BRL Hardy is an Australia based wine company which sells all over the world. It was consolidated from BRL Company and Hardy Company, both of which are local Australian wine companies but enjoys different strategies and organizational cultures. Nevertheless, the award-wining-quality Hardy and the commercial BRL merged in 1992, and became a publicly listed company in the same year.

Back to 1998, BRLH was the top-selling Australian wine brand, and 2nd among all brands in off-trade in UK market. Despite its success, this company was confronting big challenges and paradox situations in terms of corporate governance and marketing strategy at this stage.

This case study will explore the evolution progress of BRL Hardy and its endured obstacles in both operational level and strategic level, especially its internal conflicts between the headquarters and international subsidiaries in the light of the tension among the key managerial executives. Meanwhile, it will also provide an empirical suggestion on its future development and marketing strategy including the major product launch in the moment.

The Remarkable Post-merger Success:

A real growth can be seen in the development of BRL Hardy from its financial performance from 1992 onwards. By 1997, the turnover of the company tripled it was 5 years ago, and the return of investment had kept steady increase with a comparable high rate.

The key factors of success have been listed as blow:

1. Strategic Synergy

The motive of the merger was Hardy's financial crisis and BRL's need for expansion. These factors drove the two companies to make a decision they may not have made if they were not looking for help. Both companies entered into the alliance hoping the other could solve the problem. Since a merger entails the amalgamation of two formerly independent organizations, it represents sudden and major change to an organization.

Good acquisition economics: The positive aspects of this merger was both the partners bring their share of expertise with them, BRL had the raw materials, capital and well-organized management team whereas Hardy contributed their marketing excellence, brand image and technical know-how to produce wine.

Strategic fit: Hardy was the most respected and high-valued wine brand in Australia and has established a long-history global distribution channel to exporters, while BRH was more likely to be a local massive producer of the wine industry. Therefore, these two companies had different product lines, and different strategy which can compensate for each other and avoid cannibalization after merging into an international giant.

Merger motivated by core competencies will usually increase market control and lead to efficiencies. The core-competencies of both BRL and Hardy were perfect complements. BRLH found its position from both of the formers and created huge value by taking advantages of the integration. That the strategic synergy had been executed perfectly was crucial to its achievements and the future expansion.

2. Effectiveness of integration

The effectiveness of integration was promoted due to the following points and was the key to achieving the planned benefits.

Clarity of key approaches: At the beginning of the merge, the short-term goal was quite clearly set-up. Due to the finance situation, the management team clarified to concentrate on home market as first priority until the economics turns around. This has promoted the effectiveness of the first stage of merge and placed a solid foundation of the company's first step on growth. Christopher Carson and subsequently his successful implementation of cost cutting plans, controls, strong systems and policies that helped the company to gain profit in 1992.

Comprehensive planning: Analyze your assets, your competitors, market opportunities, capabilities, and then mix it all together to maximize the outcomes. The same had happened to management of BRLH. Initially they have focused on restructuring the domestic operations by capturing the economies and repositioning the product portfolio in line with the new strategy, emphasizing quality branded bottle which had led to an impressive increase in market share and profitability of BRLH, then followed by restructuring of international operations by cleaning up the operating problems and building up the export strategy on the basis of a strong quality brand image.

3. Workforce and leadership

Decentralized management:

A key indicator of strong organizational performance is a truly engaged workforce. The understanding of how the values of the two organizations are similar or different is also an important component of merger. The objective of management to change the company's culture and management style by creating a more decentralized approach, but to hold management accountable was one of the important factors behind the success of BRLH, particularly in its domestic operations, such as they kept the strategic plan moving forward and they provided necessary updates like repositioning the product portfolio and emphasizing on quality. Both the companies should understand the situation but they have to follow "they have to do it" approach.

Politics: In the upper-level management, BRL team dominated the headquarter office and delegations were point to original Hardy teams. Thus lead to the absolute decision power of BRL team, though the organizational structure is decentralized. However, this also motivated the Hardy team to work harder to "earn his stripes".

4. Product and branding

Rationalized brand portfolio: BRLH's excellent production facilities and management's commitment to quality supported its brands as they repositioned a few key brands from simple wines to fine quality wines. The diversified yet top-down-hierarchy product line and brand portfolio clearly targeted different consumer segments in the market, with distinctive brand values, won out in both domestic and export markets for BRLH.

Innovation and Technology: The companies which operate in similar areas of technology have a high percentage of achieving long term synergies and economies in their R&D as a result of their merger. BRLH has also reduced competition in technology by eliminating product standards and similarity in technology and markets and has also reduced the danger of imitation for BRL Hardy.

