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1. Identify the specific sources of tension between Mr. Davies and Mr. Carson. How has Mr. Millar been able to handle these differences? How would you rate his performance? What feedback would you give him? The tensions between Mr. Davies and Mr. Carson emerged from the merger of BRL and Thomas Hardy & Sons resulting into a new management and new strategy and hence developing into a strained headquarter - subsidiary relationship, Mr Stephen Davies as group marketing and export manager at the Headquarters in Australia and Mr Christopher Carson, MD at the UK subsidiary. Both doubted each others capability which was the fundamental source of tension. The management at the headquarters supported only those who had earned their stripes and hence didnt have the confidence in Mr. Carson while on the other hand Carsons management believed that Davies and Co. didnt understand international marketing. There were differences in their opinions on the marketing strategies which enhanced the tension as the corporate office always wanted their strategies to be followed (initially while re-launching Nottage Hill and Stamps and later on while evolving the global brand strategy) and didnt rely much on Carson even though he was the one who understood the UK market better. Thus their relationships suffered owing to Davies concerns about Carsons demand for more independence and increased local control over branding, labeling and pricing decisions. Mr. Millar was quick enough to see the tensions between the two mentioned gentlemens and thus acted swiftly by deciding to have Mr. Carson report directly to him on the UK companys profit performance but through Davies for marketing and brand strategy. This ensured their tensions didnt harm the operations of the organization and in fact Mr. Millar was optimistic about their confrontation resulting in constructive ideas for the benefit of the organization. He hoped that it will eventually subside by means of negotiations. His performance should be rated above average as per our analysis of the situation. Given the circumstances, Mr. Millar made sure that both of them worked in the best interests of the company and even though Mr. Carson had issues with the headquarters, Mr. Millar himself had very good relations with Mr. Carson. As a leader, Mr. Millar understood the importance of both Mr. Carson and Mr. Davies, had faith in their capabilities and showed respect towards their opinions and decisions and never over-interfered in their tensions. Our feedback will be to keep continuing the excellent work, Mr. Millar is doing. However, we would advise him to have a thought about bringing both of them to the tables and demarcating the roles and responsibilities for each of them. This can be done by maintaining a clear policy regarding the areas in which the headquarters would have control over and the areas which Mr. Carson can have independent control over. Also, we believe it is important to resolve the differences as early as possible and not wait as it may turn out to be harmful during tough financial conditions.

2. Should Mr. Millar approve Carsons proposal to launch Distinto? Defend your response with strong evidence and arguments. Yes, we think that Mr. Millar should approve Carsons proposal to launch Distinto as it will help in diversification of BRL Hardy and will help in immunizing it against the risk of grape harvest being vulnerable to weather, disease and other factors affecting quality and quantity

of wine. As a part of this strategy Carson wanted to source from multiple regions and a few key suppliers. Carson had two options to go for Mapocho from Chilean JV with Jose Canopa y CIA and Distinto from Italy where he had forged an agreement with a co-operative. Discussing the positive of going with Distinto: Easy to read labels with pronounceable brand name Real cooperation with 135 farmers from Sicily who were acting as part owners rather than suppliers Being allowed to deploy Technical expertise to enhance the value of harvest with surveillance which will guarantee receiving high quality grapes Price point of the brand between 3.49 -5.99 which will position the brand in low price segment presently vacant as Stamps and Nottage Hill had become more expensive.(although the premium sub-brands of Distinto will overlap with Hardys core offerings) Projected Sales of 16000 cases in first year rising to 500000 by year four.

The only negative point for Distinto is establishing a new brand beside the already existing ones will be high efforts of human resources and coordination required between the management at Australia and Europe. Now coming to Mapocho, we feel that the brand it characterized by unstable sales with sales first increasing and then decreasing by almost 60% resulting in a bad forecast in Chilly( Exhibit 6). Also there were management problems with Canepa managers raising doubts and concerns about JV claiming that their costs have gone up resulting in delay in procurement of grape harvest. As a result the sample sent to BRL Hardy London were of bad quality and the sales also were disappointing 15000 cases against forecasted 80000 and the company stands out to lose upto 400000. Thus looking at both perspectives we recommend that Millar should allow Carson to introduce the Distinto brand with a caveat to come out of the Chilean JV as it would be highly risky to straddle on two boats and will also overload the stretched human resources. Further it would also help Carson in focusing in development & promotion of only one brand which he is too excited to make global. 3. What recommendations would you make to the organization concerning the conflicting proposals for Kellys Revenge and Banrock Station? Clearly identify a possible HQ decision and supporting evidence as well as a Subsidiary perspective before making your choice. The headquarter decision in respect of the new entry-level Australian wine would be in support of Banrock Station owing to the following reasons:

Banrock Station was tried and tested in Australia and elsewhere and had a universal image of environment protection, unlike Kellys Revenge which did not have a mass appeal and was not even taken keenly by the UK grocery chains The decision would be in line with the companys long-term strategy of becoming one of the worlds first truly global wine companies and focused on one of the three core strengths of building global brands Standardization in branding, labeling and pricing and decentralized sales, distribution and promotion would enable Steve Millar to manage the company and brands better Banrock Station was seen as an environmentally responsible product and its earthtone labels, unpretentious, down-to-earth image supported the concept. Kellys Revenge, on the other hand, was seen to have a down-market and questionable image, launch of which could have serious repercussions on BRL Hardys image Though a standardized product, Banrock Station would bring revenues in UK by opening of newer markets and changing consumer profile

However, as per the subsidiary perspective of Christopher Carson, who had built the market for BRL Hardy in UK, Kellys Revenge would be a better suited product for the following reasons: Carson understood the UK market well and Kellys Revenge was created by the UKbased management specifically to suit the consumers needs UK had a strong performance and contributed significantly to BRL Hardys revenues. An important element of the companys strategy was to maintain its share in the critically important UK market that was the largest non-producing wine importer on its path of becoming an international wine company. This would be possible only by building brands specific to UK consumer needs The product had an appealing concept, designing and label. Where Banrock Station had a dull label design and concept not appealing to UK consumers, Kellys Revenge was thought to be seen as a fun brand with an appeal to young consumers or first-time drinkers UK was not a branded wine market yet, and a brand driven strategy could not be implemented successfully in such a market. The consumer mentality was that of antibranding and a bulk wine orientation would not have catered to the specific consumer needs, historically, very few mass global brand players had been successful in their business. A flexibility in handling branding and labeling would enable better alignment with the needs of different target markets and easier implementation by the UK-based teams

Thus, Banrock Station would be a better choice considering the overall strategy of BRL Hardy which was centered on creating a global wine company. However, it should be introduced after adequate testing in the UK market to gauge the potential market response.