The nature of Sandland’s business and competitive advantage

This is a paper that focuses on the nature of Sandland’s business and competitive advantage. The paper also focuses on the challenges of maintaining the competitive advantage.

The nature of Sandland’s business and competitive advantage

The Sandlands Case

Description
Approximately 80% of the 9,000 wineries in the U.S. break even or lose money. An even greater percentage loses money on an economic basis (i.e., after a charge for the capital employed). Tegan Passalacqua, a Californian winemaker who specializes in making “old vine” wines (i.e., wines from vines that are at least 50 and up to 100 or more years old), appears to have defied these difficult odds. By day, he is the head winemaker at Turley Wine Cellars, a leading Zinfandel producer. In his spare time, however, he makes premium wines under the Sandlands Vineyards label using Turley’s facilities and “forgotten” grape varieties such as Carignane, Mataro, and Chenin Blanc. The challenge is to understand what makes the industry, particularly the premium segment, so challenging; why Passalacqua has succeeded to date; and whether his success will continue into the future.

The nature of Sandland’s business and competitive advantage

The case is set in December 2017, as Passalacqua and also his wife were deciding whether to buy a building and develop a winery for the Sandlands wines at a cost of up to $500,000. Because they already own an old vine vineyard (the Kirschenmann Vineyard in Lodi, CA) and have limited financial resources, they must decide whether to make this investment or to save their resources for another investment.

Keep in mind that we are interested in the financial consequences of strategic decisions, so for a complete answer there should be included consideration and calculations of the impact of strategic choices made, or strategic choices recommended.

Instructions
Please address each question to the fullest given the time constraints. You may utilize bulleted points if the meaning is clear. Please include your calculations in the text.

A complete set of answers will address:
1. Competitive advantage
2. The challenges of maintaining competitive advantage (Porters and Pestle)
3. The business model
4. The financial impact of the business model

QUESTIONS

1.       Firstly, what is the nature of Sandland’s business (e.g. how do they make money and how much)?

2.       Secondly, describe Sandland’s competitive advantage(s). Note how these are connected to how they generate revenue and how easily they are maintained.

3.       Thirdly, provide a brief description and evaluation of the Porter’s forces on Sandland Vinyard.

4.       Fourthly, provide a description and at least one influence for each of the PESTLE categories as they relate to the Sandland’s case.

5.       Also, list reasons that support buying the Building and reasons that support NOT buying the Building? Each motivation described is worth .5-points and each supporting financial case is worth another .5-points. Include up to 5 reasons for and against buying the Building for full credit on this question.

6.       Please share a brief financial analysis of the typical (median) firm in the market.

7.       Additionally, provide an analysis of the five drivers of market attractiveness as it exists today (static analysis); and 3) an analysis of how the market is likely to evolve over time (dynamic analysis).

8.       Lastly, using exhibit 7 of a hypothetical small, premium winery, assess Sandlands’s performance by calculating its operating profit and comparing it against this hypothetical winery.

9.       (Hint: You can begin by using the configuration of choices approach and organize your answer around product, process, organization and also financing.).

10.    (You can support one or the other or if you have another suggestion, that is an option as well!)

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