Business strategy of a wine company. Proposal for improvement actions - GovtVacancy.Net

Business strategy of a wine company. Proposal for improvement actions - GovtVacancy.Net
Posted on 07-11-2022

Business strategy of a wine company. Proposal for improvement actions

This research focused on the business strategy of the firm Shangri-La Wine Co., Ltd and through SWOT analysis, proposes specific measures to provide an effective reference to small and medium-sized wine companies, especially those located in producing areas. the like, to formulate development strategies. Additionally, according to the characteristics of the company and the operating conditions, strategic safeguard measures are proposed to promote the smooth implementation of the brand strategy.

Wine has a long history in China. With the improvement of people's living standards, they pay more attention to maintaining a healthy lifestyle, so this product has been increasingly favored by consumers, gradually becoming a popular daily drink. However, China's wine industry started late, and the maturity, influence, and competitiveness of brands are insufficient. With China's accession to the WTO, imported wine has gradually entered the Chinese market, and the domestic industry has been seriously affected. This forces national wine companies to streamline the development process and seek strategic management with its own characteristics.


China has a long cultural tradition of wine and beverages in general. With the continuous development of the economy and society, wine categories and culture are also being improved. With its unique taste and health effects, wine has been welcomed by more and more consumers, and China's wine industry has entered a period of rapid development. Since 2015, wine consumption has entered an upward cycle. In 2017, the average annual consumption of wine per capita in the world was 3.3 liters/per person, while in China it was only 1.6 liters / per person, estimating annual sales between 60 and 80 billion yuan.

Shangri-La Wine Co., Ltd. is a professional company integrating the production, sale, and promotion of wine culture in China. After nearly 20 years of development, Shangri-La Wine Co., Ltd. has gradually gained a certain reputation among consumers. However, the development goal of Shangri-La Wine Co., Ltd. is not clear, its market share is not high, and the progress in business development is limited.

At present, Chinese foreign scholars' research on business development strategy has been more mature, and research on wine business strategy is also common. Studies have been carried out in order to further improve organizational competitiveness in the market and expand the share of enterprises, starting by analyzing both existing problems and development trends in China's wine industry. This research will complement the knowledge already achieved in this field.

The general objective pursued with this work is to propose actions to improve the business strategy of the company Shangri-La Wine Co., Ltd.

To this end, the following specific objectives are proposed:

  1. Study the state of the art regarding business strategies.
  2. Diagnose the current situation of the company Shangri-La Wine Co., Ltd. in terms of its business strategy.
  3. Make suggestions to improve the business strategy of Shangri-La Wine Co., Ltd., leading to the better positioning of it.

Based on the analysis of the business environment and related theories of development strategy, and on the basis of summarizing and analyzing the relevant research results on the development strategy of wine enterprises in China and abroad, this paper considers Shangri-La Wine Co., Ltd. the reference to study the current competitive environment, the existing advantages, and the most relevant problems.

The first chapter discusses the research status of enterprise development strategy, agricultural product development strategy, and wine enterprise development strategy in China and abroad. PEST analysis, Porter's five forces model, SWOT analysis, and other research methods are also explained.

The second section analyzes the current state of business development at Shangri-La Wine Co., Ltd. using the techniques discussed in section 1.

The third section, through the SWOT analysis method, carries out the comprehensive analysis and comparison of the viability of the business development strategy and presents the appropriate strategic choice for the future development of the company around the objective and the mission of business development. According to the company's own characteristics and operating conditions, it proposes safeguard measures to support the business development strategy from the aspects of building corporate culture, building talent teams, building infrastructure, building plantations, etc. ., in order to promote the smooth implementation of the development strategy.

1. Business strategies: theoretical framework of reference

1.1 PEST Analysis

PEST analysis refers to the macro-environment analysis, where P stands for politics, E for the economy, S for society, and T for technology [1]. When analyzing the background of a business group, the situation faced by a group is usually analyzed through these four factors.

