Business Studies - Grape Vine Valley Ltd Report

7/28/2019 Business Studies - Grape Vine Valley Ltd Report

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GRAPE VINE VALLEY LTD

The Edge ManagementConsultantsJoyce Sun

(Partnership with Katelin Georgeand Echo Qin)

Wine Masters Holdings CompanyUpdate Report

Review of Grape Vine Valley Ltd

Report includes information collected for a period of approximately two months about

the internal operation of the business, nature of the business, skills of management

required, management and leadership styles, business functions and the external and

internal influences.


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Contents

Contents

..1

NATURE OF

BUSINESS

..2

SKILLS OFMANAGEMENT

.3

MANAGEMENT AND LEADERSHIP.................................................................................6

BUSINESS FUNTIONS.........................................................................................................7

EXTERNAL AND INTERNAL

INFLUENCES..9

CONCLUSION

..10

BIBLIOGRAPHY11

PAGE 1


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Litersof

Wine(PerMillionL)

NATURE OF THE BUSINESS

Grape Vine Valley Ltd is a member based company, currently employing 175 winemakers and grape

growers at their Queensland winery location. The company is run by an elected Board of Directors that

all hold high skill based requirements (i.e. Bachelors or Masters Degree in Viticulture or Oenology and

Chemistry or Biology as well as other work experience in management) and structured as a hierarchical

organizational structure where every employee is grouped according to the specialized functions they can

perform. Grape Vine Valley produces over 25.5 million liters of premium white and red wine annually

(0.48% of the 1037 million liters produced annually in Australia), which is packaged and sold to

domestically around Australia.

Grape Vine Valley Ltd, fitted under the primary industry, is set up as a medium sized public company

which distributes its goods domestically and currently owned by 48 shareholders. Grape Vine Valley Ltd

was first established in 1951 and now has reached its post maturity stage. The business was purchased by

Wine Masters Holding Company in 1998 due to its success rate, however, in the previous two years; the

company has faced a sharp decline in profit. This is due to different external and internal factors whichhave led to a high turn of staff which now, presents the company with both problems and new

opportunities to renew certain aspects.

0

200

400

600

800

1000

1200

Wine ProducedAnnually

(recorded in2010)

Grape VineValley

Australia

P

rofit(Per$million)

0

5

10

15

20

25

30

1951 1960 1970 1980 1990 2000 2010

Profit

Year


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Grape Vine Valley Ltd is sourcing different renewal ideas to boost the companys profit and to adapt to

change in the future. The strategies include:

- Branching into sparkling wine and fruit wine

- Expand land area for more spatial production- Audit the management team and restructure its organizational structure and leadership style

These ideas are the different ways that the company wishes to implement in order to reach certain goals

for the company and to revive Grape Vine Valley Ltd from the two year decline.

Apart from the strategies to restore the company to its previous success before the recessions, Grape Vine

Valley Ltd set goals for the company to achieve to hopefully gain a more secure and profitable business in

the next five years. These goals can be summarized as follows:

1. Maximize economic growth to boost the companys profit.

2. Ensure relevant, integrated, coordinated and innovative R&D (research and development) team

that delivers long term solutions to threats and expansion challenges to avoid any problems in

the future.

3. Establish an infrastructure network to support current and future needs. This will prepare thecompany of future changes and be aware of the changes.

4. Create stronger linkages with the wine industry, government and regional development boards

which results into access to more resources and support.

5. Match the company with the wine industry workforce growth requirements and demands. This

will allow the company to stay on top of its operation and provide a competitive edge above

other wine companies.

6. Continue to support risk management initiatives so any future predicaments can be avoided or

solved quickly.

It is through these goals that Grape Vine Valley hopes to achieve an efficient and sustainable business for

future business to come.

