Business Case Study Summary: Robert Mondavi Winery

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“The size of global wine industry in terms of revenue , at the beginning of 21st century ranged from 130 to 180 billion in retail sales.” Furthermore, There are over 1 million wine producers in the world.
Robert Mondavi winery was founded in 1966 in Napa valley, California. It was founded by Robert Mandavi and is now run by his elder son Michael Mondavi with the help of his younger brother Tim(Head winemaker) and Greg Evans(CEO). RMW produces premium to super ultra premium wines. The family still owns 50% of company shares and an majority of the voting rights. Mondavi operates six wineries in California. Over the years, Robert Mondavi has become the leading promoter of the California wine industry. He spends a lot of time educating consumers about fine wine.
• Strategic problems faced by the top management. o External Issues-
 Faltering economy and dipping wine sale
 Dipping stock/share prices.
 Growing competition
• From Australian wine producers
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This indicates that RMW has been financing it’s expansion through debt rather than equity. The interest ratio has dipped a little but is still on the higher side, this signifies that RMW will is in a position to pay of interest on it’s debt comfortably. ROCE has gone from 12 to 12.9, which is a good sign as it indicates that the company is profitable and is using it’s capital efficiently. Inventory turnover ratio is has decreased, which shows that the inventory is being sold at a slower pace. This can be attributed to the declining sales. Inventory turnover ratio has decreased a little. Fixed asset turnover ratio has gone up from 1.31 to 1.42. This indicates that RMW is generating more revenue from it’s fixed assets, which is a good thing. ROA and ROE has increased over the past 4 years. This is again a good sign. ROE has increased more in comparison to ROA, this indicates that the company has taken a good amount of debt, which has increased the assets but decreased

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