Bonny Doon Vineyard
SWOT Analysis of company
The SWOT analysis of the company play a vital role in the determination of the market value of the company. The company’s market value is estimated with the help its Strengths, Weakness, Opportunities and Threats.
Strengths of Bonny Doon Vineyard
The core strengths of the Bonny Doon vineyard include the main capabilities that aid the company to maintain the market value. The main strengths of the company include the high valuable and inexpensive wines of the company is the core strength of the company on the other hand the company is 100% of the ownership of lies within the family. The Bonny Doon Vineyard have unconventional grapes and it focusing on the terroir and natural grapes while having unique strategies of branding and labelling of their products. Furthermore the company have connections with the various European growers and having the winery technology innovations.
The company mostly depend upon the outsourced grapes which include 80 percent of the outsourced grapes. Furthermore the company have lack of relationship with the managing team as well as the whole business is whole dependent on the Graham which shows the possibilities burnout possibilities so the complete decency or reliance on the owner could result burnout possibilities. The competitor in the market buildup a huge competition and strain in the market which might disrupt the business.
The company have various opportunities by availing these opportunities the company can reduce the strain of competitive business. Although the company have recorded growth of 300% from 1984 to 1999 while the company have strong relationships and links with the Europe so by make collaborations with the growers the company can enhance the growth. The DEWN network can help the company to keep the growth in sales and generate the profitable revenue.
Most for the customers prefer to the products which have the health benefits this trend might affect the market place and sales of the company. As the according to various assumptions the 100 percent of the varietal wines are superior which shows the greater threat for the company and the shortage of the grapes of the grapes would affect the production of the wine which might reduce the sales or revenue of the company as a result of bad harvest and the increase in the sales of vineyards to the developers in United states and other countries. Although United States have Low per capita wine consumption relative to the other countries and the decline in the wine market could badly hit the market value as well as market place of the company. While there is high chance of copycat competition which could results the high complications for Bonny Doon.
Financial Analysis of the company
For the financial analysis of the company, we have performed the horizontal and vertical analysis of the company and determined its significant financial ratios by using the financial data provided in the case.
By doing the Horizontal Analysis of the company, we have determined the percentage change in the quarterly balances of accounts involved in Balance Sheet and Income Statement. We have determined that in the year 1999 the company’s revenue were growing quarterly but in the first quarter of 2000 the company’s revenue decreased by 37%, although in that Quarter the COGS of the company also declined by 67%. Still the company maintained to achieve a good margin of gross profit around 42.5% which is 23.7% higher than that of the previous quarter. This is because the company effectively managed to decrease it costs of goods sold by around 67%. At the end of first quarter of 2000, the company was also able to achieve the profit margin of around 4%, which is although 102% lower as compared to that of the previous quarter.
By doing the horizontal analysis of the company we could observe that except the company’s equity and cash account, every account of the balance sheet such as liabilities, receivables, or inventory accounts has decreased in the first quarter of fiscal year 2000 as compared those in previous quarter.
By doing the Vertical Analysis of the company we have compared the contribution of different accounts of income statement to their sales account and also compared different accounts of balance sheet as their percentage of Total Assets. From the Vertical analysis of the company it could be seen that in the first quarter of the year 2000 the company’s COGS accounts for about 56% of its sales, whereas the SG&A Expense accounts for about 33.33% of the sales accounts which is relatively very higher as compared to other expense account of the company.
From doing the Vertical Analysis of the company’s balance sheet we have analyzed that the company’s current assets accounts for about 87.61% of its total Assets, out of which 65.49% is held by its inventories, in the first quarter of 2000. Also in that quarter the company’s total liabilities accounts for about 60% of its total assets whereas the remaining 40% is held by its equity.
To determine the financial health of the company we have determined the liquidity. Leverage and profitability ratios of the company for the year 1999.
From the liquidity ratios it could be seen that the company’s although current assets are more than its current liabilities, indicating strong working capital but it could also be said that the company is not efficiently managing its inventory which is not a good indicator of performance.
From the profitability ratios it could be analyzed that the company’s gross profit margin is around 40% of its sales in the year 1999 whereas its return on assets is 2%, depicting that the company should focus more over the strategic implementation of effective operating actives to increase the sales.
From the debt ratio it could be said that the company’s most of the capital structure is leveraged with 60% of debt, whereas the equity holds around 40% of the overall capital structure…..
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