SKILLS OF MANAGEMENT

Grape Vine Valley Ltd heavily relies on its management team to the extent of its success or failure. The

management team is currently audited to see if the management team possesses the required skills of a

dependable team. The role of management is one of responsibility to the owners of a business, in the case

of Grape Vine Valley Ltd. Management is entrusted with the responsibilities of:

- Determining the business objectives in line with the vision of the business

- Proactive planning for future growth

- Forecasting for future changes in the business environment

- Integrating all human, physical and information resources available

- Administering and controlling business activities

Apart from the responsibilities that management must uphold, management is in charge of the process of

planning, organizing, leading and controlling all phases of the business operation in order to achieve the

goals of the organization. Each of these four functions has various skills that are related with each other.

1. Planning


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Skills

a) Strategic Planning - Highly developed conceptual skills

- Capacity to view organization as a whole

- Product related and technical knowledge

- Understanding of what can be done in the present time

b) Vision - Clear focus on the big picture

- Able to perceive opportunity

- Clear foresight

- Able to integrate component parts into an interacting whole

- Knowledge of support services

c) Decision Making - Awareness of alternatives through ability to assemble data

- Ability to assess alternative and decide

- Creative and lateral thinking skills

- Clear understanding of the completing interests of stakeholders;

ability to maintain a balance between competing goals

2. OrganizingSkills

a) Self Managing - Time management skills

- Capacity to stay focused

- Understanding

b) Teamwork - Providing networks for effective information flow

- Coach, teacher, mentor roles in creating and developing groups

- Delegation of team roles, tasks and responsibility

3. LeadingSkills

a) People Skills - Understanding how people think and act

- Ability to motivate workers

- Creation of a harmonious workplace

- Effective written and oral communication skills

- Successful delegation

b) Complex Problem

Solving

- Ability to gather and assess data to isolate a problem

- Procedures for dispute resolution

- Negotiation skills learned and practiced

d) Ethical and High

Personal Standards

- Qualities of decisiveness, consistency, responsiveness,

trustworthiness, friendliness and approachability

4. ControllingSkills

a) Setting Performance

Standard and

Measurement of

Performance

- Technical measurement and diagnostic skills

- Wide variety of effective communication skills

- Preparedness to face up to identifies weakness

b) Flexibility and

Adaptability to

Change

- Clear focus on the big picture

- Able to perceive opportunity

- Clear foresight

- Able to integrate component parts into an interacting whole


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- Knowledge of support services

These skills are important to possess in a business in order to achieve the companies goal effectively and

efficiently. For Grape Vine Valley Ltd to achieve these high standardized skills, strategies of

improvement must be put into practice, to improve the skills of managers. The plausible strategies in the

four functions for the company to improve its management teams include:

Strategies

1. Planning - Audit the management team when faced with planning ahead to see

their level of strategic thinking, vision and decision making so they

are ready to face real life situation.

- Provide training and techniques to the team on how to be aware of

the situation and how to assemble data for the company. This will

allow the management team to be organized and work efficiently.

- Develop further information about the business and how to view the

organization as a whole. This will enable the management team to

see the big picture.

2. Organizing - Provide support and constructive feedback to management team to

create sustainable teamwork.

- Update the management team on the organization framework so the

team can comprehend any situation and know how to act upon it.

3. Leading - Awareness of alternatives through ability to assemble data

- Ability to assess alternative and decide

- Creative and lateral thinking skills

- Clear understanding of the completing interests of stakeholders;

ability to maintain a balance between competing goals

4. Controlling - Instruct the management team how to be proactive and put into

practice how to cope with unfamiliar and unexpected situations and

circumstances. This will allow the management team to be aware of

what issues they may come across.

MANAGEMENT AND LEADERSHIP

Grape Vine Valley Ltd takes a classical bureaucratic approach when it comes to management. This

approach stresses in finding the best strategy to manage and organize workers to improve productivity.

Because Grape Vine Valley Ltd takes the classic bureaucratic approach, the business has a strict

hierarchical organization structure with clear lines of communication and responsibility between the

laborers and the managers. Each job is broken down into specific tasks (depending on the profession of

the employee) and each worker must follow the rules and procedures in completing their set task.


