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Table of Contents
TOC o “1-3” h z u 1. Executive Summary PAGEREF _Toc112401402 h 32.1 Company Introduction PAGEREF _Toc112401403 h 42.2 Justification for the Destination Country and the Market Entry Strategy PAGEREF _Toc112401404 h 43.1 Value propositions for the company, its target customers, and its collaborators in the destination country PAGEREF _Toc112401405 h 53.2 Market Segmentation and Target Customers PAGEREF _Toc112401406 h 64.1 Internal Analysis of Grace Vineyard in Taiwan (Strengths and Weaknesses) PAGEREF _Toc112401407 h 64.2 External Analysis of Grace Vineyard in Taiwan (Opportunities and Threats) PAGEREF _Toc112401408 h 75. References PAGEREF _Toc112401409 h 86. Appendices PAGEREF _Toc112401410 h 96.1 Appendix I PAGEREF _Toc112401411 h 96.2 Appendix II PAGEREF _Toc112401412 h 9
1. Executive SummaryThe well-known Chinese winery Grace Vineyard has been in business for 20 years. The business is now concentrating on growing. It has already started to grow into more recent markets like China and Hong Kong. Although the winery has historically concentrated on Bordeaux blends, it has recently experimented with new grape varieties, such as Saperavi, Tempranillo, and Sauvignon Blanc. Grace Vineyard wants to grow its worldwide markets with these new items on the market. Particularly, Grace Vineyard finds the Taiwan wine market to be highly appealing. Based on its success in China and Hong Kong, Grace Vineyard is well positioned to dominate the Taiwan wine industry. The business is in an excellent position to appeal to a market that is keen to adopt international wine standards while maintaining its commitment to local origins. Taiwanese wine lovers are searching for a brand that rivals well-known global brands in terms of quality while retaining certain characteristics of regional Chinese and Taiwanese vineyards. The best course of action for Grace Vineyard to pursue in order to create a presence in Taiwan’s fiercely competitive wine market is to export wine products directly from China to that country.
2.1 Company IntroductionGrace Vineyard is a prominent Chinese winery that has been in operation for two decades. For the most part focusing on the home market, the winery’s wines are said to have more than 50% of the market share just within the local Shanxi province in China (Jiao & Ouyang, 2019). With such impressive growth over the last decade, Grace Vineyard has surpassed the sales of major domestic businesses as well as the state-owned wineries within the Chinese market including firms like Changyu and Great Wall (Hao, Li, & Cao, 2015). The winery has traditionally focused on Bordeaux blends, but in recent years has been experimenting with other varietals including Saperavi, Tempranillo, and Sauvignon Blanc. The company is now focusing on expanding. It has already begun expanding into newer markets within China and Hong Kong. The aforementioned new wineries are only some of the newer types that have been planted in smaller amounts. With these new products in the market, Grace Vineyard is looking to expand internationally markets. Specifically, the Taiwan wine market is very attractive for Grace Vineyard.
2.2 Justification for the Destination Country and the Market Entry StrategyUsing the purchasing power parity measure, Taiwan’s economy is ranked as the seventh largest in Asia and the twenty-second largest in the world, indicating its economic might. Taiwan’s commercial profile has improved as a result of legislative reforms and economic liberalization, and the procedure for licensing new foreign investments is more transparent and straightforward (Anderson & Wittwer, 2015). Taiwan has a large wine sector that is expanding quickly. According to a recent survey, Taiwan is one of Asia’s top five wine markets, and business analysts expect that wine consumption there will continue to rise in the coming years (Chi, 2018). During the 1990s, when customers in Taiwan’s successful corporations were supposed to drink wine as a status symbol, the wine industry in Taiwan grew exponentially. This is consistent with the rising worldwide demand for Taiwanese wines. The modern wine enthusiast seeks for wines that provide more than simply a good reputation and a high price.