The political aspect mainly includes national policy, relevant laws, regulations, etc. The economic aspects mainly include the level of economic development and the development environment. The social aspect includes social values, cultural level, etc. The technological aspect includes the technology of the production process and the latest advances [2].

In the analysis of the macro environment of an enterprise, a comprehensive study of the above four aspects can be made, studying the opportunities and threats facing enterprises, and combining with the characteristics of their own conditions, choosing the development direction of the future.

1.2 Michael Porter's five forces model

Porter's five forces model is one of the most widely used analytical tools in the process of analyzing and formulating business development strategies. The analysis of these five aspects proposed in Porter's Five Forces Model can provide research on competitive factors for companies in a wide range and has great feasibility and applicability. [3].

1.3 The SWOT analysis method

The SWOT analysis method is a commonly used strategic planning tool. It provides a complete overview of the internal and external conditions of the company and then analyzes the strengths, weaknesses, opportunities, and threats that it possesses and faces and adopts a combination of business strategies on this basis. Reasonably using their own advantages, avoiding disadvantages and taking advantage of external opportunities to reduce the negative impact of external threats, and finally formulating a decision-making system suitable for the company's own development strategy, is the purpose of this method of analysis. [4].

Based on the SWOT analysis system, four alternative strategies can be obtained through a combination method, namely: FO strategy, FA strategy, DO strategy, and DA strategy. The core of the FO strategy is to make the most of internal advantages, enhance competitiveness, and continuously improve the overall strength of the company while relying on external opportunities; the core of the FA strategy is to maximize internal advantages and avoid external challenges. The DO strategy refers to a strategy that uses external opportunities to improve or overcome its own weaknesses to obtain sustainable development, and the DA strategy emphasizes that companies must face their own weaknesses and continuously improve to meet changing external challenges.

2. Analysis of the development environment of the company

The development mission of Shangri-La Wine Co., Ltd. is: to revitalize the domestic industry as its own duty, committed to combining traditional craftsmanship with modern technology and characteristic raw materials, promoting product innovation and model wine industry business; and achieving the integration of the development of the first, second and third industries. May each consumer, in each happy moment, drink the wine of happiness.

The development objectives of the company are:

  • Short-Term Goal: In the face of today's severe market competition, create and optimize feature products and product packaging, enhance product categories around key emerging market segments, and make our products more suitable for the market environment. current market competition, consolidating the existing market. At the same time, cooperate with the production area enterprises to jointly create the image of the production area, highlight the characteristics of the production area, and form a joint development force.
  • Medium-term goal: to establish Beijing, Tianjin, and surrounding areas as a breakthrough, strengthen the brand building, increase brand promotion and publicity efforts, achieve comprehensive product coverage in Beijing, Tianjin, and the surrounding areas of the main sales channels, and occupy a certain market share. At the same time, build the company's social image, to lay a good foundation for the entity's long-term development.
  • Long-term goal: To develop Shangri-La Wine Co., Ltd. into a pastoral complex integrating the planting experience, brewing experience, tasting experience, and entertainment experience, so as to achieve the integrated development of primary, secondary, and tertiary industries of the company.

2.1 The Business Development Strategy Analysis of Shangri-La Wine Co., Ltd

2.1.1 Strategy Formulation Principles

The principle of the company's development strategy is to match its actual situation with its desired one, emphasize pragmatic innovation, and formulate suitable strategic guidelines for its overall and long-term development. Better brand awareness helps the company develop emerging markets; to improve the confidence of distributors to expand sales channels more easily; it is conducive to improving corporate image and product characteristics in the face of shaping efficiency; it is beneficial for the company to quickly attract consumers in the process of diversified marketing and improve the awareness of consumers. The brand strategy is undoubtedly the core and key to the company's long-term development strategy.

