Term Paper: Brl Hardy: Globalizing an Australian

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BRL Hardy: Globalizing an Australian Wine Company

Facing an increasingly consolidating market domestically and oligopolistic market conditions both in their native nation and throughout their largest export markets, Thomas Hardy & Sons and BRL merge. The case BRL Hardy: Globalizing an Australian Wine Company (Bartlett, 2003) illustrates how difficult mergers are to navigate at the cultural, qualitative, sales and strategy- based execution levels of a consolidated company. Hardy's expertise at managing distribution, retailing is accentuated by their expertise at regional banding, while BRL is known for its ability to execute global channel management, distribution, product, pricing and positioning strategies. Hardy's acquisitions of smaller, more boutique-like wineries is in stark contrast to the massive amount of cases BRL has the potential to move through tis distribution networks and produce profitable revenue from (Bartlett, 2003). Implicit in the case is the recognition by BRL hat their mass-market approach to wine production and distribution lacks regional insight and therefore can't deliver as unique of a customer experience as smaller brands including Hardy. The acquisition is as much about gaining access to new brands as it is about moving into the nascent but growing area of wine marketing that aligns more with the psychographics and personas of wine purchasers as it does about the more immediate features of a given wine (Quinton, Harridge-March, 2003). The conflict between a smaller, more regionally focused brand that has a decentralized management structure that reflects its market orientation (Hardy) versus a highly centralized, volume-driven business model (BRL) pervades much of the case. The product launch decisions regarding Kelly's Revenge vs. Bandrock Station and the unfortunate scenario of the Chilean wines, made more complex by D'Istino line further add to conflict and strain between the merger management teams attempting to grow globally.

Case Analysis

Combining deep insight into logistics, operations and managing a global distribution network along with savvy marketing in their native nation of Australia and other regions, BRL has proven expertise in mass marketing wines. BRL shows early in the case that the management team clearly understands that the wine market is inelastic; this can be inferred from their pricing strategies (Bartlett, 2003). The price elasticity of wine specifically and beverages overall tend to be inelastic, with marketing and positioning, in addition to experiential marketing including psychographics (Quinton, Harridge-March, 2003) being far more effective than just dropping he price and hoping for volume increases (Felzensztein, Deans, 2013). Christopher Carson succeeds in his responsibilities in the merged company due to his insights into how the dynamics of the UK and broader European market work. His ability to impact sales is in large part accelerated and supported by the freedom he has within a decentralized organizational structure (Bartlett, 2003). Yet the merger literally clips his wings and he gets two bosses, one for reporting profits and other to answer to on marketing, positioning and customer messaging. This drastically slows down his ability to move forward with new wine ideas that he intuitively sees as essential for BRLH to prosper in the UK and European markets.

Regional Autonomy vs. Corporate Dependence

One of the more systemic strategic problems that is the catalyst of the conflicts over marketing, messaging and the decision of whether to launch Kelly's Revenge vs. Bandrock Station in the UK is the wide gulf in regional autonomy vs. corporate dependence and control. Thomas Hardy & Sons has operated successfully using a highly decentralized management structure that includes delegation of decision making to the lowest levels of the organization. The paradox of regional autonomy becomes clear when Christopher Carson saves the UK subsidiary by drastically reducing the product portfolio by 70% and reducing headcount by approximately 50% yet has conflicts over marketing direction with Davies, profitably measurements with Millar and hires a marketing manager that is divisive with corporate by looking to derail Bandrock Station's launch in the UK (Bartlett, 2003). BRLH wants the financial and operational performance a regionally autonomous business unit can deliver yet doesn't want to relinquish any of its control over the core components of its operations. This dilemma is never resolved during the case study's time period, just more amplified with every marketing, selling, pricing and most importantly, sourcing and product launch decision.

