Marketing Communications

Topics: Wine, Chilean wine, Chile Pages: 19 (3067 words) Published: April 14, 2014
1 Introduction
The purpose of writing this report is to exploring new business opportunities overseas for a multinational company. The company choose Chilean wine as an option to start the business. In order to evaluate the attractiveness of Chilean wine industry, a specific analysis on the Chilean Wine industry was conducted by applying the Porters National Diamond Model and two possible market entries. The Chilean Wines have ranked very highly in the world, it’s the world’s eighth largest wine producer and the fifth largest exporter, reaching a market share of 8 per cent by volume of the global international wine market at the close of 2010. (International Organisation of Vine and Wine, 2010) However, 70percent of Chile’s wine production were exported, making it the world’s most globalized wine industry, with great flexibility, innovation and a long-term commitment to quality and service second to none. Chilean wines are known as the country’s most emblematic and best known world wine ambassador by having 150 destination countries and 1.5 billion consumers per year. (ODEPA , 2012) Table World Wine Production

Country
TH HL
Italy
France
Spain
USA
Argentina
Australia
Chile
South Africa
Germany
China
Portugal
New Zealand
Others
Total
48
46
33
21
12
12
10
10
9
8
6
2
51
266
(International Organisation of Vine and Wine, 2010)
Table Primary wine exporting countries
Country
Thousands of HL
Italy
Spain
France
Australia
Chile
Germany
USA
South Africa
Argentina
Portugal
New Zealand
Others
Total
19
14
13
8
7
4
4
4
3
2
1
8
86
(International Organisation of Vine and Wine, 2010)

Table Wine exports by Country of Destination

Quantity (1000 Liters)
Value (Thousand US dollars)

2010
2011
2012
2010
2011
2012
U.S.
118,682
129,989
156,032
241,699
273,258
300,599
U.K.
123,234
107,474
101,744
236,219
234,548
228,072
China
60,529
35,339
64,091
82,574
91,800
144,808
Japan
35,428
39,945
48,478
80,929
100,140
127,190
Spain
1,178
748
44,729
4,248
3,456
27,045
Germany
53,886
41,440
34,785
74,525
71,779
63,256
Netherlands
30,408
34,047
34,338
81,058
97,937
95,289
Brazil
24,605
27,927
31,107
70,887
89,902
95,252
Canada
30,461
26,364
24,066
89,543
93,765
93,129
Denmark
26,881
23,471
20,967
60,870
61,437
52,911
Others
227,790
201,011
193,712
531,620
585,138
580,203
TOTAL
733,082
667,755
754,049
1,554,172
1,703,160
1,807,754
(ODEPA , 2012)

2 Porter’s National Diamond
One of the most inclusive and ductility tool in order to measure competiveness for a country, industry, sector or even a single company is the diamond model. There are four determinants alongside with two other factors which are factor conditions, demand conditions, Related and supporting industries, firm strategy, structure and rivalry, government and chances. These determinants create the national environment in which companies are born and how to compete. (Porter, 1990). This diagram, Figure shows the extended version of the Porter’s National Diamond. It will be used to determine the conditions of the Chilean wine industry, and decide which strategy will be used for the company.

Figure Extended Porter's National Diamond (Porter, 1990)
2.1 Factor Conditions
As we all know, the most important ingredient of wines is grapes. By having a good quality and quantity of grapes, the chances of making a good wine are high. Chile has a good geography and climate to make an ideal winegrowing land. Chile has a few good geographical barriers which are the Atacama Desert to the north, the Andes Mountains to the east, the Patagonian ice fields to the south, and the Pacific Ocean to the west, which make them a veritable agricultural land. (Infoplease, 2005) These barriers help maintain healthy conditions and protect vineyards against Pests and disease. The climate features the warm, dry summers and cold, rainy winters that vines...
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