Case Study One- Rio Tinto: Redesigning HR Essay

1. Synopsis Rio Tinto, an international London based mining and mineral company was severely impacted by the global recession in 2008. Such an impact forced unprecedented workforce reductions worldwide and decentralized HR management had to be brought in under a single umbrella to insure an orderly and efficient system that would support the organization’s future productivity. This new proactive approach to management, utilization of technology, and preparation of the employees proved to help save the company and set the stage for continued future operations. 2. Answer the Questions Q1. How did Rio Tinto’s revamping of HR help with minimizing the potential problems with the reduction in force? The entirety of management to engage in strategic human resource planning is what had been revamped in the Rio Tinto organization. Engaging in centralized global planning, maintaining effectiveness, awareness in serving the best interests of the entire organization, and not carrying out decentralized single focused HR at all sixty individual business sites was a positive, yet necessary culture shift leading to increased efficiency. The intention to control issues and serve the best company interests were to maintain integrity, hold down costs (which could have been in legal fights and time), sensitivity to those affected persons and business units, and establish a data management system that handles international staffing and succession planning. What role would an HRIS have to play in managing a RIF? The role of Human Resource Information System(s) in any organization is to give employee asset visibility to enable management decisions and planning easier. In a perfect world, all employee records from hire to decision time would give a more complete picture on all employees past, present, and future value to the organization. The comprehensiveness of a database with all the intricacies loaded in to handle future plans, regional requirements,  training and education, critical skills, performance data, and succession planning allows managers the ability to see exactly where to eliminate positions and personnel that do not add to organizational productivity. Q2. Without a consistent philosophy, policies, and approaches to reduction in force (or any other disruptions in the future) what would the likely reactions from employees be? The first collective employee reaction management will see, whether the entire reduction in force plan is revealed, would be that of the union(s) being up in arms that there will be any employees getting the pink slip. The on the job efficiencies and reduction in productiveness could occur if employees become disenfranchised and are left wondering on whether they have a job tomorrow. Managers and employees who generally have a minor trust issue normally will withdraw from each other, which will result in work team dysfunctional behaviors and creativity will stalemate. If left to its own devices, strikes, walkouts, or employee sabotage could become the extreme results of poorly constructed philosophy, policies, and management approaches. 3. Describe a Similar Personal Experience During the mid-to-end of the 1990s, during my career in the US Army, we had a reduction in force (RIF) that was conducted very poorly. The perceived best interests (Washington politics) for the organization and centralized decisions were implemented without regard for the work units spread across the globe. There was no real use of a common sense approach to succession planning and ultimately we lost an unacceptable amount of mid-level managers that caused a knowledge gap that took nearly ten years to correct. At the time, the HRIS was not fully in place with management understanding the capability of the tools possible in making decisions. Changes since that time have improved in teaching management to leaders and in the near future, a RIF is on the way with the drawdown after we get our forces back here from the Middle East. We should watch and evaluate the historical lessons of the past.

Promote Professional Development Essay

The importance of continually providing knowledge and practice is to keep up with the constant changes that are happening all the time. Globalisation and technology have made changes in health and social care at a rapid rate. There has been a significant change in the way that care is being experienced and there are higher expectations in the quality of care. A more personal approach is required and accessibility to training resources ensures that we can all be the best in our job roles and in line with legal requirements. There are opportunities available now, thanks to technology advancements, to share responsibilities across the board, we have better access to other partnerships, training programs and can store more data than ever before and there are still developments every day. The importance of learning these developments is that we can change with the times and gain the new skills to improve the outcome for service users. The barriers to professional development require you t o look in more depth at yourself. Everybody has a different way of learning, someone may learn a lot quicker than someone else, so it’s important to try to see what ways you retain information best. Some people may learn from reading something over and over until it either makes sense or sticks with them. Some people may write down what they want to learn because it ingrains in there memory and some people may just listen to something and retain the information. It’s important to remember that what someone else might learn from a sentence may be more educational to them than if someone else was to read that very same sentence. Motivation can be another barrier; external factors can drive motivation and change behaviour like incentives to learn but internal barriers such as self-esteem, drive and desire can have an effect on professional development. An individual’s personal values, beliefs, attitudes and life priorities can impact significantly on the way people develop. Not having enough time to develop your skills or financial problems can be a big barrier to development. To get through these barriers, Support from peers, advice and mentoring may be required to h elp with individual developments. There are many different sources and systems to support professional development. At my organisation we have internal support which involves monthly supervisions with an advocate. We go through training  requirements, any training refreshment that need to be done; we go over policies and procedures and discuss our progress for professional development. We have training courses that cover every area of the care we provide and e-learning that all employees complete every 6 months, they are designed to refresh our training and inform us of new policies and procedures. You can also learn by working with more experienced colleagues and you can self-teach by reading text books and