The Edge Management Consultants Joyce Sun (Partnership with Katelin George and Echo Qin)

Wine Masters Holdings Company Update Report

GRAPE VINE VALLEY LTD

Review of Grape Vine Valley Ltd Report includes information collected for a period of approximately two months about the internal operation of the business, nature of the business, skills of management required, management and leadership styles, business functions and the external and internal influences.

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Contents
Contents ..1 NATURE OF BUSINESS ..2 SKILLS OF MANAGEMENT .3 MANAGEMENT AND LEADERSHIP.................................................................................6 BUSINESS FUNTIONS.........................................................................................................7 EXTERNAL AND INTERNAL INFLUENCES..9 CONCLUSION ..10 BIBLIOGRAPHY 11

NATURE OF THE BUSINESS

Grape Vine Valley Ltd is a member based company, currently employing 175 winemakers and grape growers at their Queensland winery location. The company is run by an elected Board of Directors that all hold high skill based requirements (i.e. Bachelors or Masters Degree in Viticulture or Oenology and Chemistry or Biology as well as other work experience in management) and structured as a hierarchical organizational structure where every employee is grouped according to the specialized functions they can perform. Grape Vine Valley produces over 25.5 million liters of premium white and red wine annually (0.48% of the 1037 million liters produced annually in Australia) , which is packaged and sold to domestically around Australia.
Liters of Wine (Per Million L)

1200 1000 800 600 400 200 0 Wine Produced Annually (recorded in 2010)
Grape Vine Valley Australia

Grape Vine Valley Ltd, fitted under the primary industry, is set up as a medium sized public company which distributes its goods domestically and currently owned by 48 shareholders. Grape Vine Valley Ltd was first established in 1951 and now has reached its post maturity stage. The business was purchased by Wine Masters Holding Company in 1998 due to its success rate, however, in the previous two years; the company has faced a sharp decline in profit. This is due to different external and internal factors which have led to a high turn of staff which now, presents the company with both problems and new opportunities to renew certain aspects.

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Profit (Per $million)

25 20 15 10 5 0 1951 1960 1970 1980 1990

Year

Profit

2000

2010

Grape Vine Valley Ltd is sourcing different renewal ideas to boost the companys profit and to adapt to change in the future. The strategies include: - Branching into sparkling wine and fruit wine - Expand land area for more spatial production - Audit the management team and restructure its organizational structure and leadership style These ideas are the different ways that the company wishes to implement in order to reach certain goals for the company and to revive Grape Vine Valley Ltd from the two year decline. Apart from the strategies to restore the company to its previous success before the recessions, Grape Vine Valley Ltd set goals for the company to achieve to hopefully gain a more secure and profitable business in the next five years. These goals can be summarized as follows: 1. Maximize economic growth to boost the companys profit. 2. Ensure relevant, integrated, coordinated and innovative R&D (research and development) team that delivers long term solutions to threats and expansion challenges to avoid any problems in the future. 3. Establish an infrastructure network to support current and future needs. This will prepare the company of future changes and be aware of the changes. 4. Create stronger linkages with the wine industry, government and regional development boards which results into access to more resources and support. 5. Match the company with the wine industry workforce growth requirements and demands. This will allow the company to stay on top of its operation and provide a competitive edge above other wine companies. 6. Continue to support risk management initiatives so any future predicaments can be avoided or solved quickly. It is through these goals that Grape Vine Valley hopes to achieve an efficient and sustainable business for future business to come.

SKILLS OF MANAGEMENT
Grape Vine Valley Ltd heavily relies on its management team to the extent of its success or failure. The management team is currently audited to see if the management team possesses the required skills of a dependable team. The role of management is one of responsibility to the owners of a business, in the case of Grape Vine Valley Ltd. Management is entrusted with the responsibilities of: - Determining the business objectives in line with the vision of the business - Proactive planning for future growth - Forecasting for future changes in the business environment - Integrating all human, physical and information resources available - Administering and controlling business activities

Apart from the responsibilities that management must uphold, management is in charge of the process of planning, organizing, leading and controlling all phases of the business operation in order to achieve the goals of the organization. Each of these four functions has various skills that are related with each other. 1. Planning
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a)

Strategic Planning

b) Vision

c)

Decision Making

Skills Highly developed conceptual skills Capacity to view organization as a whole Product related and technical knowledge Understanding of what can be done in the present time Clear focus on the big picture Able to perceive opportunity Clear foresight Able to integrate component parts into an interacting whole Knowledge of support services Awareness of alternatives through ability to assemble data Ability to assess alternative and decide Creative and lateral thinking skills Clear understanding of the completing interests of stakeholders; ability to maintain a balance between competing goals

2. a)

