Case Study Vina San Pedro

The Vina San Pedro Case Summary
Lionell C. Henderson
Northwood University
MBA 676: Integration & Implementation
Richard DeVos Graduate School of Management
Fall 2015 Evening – Cedar Hill, Texas
Professor Tara Peters, Ph.D.

1. Problem / Key issues.
a. What is the main problem to be solved? How should the president of Vina San Pedro, Matias Elton, (the protagonist), situate the company for expansion while enlarging shareholder profit?
b. What are the key issues (sub-problems) that need to be resolved in order to solve the main problem? First, Matias Elton needs to address why Vina San Pedro’s national commodity is losing income. Secondly, he should address the inaugural perspective of the export market and lastly, his growth
What case data / facts helped you resolve the Key Issues? In resolving the issue of why the company is losing income, one reason may be due to the variations in the exchange rates. According to table 7 of the article, the rate of exchange of the Chilean peso to the US dollar was 470 to $1 and was even greater compared to that of the English pound, 781 to 1. So, as you can see the peso decreases in value as the exchange rate rises. From 1994 to 1999, overall the exchange rate is steadily gravitating upward, as a result Canada presents the most solid exchange rate of the major exporting countries and all others should be either renegotiated or traded through other markets to gain better rates. “ On July 3, 1992, in a move designed to halt currency speculation, the Central Bank announced that the peso would no longer be measured exclusively against the dollar, but rather would use a blend of the dollar, the German mark, and the Japanese yen in a 50-30-20 ratio” (Wylie, Rangan, & Allen,
For example, “ Vina San Pedro wines held a 16.9% market share of Chilean wines exported to England in 1998” (Wylie, Rangan, & Allen, 2000), that’s greater than VSP’s total domestic market share in that same year. By 1987, Chile wine exports had increased from 11 million liters to 43 million liters, and to 207 million liters in 1990. This resulted with an average price per liter increase of $1.24. Exports have a very low marketing expense compared to that of domestics. For example, Table 2 from the article illustrates, “The greater need for marketing and the higher cost of buying grapes from independent producers drove domestic profitability into negative territory while the less marketing intensive wines produced from VSP’s own grapes were very profitable” (Wylie, Rangan, & Allen, 2000). It also shows, higher vineyard yields and low labor costs, contributed significantly to their profitability. Japan, Canada, and the United States presented excellent opportunities in the export market. Demand in Japan for VSP’s wine from 1996 to 1998 had risen 11%, while sales in the U.S. and Canada, had also increased to 2.6 million liters in