Exporting wine goods straight from China to Taiwan is the most advantageous course of action for Grace Vineyard to take in order to establish a presence in Taiwan’s highly competitive wine business. The process of exporting goods is one of a variety of strategies that go under the umbrella term market entry techniques. These strategies are used by businesses in order to increase their presence in international markets. Exporting is considered to be the most risk-free and conventional method of entering a market (Ho, 2021), especially when compared to the various techniques that may be used to do so (Chi, 2018). When Grace Vineyard enters the new market in Taiwan, the objective of its exporting strategy should be to maximize the likelihood of its business being successful in that market. When a product is exported directly to a customer who expresses interest in purchasing it, rather than going via a middleman distributor, this practice is known as direct exporting (Li & Ho, 2019). Grace Vineyard is going to be solely responsible for all aspects of the business, including but not limited to market research, shipping logistics, international distribution of their goods, and invoicing for their products. When it comes to saving money and avoiding the hassle of dealing with a middleman, direct exporting is often the best option for enterprises (Stoian, Dimitratos, & Plakoyiannaki, 2018). In addition to this, Grace Vineyard will have a greater degree of control over sales and will be able to communicate directly with both its existing and potential new consumers.
3.1 Value propositions for the company, its target customers, and its collaborators in the destination countryGrace Vineyard is well positioned to take over the Taiwan wine market based on its success in China and Hong Kong. The company is uniquely positioned to appeal to a market that is eager to pick up global wine standards while remaining true to regional roots (Carter, 2017). Taiwanese wine drinkers are looking for a brand that has the same quality as trusted foreign brands yet has some elements of the local Chinese and Taiwanese wineries.
Even while Taiwanese women are showing more of an interest in wine, it is common knowledge that they are picky drinkers overall, especially when it comes to alcoholic beverages. The majority of this demographic has a strong preference for wines that are delicate and light in taste and texture (Chi, 2018). Red wines are thought to have beneficial effects on one’s health, which may be one reason why female wine drinkers like them. In particular, that they enhance the complexion and lessen the signs of aging that appear on the skin.
Young urban dwellers are young people from Taiwan who have received an education and have honed their taste for wine to a more sophisticated level. These individuals are often referred to as young professionals. The vast majority of young urbanites who study in other countries, most notably in China, the United States, in Australia, and in Western Europe, are given the opportunity to get acquainted with the wine culture of the destination country (Ho, 2021). Customers that fall within this category are more likely to be open to trying new things and going to wine tastings and seminars in order to learn more about wine. They are also renowned for trying out different tastes and brands on a regular basis. When they go out with their groups of friends, they search for wines that will stand out in their memories, such as full-bodied and semi-dry varieties, so that they may enjoy social life and its unique elements.
3.2 Market Segmentation and Target CustomersIncreasingly popular local wine events have benefited the wine industry. Attendees will get the opportunity to learn more about wines from all around the globe, as well as the many grape varietals and growing regions. In the past, wine consumption was associated with successful enterprises. Today, educated wine fans are interested in learning more about wine and proper wine tasting skills, and they consume wine in restaurants (Chi, 2018). Taiwan’s purchase patterns have altered due to the influx of new customers. Women and young people, who make up the bulk of these new clients, see wine consumption as an essential component of the ideal lifestyle (Anderson & Wittwer, 2015). As a consequence, consumption patterns have shifted. Consequently, those interested in launching a business in the wine sector have a variety of options in Taiwan. The fragmented nature of Taiwan’s wine business necessitates that exporters tailor their goods to the preferences of consumers and importers, and distributors adapt their marketing and promotional efforts to the price range of each product.
Because wine is increasingly becoming a culture beverage and more appropriate and preferred by a broader variety of Taiwanese consumers, there is an increased need for Grace Vineyard to comprehend the values, patterns of consumption, and profiles of wine consumers. The company hopes to improve its ability to segment the market and target the clients it wants by improving its knowledge of the market. In order to better serve its Taiwanese customers, Grace Vineyard will categorize them according to age, geography, social life, and money. The many categories include those who consume premium wine for an undisclosed reason, wine lovers with a focus on visible rituals, people who drink wine for the sake of socializing and pleasure, wine drinkers concerned with image and fashion, and basic consumers of wine. In addition, the firm will target young people who live in cities as well as women who are interested in wine.
4.1 Internal Analysis of Grace Vineyard in Taiwan (Strengths and Weaknesses)Since Grace Vineyard’s current customers are very loyal to the brand, the company might be able to increase its market share by making its products and services better. Grace Vineyard must keep a high level of brand equity and brand awareness in order to be successful, since the company is in charge of some of the most well-known brands in the domestic market where it operates. A brand’s name recognition is a very important part of bringing in new clients from other industries that are looking for solutions. Because Grace Vineyard has good relationships with its suppliers and other people in the supply chain in China (Li & Bardaji de Azcarate, 2017), it will be easier for the company to get a foothold in Taiwan. In this area, Grace Vineyard is now the market leader. Grace Vineyard will need to put more money into research and development if it wants to join the Taiwanese world market and do well there. On the other hand, it is easy to grow the local market without making many new products.
