CORPORATE LEVEL

STRATEGIES
BUSINESS LEVEL
STRATEGY

Identify and comment on the

companys mission and goals;
Describe the corporate level strategies
that the company has used over time
Describe the business level strategy
that is currently used by the company
and how it impacts profitability

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1.1.2 Levels of strategy

he first, corporate-level strategy, is concerned with the overall scope of an organisation and
how value will be added to the different parts (business units) of the organisation. This could
include issues of geographical coverage, diversity of products/ervices or business units, and how
resources are to be allocated between the
different parts of the organisation. For Dell the push into consumer electronics was an important
corporate decision because it would affect the whole company. In general, corporate-level
strategy is also likely to be concerned with the expectations of owners the shareholders and the
stock market. It may well take form in an explicit or implicit statement of mission that reflects
such expectations. Being clear about corporate-level strategy is important: it is a basis of other
strategic decisions.

The second level can be thought of in terms of business-level strategy,3 which is about how to
compete successfully in particular markets or how to provide best value services in the public
services. This concerns which products or services should be developed in which markets and
how advantage over competitors can be achieved in order to achieve the objectives of the
organisation perhaps long-term profitability or market share growth. So, whereas corporatelevel strategy involves decisions about the organisation as a whole, strategic decisions here need
to be related to a strategic business unit (SBU).

Exploring Corporate Strategy of Coopers Creek Company.

Key initial success factors-Coopers Creek was a typical entrepreneurial venture in that its
development and growth were driven by the founding entrepreneur, Andrew Hendry. It could be
argued that a critical factor in the success of Coopers Creek was Andrew Hendrys ability to
manage linkages and activities within the context of an innovative and flexible approach. He
demonstrated industry foresight, being in networks at inception or being instrumental in their
development, and was able to use relationships to leverage resources to pursue growth, as
evidenced by Table 1 in the case and relative to the industry average. Even in the early days of
Coopers Creek, we see Andrews networking skills in action. For example, he financed the new
venture by drawing on his suppliers resources (finance and grape supplies in return for
shareholdings) and also the resources of former colleagues at Coopers and Lybrand (finance and
general business advice). Parts of this network have since dissolved, but it has to be argued that it
served him particularly well during the early development of both the company and the New
Zealand wine industry.
How was the companys initial growth/development achieved?
(a) Unique resources -In the early days of the company, Andrew Hendrys relationship with
growers offered the company some advantages within the industry. The growers financial stake
in Coopers Creek meant that they had an incentive to ensure the survival and success of the
company. The audit of the companys resources reveals that Andrew Hendry and the wine styles
of Coopers Creek are the only resources that could be classified as unique. In terms of Coopers
Creek, it is hard to identify particular resources that directly contributed to cost reduction beyond
the resource sharing aspects of the networks in which the company was involved. Although
Andrew Hendry had initially invested in land and plant, these had been operating below capacity

and, therefore, contributing to increased fixed costs. However, more recent company
developments concerned with contract crushing and cutting out intermediaries in markets can be
positioned against this initial observation.
(b) Competences in specific networks -The strategic networks of Coopers Creek can be
analysed in terms of vertical and horizontal linkages. Coopers Creeks historical vertical
relationship with grape suppliers ensured both quantity and quality of supplies in the early
development of the company. This proved an effective strategy since, typically, the demand for
grapes outstripped supply until 1996. Therefore, the ability to negotiate access at a reasonable
cost represented a critical competence. Interestingly, the majority of the networks in which
Coopers Creek was involved were horizontal or competitor-based .The most fluid of them was
the local network in which a community or neighbourly perspective was dominant. Indeed, this
network was most closely related to what might be termed a cooperative, and this is not
inconsistent with traditional agricultural/horticultural industries in general. It should be stressed
that the individual wineries did not subsume their identities to the collective. It is hard to gauge
what competences this specific network afforded Coopers Creek other than the ability to act
bigger than actual size, and some planning and resource flexibility. The arrangement made
sound operational sense even though the participants clearly maintained a focus on competition
at the level of the individual winery label. As with the shareholding arrangements with the grape
growers, Andrew Hendry was instrumental in the development of the local network.
(c) Managing linkages to gain leverage -Coopers Creek was able to leverage critical resources
through the employment of network-based strategies.The reputation of any winery rests on the
quantity and quality of the grape supply. Quantity has proved to be an issue within the New
Zealand wine industry, with climate(late frosts and hail storms) and natural disasters (volcanic