BRLH executives need to keep the regional strength of their acquired brands from Thomas Hardy balanced with the global brand development they have chosen as a long-range strategic objective. Specialty wines from specific regions of the world are often more successful when positioned when the unique, indigenous identity they have are promoted, even as part of a broader global brand (Edwards, 1989). The D'Istino line could be exceptionally successful given this insight and the fact that it will resonate with many UK customers, who often holiday in Italy. The hard reality for the BRL management team is that European wines are most successfully sold when they also have experiential value over and above just their taste, price or availability through distribution (Spawton, 1991). A wine from Italy will evoke memories for many UK customers of warmer climates, holiday trips and memories of fun travels. Yet this opportunity would be lost if Millar and Davies insist on complete corporate dependence and control.

The conflict between regional autonomy and corporate dependence makes Christopher Carson's role especially challenging as he reports to two executives at the same time. Stephen Davies wants to see Christopher Carson plan and execute highly effective marketing and selling strategies throughout the UK and Europe to further establish BRLH as a global brand, overcoming many of the regional challenges inherent in the organizational structure. Davies at times appears to not completely understand the nuances of foreign markets at a level that Carson does, and conversely, Carson doesn't appear to appreciate the ability of BRLH to execute a successful global branding strategy. Millar fails to deliver any clear direction to alleviate the ongoing conflict between Carson and Davies. He also is being very situationally-driven when making decisions regarding regional autonomy vs. enforcing corporate dependence. The result is leadership inconsistency. To his credit, Millar allows Carson to pursue the Italian cooperative responsible for the D'Istino line however and recommend the cancellation of the Chilean Mapocho wines, which the company needs to exit from. Ultimately the dual reporting structure doesn't work as Millar pushes Carson to be more decentralized in a corporate structure and culture that really values dependence and centralized control more than anything else. The result is Paul Browne being hired who leads the branding effort for Kelly's Revenge, a brand that is seen back at corporate as "kitsch, down-market and gimmicky" by Millar and the BRLH senior staff (Bartlett, 2003). The conflict between Kelly's Revenge and Bandrock Station lines serve to further intensify tensions in the company between regional autonomy and corporate dependence. The following sections discusses the decision to launch the D'Istino line and resolution of the conflict between Kelly's Revenge and Bandrock Station.

Why the D'Istino Line Must Launch

As the global wine industry continues to consolidate from a supplier and distribution channel perspective, customers' preferences for wines are become more experiential or customer experienced-based with the power of the brand meaning more than just the immediate attributes of the win itself. This shift from wine taste alone to experience is leading to a proliferation for brands that seek to meet and exceed the preferences of wine consumer globally (Bruwer, Saliba, Miller, 2011). The D'Istino line is supported by a consortium of 135 wine growers in Sicily who are open to assistance in viticulture from BRLH. Third, UK retailers have favored the D'Istino line over others. Fourth, the D'Istino line has the market potential to erase the losses caused by the disastrous performance and relationship with Chilean providers of the Mapocho wine. Due to all of these factors, BRLH needs to pursue the launch of the D'Istino line and integrate the brand into is global marketing and branding strategy.

Kelly's Revenge vs. Bandrock Station

Underscoring how complex decisions are regarding regional autonomy vs. corporate dependence and centralized control, the decision of which brand to launch in the UK, Kelly's Revenge or Bandrock Station makes the conflict very clear. Given the environmentally-focused messaging and strong alignment of the brand with sustainability messaging, it is recommended that Bandrock Station be launched globally. Empirical studies of wine shoppers' preferences for environmental messaging indicate that when these messages are combined with a well-crafted win, both factors lead to greater customer loyalty (Simone, Remaud, 2013). Bandrock Station has implications for BRLH branding globally as well, further positioning the company as a leader in sustainability efforts as well. For Carson, this presents a unique challenge of working with Paul Browne who will most likely leave the company after his branding efforts are not used. Given the divisive nature of his efforts to block Bandrock Station this could actually be a good development for the UK operations of BRLH. Millar must begin to move towards a more unified global brand and Bandrock Station, with its strong sustainability benefits and messaging, is an excellent brand… [END OF PREVIEW]

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