2.1.2 Brand Strategy

brand strategy is to take the brand as the core of the company's development competitiveness. By improving brand awareness, reputation, and customer loyalty, and using the method of strategic management, production, marketing, research and development, management, and other aspects of the company's overall planning and improvement and finally achieve the goal of improving the competitiveness of the company. The company's main competition today comes from imported wines and emerging regions of China. New products flooded the market, increasing competition and reducing the company's market share. At present, the company's brand influence is weak, which is a major disadvantageous factor in competition. As a professional wine-making company that has been deeply committed to China's wine industry for many years, it must create its own brand and highlight its own characteristics and value in the competition. Building a recognized brand and enhancing brand awareness and influence is the foundation for implementing various company development strategies.

2.1.3 Differentiation strategy

The differentiation strategy is an aspect that attaches great importance to customers and provides differentiated products or services integrating a series of actions [14]. Currently, there are numerous mixed brands in the wine consumption market. Combined with the above analysis, Shangri-La wine with "Cabernet Sauvignon" as the main raw material has a serious homogenization problem with competitors in the wine and grape raw material, which is not conducive to standing out in the market competition. . The implementation of differentiation strategy can highlight product characteristics, avoid competition from imported wine and wine from emerging regions in China, and occupy a favorable position in development. From the point of view of the specific implementation, to highlight the characteristic products,

2.1.4 Diversification strategy

The diversification strategy refers to the development strategy for companies to enter other related industries, which leads to avoiding the operational risks caused by a single business/product. According to the above introduction, Shangri-La Wine Co., Ltd. does not adopt the current popular winery development mode but adopts the simple industrial production mode. The lack of vitality in the development of the company makes its development path relatively simple, and the consumer's cognitive channel for the product is relatively narrow, which has become an important factor restricting the development of the company. Shangri-La Wine Co., Ltd.'s superior geographic position enables it to have unique advantages of diversified development. It mainly includes two aspects:

2.1.5 Horizontal integration strategy

The horizontal integration strategy refers to the strategy of company acquisition and joint competition. Through cooperation between companies in the same industry, common development and growth can be achieved to reduce competitive pressure [10]. The current domestic wine industry is being severely affected by imported wine, the industry as a whole is accelerating decline, and the company is facing a more severe market competition environment. There are many wine companies in the region where the company is located and they face the same competitive situation. Therefore, the company can plan to properly cooperate with wine companies in the production area to participate in market competition and quickly improve the company's market competitiveness. On the one hand, jointly establish the regional product standard system, jointly build the brand of the production area, and rapidly improve the popularity of products. On the other hand, after the development of the company, you can properly consider the acquisition of wine companies and vineyards in the surrounding areas to accelerate the pace of development.

2.2 Analysis of the external environment

2.2.1 The competitiveness of existing competitors in the industry

Internationally, there are currently around 70 countries in the world with wine production capacity. In 2018, the total grape plantation area in the world is about 7.6 million square kilometers, of which Europe represents more than half, distributed mainly in Spain, France, Germany, Italy, and other countries [5]. Other wine-grape growing areas are mainly concentrated in China, Australia, the United States, and elsewhere. In terms of wine production, world wine production reached 29.23 billion liters in 2018, the highest in almost 15 years, with Europe being the largest wine-producing region, with Italy, France, and Spain accounting for the largest. 62% of world production. According to current data analysis from the International Wine Organization and from various countries,

At the national level, China has a vast territory, a complex and diverse geographical environment, and different regions have their own climate. The complex climatic conditions in China have created exceptional conditions for the production of wine grapes, especially those with good quality and distinctive characteristics because the regional climatic environment has a vital influence on the quality of wine grapes. However, due to the late standardization of wine grape cultivation in China, the introduction of wine grape varieties is too concentrated, resulting in the serious homogenization of wine grape varieties in various wine-producing areas. China.

