PESTLE Analysis Of Monarchia Matt International

Political and Legal

Wine can be considered as one of the most popular drinks in the world since time immemorial. Wine has been produced in different parts of the world for thousands of year. Some of the earliest known wine producing counties are Georgia, Iran and Sicily.  In spite of the fact that there are evidences that similar kind of a alcoholic beverages had been consumed by the people in China, the earliest known wine industry is a 6,100 years old winery in Armenia (Delmas & Grant, 2014). In this era of modernization, the global retail value of wine is approximately 287 billion dollars. More than 240 million hectoliters are produced each year across the world out of which approximately 23 million hectoliters are considered to be excess.  This report contained detailed external and internal environment analysis of a popular wine company named Monarchia Matt International which is situated in new York. In order to analyze the external environment of the mentioned company PESTLE and Porter’s 5 forces analysis have been performed. To understand the internal environment of the company VRIO Test, Strategic Choice and SWOT analysis have been done. Along with the above mentioned analysis various recommendations have been suggested to the company to flourish in the US market.

PESTEL	Explanation (with supporting case evidence)	Opportunity/Threat Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper
Political and Legal	Considering the fact that level of regulation in the US wine industry is pretty high, in order to gain prosperity in the wine industry of US, Monarchia Matt International (MMI) needs to abide by the all the rules and regulations. There exist two types of regulatory environment in US, namely, open and controlled. While in open regulatory environment, industries are slowed to sell wine directly to the independent distributors, inn controlled regulatory states, and there exists monopoly regarding retailing of their own products. Along with that, being an alcoholic beverage, wine industry in US is controlled by Alcohol Tobacco and Firearms Division (ATFD) and as a result a high amount of is implemented on the mentioned industry (Pg 5, Para 2).	Threats: Laws and regulation can act as a barrier for the company. Opportunity: Open Regulatory environment of US can be an opportunity for MMI.
Economic	In US, the wide industry has a crucial contribution to the nation’s economy by generating approximately 100 billion dollars as revenue on the early basis. More than 1.2 million individuals are employed in the wine industry of US working different sectors like production, distribution and sale of the wine. Besides that taxes and duties implemented on the mentioned industry, is a major source of income of the US government.	Opportunity: Readily available labors Threat: High tax and duties
Socio-Cultural	Being a highly developed country, a majority of the consumers have vast knowledge about wine and the spent a good amount of money on buying premium wine. US Consumers generally choose wine based on four criteria namely, price range, taste, occasion and religion. While the upper middle class and elites put more emphasis on the quality of the wine, middle class consumers prefer wines within a reasonable price range (Pg 4, para 1).	Opportunity: Huge market and demand for high quality wine
Technological	US wine industry uses highly advanced technologies in order to produce high quality wine. Usages of stainless still containers and instruments to control temperature during the fermentation process have enhanced the quality of white wine. Apart from this, advanced technologies are used for quality control during grape harvesting, juicing and field crushing for more quick and vast.	Opportunity: Opportunity of enhancement of the quality and productivity due to highly advanced technologies.
Environmental	According to American Viticulture Area, at least 75 present of the grapes needed for the production of wine should come from the particular state where the wine company.	Threat: Lack of chances to export grapes.

Table 1: PESTLE Analysis of MMI

Source (Created by Author)

From the above PESTLE analysis, it can be concluded that US can be considered as one of the best market for wine industries across the world. Due to its highly advanced technologies and a huge demand for wine MMI can easily enhances its business in US.

The capital required to establish a winery is not high but it is really difficult for newly found wineries to have access of industry distribution channels. However, for popular brands, readily the distribution channels are easily available.

Considering the fact that the popularity of beer and spirits have risen among the consumers of US, the threat from substitutes is pretty high in the wine industry of US (Pg. 4, para 3). While wine is still a popular alcoholic drink to the elite class consumers, middle class buyers are more likely to substitute wine with other alcoholic beverages like spirits and beers. One of the chief reasons behind this is that substitutes of wine are available to the consumers at a much cheaper price.