Grace Vineyard’s weaknesses come from the fact that it doesn’t have or has less than five important resources and skills. These can be put into groups like people resources, physical resources like land and buildings, historical experiences and victories, financial resources, activities and procedures, and so on (Liu et al., 2014). The fact that the organization’s culture will have to change in order to meet the needs of the Taiwanese market will also be a bad thing. Appendix I below summarizes the internal environment.
4.2 External Analysis of Grace Vineyard in Taiwan (Opportunities and Threats)The expansion of the wine business in Taiwan may be attributed to a number of factors, including favorable natural circumstances, an expanding economy in the country itself, robust backing from the government, and improved managerial and technical abilities. However, there is a pressing need for more changes to take place in a number of different areas, such as the development of a complete legal framework for wine and a law that specifies how wine should be categorized (Li & Bardaji de Azcarate, 2017). The Taiwanese wine industry looks to benefit from developments such as consumer education and the rise of e-commerce, both of which are on the rise. Nevertheless, the nation is also confronted with challenges that cannot be disregarded, such as an unstable economy and the effects of climate change. This research reveals a variety of approaches that the government, industry, and enterprises in Taiwan might take to support the expansion of the country’s wine sector in the years to come. Appendix II below summarizes the external environment.
Li, Y., & Bardaji de Azcarate, I. (2017). A new wine superpower? An analysis of the Chinese wine industry. Cahiers Agricultures, 26(6), 1-8.
Liu, H. B., McCarthy, B., Chen, T., Guo, S., & Song, X. (2014). The Chinese wine market: a market segmentation study. Asia Pacific Journal of Marketing and Logistics, 26(3), 450-471.
Jiao, L., & Ouyang, S. (2019). The Chinese wine industry. In The Palgrave Handbook of Wine Industry Economics (pp. 225-246). Palgrave Macmillan, Cham.
Hao, L., Li, X., & Cao, K. (2015). Toward sustainability: Development of the Ningxia wine industry. In BIO Web of Conferences (Vol. 5, p. 01021). EDP Sciences.
Carter, L. (2017). The rapidly changing Chinese wine industry-an Australian winemaker’s perspective. Wine & Viticulture Journal, 32(2), 20-22.
Anderson, K., & Wittwer, G. (2015). Asia’s evolving role in global wine markets. The International Economics of Wine, 347-377.
Chi, C. H. (2018). Learning to Drink Sorghum Liquor: Taste and Consumption in Military Front-Line Jinmen, Taiwan. Journal of Current Chinese Affairs, 47(2), 165-191.
Ho, H. K. (2021). Twenty-first century wine consumption trends in East Asia: History, luxury and transformation. Journal of Cultural Analysis and Social Change.
Lin, F. J., & Ho, C. W. (2019). The knowledge of entry mode decision for small and medium enterprises. Journal of Innovation & Knowledge, 4(1), 32-37.
Stoian, M. C., Dimitratos, P., & Plakoyiannaki, E. (2018). SME internationalization beyond exporting: A knowledge-based perspective across managers and advisers. Journal of World Business, 53(5), 768-779.
6. Appendices6.1 Appendix IStrengths
Superior product quality
Strong brand equity
Strong relationship with the Chinese wine industry players
20 years’ experience
Successful market share Weaknesses
Organizational cultural barrier
Lack of critical talent in Taiwan
Table 1: Summary of the internal analysis
6.2 Appendix IIOpportunities
Favorable natural circumstances
An expanding economy in Taiwan
Robust backing from the government
Improved managerial and technical abilities
E-commerce growth and social media proliferation
Young urban dwellers with a wine drinking lifestyle
More women with high disposable income
Positive wine drinking culture Threats
Sticky prices in the wine market
International factors such as the poor Taiwan-China relations
Increasing costs resulting from environmental regulations
Growing protectionism in Taiwan for local companies
Competition from western firms
Table 2: Summary of the external analysis
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