eruptions) contributing to a prevailing undersupply situation. Thus, the cyclical nature of access
to grapes made managing the supply critical. The emphasis on grape quality was promoted by
the New Zealand wine industry to encourage participants to focus on the value added nature of
international offerings. This strategy is in line with the nations policy of moving away from
commodity based products in international markets. Clearly, then, Coopers Creek was able to
leverage critical supplies at the crucial establishment phase of the winery by encouraging
growers to accept a stake in the profitability of the company. Although the relationship with
grape growers became more commercial over time, Coopers Creek was able to balance supplies
of different grape varieties by negotiating and sharing with wineries in the local network. The
management of linkages in the local network also enabled Coopers Creek to achieve greater
efficiencies per dollar spent on advertising and promotion. Indeed, all the participating wineries
avoided what might be termed wasteful duplication of effort and spending, not only in terms of
advertising and promotion, but also in terms of production machinery and processing capacity. It
should be noted that these shared efforts were not permanent; the supply and production
collaboration occurred on a seasonal basis, and the promotional collaboration related to local
holidays and trade tastings. Nevertheless, they had become part of the culture ofthe network and
could be relied upon for planning purposes.
(d) Core competence inimitability- Andrew Hendry represented a unique resource of the
Coopers Creek winery, and he actively managed the companys involvement in each individual
network. He instigated the local network and his community involvement enabled him to become
known to other winery owners, and also helped to enhance his reputation. Both are essential in
building the trust on which collaborative networks are based. The combination of Andrew

Hendrys personal style, approach and business philosophy was probably the only inimitable, but
not inconsiderable, competence of the company during its initial growth and development.
What changes can be observed in the companys strategy during 19962000?
(a) Unique resources -Again, in looking for unique resources, it is hard to go past Andrew
Hendry and his relationship-based approach. It could be argued that the previously successful
partnerships with the grape growers meant that Coopers Creek occupied a position of trust and
good reputation which could be brought to bear when securing supplies, even though these
relationships had become more arms-length, transaction-based in nature. In addition, Andrews
role with the Wine Institute is likely to have resulted in two-way information sharing, by which
Andrew was able to exert some influence on the industrys direction while benefiting from the
analytical overview of the Institute.
(b) Competences in specific networks -The vertical linkages of note during this period were
those with foreign distributors. Although Coopers Creek did not collaborate on-shore with its
distributors, these arrangements, although initially based around groupings of New Zealand
wineries, became exclusive and long term, implying that relationship building and maintenance
were important. Recent developments in international markets, where Coopers Creek has
eliminated costly intermediaries, should be juxtaposed against this perspective. One exception to
on-shore collaboration was the relationship with the UK supermarket Tesco, where there was
direct input to the development of wine styles thereby helping to ensure a match with customer
tastes in the UK. The UK Wine Guild represents a horizontal network, the formation of which
was influenced by government policy. This network adopted a more instrumental approach to
collaboration than the local horizontal network. Clearly, the competency of most relevance here
was the ability to enter a major export market without consideration to the constraints of size.

This is most evident in the sharing of marketing and promotion costs. However, it should be
noted that Andrew had particular concerns about the amount of product he was shipping under
the Tesco own label brand during this period, which was not supporting the development of the
Coopers Creek brand in that market. This was not the first export market in which Coopers Creek
was involved, so it is hard to claim that knowledge of the internationalization process was a
direct result of the companys involvement (although the company undoubtedly learned
something from this specific export venture (see subsection 6.3c)). Between 1996 and 2000, the
UK was the biggest international market for Coopers Creek and representation there might be
deemed strategically important for additional forays into other EU countries. However, this is
only really evident for the Belgian market, with other European markets seemingly developing
independently of the UK market. Coopers Creek was not unique in the New Zealand wine
industry context for the use of network strategies to achieve competitive ends, especially in
international markets. This industry-based strategy offered the potential for individual companies
to shift the perceived level of competition in international markets from individual wineries to
the industry level (evident in the promotion of the generic New Zealand label ahead of individual
winery labels).
(c) Managing linkages to gain leverage
Again, the UK Wine Guild offered Coopers Creek the opportunity to share costs with a number
of other wineries. Unlike the local network, this collaboration did not eliminate duplication
between members since costs were incurred in relation to export quantity. However, it did offer
the opportunity for some wineries to become involved in an export market which was beyond
their individual capabilities. Although there was evidence that Coopers Creek had the capability
to individually address export markets, the resources of the company would undoubtedly be

spread thin without some collaboration in the international marketplace. It should also be borne
in mind that indirect benefits from the Wine Guild meetings could have accrued to Coopers
Creek.
(d) Core competence inimitability
Andrew Hendry represented a unique resource of the Coopers Creek winery, and he actively
managed the companys involvement in each individual network. He was a strong industry
player in terms of the management of both the UK Wine Guild and the Wine Institute. The
international development of Coopers Creek, its entry into new markets, and the development of
domestic operations, were heavily dependent on the learning, the combined marketing efforts
and the resources shared with other New Zealand wineries. Of particular importance was the
combined effort to build the generic New Zealand wine label ahead of individual company
labels. In addition, Andrew Hendry was a good industry player, in that he was a committee
member of both the Wine Institute and the Wine Guild. He also initiated local networking efforts
and enjoyed visiting existing and potential customers personally. No doubt his personal style,
community perspective and industry knowledge have been major contributors to his adoption of
network-based strategies.