I found an interesting research dealing with the role of cluster in the internationalization process (the 4th point we were discussing during last class) and I would like to summarize in a few lines the main findings of the author (downloadable at http://waikato.researchgateway.ac.nz/bitstream/10289/2259/1/thesis.pdf) .
The study (published this year) deals with the Yarra Valley (Australia) wine industry which includes more than 80 wineries of “different size and sophistication”. As the author said, they belong to a cluster “by default”, as a consequence of the “geographical location and physical proximity of the wineries to each other ”.
The cluster has mostly been utilized at the local level “as a discussion forum with regards to local winemaking techniques, some local promotion or to lobby local government”, and it has found to be less effective in the process of international expansion, mainly due to “the lack of leadership and joint direction among cluster members”.
In fact, “each winery is utilizing its own individual resources and networks in order to succeed internationally”. Therefore, in order to expand their operations, wineries exploited their existing relationships and “transferred some of the strategic decision making to the network partner that is more familiar with that particular marketplace”.
But since “network relationships have a strong impact on deciding which market a firm should enter”, they could also end in “restricting a firms’ growth potential”. Another factor affecting the choice of the market to enter is the “psychic distant” to the customer (rather than geographical), reflected in Australian wineries “preference of markets where culture and language are similar to their own” (eg. English speaking markets or former British colonies).
Even if the internationalization is seen as an opportunity to grow, “the majority of wineries are still very much focused on the local market; this most likely is due to a lack of information relating to foreign market opportunities, which are normally expected to be provided by a cluster”.
In addition, “the members of the cluster do not share any of their strategic knowledge (eg. using the network of some of the members) that could enable the group as a whole to be more competitive”.
Therefore, personal networks represent the feasible alternative Australian wineries have found to establish a presence in the international market by utilizing local agents or distributors and to solve the problems faced by Australian wineries in the internationalization, which basically are:
- Lack of information about foreign market opportunities (which leads to biased decisions)
- Lack of coordination (small fishes entering the ocean)
- Lack of support by the cluster in the international context
As far as I know about the Italian wine industry (actually my knowledge is limited to the Valpolicella area),it seems to me that there are many similarities between Italian and Australian wineries concerning the structure of the industry they belong to as well as the problem they deal with while entering the international market. I think also that the barriers Australian wineries encounter in the internationalization can fit well also the Italian wine context.
So, my question is: Is the New World (recalling Simpson’s title) getting older???
2 comments:
Probably you are right, since Italian firms lack in creating a network trough which they could cooperate in order to succeed in foreign markets.
Due to this lack, Italian firms allow to international retailers with active trading relations to earn more from exports, since Italian firms are not able to establish a strong brand in the international wine field.
Many kind of Italian wine are well known abroad, but few Italian firms' brands are as known as the wine they produce.
This is an old story, and it is well explained in the "In Vino Veritas" preface where Paul Duguid exposes the port case.
I did not read the paper and probably being an expert about wine industry will help in giving a sound answer...
However, my opinion about this topic is that maybe the wine industry is shaped in similar way both in the Old World and in the New World (at least in some parts of it, like Yarra Valley in the paper) for one reason: love for variety, from the consumer side (in BRL Hardy it is written something about anti-brand market)!
I believe that wine it is one of the most extreme example of it: there are countless possibilities when you want to buy wine (take a look to Snooth.com database), hundreds or thousands of time if compared with beers (or whatever commodities I can actually think of). The integration of small industries, each producing some varieties, into big ones will probably reduce this richness of possibilities, and maybe this is not what the customers (medium-high level) want. Maybe this is changing, think about the BRL Hardy example.
So, to answer your question, I think that the New World is just following the "standard evolution" of the wine industry, as a result resembling the Old World. Probably the fact that many producers in the New World have origins (and thus ideas, methods and habits) from the Old World helps a lot this development.
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