Ron Santa Teresa Case Study Analysis

The purpose of this paper is to providing a clear and concise evaluation of the company Ron Santa Teresa. In the initial section the assignment expounds on the history, development as well as the growth witnessed by the Company with progress in time. Subsequently, the assignment provides the identification of the Company’s internal forms of strengths and weaknesses in respect to its operations. Moving forward, the paper provides a description on the forms of leadership applied in the process of conducting its operations. Also, analysis are provided in respect with the nature of the Company’s business-level strategy, structural composition and control systems as well as the manner in which the aforementioned facets match with organizational strategy.

It should also be noted that the assignment provides recommendation strategies which should affect the operations of the firm positively.

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The History, Development, and Growth of the Company Over-Time

The firm was established in 1896 in Aragua. The owner, Gustavo Vollmer Ribas, had acquired a farm through which he used to plant wheat, coffee, indigo and sugarcane. The brand name of the firm Ron Santa Teresa was registered in the course of 1909 (Gonzalez & Marquez, 2005). In 1928, Alberto Vollmer Boulton facilitated the growth of the firm through purchasing an adjacent land from his brother. The land was to be used for further expansion. In 1947, Alberto Vollmer Boulton’s two sons were introduced into the family business. Both Gustavo and Alberto Vollmer Herrera facilitated the vertical incorporation strategies of the business through overseeing a project which made installation of a sugar mill possible (Gonzalez & Marquez, 2005). There was a substantial growth recorded as the two brothers helped to introduce new brands as well as packaging techniques later embraced in the production of both rum as well as extensive sugar-related products. Notably, under the aforesaid brothers, a newer milling plant was established; El Palmar (Gonzalez & Marquez, 2005). The Mill was situated near the Santa Teresa sugar mill and Gustavo Vollmer Herrera was mandated with the task of managing it. In 1955, Alberto Vollmer Herrera was imposed as the manager for the newly developed body known as CARST (Gonzalez & Marquez, 2005).

With respect to investment, it is safe to assume that the business was subjected to substantial levels of investment in the course of 1970s. For instance, in 1972 under Alberto Vollmer Herrera, the Company purchased about 47 % shareholdings in the Distribuidora Benedetti which happens to be renowned Venezuelan alcohol marketers (Gonzalez & Marquez, 2005). In 1983, the Company, out of fear for possible closure, embarked on the production of Selecto as well as Gran Reserva Santa Teresa which were established to be of high quality products from the Company. In the course of the 1990s, the Company embarked on share-deal with Allied Domecq in which it exchanged about 20 % of the Company’s stock for a substantial level of capital base (Gonzalez & Marquez, 2005). It should be noted that the coalition widened the Company’s product line which included such numerous imported products as Ballantine’s whiskey. It should also be noted that the alliance was formed in order to cut-down on pressure which was exerted by both Seagram and United Distillers which had just penetrated the Venezuelan alcohol market through purchase of Ron Cacique and Pampero respectively (Gonzalez & Marquez, 2005). In the course of 1996, the firm obtained full ownership of Distribuidora Benedetti through a stock-exchange agreement.

In 1999, the company faced an extensive financial period marred with losses. However, this was dramatically transformed into profits in the course of 2001 under an operational strategy dubbed “operation Conuco”. In 2003, the Company embarked on strategies which were aimed at venturing into the Spanish market. The firm entered into a venture-alliance agreement with Osborne whereby it targeted the export revenue through such potential consumers as premium, amber rum as well as super-premium (Gonzalez & Marquez, 2005).

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Identification of the Company’s Internal Strengths and Weaknesses

A) Internal Strengths of the Company

There are numerous internal strengths which are exhibited by the Company at hand. First, the Company enjoys a dedicated management and board members. It is certain that the management especially the family members’ have the desire to see the business go through even in times of challenges. For instance, when Alberto Vollmer Herrera foresees the possible closure of the firm, he calls for a board meeting. In this meeting, he manages to reclaim the vision of the firm and the firm is perceived as having assumed its stability again. It should be noted that these managers operate the firm in strategic manner so that each-time the firm is on its way down in terms of operation, intellectual ways are devised and it is brought back to operations again. For instance, when the Herrera Brother’s perceive the closure of the business they conduct “operation Conuco” which helps to cut-down of unnecessary expenses (Gonzalez & Marquez, 2005).

Second, the Company has established a positive relationship with the immediate environment through development of effective social initiatives. The firm introduced and nurtured the “Alcatraz Project” enhanced their positive publicity within the region. As a result, the operations of the firm went on interrupted due to the peaceful co-existence with the surrounding community. The fact that the Venezuelan President, Hugo Chavez, appraised the firm’s activities, it increased their public profile. It should be noted that while other businesses were facing a tough political environment upon which they could survive, Ron Santa Teresa enjoyed favorable business environment (Gonzalez & Marquez, 2005).

Third, the Company enjoyed a strategic location with a rich history. This facet prevented possible invasion of the premise by the ever-growing landless victims in the country. This ensured that the Company commenced with its operations without interferences from the surrounding communities. Instead, the surrounding communities applauded the Company for its role in CSR projects (Gonzalez & Marquez, 2005).