articles. You can develop your knowledge by using facilities such as libraries and learning resource centres and there is also formal support, colleague and university courses, internet courses, apprenticeships and government incentives. You can also use the policies and procedures put in place by your company to learn what is required and how to do things appropriately. There are so many factors to consider when selecting opportunities and activities for keeping knowledge and practice up to date. There would be no point in starting a course in child care if your real desire was to become a hypnotherapist. Financial issues could be problem, your organisation may cover learning costs or you may need to look into whether you are entitled to government help or whether you will be self-funding. Time requirements could be a problem and your level of commitment; maybe you are a single mother, who cannot get child care to attend night school. Another factor could be, does the opportunity or activity fit with your learning style?, You may learn better from practical activities or learn better from reading and writing, finding the right form of professional development is key to being successful. Be able to prioritise goals and targets for your own professional development In order to prioritise goals and targets for my own professional development, I look at the influences that have helped me to develop my performance so far and look at what my training has taught me and how it’s reflected in my work. I examine my strengths and weaknesses honestly and try to think about the way I practice in a constructive way. I have to evaluate myself by asking; How did I approach my work? Was my approach positive? How did the way I work affect the people I support? Did I work to the best of my ability? Which was the best aspect of my work? Which was the worst aspect of my work? Is there area’s that I can improve? What are they and how will I tackle them? In health and social care there are benchmarks and standards that I can use to measure my own ability against, like the ‘care quality commission standards’ and ‘codes of practice’. By comparing my work against these standards I can improve on the areas that I am failing in, by setting goals of what I need to learn and targets to complete it by. To prioritise my own development goals and targets, I have to think realistically about what is necessary for my job role at that moment, for example; if you are developing your communication skills and working towards building relationships and trust, you cannot plan a set strategy to produce trust and this can take time. But if you were developing your skills for independent living, encouraging accessing the community and shopping, this is something that is currently in my job role and could be a skill I can develop straight away. Making a plan to monitor each stage of developing skills will help me to see at what point something has not worked, for example; I am to Supporting Bobby with his shopping, but due to his mental health problems, he doesn’t feel comfortable being in a busy supermarket around lots of people. Putting a plan together with goals and targets will help to monitor Bobby’s progress; I could put a target in place to build Bobby’s confidence up enough so he can be in a supermarket. By recording this process and evaluating each step that it took to get him there, I improve my own skills and gain knowledge for any similar situations that may arise in the future. Be able to prepare a professional development plan To plan my own professional development with sources of support available to me, I will first have to arrange a meeting with my trainer and supervisor to identify the learning outcomes and objectives that I wish to achieve. We can then put a strategy together to meet these objectives and a time frame in which to complete them by and with their help and resources. When documenting evidence I will specify the duty, a goal, tools needed for reaching my goal and a completion date. I will then undertake the necessary educational activities, training and shadowing and collect more evidence for  my portfolio. I will review my progress at regular intervals with my trainer and supervisor to discuss any updates and get feedback on my development. My portfolio will contain evidence of records of attendance and the support that was given, highlighted areas of what I would have done differently, highlighted areas of successful care and certificates of achievements. I can also show in my portfolio, evidence of what has benefited my colleagues, i.e. protocols or guidelines that have been introduced because of things that I have learnt and feedback from colleagues on a job well done. I will show evidence of evaluating work that wasn’t done to the best of my ability and show evidence of what I have learnt to correct my work. I will put in my development portfolio evidence of any positive feedback, descriptions of new care plans made because of my positive changes, cards, letters or individual comments and positive audit results. This is an example of a plan that I would use for my own professional development. A service user I attend with learning difficulties needs a new wheelchair; the carers are finding it increasingly hard to push the service user around in the wheelchair for social visits. A healthy diet plan was encouraged but is not working as the service user lives independently, a wheelchair with a motor is needed to help the carers avoid any further injury and carry on supporting the service user to access the community. I have been allocated the responsibility to assist the service user pick a new wheelchair with a motor, I can use this opportunity to develop new skills and document and evaluate my progress. There are a few barriers to overcome so monitoring the effectiveness of my support will help to evaluate my performance and relay any significant information to fellow colleagues and others crucial support in their care, ultimately helping the service user in the future. The main barrier is the lady doesn’t like change; it worries her and makes her very anxious, when she is anxious she gets the medical condition hives. Her confidence will need to be built up over time. The goal is to help the lady pick a new motorised wheelchair for accessing the community only, she can continue with the wheelchair she is familiar with, and likes at home, but the goal is to find one that the service user is 100% happy and secure in, to prevent any further injures to carers and to keep the lady involved in her daily routines. The tools needed for succeeding with this duty is to have the families support, a risk assessment, a shop with accessibility and  understanding with this sensitive issue and support from my managers and any other active partners that support with the service users care needs. For evidence I would put in my portfolio the emails from the partnerships, my advocate and myself that detail, the support that is needed, with the