1. Analyze and compare the Old World wine industry to the New World wine industry (note: you must demonstrate that you have conducted two separate analyzes of industry structure). Which of the two industrial environments is more attractive to incumbents (those who compete in that sector)? Why?External Analysis – Competitive EnvironmentWhen initially analyzing the Old World versus New World wine industry, the differences are obvious. Strong representations of this include factors such as size, production methods, brand value, and production orientation. By conducting an analysis using Porter's Five Forces, one can clearly see the delineating factors between the Old and New Worlds. Threats of New Entrants Within the wine industry, it is often thought to have a low threat of new entrants based on historical understanding. In the Old World, the use of technology and automation as well as the use of strategic advertising and promotional methods are avoided. Furthermore, a highly regulated production system is implemented for some industry inputs, which introduces a low threat of new entrants. However, the threat has increased in the New World due to investments in technology and automation-based production, as well as due to increased advertising budgets. The ability to start an independent, high-end winery requires a large investment of physical and financial capital. Threat of Substitutes In general, other alcoholic beverages can be seen as substitutes for wine. However, wine-specific substitution in the New World is low because most people prefer to purchase wine from a retail establishment instead of producing it themselves. Where as in the Old World the option of producing wine...... middle of paper......is found in Spain, Belgium, the United Kingdom, Japan and China. Future growth can be achieved by positioning current brands in those emerging markets. Risks and Rewards As we continue to expand Mondavi's product line through joint ventures and partnerships in foreign countries, risks and rewards are inevitable. Benefits: • Reduce risk while expanding the regional reach of your product line. • The ability to access new customer segments and expand your customer base. • Share knowledge, technology and capital brought to the company from the partner.Disadvantages:• Regulations and obstacles in foreign territories are often immensely different than those in North America.• Income potential can be extremely limited due to the nature of pricing.• The company's reputation is at stake when introduces a new product to a new market in a foreign country.