Case Analysis
Case Analysis
Case Analysis
WHAT is the business decision The owners want to develop a winery, which distributes high quality premium
we are trying to make? What wine. Some of the underlying issues that they need to decide on is about the
are some of the underlying grapes, the location of the winery, and the barrels to be used.
issues?
WHY has this a decision that This decision needs to be made because Tasmanian wines have a high reputation
needs to be made? How do we for high quality wine. We know this because Tasmania is considered to have an
know this? What led to the ideal climate that can be used for production of wine.
current situation?
WHEN does the business This decision needs to be made as soon as possible because it is at the fore front
decision need to be made? Is of the business that they want to undertake.
it urgent?
Why?
Step 2: In-Depth Analysis - Questions related to the case:
Labelling $1.30
Labor $3.20
Grapes $7.45
Utilities $0.50
4,785,000/13.05 = 373,563.22
Question 3: What would be the company’s profit before taxes (or net income) if the winery operated at its capacity
production level? Show your work.
Capacity: 550,000
Sales = $1,425,000
Variable cost: $6,847,500
Commission for marketing manager: $27,500
Fixed costs: $4,875,000
Total cost: $11,750,000
Question 4: Let’s say the company is confident they can sell 385,000 liters of wine. How much profit could they make?
Show your work.
Question 5: Let’s say the company has a $10,000 advertising opportunity and the company thinks they can sell 500
more liters of wine as a result of the advertising. Is the advertising investment a good idea? Show your work.
The advertising would be a good idea because it would lead to an increase in revenue and sales for the company. The
opportunity would generate sales of $12,750 at a cost of $10,000.
12,750-10,000 = $2,750