evidence that I have been allocated to support with this. The email will also show my reply, for the request of informing all other carers to reassure her when necessary for when she gets anxious and upset. I would put in place a communication diary especially to deal with this task, firstly to monitor any upset behaviour and how my colleagues and I resolved it and secondly I could use it as evidence. I would keep a written account of how many trips to the shops and what her behaviour was like on each visit, I would record what helped keep her calm and feeling secure and record anything that failed and how we made it better. I would keep a medical record of any outbreaks of hives and how it was treated. I would have regular meetings with my advocate to get feedback, discuss updates, ask for any advice or help that I need and review the completion date. I would discuss attending training courses that could help me with addressing this situation to the best of my ability, like manual handling, first aid, communication skills and keep evidence of my achievements. I would finally add to my portfolio evidence of the service user (in line with confidentiality requirements) accomplishing this task, I would get evidence of how long it took to achieve and what the final outcome was. Be able to improve performance through reflective practice Models of reflection encourage a structured process to guide the act of reflection, there is no right model of reflection, but it is important to choose the one that you feel comfortable using and best assists you to learn from your experience. Sometimes it is appropriate to use one model of refection as a basis, but use prompt questions from other models if they suit your particular situation. I found Bortons Model of reflection easy to remember; therefor making it is easy to apply to an experience as it happens. What, So What, Now What, the simplicity of the model helps evaluate quickly and simply an experience but does not allow for specific details as opposed to Gibbs Model. Johns Model of reflection is based more on self-awareness and self-improvement. It allows you to analyse influencing  factors on your thoughts and behaviour, what triggers the behaviour and you can delve far more intimately into your feelings, opinions and judgements and intern how this affected who you are working with. This level of learning allows you to evaluate very deeply on all levels, morals, background, knowledge, self-awareness, past experiences and future practice, making this model of reflection by far more personal and a more appropriate model for self-improvement and self-development. The Kolb model is made up of 4 steps and learning can start at any of the steps at any time, there is no process. When a person carries out an action they can both, observe and reflect upon its underlying process and possible consequences. The action becomes open for analysis, concepts can be tested at further through new experiences in order to both validate and develop them further. Gibbs Model of reflection is a more descriptive model of Kolb’s and it also has a process in which to follow allowing for deeper analysis. Gibbs model gives you more a detailed structure in which to evaluate your experience, which is why I found it to be more widely used in the healthcare industry. The theory follows 6 steps of the model, and each step informs the next. I found that using Gibbs model and examining an experience in greater detail was very beneficial but found the Evaluation, Analysis and conclusion asked very similar questions which seemed to be a little repetitive. But Gibbs model challenged my assumptions more and allowed me to explore more ideas to promote self-improvement more than the other models. Of all the models of refection I have researched I found these 4 more beneficial to my learning and self-improvement and they even challenged what I thought I already knew. By using Gibbs Cycle as a basis and applying the descriptive evaluations of all the other models to the specific levels, I can examine myself in far more depth and improve my quality of work consistently. Reflective practice is thinking or reflecting on what you do, it is learning from an experience and teaching you evaluation skills to examine your actions and reactions. Thinking about what h as happened is part of being human but reflective practice differentiates between casual thinking and reflective practice, it requires a conscious effort to think about events and develop insights into them. Once you get into the habit of using reflective practice, it becomes a skill and you can develop it every day, in every type of situation. Feedback from others is a very important part of reflective  practice, as you cannot always see what your own faults may be or you may not want to hear what faults you have. Considering feedback as another opportunity to learn will develop your self-awareness and can start a process of change that will benefit anyone that you work with. For example, very early on in my healthcare career, I supported an elderly lady with learning disabilities, since her husband past away; she would get very lonely and ask to move a lot. Her social worker and advocate had taken her to see a few warden controlled apartments in a more communal building, but the lady did not like them and it gave her a bad experience of what she thought was available to her. I work in a few homes for elderly service users with learning disabilities and I invited my service user round for tea, so she could see a different kind of living situation, a house share that could be available. Whilst the trip was successful in the way that the lady now knew of a different living arrangement, at a meeting shortly after, that involved other healthcare providers for the service user, I acquired feedback from the ladies advocate that showed my own faults and issues that wasn’t within my capability to see. My intention had been misunderstood and Unknown to me the service user had wanted and was adamant, that a housemate was to move into her own home as she had a spare room; this was not a suitable situation for another vulnerable adult to move into because of the service user’s regular change of behaviour, and the house shares have a carer on duty at all times. If I had informed and attained advice on this situation it could have been dealt with in a different way. My lack of knowledge and understanding of how my actions could been seen as something different for a service user made me evaluate at what level I went wrong and how to rectify this problem so it is not an issue in the future. The advocate commended me on my thoughtfulness but advised certain aspects need to be considered when working with this particular service user. Trial and Error is always going to be a big part of my learning development, working with others there is always going to be the potential for harm, both physically and emotionally. It is imperative that practice changes as a result of these mistakes.