5. Evolving strategy

Industry trend: The industry itself was becoming increasingly fashion-driven and Australian wine was becoming a "hot trend" and because of this rapidly growing demand. The industry association saw potential growth in exports levels which was a good indicator for BRL Hardy to flourish in their business.

Go global: Following the trend, an important strategic shift was taking place that BRL Hardy would not project itself as just a "quality exporter" but as an "international wine company" with worldwide product access backed by the marketing capability and distribution channels to create global brand image.

Sources of Tension:

As the conflicts between Mr. Davies and Mr. Carson reveals, it has become the most controversial issue of BRLH's managing style:

* Cultural differences between BRL and Hardy:

Stephen Davies who got promoted from the original BRL office represents the BRL culture and managing ability, while Christopher Carson inherited the Hardy legacy.

Although Stephen Davies endorsed Carson's plan to revitalize the Hardy brand in Europe, the BRL dominated headquarters management wasn't enthusiastic about the plans of Hardy built European operations. Instead, the former BRL management did not want to give up decision making power to the mostly Hardy oriented branches. This created an "Us vs. Them" attitude where trust for new team member will be minimal. The synergies that were initially sought may be harder to achieve, which was often the source of conflict between the HQs and the European operations which resulted in under utilization of company's assets and organizational capabilities in subsidiaries.

* Different believes in marketing strategies:

Carson knew better in UK local market which was the key export destination of BRLH, and pointed out the global branding strategy might not work because UK was not yet a branded wine market. Carson stressed the strategy focus should be distribution to generate sales, but Davies wanted to implement his global consistent branding strategy.

Carson was concerned about the image of Hardy's brands Stamps & Nottage Hill as it was eroding in UK and he wanted to implement adaptive strategy by repositioning & re-launching the products but it was difficult to convince the HQ as Davies was concerned about the demand for local control over branding, labelling, and pricing decisions and HQ will lose control if they decentralize too much. Davies wanted his UK subsidiaries to act as local implementer and adapter of global directions, and thus underutilizing its organizational capabilities as a result it will affect BRL Hardy by overcompensation for needs of smaller or less crucial markets and under responsiveness to the needs of strategically important countries.

On the decision of Kelly's revenge, Davies still hold a negative attitude on Carson's proposal, and insist the Banrock Station launch in UK which was aligned with his global consistent branding strategy, whilst Carson posed a strong believe in the market he had operated well.

The Triangle -Steve Millar:

As the absolute head, MD Steve Millar played a balance role between Davies and Carson.

Millar pointed Davies as the Group marketing and export manager to control the global business, and Carson had to report to him, while he has the decision making power as the regional director in Europe. Conflict and competitiveness can promote the improvement and performance of both sides. The Shared reporting relationship has also imposed an positive effect on Carson's productivity and efficiency, as he continuously proposed new strategy and product launch, which provide more opportunities for Millar to consider in an expansion of the brands and company.

Meanwhile, cc's proposal is always delayed or on hold, whenever it comes to the HQ.e.g. Re-label re-launch hardy's nottage hill and stamps.

D'Istinto Proposal:

Carson started working independently on every front to make branded products - D'istincto - agreeing with new strategy:

  • Aligning business objectives with brand strategy.

  • Facilitating growth by taking a market perspective approach.

Proposal to launch D'istinto brand:

Launching of D'istinto brands will help BRL Hardy diversify its suppliers and maximize its power as a distributor. Also sourcing from multiple regions will reduce the market related risks.

  • Carson carries with him 20 years of strong marketing experience selling Italian wines & this joint venture will allow BRL Hardy to have a grip in traditional winemaking country.

  • BRLH would also be able to control the market opportunity as the major retailers are trying to reduce their suppliers. Thus providing more varieties to the retailers would help them grabbing more market for the product.

  • It would also provide assistance against currency fluctuations in the market.

  • It would also help the company to compensate on projected Australian red wine shortages with alternative sources leverage distribution.

  • It would not only serve the whole European market but also has a potential to export to other potential countries like US & Latin America.

D'Istinto's weakness:

  • The wine market is still at a emerging stage (fragmented market) and there could be changes in trends in the future as well.

  • Failure of Mapocho launch has already created a doubt in the minds of HQ's management

  • D'istinto could overload human resources already affected by the rapid expansion in the last 5 years

  • Italian venture has a history of losing money and the HQ is doubtful of putting money in this venture because if you are not making profits from the venture it's good to say no to the venture.

  • HQ's concern of "too much decentralizing" would get deepen if the project gets approved and will result in loss of skills and energy of managers and will challenges organisational capabilities in subsidiaries.