B) Internal Weaknesses of the Company

First, for the most part of its operational years, the Company was being managed by family members who were positioned at top-most posts irrespective of their immediate qualifications and experience needed in operating businesses. It should be noted that at one point in time the Vollmer Brothers’ conducted an operation which rendered most of the people unemployed in order for the firm to post profits. In case of a professional manager in the situation, the matter could have been handled in an effective manner like cutting down on production (Cronin-Gilmore, 2012).

Second, the strategies used in managing the firm appeared outdated and non-operational. For instance, in separate cases the firm, under the management of the Vollmer Brothers, partook an initiative concerned with forming alliances with both Distribuidora Benedetti and Osborne. Unfortunately, these alliances were perceived as having failed and had gone to the extent of rendering the Company’s financial base distorted in that matter. Thus, it is clear that most strategies put forth by the Company in order to decrease chances of possible closure were not effective. Third, there were possible wrangles and un-cooperation between the management and the board members. It is perceived that whenever the two groups meet in order to resolve issue affecting the Company, the meeting turned chaotic and un-cooperative. A possible “bad-blood” is evident between these two groups such that each one of them aspires to outperform one another. Therefore, because of the un-cooperation there were never issues resolved for the benefit of the Company.

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The Nature of the External Environment Surrounding the Company

The Company is surrounded by a community which is characterized by such facets as, living below the poverty levels, in-secured, as well as unemployed. In terms of poverty, the surrounding community in Aragua state is categorized into critically poor covering 48.4% of the population and extremely poor people covering for 21.0 % of the population in Venezuela. These poor people live in shacks which cover most of the Municipality (Gonzalez & Marquez, 2005).

In respect to unemployment, the unemployment rate covers 70% – 75% of the total population with the youth in Ravenga Municipality being the most affected. Statistically, the youth between the ages 15-24 have attained a 35.4 % unemployment level. Due to poverty and unemployment of the community surrounding the Company, it has lead to elements of immense levels of insecurity. This facet is attributed to the fact that most youth engage in crime related activities due to lack of finances. They have been rendered jobless due to the inability to attain high-school degrees. For instance, the Aragua Police State was set to rule-out possible criminals through mass execution (Gonzalez & Marquez, 2005).

There has also been economic crisis witnessed in Venezuela since the 1990s and affected the operations as well as setting-up of newer business in the area. Statistically, there has been a 57 % drop in business establishment in the course of the period between 1997-to-2002 (Gonzalez & Marquez, 2005). In addition to this, the exchange rate had also been rendered vulnerable especially because the bolivars had weakened against the dollar to lows of about 1,920 bolivars for a dollar. This meant that localized business was subjected to cheaper alcohol imports due to the favorable pricing in the country (Zott & Amit, 2008).

Types of Leadership Found Throughout the Company

The Company is headed by a President who is also the Chief Executive Officer. The CEO exercises the authoritarian form of leadership given the fact that Alberto imposes notions into the board meeting and when he learns that they cannot accommodate his ideas he performs the activities which befits his thinking. For instance, after most of the board members had decline to most of his strategies, he requested his father in Rome to halt their duties as board members in Ron Santa Teresa (Gonzalez & Marquez, 2005).

Alberto is perceived as having initiated and implemented “Operation Conuco” based on depriving over 600 employees of their respective duties in the Company. He conducts this operation with the aid of the brother without any form of regrets whatsoever.

The Kind of Corporate-Level Strategy Pursued By the Company

The Company is perceived as having adopted a community based corporate strategy; it has focused on providing much assistance in form of offering CSR projects as well as participating in different social initiatives like the “Alcatraz Project”. This strategy seems to favor its operations given the fact that it has not been affected by the surrounding hostile community.

The Nature of the Company’s Business-Level Strategy

The business is perceived as having assumed two different business strategies which are aimed at reviving the operations of the Company as a whole. First, the management of the company has been engaged tremendously with formation of alliances as well as acquisition of competitors in order to remain relevant within the business environment. Such alliances formed are between the Company and Osborne as well as Distribuidora Benedetti the latter being acquired through a stock-exchange agreement. The Company has also been involved with production of newer brands in order to off-set possible closure due to incoming competition.

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The Company’s Structure and Control Systems and How They Match Organization’s Strategy

The control systems are directed towards adapting to rather hostile environment through development of such social initiative projects as the “Alcatraz Project” as well as other foundations like the PROVIVE and Alberto Vollmer Foundations aimed at assisting the poor in order that they can access basic needs as well as medicines in case of pregnant women. This strategy matched the Company’s operational strategy whose goal was to involve the community in the daily-operation of the firm so that they could survive the hostile external environment portrayed by the immediate community. It should be noted that at one point in time the firm’s land was grabbed and instead of settling the matter in a hostile manner, the management of the firm decided to accommodate the strangers.

Possible Recommendations for the Future

First, the Company should embark on deploying managers in respect to their qualifications and experience in order to avoid chaos and misunderstandings between management and board (Rumelt, 2011). Second, the firm should deploy new operation strategies concerned with application of effective strategies needed in attaining a company’s goal without over-involvement in CSR projects.

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