Global Wine War Essay

Introduction Human beings have been dealing with wine for thousands of years, from the Mesopotamians to the ancient Egyptians, from the Greeks to the ancient Romans, the latter which under their vast empire spread viticulture through the Mediterranean region. Through centuries countries, such as France and Italy, obtained a consolidated position in the wine industry, both in demand and production. In the last part of the 20th century newcomers (Australia, South Africa, New Zealand, Argentina, Chile, USA, etc.) have successfully challenged the leadership of the so-called Old World that represented the majority of global market share. Wine Industry Analysis using the Porter’s Five forces Model A brief Porter’s five forces analysis can help understand how the evolving of competitive environment is actually composed and why this market shake occurred. Figure 1. 1: Porter’s Five Forces Model For what concerns the threat of new entrants; the Old World companies completely underestimated this threat. When the newcomers entered the market they could bargain market share of the pre-existing ones without facing real opposition, exploiting better marketing strategies and more efficient organizational approaches. Regarding to the threat of substitute products; this seems to be a challenge for the future, with the introduction of branding as a marketing approach; the threats from the beer industry and â€Å"soft drinks† producers must be taken into account. Referring to the bargaining power of buyers and suppliers, the entrants are in a much better position because of bigger production plants which allow them to gain a stronger contractual power towards distributors; moreover their value chains are more concentrated removing the troubles of the too much fragmentation and variety of actors between the producer and the consumer, which on the contrary, Old World’s competitors are facing. Furthermore analyzing the rivalry among existing competitors it is possible to understand that the traditional producers are facing much more difficulties, because they cannot exploit advantages the newcomers have, such as professional management, large marketing investments and economies of scale and scope. Unfortunately, these are not the only intricacies they are bearing with; the pre-existing producers have always been in competition one against the other, making it more difficult to achieve competitive advantages through cooperation. Eventually the newcomers are concentrating their action in the new growing markets while the old ones are still mainly struggling in the Old World declining markets. Network value analysis It is also of a relevant importance introducing the Chain Value Model that was at first presented by Porter in â€Å"Competitive Advantage. Creating and Sustaining Superior Performance†. This model was introduces in order to better understand the activities through which a firm, in particular a wine firm, develops a competitive advantage and creates shareholder value (fig. 1. 2). Concerning the primary activities we can see that in both the inbound and the outbound network logistics, the NW producers managed to reduce costs of transport and warehousing, exploiting new technologies of packaging (an example is the Australian â€Å"wine-in-a-box† instead of the classic glass bottle. ) Analyzing the outbound logistics, it is possible to explore the fact that as consequence of being big multinationals the newcomers can bargain power of the distributors, carving out margins which the European competitors are not able to gain due to the excess of fragmentation which reduce contractual power towards the distributors. With reference to the inbound logistic a major role in reducing costs per unit is played by mechanization and scale economies, which are widely exploited by the NW producers. The same advantages are reflected on the operations where mechanization of harvesting and scale are making the incumbents competitors more profitable, moreover they are also exploiting scope economies, while in the Old World, the fragmentation and the wide specialization, which were the strength of the systems now are showing themselves as weaknesses. Figure 1. 2: â€Å"Chain Value Model† by Michael Porter The use of new technologies and new organizational approaches are also incident on the quality of the final product, which is granted by the integration of the processes and an efficient network strategy by the newcomers, while in the OW these challenges have not been answered yet. One of the largest disadvantages the mature competitors are facing concern the activity of marketing and sales, where due to the newcomers approach they are loosing the market confront. The Old World is exploiting factors largely underemployed by the Europeans, the use of professional marketing, market researches try to understand and forecast the market in order to be more responsive to the real needs of the demand. The correct use of branding from part of the NW producers is resulting as one of the strongest competition advantage towards the OW ones. Concerning the support activities the situation does not vary, the new-comers have advantages in the firm infrastructures mainly because of a more efficient organization of the all networks and because of a better organization and integration of the production chain. As regards to the Human Resources Management the differences are mainly a consequence of the different organization types of the actors of the market; in the New World the companies are organized as multinationals with professional managers and marketers, in the Old World the firms are often too small, fragmented and in competition among them to have access to such resources. On the side of technology development the newcomers are exploiting the new technologies in order to gain efficiency and quality, developing new mechanical tools and new approaches mainly regarding harvesting. Completely different is the approach of the New World competitors, strongly opposing the use of new technologies providing quality with a traditionalist method, an unfortunate approach for gaining market share. In terms of procurement it is unclear if there are advantages of one system towards the other. The outcome of the analysis shows how the New World could gain market share against the Old World, challenging a domination that lasted for centuries. 