? Rushansky needed to devise and execute a series of strategies to better take advantage of the impressive Chinese market, establish a brand for Golan Heights Wines and create a platform for future growth. THE GLOBAL WINE INDUSTRY The global wine industry had been characterized by oversupply conditions for most of the past decade. The emergence of New World producers in addition to traditional manufacturers had resulted in a "global glut of wine." As a result, wine prices and profitability had fallen. In 2008, when key wine-consuming countries fell into recession, industry conditions worsened. The wine industry had not improved in 2012 either, as high unemployment, high government debt and government spending cuts held the marketRelated Questions
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