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Essay / Wine Industry Essay - 1179
Resource-based view: Although insignificant in size and reputation compared to the well-established industry in traditional wine-producing countries, vineyards and Winemakers have been established in many New World countries since the 18th century β many of whom were influenced by immigrants from Old World wine-growing countries. These New World countries, including Australia, the United States, Chile, and South Africa, possessed the resources and capabilities, both tangible and intangible, that enabled and advanced business performance. New World countries had physical, technological and organizational resources that added value to the results. The climates and soils allowed viticulture to flourish in their environment β ββand the land on which the crop was best suited was widely available and inexpensive, allowing the growth of much larger vineyards. The lands of Old World countries were continually fragmented and despite advances in maintenance and harvesting, vineyards became smaller instead of larger over time. Lack of land was a physical weakness of Old World wine producers, they had to outsource much of their grape growing and quality was compromised (payment by yield), which contributed to its below average performance. This tangible resource gave New World countries value, scarcity, and the opportunity to experiment and test within the wine industry. New World producers also had intangible assets, including resources and capabilities for innovation and reputation. New World vineyards introduced innovation into a rigid traditional industry: the use of specialized equipment, mechanical harvesters, and then mechanical pruners became the industry standard. Night harvests were familiarized to maximize grape sugars and systems were developed with capabilities to consume locally produced table wine, with the market increasingly driven by high-end urban consumers. Changes in fashion posed a problem for producers. Although wines have a productive life of 60 years, they typically take 3 to 4 years to produce their first harvest, 5 to 7 years to reach full production capacity, and up to 35 years to produce grapes of the best quality for wine. This cycle did not respond well to demand, nevertheless, New World wine regions still had the capacity to plant new vineyards, but Old World countries struggled due to the inefficiency of the system . Producers began to differentiate their products and make them more appealing to palates unfamiliar with wine; they have made marking and labeling an integral part of wine making. They used their integration to gain market power domestically, generating the resources and expertise needed to attack export markets..