Your assignment is to prepare and submit a paper on fosters start changes in the beverages industry. The growth of wines in the market urged Fosters to move in these wine industries, and he earns more than expected compared to its previous business, the beer company. In the USA, it’s been stated that its continuous growth in the past 30 years has enjoyed and has never experienced two years of falling demand. But this summed up had changed when overcapacity in the production of wines occurred. And unfortunately, this instance is now the source of many of Foster’s problems. Beringer Blass Wine Estates (2004), for instance, consolidated some production and warehousing facilities, wrote down the book value of excess bulk wine inventory, and selected “non-strategic vineyards” in California and Australia to put up for sale. Same with what happened to Fosters when he encountered the overcapacity in his production, forcing Fosters to make changes before his wine business will automatically descend. . By the first half of 2003, Foster’s earnings had dropped to 64 percent due to deep price cutting since other wine business, or its competitors had cut away their profit margins. The immediate fall of earnings of Fosters obliged him to cut costs leveled with the costs of its competitors. But Fosters didn’t engage immediately in planned change before its wine business got into trouble. Fosters were expecting that, sooner, the sales he produced in the preceding years will continue in the following years. But he rather experienced more difficulties and therefore cleared that Fosters needed to undergo significant changes to get back on track. The first he does was the appointment of a new chief executive, Trevor O’Hoy, which also headed the wine business. Their main focussed under the new chief executive, which are the biggest threats to Fosters successfully carrying out this change program, was focussed on cutting costs and improving efficiencies. An established company in a maturing market is likely to see the best return from investments in cost-cutting – but this has to be balanced with investments that will grow the top line – typically a mixture of selling more to existing clients (market penetration) finding new clients both locally and internationally (market development) and creating new profitable products and services (product development) (“Costs Cutting”, 2008).
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Your assignment is to prepare and submit a paper on fosters start changes in the beverages industry.