In terms of total volume, as shown in Figure 1, China's wine production has been declining year on year since 2014. In 2016, the national wine production was 1.13 million kiloliters, down 1% from the previous year. In 2017, the country's wine production was 10.01 million kiloliters, down 11.96 percent year on year. In 2018, the national wine production was 629,000 kiloliters, a significant decrease of 372,000 kiloliters, or 37.16%, compared to the total production in 2017, indicating an accelerated contraction trend of the wine industry of China as a whole [7].

2.2.2 Threat of new entrants

Emerging wine companies have a higher threshold to enter the market. On the one hand, China's wine industry is gradually shrinking due to the impact of the imported wine market. It is very difficult for new wine companies to enter the market and compete with imported wines with high maturity right away. On the other hand, the admission and approval requirements for wine production are higher. It is required to have a complete production line, filling equipment, testing equipment, fermentation equipment, and other chain facilities at the same time, and can only be operated after passing inspection. This determines that emerging wine companies need a certain degree of intensity of investment in fixed assets when they are preparing to enter the market,

In the initial stage of construction, emerging companies need to transfer or requisition a certain scale of land to plant raw materials, and with the development of companies, stable and long-term investment in building the raw material base is needed, which also increases the financial burden on wine companies. As a result, while China has a potentially large market and the wine industry has high-profit margins, not many new entrants have entered the industry in recent years. For Shangri-La Wine, the threat of new entrants is not the main source of competition in the market.

2.2.3 Threat of substitute products

Under the influence of traditional wine culture, liquor has always held the dominant position in the beer industry, occupying the largest market share. Beer has become the main force of summer wine consumption with its characteristics of low alcohol content and low price, and the market space is relatively stable. According to statistics, in 2017, the total volume of wine brewing companies in the national regulations was 707.7441 million kiloliters, up 3.31% year on year, and the cumulative total profit was 131.403 billion yuan. Among them, the total output of liquor was 1,198.06 million kiloliters, up 6.86% year on year, and the accumulated total profit was 102.849 million yuan, up 35.79% year on year. +

Total beer production was 44,014,900 kiloliters, 0.66% less year-on-year. Total profit was 12.915 million yuan, down 9.83% year on year. The total volume of wine production is 1.001 million kiloliters, down 5.25% year on year, and the total profit is 4.228 million yuan [8].

It can be seen that the threat posed by wine substitutes in China is mainly liquor and beer. The accumulated profit of liquor accounted for nearly 80% of the total profit of the brewing industry, its position is very stable. Although beer production and profits have decreased somewhat, the total amount is still large. As an emerging foreign wine, the market share of wine is very limited.

2.2.4 Negotiating ability of the buyer

As with other exotic consumer goods, the initial consumption of wine is primarily high-end consumption. When consuming wine, these consumer groups see wine as a reflection of their identity and status and pay no attention to the price.

Along with the gradual popularization of the social cognition and culture of wine, wine is gradually being transformed for consumption by ordinary people. The mid-range and low-end consumer markets are expanding and account for around 70% of the total market share. From the point of view of the purpose of wine consumption, the vast majority of consumers buy wine for the purpose of consuming food. With the improvement of consumption, the continuous launch of new products, and the rapid popularity of e-commerce platforms, wines from different countries, brands, flavors, and cultures can be quickly and conveniently presented to consumers. The wider range of options strengthens the bargaining power of consumers.

2.2.5 Negotiation skills of suppliers

Today, growing wine grapes is still dominated by retail farmers. In addition to its own wine grape plantations, Shangri-La Wine Company still needs to properly purchase wine grapes at retail according to the production and consumption plan to meet the company's production needs. At present, the cost of growing wine grapes in China is relatively high and there is no obvious profit advantage compared to other agricultural products, and wine grape suppliers have low bargaining power.

