CORPORATE LEVEL STRATEGIES

Identify and comment on the company’s mission and goals;Describe the corporate level strategies that the company has used over time

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BUSINESS LEVEL STRATEGY

Describe the business level strategy that is currently used by the company and how it impacts profitability

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1.1.2 Levels of strategy

he first, corporate-level strategy, is concerned with the overall scope of an organisation and

how value will be added to the different parts (business units) of the organisation. This could

include issues of geographical coverage, diversity of products/ervices or business units, and how

resources are to be allocated between the

different parts of the organisation. For Dell the push into consumer electronics was an important

corporate decision because it would affect the whole company. In general, corporate-level

strategy is also likely to be concerned with the expectations of owners – the shareholders and the

stock market. It may well take form in an explicit or implicit statement of ‘mission’ that reflects

such expectations. Being clear about corporate-level strategy is important: it is a basis of other

strategic decisions.

The second level can be thought of in terms of business-level strategy,3 which is about how to

compete successfully in particular markets – or how to provide best value services in the public

services. This concerns which products or services should be developed in which markets and

how advantage over competitors can be achieved in order to achieve the objectives of the

organisation – perhaps long-term profitability or market share growth. So, whereas corporate-

level strategy involves decisions about the organisation as a whole, strategic decisions here need

to be related to a strategic business unit (SBU).

Exploring Corporate Strategy of Coopers Creek Company .

Key initial success factors-Coopers Creek was a typical entrepreneurial venture in that its

development and growth were driven by the founding entrepreneur, Andrew Hendry. It could be

argued that a critical factor in the success of Coopers Creek was Andrew Hendry’s ability to

manage linkages and activities within the context of an innovative and flexible approach. He

demonstrated industry foresight, being in networks at inception or being instrumental in their

development, and was able to use relationships to leverage resources to pursue growth, as

evidenced by Table 1 in the case and relative to the industry average. Even in the early days of

Coopers Creek, we see Andrew’s networking skills in action. For example, he financed the new

venture by drawing on his suppliers’ resources (finance and grape supplies in return for

shareholdings) and also the resources of former colleagues at Coopers and Lybrand (finance and

general business advice). Parts of this network have since dissolved, but it has to be argued that it

served him particularly well during the early development of both the company and the New

Zealand wine industry.

How was the company’s initial growth/development achieved?

(a) Unique resources -In the early days of the company, Andrew Hendry’s relationship with

growers offered the company some advantages within the industry. The growers’ financial stake

in Coopers Creek meant that they had an incentive to ensure the survival and success of the

company. The audit of the company’s resources reveals that Andrew Hendry and the wine styles

of Coopers Creek are the only resources that could be classified as unique. In terms of Coopers

Creek, it is hard to identify particular resources that directly contributed to cost reduction beyond

the resource sharing aspects of the networks in which the company was involved. Although

Andrew Hendry had initially invested in land and plant, these had been operating below capacity

and, therefore, contributing to increased fixed costs. However, more recent company

developments concerned with contract crushing and cutting out intermediaries in markets can be

positioned against this initial observation.

(b) Competences in specific networks -The strategic networks of Coopers Creek can be

analysed in terms of vertical and horizontal linkages. Coopers Creek’s historical vertical

relationship with grape suppliers ensured both quantity and quality of supplies in the early

development of the company. This proved an effective strategy since, typically, the demand for

grapes outstripped supply until 1996. Therefore, the ability to negotiate access at a reasonable

cost represented a critical competence. Interestingly, the majority of the networks in which

Coopers Creek was involved were horizontal or competitor-based .The most fluid of them was

the local network in which a community or neighbourly perspective was dominant. Indeed, this

network was most closely related to what might be termed a ‘cooperative’, and this is not

inconsistent with traditional agricultural/horticultural industries in general. It should be stressed

that the individual wineries did not subsume their identities to the collective. It is hard to gauge

what competences this specific network afforded Coopers Creek other than the ability to ‘act

bigger’ than actual size, and some planning and resource flexibility. The arrangement made

sound operational sense even though the participants clearly maintained a focus on competition

at the level of the individual winery label. As with the shareholding arrangements with the grape

growers, Andrew Hendry was instrumental in the development of the local network.

(c) Managing linkages to gain leverage -Coopers Creek was able to leverage critical resources

through the employment of network-based strategies.The reputation of any winery rests on the

quantity and quality of the grape supply. Quantity has proved to be an issue within the New

Zealand wine industry, with climate(late frosts and hail storms) and natural disasters (volcanic

eruptions) contributing to a prevailing undersupply situation. Thus, the cyclical nature of access

to grapes made managing the supply critical. The emphasis on grape quality was promoted by

the New Zealand wine industry to encourage participants to focus on the value added nature of

international offerings. This strategy is in line with the nation’s policy of moving away from

commodity based products in international markets. Clearly, then, Coopers Creek was able to

leverage critical supplies at the crucial establishment phase of the winery by encouraging

growers to accept a stake in the profitability of the company. Although the relationship with

grape growers became more commercial over time, Coopers Creek was able to balance supplies

of different grape varieties by negotiating and sharing with wineries in the local network. The

management of linkages in the local network also enabled Coopers Creek to achieve greater

efficiencies per dollar spent on advertising and promotion. Indeed, all the participating wineries

avoided what might be termed wasteful duplication of effort and spending, not only in terms of

advertising and promotion, but also in terms of production machinery and processing capacity. It

should be noted that these shared efforts were not permanent; the supply and production

collaboration occurred on a seasonal basis, and the promotional collaboration related to local

holidays and trade tastings. Nevertheless, they had become part of the culture ofthe network and

could be relied upon for planning purposes.

