Situation Analysis Case Facts
Situation Analysis
Case Facts:
Below is the list of case facts that are present:
? William Jaeger is partner at Freemark Abbey Winery.
? The winery was in the business of producing only premium quality wines.
? Winery bottled 25000 cases and has four varieties:
? Cabernet Sauvignon
? Chardonnay
? Riesling
? Petite Syrah
? Different varieties of wine sought contain proper balance between sugar and acidity but
ripening process are different, provided weather is also favourable.
? There is a 50% probability of storm and if storm actually comes than there is 40% chance
that storm will develop botrytis. Other 60% chance will decrease juice concentration that
will result in thin wine valued at only $2.00 per bottle. He can also sell grapes directly to
avoid risk.
? But on the other hand if there is no storm than grapes may be left to ripen up. Depending on
the luck, grapes crop could attain sugar level of 25%,20% or less than 19%,
Inferences:
Freemark Winery has been always concerned about the quality over quantity.
Proper balance between sugar and acidity only occurs when weather is favourable. William
Jaeger is facing a situation in which he has to decide whether he should harvest the crop or
not harvest taking into considerations the facts presented above.
Problem Statement
? The first problem that is evident is of bad forecasting because he is relying on only
present weather report and not on anything else. So the problem that lies here is about
predicting the uncertainties of weather.
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? The second problem is that Jaeger has to make a decision about whether to continue with
premium quality wines and take risks or to shift to low quality wine that would avoid
short term loss.
Decision Objectives
Decision on basis of Short Term problem:
Decision to harvest crops or not should only be taken by Jaeger after proper research on the
past weather for the current season and location. Also, he could study about the damages
done to the crops by storms in the past. After analysing this results a final call should be
made. If he decides not to harvest than the subsequent action should be on risk minimization
of the crops due to storm.
Decision on basis of Long Term problem:
In order to maintain winery’s reputation that it has acquired over the past years, it should not
be allowed to be sacrificed for short term benefits. Based on the case facts it is not sure that
how good a bad a storm can be. Sugar levels have also occasionally failed to rise above
19%. So he should harvest and sell the grapes directly instead of taking risk of making
inferior quality wine. In the long run he would not get any benefit in loosing loyalty of
consumer.