2.3 Analysis of the internal environment

2.3.1 The Company

Founded in 2000, Shangri-La Wine Co., Ltd. is one of the provincial-level leading enterprises in agricultural industrialization in Yunnan Province. In 2003, the company registered Shangri-La (Qinhuangdao) Wine Co., Ltd. and was rated as the leading agricultural industrialization enterprise in Hebei Province. Through more than ten years of development, the company has formed the development and marketing of the Yunnan production area, the Lulong production area, and the layout of the brewing and storage business. Through the introduction and continuous renewal of winemaking technology, the introduction of foreign first-class technical experts and winemaking process equipment, wine production technology has been at China's leading level,

2.3.2 Production research and development capacity

Shangri-La Wine Co., Ltd. has a modern 50,000-square-meter production plant, all imported from Italy, with Chinese advanced technology such as air-bag pressing and diatom filtration, to ensure smooth implementation of the process. of production; and the annual wine production capacity is about 35,000 tons.

2.3.3 Financial condition

The financial situation of a company is an important indicator of its development, which is of great importance for the analysis of its operation and the formulation of its business development strategy. The financial situation of Shangri-La Wine Co., Ltd. in the last three years is shown in Table 1:

Table 1. Profit Statement of Shangri-La Wine Co., Ltd in the past three years (unit: ten thousand yuan)
Project 2017 2018 The first half of 2019
Main operating income 19623 11552 6576
Main operating costs 13798 7118 4509
non-business income 820 1700 944
Retained earnings 5881 4648 2717
Font. Obtained from internal data of Shangri-La Wine Co., Ltd.

From the analysis of the financial data of the company in the past three years, it can be seen that the financial situation of the company is at a normal level and can still remain relatively stable under the strong market impact of imported wine in recent years. . It shows that the company has some competitiveness and the ability to withstand risks in the field of wine production and sale, but the overall scale is small, so it needs to be further expanded and strengthened.

2.3.4 Status of human resources

Shangri-La Wine Co., Ltd. has 155 employees (excluding sales companies), of which 2 have master's degrees; there are 77 employees with a bachelor's degree, 76 with a bachelor's degree or lower, and 50.3% of registered employees have a bachelor's degree or higher.

There are 9 workers as R&D and technical personnel of all kinds, including 5 production technical management persons, 4 domestic tasters, 1 domestic winemaker, 3 product R&D persons, and 1 foreign technical consultant. The proportion of technical and R&D staff in the registered staff is 5.8% (see Table 2).

Table 2. Composition of the academic background of the staff affiliated with Shangri-La Wine Co., Ltd.
schooling standard Number of people Proportion (%) Observations
master's degree two 1.3 Those with a bachelor's degree or higher accounted for 50.3% of registered employees
Bachelor's degree 77 49.7
Lower university degree 76 49
Total 155 100
Font. Obtained from internal data of Shangri-La Wine Co., Ltd.

2.3.5 Corporate culture and marketing

Today, the corporate spirit of Shangri-La Wine Co., Ltd. still adopts the cultural core of its parent company, Jindong Group, whose core concept is “to create more employment opportunities for society; provide consumers with more valuable brands; create a happy work environment for employees. This concept is mainly aimed at the management and operation of the company and is relatively broad. The corporate culture applied to external advertising has not yet been clearly elaborated. In terms of marketing, Shangri-La Wine Co., Ltd. adopts the collective sales channel of its parent company, Jindong, and carries out marketing activities through more than ten sales companies, with few typical marketing activities. that are carried out independently.

3. Proposal of actions to follow as part of the company's development strategy

3.1 SWOT Analysis

In this section, an analysis of the company's development and change trend is made from four aspects: strengths, weaknesses, opportunities, and threats. Combined with the mission and the objective of the company's development, the choice of the company's development strategy and the improvement actions to be carried out are presented.

3.1.1 The strengths of the company

Through the analysis of the company's raw materials, sales channels, location advantages, product characteristics, and other factors, the company has the competitive advantages drawn as an important benchmark for the choice of business development strategy.

