Brl Hardy

A. Exploration of Issues

A. 1. Merge Conditions

Although BRL and Hardy were in the same line of business and had many of the same goals, these two companies were not initially looking to merge with any other company. However, in June of 1992, BLR Hardy was formed. Unfortunately, the merger was the result of Hardy’s financial crisis and BRL’s need for expansion. These factors drove the two companies to make a decision they may not have made if they were not looking for help. Both companies entered the marriage hoping the other could solve the problem. Because high expectations were placed on the employees, workers began to work to keep their jobs rather than work to advance the company.

A. 2. Traditional vs. Modern

Starting with just one man in 1857, Hardy was a company with a long history and a traditional style. Having the “winemaking know-how”, this company prided itself in building relationships and maintaining quality first and foremost. On the other hand, BRL was formed by the union of 130 individual grape growers in 1916 and underwent a major merge in 1982. BRL’s members were quite familiar with change and knew that you must work hard to “earn your stripes”. In addition, its management moved quickly and jumped on opportunities when given the chance.

A. 3. Management

When these two companies became one, only one operational style dominated. From the selection of the upper management to the investment choices, it was clear BRL led the way. This created an “us and them” environment, which led to distrust and new hostile workplace for Hardy employees.

A. 4. Goals

Although the newly formed BRL Hardy Company did lay out strategic benchmarks for its domestic endeavors, it did not seem to know where to start on the international front. Once the Australian market began to turnaround, the upper management put a great deal of confidence in Christopher Carson. However, the management did not allow sufficient time for the UK market to come make the comeback needed to launch addition international investments. After venturing out into Chile, headquarters soon found it difficult to maintain both fronts, especially when problems arose. BRL Hardy failed to decide what path they would take to globalize their products. They desperately needed to have an external analysis of their company and how it related to the global market.

B. Closer Look

B. 1. Internal Company

B. 1. a. Company Analysis

BRL Hardy is an Australian Wine company created with the merger of Thomas Hardy and Sons and Berri Renmano Limited (BRL) in 1992 while both companies were struggling. While separately both Hardy and BRL had operated in dramatically different markets, Hardy specialized in the premium quality wine segment and BRL fortified bulk wine segment. Together they had the capability and the resources to create a global brand.

Advances in wine making know-how, climate, changes in consumer demand and preferences, vineyard location became significant factors in product quality and brand identity. Vineyards were no longer mere commodities; they became strategic assets and BRL Hardy had enormous advantage in this regard. Through BRL, the company had access to a large volume and supply of produce, 50,000 tonnes of grapes, the second largest crush in Australia. Additionally, with most of wineries of Hardy and BRL located in the South Australian region, they could take advantage of the natural benefits of phylloxera free environment and a Mediterranean climate, essential for getting a good harvest. Through Hardy, the company also had access to scientific wine making practices such as micro-oxygenization, clonal selection, canopy management and vine spacing, which could control quality and yield. They could also capitalize on the emerging preference for cabernet, shiraz, merlot and chardonnay varietals among consumers, as this was classic grape type with which they were associated.

Additionally, between the two, the company had the required funds, the technical know-how, brands and the marketing expertise to build a strong domestic brand as well as a global one. It was using these precise assets which the national sales manager David Woods used to recapture the domestic market. The company’s revenue increased from A$151.5 million in 1992 to A$ 238.3 million in 1993.

However, the company had difficulties translating their goals into action in the beginning due to conflicts that arose between Christopher Carson, the managing director of Hardy’s UK subsidiary and Stephen Davis, BRL Hardy’s new group marketing and export’s manager.

B. 1. b. Conflict

“We had begun to realize that for historical reasons the wine business, unlike the packaged food industries- had very few truly multinational companies and therefore very few true global brands. Wine consumers were getting more discerning and knowledgeable in the early 1990s, and to our reasoning, a great opportunity existed for a company to build a well-known international wine brand of quality and reliability.” This was Steve Millar’s, the new CEO of the BRL Hardy’s rational behind taking BRL Hardy into the global arena.

However, �In today’s global market, if global and local organizations cannot collaborate, they will not succeed’. (Tasoluk, Yaprak, Calantone, 2006). This was precisely the problem that plagued BRL Hardy and why they had difficulties in implementing their global strategy.

The merger of BRL and Hardy had resulted in a change in the management structure in the new company. In cases of mergers, there are always some resultants issues, with the employees from both companies suffering from a lack of trust and difficulties adjusting to a new culture. The BRL Hardy’s case, the majority of the problems seemed to merge between the headquarters in Reynella, Australia and the company’s UK division, specifically Christopher Carson and the marketing manager Stephen Davis.

There was lack of communication or ambiguity about what the company’s global strategy should be. The result was that there was a difference in goals, risk preferences and perceived capabilities. It also had implications of problems in international marketing contexts, global introductions, regional versus local positioning