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The management style chosen by Grape Vine Valley Ltd is suitable for the company as it groups

employees according to the specialized functions they perform. Every employee is led through the

autocratic leadership style where the manager of the sector decides on all the decisions, dictates all work

procedures and evaluates the employees performance. The autocratic managers at Grape Vine Valley Ltd

generally provides clear directives by telling employees what to do, without listening to or permitting

any employee input. This may be a factor that is contributing to the decline of the business due to valid

and effective ideas not being communicated. The classic bureaucratic approach along with the autocratic

leadership style may have affected the overall operations of the business as the company lacked

communication between employee and manager.

Changing the company to a behavioral management approach may be a suitable strategy for the company

to undertake to solve the issue. The behavioral approach to management stresses that employees should

be the main focus in which the business is organized and that their ideas should be considered. The

behavioral management approach will also restructure the entire company making it flatter where there is

more communication, teamwork, wider span of control amongst the employees. This will help the

business as

more ideas will be put forth to resolve issues, implement new ideas and strategies and reach decisionsfaster due to a new democratic leadership style. Employees are able to communicate straight to the Board

of Directors and present their ideas therefore; the company becomes a more team based structure that

constantly works together.

Grape Vine Valley

Board of Directors

Grape Vine ValleyManaging Director and CEO

Grape Vine Valley

Operations Manager

QC

Supervisor

Assembly

Supervisor

Process

Employees

Tool Room

Supervisor

Warehouse

Manager

Store

Person

Assembly

Supervisor

Grape Vine Valley

Marketing

Manager

Grape Vine Valley

Marketing

Manager

Grape Vine Valle

Human Resourc

Manager

Sales

Representativ

Sales Clerks

Senior Clerk

Debtors Clerk

Payroll

Supervisor

Clerk Typists

Current Structure of Grape Vine

Valley Ltd

Grape Vine Valley

Board of Directors

Employees

Future Structure of Grape

Vine Valley Ltd


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BUSINESS FUNCTIONS

Grape Vine Valley Ltd, like most businesses, has key business functions that are interdependent and rely

on each other in order to complete tasks set by the company. The key business functions in Grape Vine

Valley Ltd branch into four sections: Operations, Marketing, Finance and Human Resources. Each of the

key functions performs their distinct roles but relies on the others to perform effectively. In the past 2

years, Grape Vine Valley has faced a sharp decline in profit. By auditing the four key business functions,

strategies can be implemented to improve the success of the business and the business functions.

Operations:

The operations of Grape Vine Valley Ltd involve the production of its goods, the wine. The businesscurrently operated on a five acre stretch of land filled with growing green and red grapes and a factory

that processes the collected grapes and transforms it into fermented bottles of wine. The trained staff is

segmented into their specialized area where they do their part in the operation. There are issues in the

operations department as there is a large amount of workers hired to process the grapes, and not enough

room for all employees to work freely in the factory, therefore, resulting in production slowing down.

Also, the location of the winery heavily affects the business as Queensland is constantly bothered by rain,

the grapes do not grow to its full potential or produce as much. Strategies to improve this factor of

business can be expanding the land area to plant more grape vines and fruit which then, those grapes

could be used for the production of new types of alcoholic beverages like sparkling wine and fruit wine,

expanding the size of the factory so workers are able to move around freely without congestion and

building a green house to enhance the growth of the grapes/fruit while shielding them from the harshrain. These strategies will improve the efficiency of the operation function of the business which results in

faster production of the product.

Marketing:

Marketing is a slow functioning sector in the business as it is hard for Grape Vine Valley to advertise

effectively. Currently, the marketing strategy used in Grape Vine Valley Ltd is by selling to retailers

hoping to attract consumers to the label. This is not effective at all as the company relies on consumers to

recognize the products themselves. In addition to this, the wine that is produced from Grape Vine Valley