  1. Advantages of raw materials: Shangri-La Wine Co., Ltd. has two raw material planting areas and has set up factories and put them into production. One is the Shangri-La production area in Yunnan. Located in the Qingdi Plateau of Yunnan Province, it is in the "Three Parallel Rivers" world natural heritage core area, with an average altitude of 1700-2800 meters, with obvious high-altitude and low-latitude natural conditions, which it is very suitable for the growth of wine grapes. Second, the Luong production area in Hebei province. Located in northeast Hebei, the Bohai Rim Economic Circle is an important link between the Beijing-Tianjin-Hebei Capital Circle and the Liaodong Peninsula City Circle.
  2. Group management and channel advantages: Jindong Group was founded in 1996, formerly known as "Jinliufu" and "Huaze Group", and changed its name to "Jindong Group" in 2016, mainly engaged in the wine industry. After 20 years of development, Jindong Group has formed an "industry + investment" business model. Jindong Group has 12 liquor production companies under its jurisdiction, with 15,000 employees and total assets of more than 30 billion yuan.
  3. Product Features and Advantages: Shangri-La Wine Co., Ltd. has two production areas: Yunnan Shangri-La and Hebei Lulong. The raw materials have obvious characteristics and high quality, and the products are bright and lustrous with strong fragrances, forming a unique product style. Among them, the products of the Yunnan production area have distinctive characteristics in the plateau and have outstanding characteristics in the same products. The main series of old trees in the Lulong producing area take full advantage of the long planting time and early start of the grape in the producing area, forming a special competitiveness that other producing areas do not have, so it has a great advantage in promoting the product.

3.1.2 The weaknesses of the company

This section analyzes the disadvantages of the company from the aspects of company brand awareness coverage, sales scale, raw material homogenization, etc., to further clarify the development strategy optimization direction. business.

  1. Small coverage of brand awareness: Although the company has made some achievements in brand building, it is still far behind well-known Chinese brands such as Changyu and Dynasty, as well as regional leading brands such as Huaxia Great Wall. The idea of ​​brand building is unstable and not lasting, and the lack of advertising investment leads to the company's brand awareness only covering the vicinity of the production area, and the brand awareness and attractiveness in the key sales areas are not strong, which affects the market to some extent.
  2. Small sales scale: At present, the sales scale of Shangri-La Wine Co., Ltd. is still relatively small. Comparison with the five best-known Chinese wine brands shows that there is an obvious gap in Shangri-La's sales scale. Changyu achieved an operating income of 5.142 billion yuan in 2018, up 4.25% year on year; Tongpu reported an operating income of 1.02 billion yuan, up 9.06% year on year; Veyron had an operating income of 788 million yuan, down 5.13% year on year; China and Portugal achieved total revenue of 340 million yuan, down 14.8% year-on-year. Mogao achieved total revenue of 230 million yuan, up 2.5% year on year. Shangri-La's operating income reached 132 million yuan, a year-on-year increase of 17,
  3. Severe homogeneity of grape raw materials: Although the company has developed some new making materials such as highland barley wine, the traditional making materials are still basically Cabernet Sauvignon varieties. This variety is characterized by high sugar content, a high proportion of pulp, and strong adaptability to growth, especially the high content of phenolic substances; so the resulting wine is dark and thick, can be steeped for a long time, and has great aging potential.

Cabernet Sauvignon is the main grape grown in Bordeaux, France, and is therefore recognized by the wine industry throughout the world. However, the single plantation variety of raw materials leads to serious homogenization of the quality of wine products and a lack of differentiation in taste, which does not lead to the subdivision of products and brands. However, changing varieties requires a lot of time and capital costs, which makes it difficult for companies to transform their raw materials.

3.1.3 Opportunities facing the company

This section analyzes the opportunities facing the company from the perspectives of improving consumption, regional development, government support, etc. It can be seen that Shangri-La Wine Co., Ltd. as a small and medium-sized wine company faces a paradoxical development opportunity.