Organizing Self Managing Skills Time management skills Capacity to stay focused Understanding Providing networks for effective information flow Coach, teacher, mentor roles in creating and developing groups Delegation of team roles, tasks and responsibility

b) Teamwork

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Leading Skills Understanding how people think and act Ability to motivate workers Creation of a harmonious workplace Effective written and oral communication skills Successful delegation Ability to gather and assess data to isolate a problem Procedures for dispute resolution Negotiation skills learned and practiced Qualities of decisiveness, consistency, responsiveness, trustworthiness, friendliness and approachability Skills Technical measurement and diagnostic skills Wide variety of effective communication skills Preparedness to face up to identifies weakness Clear focus on the big picture Able to perceive opportunity Clear foresight Able to integrate component parts into an interacting whole
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a)

People Skills

b) Complex Problem Solving d) Ethical and High Personal Standards 4. a) Controlling

Setting Performance Standard and Measurement of Performance b) Flexibility and Adaptability to Change

Knowledge of support services

These skills are important to possess in a business in order to achieve the companies goal effectively and efficiently. For Grape Vine Valley Ltd to achieve these high standardized skills, strategies of improvement must be put into practice, to improve the skills of managers. The plausible strategies in the four functions for the company to improve its management teams include: Strategies Audit the management team when faced with planning ahead to see their level of strategic thinking, vision and decision making so they are ready to face real life situation. Provide training and techniques to the team on how to be aware of the situation and how to assemble data for the company. This will allow the management team to be organized and work efficiently. Develop further information about the business and how to view the organization as a whole. This will enable the management team to see the big picture. Provide support and constructive feedback to management team to create sustainable teamwork. Update the management team on the organization framework so the team can comprehend any situation and know how to act upon it. Awareness of alternatives through ability to assemble data Ability to assess alternative and decide Creative and lateral thinking skills Clear understanding of the completing interests of stakeholders; ability to maintain a balance between competing goals Instruct the management team how to be proactive and put into practice how to cope with unfamiliar and unexpected situations and circumstances. This will allow the management team to be aware of what issues they may come across.

1.

Planning

2.

Organizing

3.

Leading

4.

Controlling

MANAGEMENT AND LEADERSHIP

Grape Vine Valley Ltd takes a classical bureaucratic approach when it comes to management. This approach stresses in finding the best strategy to manage and organize workers to improve productivity. Because Grape Vine Valley Ltd takes the classic bureaucratic approach, the business has a strict hierarchical organization structure with clear lines of communication and responsibility between the laborers and the managers. Each job is broken down into specific tasks (depending on the profession of the employee) and each worker must follow the rules and procedures in completing their set task.
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Grape Vine Valley Board of Directors Current Structure of Grape Vine Valley Ltd

Grape Vine Valley Managing Director and CEO

Grape Vine Valley Operations Manager QC Supervisor Assembly Supervisor Process Employees Tool Room Supervisor Store Person Warehouse Manager Assembly Supervisor

Grape Vine Valley Marketing Manager Sales Representativ e Sales Clerks

Grape Vine Valley Marketing Manager Senior Clerk

Grape Vine Valley Human Resource Manager Payroll Supervisor Clerk Typists

Debtors Clerk

The management style chosen by Grape Vine Valley Ltd is suitable for the company as it groups employees according to the specialized functions they perform. Every employee is led through the autocratic leadership style where the manager of the sector decides on all the decisions, dictates all work procedures and evaluates the employees performance. The autocratic managers at Grape Vine Valley Ltd generally provides clear directives by telling employees what to do, without listening to or permitting any employee input. This may be a factor that is contributing to the decline of the business due to valid and effective ideas not being communicated. The classic bureaucratic approach along with the autocratic leadership style may have affected the overall operations of the business as the company lacked communication between employee and manager. Changing the company to a behavioral management approach may be a suitable strategy for the company to undertake to solve the issue. The behavioral approach to management stresses that employees should be the main focus in which the business is organized and that their ideas should be considered. The behavioral management approach will also restructure the entire company making it flatter where there is more communication, teamwork, wider span of control amongst the employees. This will help the business as more ideas will be put forth to resolve issues, implement new ideas and strategies and reach decisions faster due to a new democratic leadership style. Employees are able to communicate straight to the Board of Directors and present their ideas therefore; the company becomes a more team based structure that constantly works together.