1. How did the French became the dominant competitors in the increasingly global wine industry for centuries? What sources of competitive advantage were they able to develop in order to support their exports? Where were they vulnerable? * Competitive advantage sources: history and traditions; know-how; experience; strong internal demand; world wide quality recognition; leader in wine sector for centuries. * Weak areas: fragmented chain of production; too strict regulation and classification; scarce innovations; no differentiation of the product; poor marketing; no branding bargaining power. As wine production grow up in the Mediterranean area, this alcoholic beverage became more and more blended with cultures, religious traditions and everyday life in the area that now is called the â€Å"Old World†. Wine first uses and its complex production made it not accessible for all, actually it was considered a luxury good. But centuries of development in the production process, like vineyard horses or row plantations, innovations in the distribution and preservation of the wine, like cork stopper or mass production of glass bottles, made it affordable for everyone generating a strong internal demand in countries such us French, Italy, Germany and so on. Specifically, regarding France, in 1966 the domestic demand accounted for 120 liters per capita and it became the country with the higher consumption of wine, followed by Italy with 110 liters. In order to better understand the dimension of the market, in the same year in Australia, USA and UK the annual per capita consumption was far less than 10 liters. In France, wine was not only highly consumed in every house, but it became one of the business strengths of the country. Actually it was the second largest French export, because History and tradition made the French wine synonymous of quality in the whole world. Moreover, since there were hundreds of different types wine, French government codified a hierarchical classification (Appellation d’Origin Controllee – AOC, Vins Delimites de Qualite Superieure – VDQS, Vins de Pays) and nurtured the concept of terroir to help consumers recognize their finest wines in a highly fragmented market. This significantly strict regulation was an important innovation that made the difference among the main competitors, such as Italy or Spain. French source of competitive advantage was not only the century know-how that permitted to have a high quality wine and the strong internal demand, but also the demand coming from the neighboring countries without a highly developed wine industry. Wine producers, in many countries of Europe, were isolated from each others, and most of the world’s wine drinkers consumed either local wines or imported from close winemakers. This tradition made the fortune of France, since the climate and the soil in the United Kingdom didn’t allow grape growing enough to satisfy the huge internal demand, British were forced to import from the closest producer. The century tradition was an advantage for the French wine because it was a symbol of quality, but it was also a drawback, because it fiercely limited the flow of innovation and development concerning the production, distribution and branding of wine. Moreover, since the whole production chain was fragmented in many segments, there was a lack of economies of scale and integration that had terrible results in market power of the French producers. Actually branding was poor or even not existing and a number of small producers with very small bargaining power were incapable to deal with retailers as supermarkets loosing market visibility and the connection with the whole segment of customers. The direct competitors, the Old World producers, were all in the same situation: fixed to the traditions and unable to satisfy the increasing fast-changing consumer tastes and preferences. The fact that they had been the market leaders for centuries made them unconscious about the possibility of new hardened competitors growing in the New World. 2 What changes in the global industry structure and competitive dynamics led France and other traditional producers lose their market share to challengers firm Australia, US, and other New World countries in the late 20th century? In the last twenty years, the worldwide wine industry has become increasingly internationalized and sophisticated, though over the years, the market has become fragmented, international, multi-lingual, operating in many currencies, and information-intensive. The wine industry globally faces continued shake-up and consolidation and the generation of mega wine companies has become inevitable as no one wine company – listed or private – currently has more than one percent of the world wine market, in stark contrast to other beverages. Global wine showed solid growth in volume terms in recent years, up nearly two percent to 25,066 million liters. Still red wine provided much of the impetus for volume growth in the world wine market over survey period, with sales rising nearly 12% between 1998 and 2003. However, volume growth of global wine was dampened by changing patterns of consumption in important Western European markets, like Italy, France, Portugal and Spain, as younger consumers moved away from traditional everyday wine drinking to more occasional consumption. Globally, the two countries that are leading the wine production and consumption businesses are France and Italy. However, the irony is that these two countries are also witnessing a steady erosion of their global market share. In our opinion there are five key success factors that we have identified that are extremely relevant to compete favorably in the global wine industry: * a strong existing domestic market * domestic market growth potential * economies of scale advantage * industry adaptability to change and * potential to attract foreign investment. First, a strong domestic market is one where a large volume of wine is purchased and where consumers readily select domestic wines. Second, even more important is the potential for growth in a producer’s domestic market, as this shows if opportunities for additional sales exist where producers may have local knowledge and other native advantages such as local distribution. Third, countries where production is dominated by larger firms have the advantages of scale and scope as well as improved power in promoting and pushing their wines to consumers and retailers. Fourth, industry adaptability to change summarizes the willingness of producers to experiment with