Ltd may rub off as a want not a need and during a financial situation, consumers may not want to spe nd

money on wants. To overcome this predicament, the company should consider hiring a new marketing

team responsible for promoting the goods. The market team may suggest ideas of creating newspaper

advertisements or creating an advertisement in a retail brochure. The company could also go through the

process of the four Ps: Product, Price, Promotion and Place. Each of the four Ps suggests strategies to

market the business good effectively: Product: Design a unique bottle for bottling the wine in. Use Eco

friendly packaging so society can see the company cares about the environment. Price: Set a reasonable

price on the goods, considering the prices of competitors and finding a price that produces profit and

gives a competitive advantage. Promotion: Produce a loyalty card that provides regular customers

sufficient discounts when subscribing to be a member. Members of the company can also be updates for


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up and coming weekend events and offers such as wine tastings and tours of the winery. Place: Grape

Vine Valley Ltd is originally a producer to retailer to customer business, the company should also branch

into a producer to customer business to allow a closer relationship between consumer and producer, allow

the consumers the services the company provides to society. These strategies help the business to be

known in society so that more consumers are aware of the product and would want to buy the goods,

which ultimately leads to profit growth.

Finance:

Grape Vine Valley produces goods to society and gains profit by selling the goods at reasonable price

with the hope of high sales. Thus, through this, begins the cash flow. Grape Vine Valley was recently

influenced by the GFC (Global Financial Crisis) in 2009 which led to the financial sector for the company

to become unorganized as the costs of the goods were going up but the sales were declining. This

influenced the cash flow as less profit was coming in. This led to the company having less money,

resulting in low pay wages for the employees and the high turnover of staff. To combat this issue, Grape

Vine Valley Ltd should create a finance teams who set strategic plans and takes the necessary procedures

to follow them, as well as a tactical plans that can be adjusted in case of sudden change. With this

constant auditing, the profit should maintain and avoid large recessions especially if the company ensures

that the costs of the goods are reasonable so that the sales are raised.

Human Resources:

Human Resources at Grape Vine Valley Ltd are in charge of hiring staff and forming the relationship

between employer and the employees. Human resources hire individuals who are most suitable for the

company, those with relevant qualifications (Degrees in Viticulture, Oenology, Biology and/or

Chemistry) and important work experiences (management). Due to the influence of the financial market

in 2009, Grape Vine Valley underwent a high turnover of staff, therefore, HR is responsible for hiring

new staff in short notice so the operations of the company is not disturbed. Strategies to improve HR at

Grape Vine Valley Ltd could include recruiting well trained people by processing them throughexaminations and interviews, conduct evaluations on a frequent basis to form a healthy relationship

between company and workers; and establish happy environment by holding non monetary benefits and

rewards such as a on the house dinner every once a month to keep the staff motivated.

EXTERNAL AND INTERNAL INFLUENCES

The environment that Grape Vine Valley Ltd operates in is constantly influenced by various external and

internal factors. These factors influence the companys cash flow and general operations; therefore, the

company must be ready to combat these problems with effective strategies. The general strategies for

resolving issues influences by internal and external factors include:

External Influences:

1. Economic

Two years ago (2009), Australia was hit by the Global Financial Crisis which led major influences onto

many companies. Grape Vine Valley Ltd was influenced by the GFC, as the company could not maintain

the number of employees even with the decrease in wages, leaving the employees concerned about their

job stability which ultimately led to the high turn in staff; and the company was unable to keep the sales


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at a steady rate as consumers were spending less (this also influenced the cash flow as it decreased in

activity when the business lowered its prices but kept in line with other competing brands).

Strategies that can be executed to overcome these issues could be retrenching workers, reducing costs of

goods to a lower price, slow down operations to match with consumer sales and selling directly to

consumers rather than just to retailers as this does not show off the brand effectively.

2. Geographical

Globalization is affecting much business around Australia as it increases the global competition for

purchasing goods online. Consumers are able to fine wine sold online at a cheaper price which ultimately

makes it harder for any company to compete. In relation to Grape Vine Valley, to match the competition,

costs have to be lowered; however, this will alter the cash flow, lowering the profit. To combat this

situation, strategies could be setting up an online store so consumers are able to purchase the goods

online with ease and selling packages of wine to retailers around Australia so people around Australia are

aware of the brand.