Grape Vine Valley Board of Directors

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Future Structure of Grape Vine Valley Ltd

Employees

BUSINESS FUNCTIONS
Grape Vine Valley Ltd, like most businesses, has key business functions that are interdependent and rely on each other in order to complete tasks set by the company. The key business functions in Grape Vine Valley Ltd branch into four sections: Operations, Marketing, Finance and Human Resources. Each of the key functions performs their distinct roles but relies on the others to perform effectively. In the past 2 years, Grape Vine Valley has faced a sharp decline in profit. By auditing the four key business functions, strategies can be implemented to improve the success of the business and the business functions. Operations: The operations of Grape Vine Valley Ltd involve the production of its goods, the wine. The business currently operated on a five acre stretch of land filled with growing green and red grapes and a factory that processes the collected grapes and transforms it into fermented bottles of wine. The trained staff is segmented into their specialized area where they do their part in the operation. There are issues in the operations department as there is a large amount of workers hired to process the grapes, and not enough room for all employees to work freely in the factory, therefore, resulting in production slowing down. Also, the location of the winery heavily affects the business as Queensland is constantly bothered by rain, the grapes do not grow to its full potential or produce as much. Strategies to improve this factor of business can be expanding the land area to plant more grape vines and fruit which then, those grapes could be used for the production of new types of alcoholic beverages like sparkling wine and fruit wine, expanding the size of the factory so workers are able to move around freely without congestion and building a green house to enhance the growth of the grapes/fruit while shielding them from the harsh rain. These strategies will improve the efficiency of the operation function of the business which results in faster production of the product. Marketing: Marketing is a slow functioning sector in the business as it is hard for Grape Vine Valley to advertise effectively. Currently, the marketing strategy used in Grape Vine Valley Ltd is by selling to retailers hoping to attract consumers to the label. This is not effective at all as the company relies on consumers to recognize the products themselves. In addition to this, the wine that is produced from Grape Vine Valley Ltd may rub off as a want not a need and during a financial situation, consumers may not want to spe nd money on wants. To overcome this predicament, the company should consider hiring a new marketing team responsible for promoting the goods. The market team may suggest ideas of creating newspaper advertisements or creating an advertisement in a retail brochure. The company could also go through the process of the four Ps: Product, Price, Promotion and Place. Each of the four Ps suggests strategies to market the business good effectively: Product: Design a unique bottle for bottling the wine in. Use Eco friendly packaging so society can see the company cares about the environment. Price: Set a reasonable price on the goods, considering the prices of competitors and finding a price that produces profit and gives a competitive advantage. Promotion: Produce a loyalty card that provides regular customers sufficient discounts when subscribing to be a member. Members of the company can also be updates for
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up and coming weekend events and offers such as wine tastings and tours of the winery. Place: Grape Vine Valley Ltd is originally a producer to retailer to customer business, the company should also branch into a producer to customer business to allow a closer relationship between consumer and producer, allow the consumers the services the company provides to society. These strategies help the business to be known in society so that more consumers are aware of the product and would want to buy the goods, which ultimately leads to profit growth. Finance: Grape Vine Valley produces goods to society and gains profit by selling the goods at reasonable price with the hope of high sales. Thus, through this, begins the cash flow. Grape Vine Valley was recently influenced by the GFC (Global Financial Crisis) in 2009 which led to the financial sector for the company to become unorganized as the costs of the goods were going up but the sales were declining. This influenced the cash flow as less profit was coming in. This led to the company having less money, resulting in low pay wages for the employees and the high turnover of staff. To combat this issue, Grape Vine Valley Ltd should create a finance teams who set strategic plans and takes the necessary procedures to follow them, as well as a tactical plans that can be adjusted in case of sudden change. With this constant auditing, the profit should maintain and avoid large recessions especially if the company ensures that the costs of the goods are reasonable so that the sales are raised. Human Resources: Human Resources at Grape Vine Valley Ltd are in charge of hiring staff and forming the relationship between employer and the employees. Human resources hire individuals who are most suitable for the company, those with relevant qualifications (Degrees in Viticulture, Oenology, Biology and/or Chemistry) and important work experiences (management). Due to the influence of the financial market in 2009, Grape Vine Valley underwent a high turnover of staff, therefore, HR is responsible for hiring new staff in short notice so the operations of the company is not disturbed. Strategies to improve HR at Grape Vine Valley Ltd could include recruiting well trained people by processing them through examinations and interviews, conduct evaluations on a frequent basis to form a healthy relationship between company and workers; and establish happy environment by holding non monetary benefits and rewards such as a on the house dinner every once a month to keep the staff motivated.