  1. Consumption improvement: As the market recovers, wine has become a regular guest of family daily consumption and wedding banquets. After 2016, the wine industry entered a "new normal" of stable development. These signs declare that China's wine industry is entering a period of an upturn in consumption, followed by industry-wide growth in activity and revenue.
  2. Local government support: In order to accelerate the development of the wine industry, Hebei Province has formulated the "13th Five-Year Plan for the Development of the Wine Industry". Changli and Lulong wine-producing areas, as the earliest wine grape-growing areas in China, will fully undertake various preferential policies to inject new impetus into the development of enterprises in the region and drive the overall improvement of wine-producing areas. In the Shangri-La production area of ​​Yunnan Province, the government supports the Shangri-La Wine Company as a major leading company in the local industry and provides the highest level of preferential policies in terms of land and taxes. Actively help companies expand sales channels and promote products as tourism products.

3.1.4 Threats facing the company

This section analyzes the main competitive threats facing the company from two aspects: imported wine and wine from emerging regions of China, and further analyzes the current market competition.

  1. Impact of imported wine on the market: With the acceleration of the world economic integration process and the improvement of China's wine consumption capacity, the Chinese market has become the target for which global wine companies compete. With the continuous liberalization of the national tax system, some countries, represented by Australia and Peru, unreasonably enter the Chinese market with the "zero tariffs" policy and occupy a large market share. In 2014, wine imports were always at a high level. In 2018, although the import volume decreased, the reduction was small, and the import volume continued to increase slightly, reaching 2.86 billion US dollars, accounting for 49.5% of the wine import volume [9]. This has had a huge impact on the Chinese wine market.
  2. The development impact of emerging production areas: Due to climate, soil conditions, land intensification, and the comparative benefits of agricultural products in western China, etc. In recent years, the focus of China's wine industry has shifted to the western region, with grape cultivation gradually concentrated in Xinjiang, Ningxia, and elsewhere. With the rise of these emerging production areas, the competition between major production areas and companies in China is becoming increasingly fierce. Each producing area takes advantage of its own advantages to develop new products with distinctive characteristics of producing areas. For example, Changbai Mountain in Northeast China developed a unique ice wine due to its cold climate. The Shandong Peninsula highlighted the characteristics of the coastal monsoon, and developed wine with a characteristic flavor; Xinjiang has a long history of grape cultivation, high visibility, and the development of regional characteristics of distinctive wine products.

A large number of brands create brand characteristics through differentiation, making it difficult for wine companies to compete.

3.1.5 SWOT combination analysis

  • OF-Strategy: The company has an excellent highland wine grape and barley planting base, and other distinctive new brewing raw material brewing technology, the products are quite distinctive, providing a solid foundation for building the company brand. At the same time, relatively mature sales channels and superior location advantages must also be used for brand promotion to provide favorable conditions. In the process of tourism development, the local government in the production area consciously advertises and promotes the company's products, which makes the company more efficient in brand building. As one of the pillars of the competitiveness of wine companies,
  • FA Strategy: Shangri-La Wine Co., Ltd. mainly faces two threats from imported wine and wine from emerging regions of China. However, the company's existing advantage lies in its own products with the current market of similar products having a strong degree of differentiation. With independent intellectual property rights, the "Great Cang Mui" series and the series of mature old trees from Changli production areas in China, can form a certain differentiation advantage in the market competition, and the product characteristics of the company can be better reflected in the mature sales of the company. Therefore, highlighting product features is one of the company's future development focuses.
  • DO Strategy: Currently, the company faces three handicaps: weak brand appeal, small sales scale, and high homogeneity of major raw materials. The coordinated development of the Beijing-Tianjin-Hebei region and the establishment of the Xiongan New Area has formed emerging markets within the coverage of the company's brand awareness, providing a unique opportunity for the company's development. With the development of the regional economy, the development potential of regional tourism gradually deepens. At present, the new mode of agricultural and rural development represented by the pastoral complex is receiving strong support from the state. This provides favorable conditions for the company to develop wine tourism and cultural business activities.
  • OA Strategy: As a defensive strategy, in the face of fierce market competition, the company relies more on the strength of the production area, and strengthens the overall competitiveness of the production area by cooperating with internal companies in the production area, to better cope with to competitive pressure from imported products and products from other production areas in China.