3. Social

Rapid changes in tastes and culture has led to a decline of profit at Grape Vine Valley Ltd. The company

relies on its consumers to purchase the wine according to their taste. The company is influenced by

society based on factors such as consumers purchasing other alcoholic beverages such as wine coolers,

champagne and fruit wine or not purchasing alcohol at all due to the public awareness of what drinking

can do to health. To overcome these issues, strategies such as producing other branches of win such as

sparkling wine or fruit with and selling them in wine bottles of different volumes to control the amount of

alcohol intake (100mL and 500mL bottles of wine) can be implemented.

4. Institutional:

Grape Vine Valley Ltd is governed under the State government regulation of Occupational Health and

Safety. The OHS regularly audits companies to foster a safe work environment and protect workers,family members, employers, customers, suppliers, nearby communities and other members of the public

who are impacted by the workplace environment. Grape Vine Valley is influenced by this regulation as

they must comply with the programs that OHS runs in order to maintain the safe work environment.

Internal Influences:

1. Productc

Grape Vine Valley Ltd produces wine which relies on the resources it is able to source such as land to

grow the grapes and a large storage area to produce and ferment the wine. This effects how the business

is run as the structure of the business and its operations must be organized well and be constantly

monitored so the final product is not ruined. Because wine uses fine raw material, the company must be

extensively prepared for any problems that happen during the operation. To respond before anything has

happened, strategies of setting up a risk management team would allow the company to constantly

monitor the process of producing wine so any problems can be solved in efficient time and also forecast

and problems that may happen in the future.

2. Location

Queensland is the main location of Grape Vine Valley Ltd due to the good soil and great produce it

produces. Due to the location of the business is not located near the general public, the general public are


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not exposed to the company therefore effecting the marketing function of the business which means sales

are not high as possible. However, the location provides beautiful views and a taste testing tour which can

be advertised as a main tourist attraction for people around the area. Advertising weekend activities such

as wine tastings and tours could be an effective way to promote the company to raise profit and respond

to change.

3. Management

The company heavily relies on the management team as they make the decisions that the business has to

comply with. Grape Vine Valley is run through the traditional organizational structure which ultimately

means the management team lies at the top and underneath is the divisions of labor. This means all

decision is made by the management team as the give the final say. With limited ideas, the management

team is slow to respond to the changing needs of the consumer and market conditions which in the long

term, can lead to profit loss. To avoid this, restructuring the organization would help employees to

provide ideas without getting them approved by the management team. This can lead to faster decision

making and ultimately lead to a faster working environment that is able to face situations which more

confidence,

CONCLUSION

In conclusion, Grape Vine Valley Ltd is a medium sized public company that in previous years have been

highly successful but due to different external and internal influences on the key business functions and

management team has led to a two year decline in sales, profits and market share and a high turn of staff.

There are many strategies that can be implemented to hopefully boost the profit again and restore the

cash flow of the business to what it was before.

BIBLIOGRAPHY

1/ Chapman, S. (3rd Ed.) (2011), Business Studies in Action: Preliminary Course, John Wiley and Sons

Australia Ltd, 42 McDougall Street, Milton, Qld 4064

2/ NSW Government Industry and Investment, 2010, NSW Government, NSW, viewed 10 June, 2011,

http://www.nswwinefestival.com.au/

3/ Hunter Wine , 2011, Cognition, Sydney, viewer 10 June, 2011,

http://www.winehuntervalley.com.au/

4/ Monash University, 2009, CRICOS, Western Australia, viewed 10 June, 2011,

http://www.buseco.monash.edu.au/blt/monashreg/national/govtbodies.html5/ Freshmeat , 2011, Geeknet, ACT, viewed 10 June, 2011,

http://freshmeat.net/projects/wine/date_metrics

6/ News Limited , 2009, Robert Burton, WA, viewed 10, June, 2011,

http://www.news.com.au/features/environment/climate-change-threatens-australias-wine-industry-

study-warns/story-e6frflp0-1226068502698

Documents

Business Studies - Grape Vine Valley Ltd Report