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Case Analysis: Rjm Enterprises, Inc. – Romancing the Vine

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Case Analysis: RJM Enterprises, Inc. – Romancing the Vine Brief Background The case is introduced in late 1998 with Ron McManisat a crossroads of sorts regarding his family owned business. Currently, McManisenjoys moderate success as a mid-sized, Central Valley grower of grapes who sells his product to valley based wineries. His particular plot of land affords the added benefit of being able to produce high quality grapes in an area that is largely thought to produce grapes found in cheaper wines. In an effort to rid himself of this stigma and strategically position his company for growth, McManishired consultants to present options for expanding his current operations. The case closes with a presentation of various options with …show more content…

The analysisassumes that the bank will finance the entirety of each scenario and does not account for high interest rates (they only list interest at 9%) that the bank will likely charge for the additional risk associated with the bigger projects. Another cost that the consultants conveniently left out of their financial analysis is the cost of having consultants spendtime and energy on a project like this. Depending on the amount of time involved, this cost could be somewhere in the $10,000 - $25,000 range. *Question 3: If you were McManis*, what would you do? If I were in McManis’ position, I would purchase the mobile/field press as stated in option 2. A mobile field press allows for conservative growth in the Northern California market while allowing RJM to gain knowledge of the juicing/storage process. It will allow the company to continue to focus on the quality of its grapes without a massive capital expenditure. Unfortunately, a downside to this plan is the inability to capture the vigorish which is valued by some customers. McManisis currently in a pretty good situation from a strategy standpoint. Although overall wine consumption is dropping across the board, label laws are making it possible for Northern California wineries to add up to 25% of total grapes from regions outside of their own. By extension, this allows these wineries to charge a higher price, while having a lower overall cost. McManis’

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