cost saving production methods or to pioneer new marketing techniques. It also indicates if producers are free from excessive regulations or blind adherence to long standing traditions. Finally, countries that have business-friendly climates, favorable costs or other natural comparative advantages will attract foreign investment in wine production, which makes these countries stronger global competitors. Old World producers were the first to define tastes and quality standards and they have traditionally been supported by a strong local consumer base. The New World has had to work hard to build their wine industry, both in infrastructure and reputation. Large scale wine production is relatively recent, and many of the New World producers faced difficulties such as currency collapse, prohibition and international sanctions. Per-capita consumption also lags that of the Old World countries. Yet New World producers have recently been successful in producing consistent quality wine and in capturing global market share. .The group with the strongest competitive position includes Australia, Chile and the United States. Australia and Chile both have small populations that provide for a tiny domestic market with little potential for growth. However they are very well positioned to produce and export wine with their adaptive, large-scale producers and their great lure for foreign investments, providing them with a position of a strong competitive advantage. The US is a populous, affluent nation, and while the US wine market is already large, it has even more potential to expand. With all other key success factors strongly favorable, the US also possesses significant competitive advantages. The countries with the weakest competitive advantages in the global wine industry are two traditional strongholds of wine production in the Old World: France and Germany. While they have large domestic markets, there is little opportunity for further growth. There are many causes of the decline of France, and the Old World in general, in the market share of this sector; these concerns globalization, changes in the demand, more responsive strategies of the rivals and also the lack of market research and marketing investments by the French firms and totally ineffective technology and innovation policy. Moreover, the concentration of production into small wineries, complex labeling practices and inability to leverage new production and marketing techniques does also not bode well for effective competition in a global market place. Nor does either country hold much potential for attracting foreign investment, save for some traditionally undervalued areas of France, like Languedoc. In response to the shrinking costs of transport, globalization allowed companies situated in different areas of the globe competing in the same final market, an example is the UK one, where in the past the demand was completely satisfied by French, Italian and German wines. Although consumption per person has decreased in traditional consuming and producing countries (Italy, Spain, France), the consumption and production of wine is increasing in new countries in northern Europe, Americas and Asia. Countries like South Africa, Australia, Chile and Argentina are radically modifying the industry’s competitive environment. With the â€Å"globalization† of the wine market, the environment is becoming more competitive and producers are implementing new strategies. We can observe two very different production and marketing models. * The traditional French model, based on the certificate of guaranteed origin (AOC), whose objective is to turn out a high added value typical product in limited quantities through the combination of a demarcated territory called terroir and enforcement of constraining specifications and regulations. * The second, is being implemented by producers in the so called New World (the United States/California, Australia, South Africa, Chile, Argentina). It is based on â€Å"industrialized† mass production and intense marketing of relatively standardized products which are easily identifiable through private brands. There are different observable relationships between the players and the production sites in the industry. In this context, the French wine industry appears to be in an insidious or even open crisis. In most producing regions, a major symptom is the decrease in domestic sales in a context of market shrink. In addition, there is a loss of export market shares which is estimated at ten points in several countries that have traditionally been markets for French such as Great-Britain, Germany and Canada. In these cases, these losses are not due to an overall market decline, which is actually on the rise, but rather to the increase in competition by producers who are mostly from the southern hemisphere (Argentina, Chile, Australia, South Africa) and California. The real alleged weaknesses of the French wine industry have been the subject of numerous analysis and reinforcement proposals: regulations which are too strict and consequently slow down innovation, a complex and hard to understand product supply, minimal or even no effort made concerning promotion and marketing. Furthermore, we believe that the main mistake lies in the structural organization of the wine industry in France. Hence, we would like to not concentrate on the wine product and its specific qualities but will try to compare the way the industries’ players are organized, in order to analyze where the French industry is not adequate to modern challenges. The terroir/AOC model has been a reference for worldwide wine production until the 1980s but it is no longer the case in the early 2000s. Why is France’s position on the international wine markets degrading while New World wines experienced spectacular improvements and now aim at catching up with traditional â€Å"Old World† products? From an organizational point of view the terroir/AOC model seems to have a certain number of cumulative weak points in comparison to the new world’s model (identifiable with Porter-like clusters.) In terms of the supply structures, the French established supply model and infrastructure are characterized by fragmentation and a high number of small winemakers that have a negative effect on investment capacities (material or immaterial) in the industry as a whole. This fragmentation has certainly a negative effect on the ability to innovate in terms of products, processes and even