Mondavi Procurement Management

Bonny Doon Vineyards, a successful winery business based in Santa Cruz, California, has grown from selling 5,000 cases of wine a year in 1981 to 200,000 cases a year in 1999. To keep growing and be more profitable, the business must choose amongst three possible strategic directions. The first strategy is to start importing wines from Europe into the United States. The second alternative is branching into a retail outlet for unusual wines of great value, accompanied by a high level of service. Lastly, the business’ D.E.W.N could be expanded to include wines not made by the company itself but by other wineries that follow the same values and philosophy.

Procurement is the act of obtaining or buying goods and services. So it’s the process an organisation uses to buy the products or services it needs, from other organisations. So procurement department for Tesco is essential in order for them to be able to sell products and offer a service to their customers. Without the good and services it needs Tesco would not be able to operate so it’s essential the procurement team do a good job.

Smaller firms such as the family run operations in Europe may not be able to realize these same cost efficiencies. Furthermore, grapes represent 50 to 70% of a winemakers COGS, thus the competition for sourcing high quality grape growers is quite high. Just as Mondavi does for 75% of its purchases, most premium wine makers enter into long-term contracts with growers to not only ensure that their demand is met but also to make sure that they receive grapes that are consistent in quality.

A basic definition for the procurement is “the way the building is realised” and “involves assembling and organising the skills and services of a team of construction professionals”. (the Construction Round Table, 1995). More precisely, the construction industry describes procurement as “a system that establishes the roles and relationships which make up a project organisation”; hence the overall organisation and communication structure for the management, administration and control of a project is established by the procurement system. (D.C.H Coles, 2010)

A contract is defined as, “a legally enforceable exchange of promises or an exchange of a promise for an act that assures that parties to the agreement that their promises will be enforceable (Kubasek 2015).” Contracts are essential for businesses to conduct business with one another. Before delving too far into the Muscadine grape case, it is also important to note that a sale is the, “passing of title to goods from buyer to seller for a price (Kubasek 2015)” and that a good is considered, “tangible personal property (Kubasek 2015).” Muscadine grapes and their by-products are the goods in question. When considering any legal case it is important to first consider the facts and the issues that are being considered.

This discussion board post will respond to various questions regarding the Contracts Analysis Case Study involving Marshall Petersen and his local health food business from a

The first stage of the process is to understand and define the buyer’s needs. This is where the procurement department need to recognize that a product is needed in order to purchase it. This needs to be done with a high level specification which can be achieved by using a variety of stakeholders. This stage is where all the requirements for the product need be identified.

Pricing is a pertinent issue in procurement and acquisition in organizations. Consumers buying the commodities of an entity should get clarity on pricing related issues. There is uncertainty in Pro

However, Bonny Doon is vulnerable and reliant on its suppliers, as 80% of the firm’s grapes are bought from external growers. Bonny Doon requires unpopular grape varieties and grapes that meet high quality specifications (which decreases agricultural yields and creates a trade-off for growers). They need to develop long-term relationships with the growers to ensure uniformity and high production quality with respect to the firm’s key product input: grapes. On the other side of the value chain, the firm has preferred small-medium sized distributors for their product. This has enabled them to retain higher profits, despite selling wine in smaller quantities.

The supply of grapes, apples, bulk wine and grape juice concentrate for Vincor’s wine products comes from a combination of sources. Privately owned vineyards (Canada, U.S., Australia) provide somewhere between 35% to 57% of the raw products needed to

Contract is defined as an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. For purposes of this chapter, we are concerned with agreements to buy and sell some type of agricultural product. Contracts 101 You should be concerned about contract law because it determines how parties to the contract will need to keep the promises they make. Although very few contracts ever end up in court, if the parties to a contract disagree on something and are unable to resolve the disagreement, they may have to resort to the judicial process. This means that as the parties negotiate a contract, they need to consider how a judge might ultimately interpret it. For a contract to be enforceable, it must involve:

While bargaining power of buyers is ranked the least important of the five factors for Mondavi’s strategy, its importance should not be understated. One of the Wine is typically sold to wholesalers who then distribute to retail outlets. With the decreasing number of wholesalers and the consolidation of retailers, buyers negotiating power is increasing. It is difficult for companies like Mondavi to make consistent profits and maintain market share if they cannot keep products on retailers’ shelves.

Due to the fact that procurement strategies are the focal point in the planning stage of all business firms and is a vital

Wine consumers hardly think about price when it comes to buying. For the lower grad cheaper wines, the power of the buyer is greater; but when in comes to premium brands of wine, the power of the buyer is low.

Contracts rarely stay the same, they are constantly changing and the successful businessperson has to be flexible in order to succeed.