De Tierra Vineyards

Russell DonaldJoseph Goldberg

Erik PriceJames Rinfret

Nicole Saldaña

Agenda

● History and Overview

● External Analysis

● Internal Analysis

● Possibilities & Recommendations

● Conclusion2

History and Overview

● History

● Mission, Vision, Goals

● Organizational Structure

● Industry, Products & Services

● Summary of Findings

3

4

History

Mission, Vision, and Goals

● Best Representation of the Land

● No Compromise

● Unique and High Quality

● Inviting Atmosphere

● Sustainable Management5

6

De Tierra Vineyards

Thomas & Carol[Founders]

Zach Lawrence[Winemaker]

Anna Russell[General Manager]

7 Full-Time Employees

Organizational Structure

7(Source: T, Liz, lizhatch.wordpress.com, February 8, 2015)

Industry Overview

2000 20012002 2003 2004 2005 2006 2007 2008 2009 2010

2011 20122013

2.01 gals 2.01 gals 2.14 gals 2.20 gals 2.26 gals 2.34 gals 2.40 gals 2.46 gals 2.45 gals 2.49 gals 2.53 gals 2.68 gals 2.73 gals 2.82 gals

US Wine Consumption Per CapitaReached 2.82 gallons (10.6 liters) in 2013

● Sustainable, Hand-Crafted Wines

● 12 Selections of Wine

● Price Range: $26-$52

● Vineyards, Tasting Room

● De Tierra Wine Clubs

● Saturated Market 8

Products, Services, and Market

9

Strengths• Location

• Sustainability

Weaknesses• Website

• Awareness

Opportunities• Millennial Age Group

• Industry Growth

Threats• Established Wineries

• Lasting Drought

Summary of Findings

External Analysis

● General Environment

● External Stakeholders

● Competitive Environment

● Key Success Factors

● Strategic Group Analysis

● Supply Chain

● Five Forces Analysis

● Summary of Findings

10

General Environment

11

• Meeting City RequirementsPolitical

• Increasing Demand For WineEconomic

• Social StigmaSocial

• Social Media UseTechnological

• Agricultural BusinessEnvironmental

• Alcoholic Beverage Control

Legal

12

External Stakeholders

13

Competitive Environment

14

Key Success Factors

● Comparing Scored Wines and Prices

● Out of 100 Point Scale● 89=Very Good● 90+=Outstanding

15Key: DT= De Tierra Vineyards, WO=Windy Oaks Winery, PW= Pessagno Winery

Strategic Group Analysis

DT

WO

PW

 $‐

 $10

 $20

 $30

 $40

 $50

 $60

88.5 89 89.5 90 90.5 91 91.5 92 92.5

Wine Scored

 Average Pric

es

Wine Scored Rating Average

Strategic Analysis

16

Stemming & CrushingGrape Production Fermentation

Packaging

Storage

Aging Clarification

Consumer PhaseDistribution

Source: (“Ecomanagement for Food”, 2015)

Supply Chain

Source: (Ketchen, et. All, Chaptetr 5, Section 5.1) 17

Five Forces Analysis

18

Opportunities• Improve Wine Score

• Environmental Sustainability

• Millennial's Switching to Wine

Threats• Substitutes

• Competitive Rivalry

• Economic Uncertainty

Summary of Findings

● Resources & Capabilities

● Value-Adding Activities

● Performance Measures

● Strategies

● Summary of Findings

19

Internal Analysis

Resources

20

Valuable Rare Non-Imitable

Non-Substitutable

Tangible Blend Properties Blend Properties

Blend Properties

Intangible I. P. of Wine

Corporate Strategy & Culture

I. P. of Wine

Corporate Strategy & Culture

I. P. of Wine I. P. of Wine

Corporate Strategy & Culture

Key: I.P.= Intellectual Property

Capabilities

21

Extraordinary Resources Capabilities Value Added

Vatting Machine Utilizes MachineBetter Efficiency & Quality

Production Demands

Winemaster Creates Blends Certain Flavors

General Manager Coordinates Events Increase Customer Relations

Culture “Best

Representation of the Land”