marketing and selling. The small scale of businesses and lack of tradition as regards pooling resources do not allow producers to find the financial means necessary for heavy investments. This weakness tends to neutralize the local industry’s reaction capability when it faces the new environment pressures. The fragmented supply chain is, indeed, both the cause and the consequence of a â€Å"non-competitive/non-co-operative† tradition among producers; individual strategies of traditional producers aim to avoid all forms of comparison with neighbours and potential competitors. This lack of cooperation is, in Porter’s perspective, one of the major weak points. On one side, for New World producers, wine-making is an economic activity and is taken on as such: producers define output, profit and market share growth objectives and give themselves the means to reach them. On the other, for traditional terroir producers, wine production, though highly lucrative, is not taken on in its economic dimension but rather centered round the â€Å"cultural† nature of the product. The â€Å"New World producers are turned towards innovation, the terroir is founded on immutability of tradition; it is consequently strongly resistant to change. Terroirs’ organization model is traditionally supply driven in a context of scarcity. This avoids producers to think about productive environment and production method change. Consequently, traditional producers have had trouble in considering both the qualitative and quantitative evolution of demand and its consequences on supply, where â€Å"New World† producers are used to have a proactive behavior and, therefore, anticipating and stimulating it. And even when the need to change is implemented, the existence of tight regulation within a specific AOC can make a substantial product modification or production method more difficult to happen. A further set of identifiable weak points is linked to the nature of the top-down complementary relationships between grape growers and wine traders and to the transaction costs that result. The terroir/AOC† model of organization tends to generate opportunistic behaviour that can call into question its very survival, specifically in a very competitive context. In fact, while the perspective of getting an AOC label encourages players to enhance production quality, it may lead to let up on efforts made to maintain product quality once the label has been obtained, interfering with the overall image of the terroir and raising suspicion as regards product quality. To particularly highlight is the existence of incomplete contracts between grape growers and winemakers/wine merchants, the latter being responsible for the marketing of the product. This â€Å"generates considerable price variations and makes it impossible to set up contracts that guarantee traders constant and adequate wine supplies in terms of quantity and quality. The problem can spread to wines beyond generic wines and condemns, in advance, all ambitious and viable marketing strategies from the traders. † The presence of extremely heterogeneous quality levels within the same appellation can thus call into question the appellation itself and therefore the whole of the â€Å"terroir/AOC† organization and strategy. To avoid such opportunistic behaviours, autonomous certification bodies should be entitled to reconsider such certification on a regular basis and ban weak products/producers. The industry’s players themselves or a third party must assume responsibility for product quality guarantee. A major terroir organization characteristic is fragmentation and corporatism. Consequently, taking responsibility for such guarantee scheme is extremely difficult owing to incompatible corporatist and general interests. What is more, the existence of non-market regulation mechanisms (based on, for example, family or friendship ties) can in this case be counter-productive. Indeed, players can be tempted not to sanction one of their kin in the name of these relationships and later themselves avoid possible sanctions, whereas the intervention of a third party that is likely to guarantee this quality is difficult to promote with local entities. Under the AOC label, regulation is indeed carried out at local level by local players themselves and therefore known to be rather lax: making it impossible to use the label as a genuine quality guarantee. 3. 1 What advice would you offer today to the French Minister of Agriculture? To the head of the French wine industry association? To the owner of a mid-size, well regarded Bordeaux vineyard producing wines in the premium and super premium categories? * French Minister of Agriculture: increase government investments in the wine industry; promote a responsible wine consumption of wine through events marketed at the new generation; create a new clear classification system based on the consumer tastes; promote the creation of big companies and disadvantage the proliferate of little-medium producers; sign contracts with other agriculture ministers of consumers countries in order to favour the French wine. * Head of the French wine association: better integrate the network; quickly spread the know-how, techniques and innovations throught the French producers; promote wine events to increase the consumptions; promote the invention of new products made with wine; try to anticipate the next changes in the consumer tastes; advertise and invest more on the type of wine that is preferred by the consumers in that very moment; make advertisement aimed to a responsible and wealthy consumption of wine; try to drive the consumption to the type of wine that is over offered; lobbying the ministry of agriculture in order to have grants and privileges. * Owner of the mid-size, well regarded Bordeaux vineyard: found a bigger company with the surrounding producers; invest in innovating the production process in order to increase the quantity and the quality; buy extensive land in the New World and exploit economic scale advantages. 3. 