According to the above analysis, the corporate brand strategic choice matrix is ​​shown in Table 3.

Table 3. Shangri-La Wine Co., Ltd. Strategic Choice Matrix
OF Strategy DO Strategy
Take full advantage of the original advantages of enterprises and government support, strengthen brand cultivation, and enhance brand awareness and influence. Integrate tourism elements in the future development of the company and implement a richer business model.
AF Strategy OA Strategy
Outstanding characteristic products. Cooperate with internal companies to strengthen the general competitiveness of the production areas.

3.2 Actions to perform

3.2.1 Deepen the construction of the business culture

Corporate culture is an important foundation for brand building, and further deepening the construction of corporate culture is an important guarantee for carrying out brand warfare [11].

3.2.2 Talent team building

Based on the above analysis, there has been a wide gap between the degree of development of the Chinese wine industry and that of Western countries for a long time. At present, there are few wine majors in Chinese colleges and universities, and the foundation for cultivating wine professionals is not strong, especially for winemaking, tasting, and sommelier.

In the face of increasingly fierce competition in the market, professional and high-end wine talents are the basis of product differentiation, and also the key support for the brand development of wine companies in the future, and they may become the center of a new round of industrial competition. [12].

Therefore, it is necessary to strengthen cooperation with universities and reduce the cost of talent training, as well as enrich the direction of talent training, to achieve the diversity of the talent pool.

3.2.3 Strengthening the construction of plantations

According to the above analysis, the current benefit of wine grape planting is not obvious compared with traditional crops, and the economic benefit is not high. As a result, the level of management of farmers in the vineyards is generally low. The quality of the wine grapes produced by the companies' own plantations is obviously superior to that of the purchased grapes, which guarantees the quality of the product from the end of the raw material. Therefore, the establishment of a sufficient area for ​​their own plantations is the only way for the development of wine companies.

At the same time, contact with local governments, regional cooperation, and jointly building a regional brand image should be strengthened.


The selection and formulation of the development strategy is an important process for the development of companies. With the gradual maturity of China's wine industry, the development strategy is the foundation for the development of Shangri-La and other small and medium-sized wine companies, and the key to future competition.

Based on PEST analysis, Porter's five forces model, SWOT analysis, and other research methods, this paper summarizes and analyzes the current development environment and operating conditions of Shangri-La Wine Co., Ltd., and draws the following conclusions.

First, according to PEST analysis and Porter's five forces model analysis, Shangri-La Wine Co., Ltd. faces fierce competition in the market, but the current Chinese wine market has good potential. for development, and the company's future development opportunities and challenges coexist.

Secondly, based on the SWOT analysis, this paper proposes the macro strategy of the company's development and proposes four specific strategic measures, namely, brand strategy, differentiation strategy, diversification strategy, and horizontal integration strategy, in combination with the mission and objective of business development and the principles of formulating business development strategies.

Third, from the analysis of the business development environment and the choice of the company's development strategy, the steps for the implementation of the company's strategy are formulated, and the safeguard measures, such as deepening the construction of corporate culture, strengthening the construction of talent teams, improve the construction of infrastructure, and strengthen the construction of self-managed plantations. These actions are proposed to promote the implementation of the company's brand strategy.

The innovative point of this work lies in the analysis of the current situation of the company from the perspective of its unique individual characteristics, based on the target company's production area, regional characteristics, and product characteristics. From the perspective of development strategy, this document presents specific measures to strengthen the market competitiveness of Shangri-La Wine Co., Ltd. and provides an effective reference for the development of Shangri-La and similar small wine companies.

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