Among hundreds of competitors in the US, three major competitors of MMI that held more than 10 percent of the market share are E and J Gallo, Constellation and The Wine Group (pg. 5, para 1). All the three companies offer a complete range of wine within a reasonable price range. Considering the fact that there exists no switching cost has enhanced the revelry among the competitors.

Economic

Considering the fact that that there exists numerous wineries in US which offers  similar quantity of wine within a similar price range, the switching cost for consumers are very low. Hence consumers can easily shift from one brand to another for the slightest dissatisfaction or just for experimenting with taste.

Due to existence of a large number of suppliers, the power of the suppliers in the wine industry of US is considerably low (Pg. 5, para 2). Another reason behind this is the oversupply of grapes due to favorable weather and usage of highly advanced technologies.

From the above analysis, it can be concluded that US can be considered as a potential market for Monarchia Matt International due to high demand of wine and low power of the suppliers. In order to deal with the above mentioned issues like tendency of consumers to shift towards the substitute and high competitive revelry, MMI needs to develop unique strategies to differentiate their products from the existing competitors.

Bundled Resources (what the Company has)	+ Competences (how the Company uses its resources)	= Strategic Capabilities (what the Company is able to do exceptionally well or do differently from its competitors)
The company produces uniquely High quality wine for a limited number of consumers (Pg. 7, para 4).	MMI offers the wine to the consumers through some special retailers and restaurants. They do not sell their product in the supermarkets. Therefore, wines produced by MMI are available to the consumers only through the restaurants and retailers.	SC#1 – Considering the fact that the quality of wines produced by MMI is superior in taste, consumers who have tasted the wine in restaurants often seek out the same wine to the wine retailers. Thus the demand for MMI gets increased. The company has been nominated as one of the best wine selling group of US by a highly popular magazine of Italy named Gambero Rosso.
Availability of large number of variation of Hungarian wine (Pg. 10, para 2)	Considering the fact that Hungarian wine does not have a good image among US consumers due to several misconceptions, the company renamed the wines to combat misconceptions. For instance, MMI renamed Egri Bikaver which is commonly known as Bull’s Blood as Rapsody in Red. In order to maintain the reputation of the company regarding its high quality, MMI along with its Hungarian based team looks after the selected wineries in order to meet the ultimate taste and quality specifications.	SC#2 – The company has successfully incorporated both red wine and white wine manufactured in Hungary in the wine industry of US.
Considering the fact that the MMI company imports wines from major countries of the world that includes Hungary, Germany, Austria, Italy, Spain, France, US, Argentina and New Zealand, MMI is able a offer a large variety of wines to its consumers.	Due to the fact that the company imports wine from different parts of the world, the number of consumers of the company is high. This factor results in the enhancement of the overall revenue of the company.  Another advantage of marketing wines having a wide range of   variety is that MMI can introduce the popular wines of one country in another country. This will provide further competitive advantage to the company since consumers of the wine industry is always looking forward for experimenting with wines of different types and tastes. Apart from that, in order to attract the consumers of each country, the company manufactures varieties of wine that keeping in mind the specific choice of taste of that country. For instance, in order to capture the market of Hungary, MMI manufactures popular Hungarian wines like monarchia Tokaji Aszu, Monrchia Pinot Gris an others, while some of the popular wines of MMI in Italian market are Sfida Puglia Ross Igt, Geografico Chianti Classico and others.	SC#3 – MMI is experiencing an enhancement in revenue due to its global importation. Considering the fact that that unlike various wine companies, the Monarchia Matt International has diversified its products keeping accordance with the local tastes, the attraction of consumers towards MMI wines has enhanced a lot.