1 Possible advices to the French Minister of Agriculture Since the main objective of France is to take back the market share of the past and maintain the leader position in the wine market, it has to better exploit its competitive advantages and adopt some technical and marketing innovations in order to compete and defeat the new threatening producers. The first functional recommendation for the French Minister of Agriculture is to increment the government investments in the wine industry. The larger flow of money would be used, firstly, to invent or to develop techniques and tools for harvesting or farm vineyards, secondly, to achieve and overtake the distribution and marketing level of the New World producers. All those developments will also increase the production of wine and fulfil a larger portion of the international demand. In the last ten years, the new generation has grown with a high consumption of beer and super-alcoholic cocktails, the French Minister could aim to substitute these beverages with the wine. He might promote a responsible wine consumption through events directed to the new generation. It is important to advertise wine as a drink for all ages instead of a refined beverage just for mature people as this would implement the demand from part of the younger generation. One of the common problems of wine consumers is choosing which kind of wine and which brand purchase at the supermarket. This issue could be solved with a classification of brands and wine names that could be easily understood and memorized by the consumers. Quality can be maintained and highlighted also gathering the large number of different types of wine in few clusters with easy names to remember. This problem is also due to the large number of brands in the market. The majority of potential consumers are confused and at the end they prefer to buy a bottle of beer of a well known brand. It’s possible to overcome this situation promoting the creation of big companies and disadvantage the proliferation of little-medium producers. Big companies bring into the market well-known brands, which massively increase producers’ market power. In order to increase the French market power compared with the direct and New World competitors’ ones, the French Minister of Agriculture could sign contracts or agreements with other agriculture ministers of consumers countries in order to favour the French wine. Since, UK, one of the larger consumer countries is next to France, it would be easy to find something to exchange for a commercial agreement. 3. 2 Possible advices to the head of the French wine industry association As the Head of the French wine industry association to manage and represent all the wine producers, its objective is to promote and give advantage to its associates. Furthermore it would be useful to advise him to promote a better integration of the wine production process from the vineyards to the final consumer. This issue could be achieved through a cooperation or collaboration between the wine producers, merchant traders and the retailing sector. A superior control, permitted by this form of collaboration, avoid more handling stages, holding less inventory, capturing the intermediaries’ mark-up, sharing common objectives and improving the time to market. Moreover, the cooperation can spread the know-how, technique and innovation through all the French associates. It is really important to promote higher investments in R&D in order to fill the gap that has occurred between France and the other New Word competitors. New innovations and technologies bring new developments and improvements to overtake and succeed on the marketing and distribution level of the competitors. Concerning the distribution, communities, retailers, and consumers are demanding more sustainable, eco-friendly packaging options, whether for everyday items or higher end purchases like fine wine. For some products, the barrier to conversion has been package performance. Therefore would be important to spread the use of â€Å"green† materials to pack and deliver the products. Since the French has never developed an efficient marketing strategy it has been difficult to align the interests between supply and demand. The French wine association has to try to anticipate the next changes in the consumer tastes, by means of market surveys and data collected through an effective wine industrial analysis. It is also important to drive the offer towards to the type of wine that is preferred by the consumers in that very moment. On contrary it is possible to drive also the demand and not only the supply of wine. Guiding the consumption towards the type of wine that is over offered or over produced it is hoped to avoid sure future losses. Nowadays people are blasted with advertisement that recommends not consuming wine because it is unsafe for the drinkers’ life. There will be an increment of demand persuading consumers that a little quantity of wine is not dangerous but rather really healthy, in particular the consumption of red wine. As well as the French Minister of Agriculture the Head of the French wine industry Association might promote and arrange wine events to increase the new generation consumption of wine. 3. 3 Possible advices to the owner of a middle size well regarded Bourdeaux vineyard producing wine and premium and superpremium category The main issue for French wine producers in the actual competitive environment, considering how the newcomers are acting and consequently gaining market share, is size. One of the challenges each small producer has to face is a competitive market without boundaries, totally changed from what it was only 10 or even 5 years ago, in which large multinationals are now efficiently operating. There is no univocal solution to this problem, but a few advices could be given to small or mid sized European companies. In order to gain advantage in terms of scale but even scope, the best way is to control the full production chain. From the vineyard to the glass, this can be obtained through either acquisition of neighbour producers, merging with other companies to better integrate or forming and exploiting networks. Each winemaker should analyze the market, an affordable process, and identify its possible cooperation/competition strategies. Maximum control over the value chain can often guarantee that the final product is produced and sold at the company’s standards. One of the troubles the incumbents have to face is the inconstant quality often found within the same wine denomination. Bottles often sold at very high prices, due to a very lousy quality denomination system, are ruining the reputation of the other products of the same wine group. This is unacceptable as it ruins the whole regional system, but a solution can be found through the aforementioned network implementation or radical integration.

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