Yet, by valuing the pros and cons of the proposal, it is recommended that BRLH should give a shot for this Sicilian heritage wine. To solve the resource allocation problems at the moment, he can get rid of the failure brand Mapocho by selling it or even eliminating it. The best way to stop the backfire from a canker is too cut it down. As D'Istinto has its distinctiveness on flavour and brand image, it will not affect other lines of BRLH if it is marketed well through communications.

The past failure could be a lesson to learn from and if it is viewed as an experiment, the possible problems has already merged, and better outcome will be in the next practice for sure.

The most important reason for supporting the D'Istinto's launch is that it fits the global strategy addressed by the new evolution trend of the company, and it should be a way to explore a path to realize the transnational growth.

Kelly's revenge over Banrock station:

Although BRL Hardy has a long history of exporting wine overseas, most of its experience derives from its domestic market operations in Australia. In order to derive a better strategy for the global market, unique market segment can be approached differently, especially for UK consumers, who accounts for a large proportion of the global wine market.

By launching Banrock Station, HQ is not only ignoring local knowledge and underutilizing subsidiary strengths but also de-motivating its subsidiary managers. Globalization also will see the widespread extension of wine company alliances and joint ventures across national boundaries.

We believe that launching Kelley's Revenge would be the ideal strategy for European markets:

  • A well known brand like Banrock Station may have to face new challenges such as shift of customer base to another brand due to non compliance with its standards.

  • We believe that the company should take a multi-domestic strategy versus a global strategy as the wine industry is better off with an adaptation rather than standardization concept. Since wine users prefer less common wines it is important for companies to come up with fresh product. Creating a standard product is very risky in such an industry because once customers recognize the brand; sales of that brand are likely to fall because the customer will find the other brand more exclusive in taste than this brand.

  • As UK management team feels that wine market is still at growing stage, the environmental positioning of Banrock Station would have limited appeal to U.K consumers and the labelling and marketing strategies are not fully placed.

  • Apart from other risks, risk of currency fluctuation will be there if the company comes up with global product and thus price equality will be very difficult because inequality in price will result in inelasticity of demand which will be harmful to the Banrock Station as quantity demanded is completely insensitive to price.

  • Kelly's revenge, specifically targeting the youth generation of UK, is likely to win the heart of them with its unique and unprecedented approach then possibly turn them into the followers of other BRLH branded wines as upgraded alternatives.

The Headquarter-Subsidiary Relationship:

Globalization is believed to bring about a process of union of all the three cultural, political and economic aspects of business life. Headquarter cannot make all the decisions on their own because they don't have all the necessary knowledge and capabilities but they cannot let subsidiaries to take all the decisions because the interest of subsidiaries might be different from the Headquarters. When a company establishes a subsidiary in a foreign country, its managers must decide how much control they need to maintain over the subsidiary's managers. A headquarters-foreign subsidiary control relationship can be one of centralization or decentralization. Decentralization is more democratic in terms of decision making as it allows for initiatives and the use of talents. However, decentralization is not suitable in times of crisis because crisis requires urgent, decisive and firm action. So, at the time of crisis unity of command and control should be centralised. The choice of control mechanisms, management style, organizational structure and knowledge sharing constitute four bearing pillars that comprise the shape and mode in which the HSR clearly perceived itself.

BRL Hardy should impose these factors for a successful HSR:

Control Mechanism: headquarters-subsidiary relations, it has been reported that more severe agency problems are controlled by increased headquarters power. There should be an impersonal control with division of powers and authority for proper functioning and efficiency which is often represented by set rules and procedures.

Base on market.

Management Style: Management style should be democratic in which manager allows or take the consent of all the employees in the decision making. The flow of information should be both ways from top to bottom and vice-versa. Different strategy approach can be applied, and politics and conflicts can sometimes improve the performance, but balance should be well-controlled.

Organizational structure:
BRL Hardy has decentralised structure its good for the organisation to flourish but at the time of crisis or emergency the decision should be made by the top executives.

Knowledge Sharing: Knowledge should be shared on HQ-subsidiary level as well as Inter subsidiary level. This will help in creating common understanding among team members; it will also help the experienced staff to identify potential risk in the projects, and new staff for learning within the subsidiary as well as between HQ-subsidiary levels.


From studying this case, the BRLH globalization can be categorized in the following model:


The M&A process always play a crucial role in success of any firm, and is the quickest way to go global. It provides clear, consistent, factual, sympathetic, and up-to-date information in various ways which ultimately increases the coping abilities of employees, which will in turn increase the productivity. This increased productivity will positively impact on the firm's performance and create sustained competitive advantage by achieving synergies, and the global subsidiaries are key to reallocate resources and distribution channels which provide a wider spectrum on the vision. The companies also have to learn from each other because these learning help the companies in their future actions. Companies that follow these honestly and diligently benefit from improved performance over time.

Source: ChinaStones -

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