EXTERNAL AND INTERNAL INFLUENCES

The environment that Grape Vine Valley Ltd operates in is constantly influenced by various external and internal factors. These factors influence the companys cash flow and general operations; therefore, the company must be ready to combat these problems with effective strategies. The general strategies for resolving issues influences by internal and external factors include: External Influences: 1. Economic Two years ago (2009), Australia was hit by the Global Financial Crisis which led major influences onto many companies. Grape Vine Valley Ltd was influenced by the GFC, as the company could not maintain the number of employees even with the decrease in wages, leaving the employees concerned about their job stability which ultimately led to the high turn in staff; and the company was unable to keep the sales
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at a steady rate as consumers were spending less (this also influenced the cash flow as it decreased in activity when the business lowered its prices but kept in line with other competing brands). Strategies that can be executed to overcome these issues could be retrenching workers, reducing costs of goods to a lower price, slow down operations to match with consumer sales and selling directly to consumers rather than just to retailers as this does not show off the brand effectively. 2. Geographical Globalization is affecting much business around Australia as it increases the global competition for purchasing goods online. Consumers are able to fine wine sold online at a cheaper price which ultimately makes it harder for any company to compete. In relation to Grape Vine Valley, to match the competition, costs have to be lowered; however, this will alter the cash flow, lowering the profit. To combat this situation, strategies could be setting up an online store so consumers are able to purchase the goods online with ease and selling packages of wine to retailers around Australia so people around Australia are aware of the brand. 3. Social Rapid changes in tastes and culture has led to a decline of profit at Grape Vine Valley Ltd. The company relies on its consumers to purchase the wine according to their taste. The company is influenced by society based on factors such as consumers purchasing other alcoholic beverages such as wine coolers, champagne and fruit wine or not purchasing alcohol at all due to the public awareness of what drinking can do to health. To overcome these issues, strategies such as producing other branches of win such as sparkling wine or fruit with and selling them in wine bottles of different volumes to control the amount of alcohol intake (100mL and 500mL bottles of wine) can be implemented. 4. Institutional: Grape Vine Valley Ltd is governed under the State government regulation of Occupational Health and Safety. The OHS regularly audits companies to foster a safe work environment and protect workers, family members, employers, customers, suppliers, nearby communities and other members of the public who are impacted by the workplace environment. Grape Vine Valley is influenced by this regulation as they must comply with the programs that OHS runs in order to maintain the safe work environment. Internal Influences: 1. Productc Grape Vine Valley Ltd produces wine which relies on the resources it is able to source such as land to grow the grapes and a large storage area to produce and ferment the wine. This effects how the business is run as the structure of the business and its operations must be organized well and be constantly monitored so the final product is not ruined. Because wine uses fine raw material, the company must be extensively prepared for any problems that happen during the operation. To respond before anything has happened, strategies of setting up a risk management team would allow the company to constantly monitor the process of producing wine so any problems can be solved in efficient time and also forecast and problems that may happen in the future. 2. Location Queensland is the main location of Grape Vine Valley Ltd due to the good soil and great produce it produces. Due to the location of the business is not located near the general public, the general public are
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not exposed to the company therefore effecting the marketing function of the business which means sales are not high as possible. However, the location provides beautiful views and a taste testing tour which can be advertised as a main tourist attraction for people around the area. Advertising weekend activities such as wine tastings and tours could be an effective way to promote the company to raise profit and respond to change. 3. Management The company heavily relies on the management team as they make the decisions that the business has to comply with. Grape Vine Valley is run through the traditional organizational structure which ultimately means the management team lies at the top and underneath is the divisions of labor. This means all decision is made by the management team as the give the final say. With limited ideas, the management team is slow to respond to the changing needs of the consumer and market conditions which in the long term, can lead to profit loss. To avoid this, restructuring the organization would help employees to provide ideas without getting them approved by the management team. This can lead to faster decision making and ultimately lead to a faster working environment that is able to face situations which more confidence,

CONCLUSION
In conclusion, Grape Vine Valley Ltd is a medium sized public company that in previous years have been highly successful but due to different external and internal influences on the key business functions and management team has led to a two year decline in sales, profits and market share and a high turn of staff. There are many strategies that can be implemented to hopefully boost the profit again and restore the cash flow of the business to what it was before.

BIBLIOGRAPHY
1/ Chapman, S. (3rd Ed.) (2011), Business Studies in Action: Preliminary Course, John Wiley and Sons Australia Ltd, 42 McDougall Street, Milton, Qld 4064 2/ NSW Government Industry and Investment, 2010, NSW Government, NSW, viewed 10 June, 2011, http://www.nswwinefestival.com.au/ 3/ Hunter Wine , 2011, Cognition, Sydney, viewer 10 June, 2011, http://www.winehuntervalley.com.au/ 4/ Monash University, 2009, CRICOS, Western Australia, viewed 10 June, 2011, http://www.buseco.monash.edu.au/blt/monashreg/national/govtbodies.html 5/ Freshmeat , 2011, Geeknet, ACT, viewed 10 June, 2011, http://freshmeat.net/projects/wine/date_metrics 6/ News Limited , 2009, Robert Burton, WA, viewed 10, June, 2011, http://www.news.com.au/features/environment/climate-change-threatens-australias-wine-industrystudy-warns/story-e6frflp0-1226068502698

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