Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Leadership & Managing People
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market
In 2005, a wine snob in the critically acclaimed movie Sideways denounced merlot. Subsequently, sales of merlot, including sales for Terlato's Rutherford Hill merlot, declined significantly. Students are asked to evaluate three strategies-rebranding, cutting price, and launching television advertising-that Terlato is considering to reverse this decline. The case should be used with "Student Supplement: Terlato Wines International: Background Note on the U.S. Wine Market and Terlato Wines International," Case #KEL359.
Authors :: Alice M. Tybout, Patrick Bennett, Brie Koenigs
Swot Analysis of "Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market" written by Alice M. Tybout, Patrick Bennett, Brie Koenigs includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Merlot Terlato facing as an external strategic factors. Some of the topics covered in Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market case study are - Strategic Management Strategies, Pricing and Leadership & Managing People.
Some of the macro environment factors that can be used to understand the Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market casestudy better are - – increasing household debt because of falling income levels, wage bills are increasing, increasing commodity prices, geopolitical disruptions, increasing government debt because of Covid-19 spendings, digital marketing is dominated by two big players Facebook and Google, central banks are concerned over increasing inflation,
increasing energy prices, talent flight as more people leaving formal jobs, etc
Introduction to SWOT Analysis of Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Merlot Terlato, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Merlot Terlato operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market can be done for the following purposes –
1. Strategic planning using facts provided in Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market case study
2. Improving business portfolio management of Merlot Terlato
3. Assessing feasibility of the new initiative in Leadership & Managing People field.
4. Making a Leadership & Managing People topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Merlot Terlato
Strengths Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Merlot Terlato in Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market Harvard Business Review case study are -
Effective Research and Development (R&D)
– Merlot Terlato has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Merlot Terlato is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Merlot Terlato is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Merlot Terlato is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Analytics focus
– Merlot Terlato is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by Alice M. Tybout, Patrick Bennett, Brie Koenigs can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
High brand equity
– Merlot Terlato has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Merlot Terlato to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Low bargaining power of suppliers
– Suppliers of Merlot Terlato in the sector have low bargaining power. Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Merlot Terlato to manage not only supply disruptions but also source products at highly competitive prices.
Cross disciplinary teams
– Horizontal connected teams at the Merlot Terlato are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Innovation driven organization
– Merlot Terlato is one of the most innovative firm in sector. Manager in Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Ability to recruit top talent
– Merlot Terlato is one of the leading recruiters in the industry. Managers in the Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Organizational Resilience of Merlot Terlato
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Merlot Terlato does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Ability to lead change in Leadership & Managing People field
– Merlot Terlato is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Merlot Terlato in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Leadership & Managing People industry
– Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market firm has clearly differentiated products in the market place. This has enabled Merlot Terlato to fetch slight price premium compare to the competitors in the Leadership & Managing People industry. The sustainable margins have also helped Merlot Terlato to invest into research and development (R&D) and innovation.
Weaknesses Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market are -
Slow decision making process
– As mentioned earlier in the report, Merlot Terlato has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Merlot Terlato even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Workers concerns about automation
– As automation is fast increasing in the segment, Merlot Terlato needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Slow to strategic competitive environment developments
– As Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market HBR case study mentions - Merlot Terlato takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market, it seems that the employees of Merlot Terlato don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High bargaining power of channel partners
– Because of the regulatory requirements, Alice M. Tybout, Patrick Bennett, Brie Koenigs suggests that, Merlot Terlato is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
No frontier risks strategy
– After analyzing the HBR case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market, it seems that company is thinking about the frontier risks that can impact Leadership & Managing People strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Aligning sales with marketing
– It come across in the case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market can leverage the sales team experience to cultivate customer relationships as Merlot Terlato is planning to shift buying processes online.
Need for greater diversity
– Merlot Terlato has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Interest costs
– Compare to the competition, Merlot Terlato has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Skills based hiring
– The stress on hiring functional specialists at Merlot Terlato has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Low market penetration in new markets
– Outside its home market of Merlot Terlato, firm in the HBR case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market are -
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Leadership & Managing People industry, but it has also influenced the consumer preferences. Merlot Terlato can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Merlot Terlato in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Leadership & Managing People segment, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Merlot Terlato can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Leadership & Managing People segment.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Merlot Terlato in the consumer business. Now Merlot Terlato can target international markets with far fewer capital restrictions requirements than the existing system.
Low interest rates
– Even though inflation is raising its head in most developed economies, Merlot Terlato can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Manufacturing automation
– Merlot Terlato can use the latest technology developments to improve its manufacturing and designing process in Leadership & Managing People segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Leveraging digital technologies
– Merlot Terlato can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Merlot Terlato can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Merlot Terlato can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Developing new processes and practices
– Merlot Terlato can develop new processes and procedures in Leadership & Managing People industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Merlot Terlato to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Merlot Terlato to hire the very best people irrespective of their geographical location.
Learning at scale
– Online learning technologies has now opened space for Merlot Terlato to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Creating value in data economy
– The success of analytics program of Merlot Terlato has opened avenues for new revenue streams for the organization in the industry. This can help Merlot Terlato to build a more holistic ecosystem as suggested in the Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market case study. Merlot Terlato can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Threats Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Merlot Terlato will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Shortening product life cycle
– it is one of the major threat that Merlot Terlato is facing in Leadership & Managing People sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Stagnating economy with rate increase
– Merlot Terlato can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing wage structure of Merlot Terlato
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Merlot Terlato.
High dependence on third party suppliers
– Merlot Terlato high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Merlot Terlato with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Merlot Terlato in the Leadership & Managing People industry. The Leadership & Managing People industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Environmental challenges
– Merlot Terlato needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Merlot Terlato can take advantage of this fund but it will also bring new competitors in the Leadership & Managing People industry.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Merlot Terlato in the Leadership & Managing People sector and impact the bottomline of the organization.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Merlot Terlato business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Merlot Terlato can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Merlot Terlato.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Merlot Terlato needs to understand the core reasons impacting the Leadership & Managing People industry. This will help it in building a better workplace.
Weighted SWOT Analysis of Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Terlato Wines International: Managing Rutherford Hill Merlot in a Post-Sideways Market is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Merlot Terlato needs to make to build a sustainable competitive advantage.
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