(d) Core competence inimitability- Andrew Hendry represented a unique resource of the

Coopers Creek winery, and he actively managed the company’s involvement in each individual

network. He instigated the local network and his community involvement enabled him to become

known to other winery owners, and also helped to enhance his reputation. Both are essential in

building the trust on which collaborative networks are based. The combination of Andrew

Hendry’s personal style, approach and business philosophy was probably the only inimitable, but

not inconsiderable, competence of the company during its initial growth and development.

What changes can be observed in the company’s strategy during 1996–2000?

(a) Unique resources -Again, in looking for unique resources, it is hard to go past Andrew

Hendry and his relationship-based approach. It could be argued that the previously successful

partnerships with the grape growers meant that Coopers Creek occupied a position of trust and

good reputation which could be brought to bear when securing supplies, even though these

relationships had become more arms-length, transaction-based in nature. In addition, Andrew’s

role with the Wine Institute is likely to have resulted in two-way information sharing, by which

Andrew was able to exert some influence on the industry’s direction while benefiting from the

analytical overview of the Institute.

(b) Competences in specific networks -The vertical linkages of note during this period were

those with foreign distributors. Although Coopers Creek did not collaborate on-shore with its

distributors, these arrangements, although initially based around groupings of New Zealand

wineries, became exclusive and long term, implying that relationship building and maintenance

were important. Recent developments in international markets, where Coopers Creek has

eliminated costly intermediaries, should be juxtaposed against this perspective. One exception to

on-shore collaboration was the relationship with the UK supermarket Tesco, where there was

direct input to the development of wine styles thereby helping to ensure a match with customer

tastes in the UK. The UK Wine Guild represents a horizontal network, the formation of which

was influenced by government policy. This network adopted a more instrumental approach to

collaboration than the local horizontal network. Clearly, the competency of most relevance here

was the ability to enter a major export market without consideration to the constraints of size.

This is most evident in the sharing of marketing and promotion costs. However, it should be

noted that Andrew had particular concerns about the amount of product he was shipping under

the Tesco own label brand during this period, which was not supporting the development of the

Coopers Creek brand in that market. This was not the first export market in which Coopers

Creek was involved, so it is hard to claim that knowledge of the internationalization process was

a direct result of the company’s involvement (although the company undoubtedly learned

something from this specific export venture (see subsection 6.3c)). Between 1996 and 2000, the

UK was the biggest international market for Coopers Creek and representation there might be

deemed strategically important for additional forays into other EU countries. However, this is

only really evident for the Belgian market, with other European markets seemingly developing

independently of the UK market. Coopers Creek was not unique in the New Zealand wine

industry context for the use of network strategies to achieve competitive ends, especially in

international markets. This industry-based strategy offered the potential for individual companies

to shift the perceived level of competition in international markets from individual wineries to

the industry level (evident in the promotion of the generic New Zealand label ahead of individual

winery labels).

(c) Managing linkages to gain leverage

Again, the UK Wine Guild offered Coopers Creek the opportunity to share costs with a number

of other wineries. Unlike the local network, this collaboration did not eliminate duplication

between members since costs were incurred in relation to export quantity. However, it did offer

the opportunity for some wineries to become involved in an export market which was beyond

their individual capabilities. Although there was evidence that Coopers Creek had the capability

to individually address export markets, the resources of the company would undoubtedly be

spread thin without some collaboration in the international marketplace. It should also be borne

in mind that indirect benefits from the Wine Guild meetings could have accrued to Coopers

Creek.

(d) Core competence inimitability

Andrew Hendry represented a unique resource of the Coopers Creek winery, and he actively

managed the company’s involvement in each individual network. He was a strong industry

player in terms of the management of both the UK Wine Guild and the Wine Institute. The

international development of Coopers Creek, its entry into new markets, and the development of

domestic operations, were heavily dependent on the learning, the combined marketing efforts

and the resources shared with other New Zealand wineries. Of particular importance was the

combined effort to build the generic New Zealand wine label ahead of individual company

labels. In addition, Andrew Hendry was ‘a good industry player’, in that he was a committee

member of both the Wine Institute and the Wine Guild. He also initiated local networking efforts

and enjoyed visiting existing and potential customers personally. No doubt his personal style,

community perspective and industry knowledge have been major contributors to his adoption of

network-based strategies.