The Current Status Of Mondavi 's External Environment

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Mondavi and Evans have decided to focus on “organic growth rather than acquisitions (Roberto, page 16)
1. What is the current status of Mondavi’s external environment? Generally, what are the primary industry-wide sources of competitive advantage? Which ones matter to Mondavi? Why?
I apply Porter’s Five Forces to analyst the current status of Mondavi’s external environment as follows
(Grant, page 69):
1. Industry Rivalry:
- There are many competitors in this industry, but the main competitor of the company is Gallo because its product takes some part of the market share from Woodbridge which is the main source of revenue for Mondavi (Roberto, exhibit 15).
- Mondavi has a product differentiation because there are various brands
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changed to off-premise because people started buying wine from supermarkets and wholesaler clubs (Roberto, exhibit 11). This change leads to the more price sensitivity because the consumers had more chance to compare a price before making a decision to buy bottles of wine. Therefore, the bargaining power’s customer is dramatically increased.
There are two sources of the industry-wide of competitive advantage, including cost advantage and differentiation advantage (Grant, paage178). From my analysis, Mondavi can apply both sources to use with its products, but it should use one competitive advantage at a time. For instance, according to exhibit 4 in Jug and pop-pre segments, Woodbridge should be applied to the cost advantage because the price competition in this type of wine was very aggressive at that time. Thus, the company has to reduce costs to compete with other competitors. However, referring to exhibit 4 in luxury-prem segment, the company should apply the differentiation advantage for Robert Mondavi (RM)Winery and RM Coastal Private Selection because these two brands target the high end customers caring for the quality rather than the price. According to the Porter’s generic strategies (Grant, page 178), the company does not in the scope of a single segment; therefore, the industry-wide method would be a suitable one for the company. For this reason, the company has to separate the brands of wine before

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