North Land Winery Case Study Essay examples

713 Words Sep 19th, 2013 3 Pages
ENGG439 Case Study - Week 5
North Land Winery are a solid, well established, family-based winemaker headquartered in Wollongong, NSW. After ongoing success the vintners have addressed the idea of expanding their wine distribution to Ontario situated in Eastern-Canada.
So far NLW's most innovative product involves soil-aged merlots and chardonnay grapes grown in areas prone to wild fires which was labeled "Deep Burn". The purpose of these wines were to exploit these wild fires to give the wines "smoky" characteristics. Given the popularity of this flavor in North American foods & beverages, this wine would be expected to pair well with many Canadian palates, particularly red meat dishes. Ideally this product would be a key seller to
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Each employee could be expected to generate $1,000,000 in sales.

The following rule is the basis for comparison between the two and the unknown variables can be grouped using general arithmetic:
Cost of sales reps = Cost of own office
No.of employees * 10% of gross sales = Cost of set up & ongoing communication + No. of employees * (Employee Base Salary + 5% of gross sales)
No. of employees * (0.10 * Selling Price * Volume of sales) = $100000 + No. of employees * ($25000 + 0.05 * Selling Price * Volume of Sales)
$100000 + No. of employees * $25000 = No. of employees * Volume of sales * Selling Price * (0.10 - 0.05)
$2,000,000 + No. of employees * $500,000 = No. of employees * Volume of sales * Selling Price
"Indifference point" occurs when both sides are equal. As the figures used are annual, the ratio of LHS to RHS * 1 year will determine the amount of time it takes for costs with sales representative to match a sales office. The longer this takes, the more justifiable it is to run with option 1. As there are a number of variables NLW should first research current and future demand which will provide a good indication of turnover. Sales representatives can be kept to a minimum of 1 rep

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