Ensures Quality

FocusGood Inputs = Good Outputs

Primary Value-Adding Activities

22

Inbound Logistics

•Grape Acquisition

•Meeting Demand

Operations

•Increased Harvest Season Labor

•Turning Grapes Into Juice

Outbound Logistics

•Fulfilling Orders

•In‐House Packaging

Marketing & Sales

•Brand Building Events

•Ages 35+

•52% Growth In 2014

Service

•Free Tasting Session For Club Members

•Knowledgeable Employees Inform Customers

Support Value-Adding Activities

23

Procurement

• Strong Supplier Relationships

• Obtain Lowest Possible Prices

Technology Development

• New P.O.S. System

• Website

• Instagram

Human Resource Management

• Strong Base Of Employees

• Incentives Maximize Potential

Firm Infrastructure

• Accounting, Legal, Administrative

• Maintains Sound Business Operations

Income Overview

24

Income 2012 Income 2013 Income 2014 Sales 11,032.69 33,359.02 58,319.84

Gross Profit 15,720.40 14,914.98 8,647.09Net Income (23,681.24) (80,745.01) (3,211.17)

Efficiency Ratios Average Collection Period 414.77Inventory Turnover 0.88

Leverage Ratios Debt Ratio 146%

Financial Ratios

Performance Measures

Other Performance Measures

25

Business-Level Strategy

26

Alignment

27

Summary of Findings

28

Strengths• Quality

• Service

• Management

Weaknesses• Sunk Cost

• Small Staff

• Supply Issues

● Corporate Strategy

● Business-Level Strategy

● Strategic Competitive Advantage

● Operational Efficiency

● Conclusion

Possibilities and Recommendations

29

Possibilities: Corporate Strategy

Possibility I

• Keep Current Corporate Strategy

Possibility II

• Change Current Corporate Strategy

30

Recommendation: Corporate Strategy

Possibility I

• Keep Current Corporate Strategy

Possibility II

• Change Current Corporate Strategy

31

Possibilties: Business-Level Strategy

Possibility I

• Maintain Current Business-Level Strategy

Possibility II

• Change Current Business-Level Strategy

32

Recommendation: Business-Level Strategy

Possibility I

• Maintain Current Business-Level Strategy

Possibility II

• Change Current Business-Level Strategy

33

Possibilities: Strategic Competitive Advantage

Possibility I: Expand Product Portfolio

• Alternative A: Eau-De-Vie

• Alternative B: Pinot Noir Brandy

Possibility II: Lower Cost Storage

• Alternative A: American Oak Barrels

• Alternative B: U.K. Oak Barrels

34

Recommendation: Strategic Competitive Advantage

$190,000 

$76,000 

$0

$50,000

$100,000

$150,000

$200,000

French Oak Barrels American Oak Barrels

OAK BARREL SPENDINGOak Barrel Spending

35

Possibility II: Lower Cost

Storage

• Alternative A: American Oak Barrels

Possibilities: Operational Efficiency

36

Possibility I: Enhance Current Organizational

Structure• Alternative A: Continue with

Current Staff and Duties

• Alternative B: Hire An Assistant Manager

• Alternative C: Hire An Intern

Possibility II: Facilitate Sunk Cost Management

Plan• Alternative A: Maintain

Current Pace

• Alternative B: Increase Pace of Sunk Cost Payments

Recommendation: Operational Efficiency

37

Possibility I: Enhance Current

Organizational Structure

• Alternative C: Hire An Intern

Possibility II: Facilitate Sunk Cost Management Plan

• Alternative A: Maintain Current Pace

Conclusion

38

Conclusion

DT

WO

PWF DT

 $‐

 $10

 $20

 $30

 $40

 $50

 $60

88.5 89 89.5 90 90.5 91 91.5 92 92.5

Wine Scored

 Average Pric

es

Wine Scored Rating Average

Strategic Analysis

Key: DT= De Tierra Vineyards, WO=Windy Oaks Winery, PW= Pessagno Winery, F DT= Future De Tierra Wineyards

39

40

Questions