Table 2: Strategic Capabilities of MMI

Source (Created by Author)

Strategic Capabilities	VRIO Criteria			Results
Valuable	Rare	Inimitable	Organizational Support
SC#1 – Supplying superior quality of wine only to restaurants and chosen dealers has increased the demand of MMI among consumers.	Very few amounts of competitors can match up to the variety and quality of wine supplied by MMI.	This SC is not difficult to imitate by the competitors.	The case suggests that MMI needs to posses appropriate equipments to enhance the productivity of the company	Temporary Competitive Advantage
SC#2 – MMI has successfully incorporated both red wine and white wine manufactured in Hungary in the wine industry of US.	MMI is the major source of Hungarian wine in US.	This SC is not difficult to imitate by the competitors.	MMI needs more organizational support to this SC.	Temporary Competitive Advantage
SC#3 – Monarchia Matt International has diversified its products keeping accordance with the local tastes, the attraction of consumers towards MMI wines has enhanced a lot.	Unlike its competitors, MMI has lots of variety in Hungarian wine.	This SC is not difficult to imitate by the competitors.	The organization support for this SC is sufficient.	Temporary Competitive Advantage

 
Table 3: VRIO Test of MMI

Source (Created by Author)

Comparative costs estimates: MMI Versus Single-Market Distributors

Factors	MMI ( Dollar Amount in USD)	Average Single Market Distributors
Number of portfolio Labels	300	1000
Number of Wineries represented	60	100
Number of distribution states	26	1
Number of staffs	15	3
Sales	6000	350
Gross Margins	1992	88
Gross Margin percentage	33.2%	25.1%

Table 4: Financial comparison of MMI with Average Single Market Distributors

Source (Created by Author)

From the above table, it can be clearly understood that MMI is enjoying competitive advantage over the single market distributers of US. The business strategy of MMI to invest more on enhancing the quality of wine rather than producing a vast amount of product can be considered as the chief reason behind this success of the company.

Some of the key weaknesses of the company are

1. One of the key weaknesses of the organization is image problem of Hungarian wine in US.  There prevails a miscomputation in US about Hungarian wine that the cheap bull’s Blood wine of Hungary is tasteless and have very low quality (Pg. 10, para 4). Since the company manufactures a good number of Hungarian wines, it will be difficult for MMI if wine consumers of US stop buying Hungarian wines.
2. Another factor that has the potentiality of affecting the overall sales of the company negatively is limited amount of production of wines ((Pg. 10, para 5). Considering the fact that the chief target of the company is to produce a limited amount of wine that has very high quality, the company may face issues of not able to satisfy the consumers due to lack of production in near future.
3. In spite of the fact that MMI imports wine from a large range of global wine producers, the company is only present in New York and Westchester County. Lack of presence in the global market associated with the wine industry, can be considered as another major weakness of MMI.
4. Another weakness of the Monarchia Matt International that can be pointed out is the absence of the company in the online market. Considering the fact that in this era of modernization, several competitors of MMI has established online marketing along with offline marketing of products, MMI should also expand in business in the online world in order to enhance its revenue.
5. Despite the fact that the target of the company is to provide  high quality wines with niche appeal, the fact that the target consumers of the company is much lesser than that of its competitors can be considered as another major weakness of the company.

From the above discussion, it can be concluded that the mentioned strategic capabilities are providing sustained competitive advantage to the company. While production of a limited amount of high quality wine is enhancing the demand of MMI’s wine to the consumers, production of a good variety of wine in accordance to the local taste is attracting the consumers towards the products of the company. In spite of the above mentioned advantages, the major weaknesses of the company can impose a highly negative impact on its yearly revenue. In order to fix the issues like misconception of the wine consumers about the Hungarian wine, lack of production of wine and absence from online marketing, the company needs to develop effective strategies like implementation of latest technologies to enhance the production to overcome these issues.

SWOT ANALYSIS
STRENGTHS · One of the major strengths of MMI is the high quality of wine produced b them. · Considering the fact that MMI produces a large variety of wines to choose from, majority of which are Hungarian wines, this can be considered as another advantage of MMI. · The fact that Monarchia Matt International imports wine from a wide range of suppliers that includes Hungary, Germany, Austria, Italy, Spain, France, US, Argentina and New Zealand, this factors serves as a strength for the company.	OPPORTUNITIES · MMI Company has the opportunity to expand its business by initiating online marketing of wine. Online marketing will not only ensure a larger range of consumers, but it will also ensure the increment in the overall revenue of the company. · Considering the fact that US is a highly develop country, MMI company can implement highly advanced tools used by its competitors in the Hungarian wineries in order enhance the production of the wine. · Considering the fact that the competitors of the Monarchia Matt International have extended their business in different part of the world, MMI should also spread its business outside US to enhance the number of consumers which in turn, will enhance the overall revenue of the company. · Since Wine industry of US serves as a source of employment, the company has the opportunity of employing individuals at a much lower cost (Mozell & Thach, 2014).
WEAKNESSES · One of the major weaknesses of the Company is the limited amount of production of Wine. · Another weakness of MMI is the lack of global presence of the company. · Absence of the company from the online marketing can be considered as another weakness of the MMI. · Targeting a limited amount of consumers is one of the major weakness of Monarchia Matt International.	THREATS · One of the major threats of Monarchia Matt International Company are its competitors in the wine market of USA. Wine companies like E & J Gallo, The wine group and Constellation have occupied almost 10 percent of the market share of US. · Considering the fact that US implements a high amount onf tax on the wine companies, this factor is a major threat for MMI Company. · Since several consumers of USA are getting inclined towards the consumption of beer and spirits in place of Wine due to their low cost, this phenomenon is imposing a negative impact on the yearly revenue of the company.

Socio-Cultural

Table 5: SWOT Analysis of MMI

Source (Created by Author)

• Business strategy

The company needs to focus on producing and importing a greater quantity of wine in order to cope up with the increasing demand of the consumers. However the enhancement in production of wine should not come at the cost of decrement of the quality.

• Corporate strategy and diversification

Considering the fact that the current target consumers of wines produced and imported by MMI are upper middle class and elite class consumers who can afford high quality wine and have no issues with the cost of the products, the company should diversify its products in order to enhance the number of consumers. In order to reach the middle class consumers, the company should deal with more suppliers and dealers so that MMI wines can be available to a greater mass.

• International strategy

Considering the fact that MMI has already gained popularity with its high quality wines in New York wine industry, the company should expand its business in different parts of the world to attract international consumers.

• Mergers, acquisitions and alliances

MMI, although a popular wine company in New York, may consider merging with top wine companies of US like E and J Gallo or Bronoco Wine Company in order to enhance their market value and gain competitive advantages.

Issue 1: How to enhance the production of Hungarian wine while keeping the quality of the wines same?

In order to enhance the productivity, the MMI Company should invest on implementing advanced technologies in the wineries of Hungary. Considering the fact that Hungary is still a developing country, the wineries in Hungary cannot afford technologically advanced equipments to produce wine and as a result MMI can import a limited amount of wine at one go. The company can offer advanced equipments to the wineries in exchange of reduced importation cost.

Issue 2: How to expand the business of MMI to international level?

In order to expand the business to an international level, the company can merge with various International wine companies. This strategy will not only ensure international expansion but will also enhance the revenue of MMI.

Issue 3: How to start online marketing to enhance the yearly revenue of the company?

In order to get started with online marketing, the company should open its own official page. This page will contain all the information about the quality and the variety of wines available. In order to make consumers aware of its online presence, MMI should incorporate various social media sites like Facebook and Twitter to promote its business.

Conclusion

From the above report it can be concluded that Monarchia Matt International being a popular wine company of New York, has the potentiality to expand its business across US and in the international market. From the external and internal analysis of the company’s environment several issues and weaknesses are detected. Several strategies have being been discussed in order to overcome the shortcomings of the company. Finally, it can be said that the company can gain huge prosperity in near future by following the above mentioned strategies.