Area Size for Wine Production Wrongly Considered

Question

It says in the case that only 1/4 of the produce is converted into wine & rest is sold off. But when I look at the calculation for the yeild, they have taken the entire 11 hectares for calculating the amount of wine produced. This looks wrong, since I would assume we should take only 1/4th of the 11 hectares as the area for wine production. Maybe I'm missing something here?

Answer 1

Hello!

In this case, it´s the total POSSIBLE production, not taking into consideration the 1/4.

However, agree with you, this is not clear and would be good clarifying with the interviewer -would be a good question-.

Hope it helps!

Cheers,

Clara

Answer 2

Hi

In the calculation, it states that its the total possible wine production when they are using the full 11 hectares not the actual production.

What is a bit surprising is that this is not a discussion under various ways to increase profitability later in the case. I would assume that currently, they are selling 75% of the grapes to other producers at a wholesale price. The question then becomes if it would be more profitable for the winery to convert these grapes to wine in-house instead.

-A

Answer 3

Hi Kanishka,

This is a great lesson in clarifying questions!

The beginning of the case is not the only time you should ask clarifying questions. Throughout the case, if you are unsure of the question, objective, context, etc., ask!

That being said, I know you can't ask when reading a case on your own, but still wanted to point this out :)

Answer 4

Hello Kanishka,

Text is asking about the potential total wine production, that's why they consider the total area. ANyway don't worry too much, this is the perfect sample of something that you should ask your interviewer.

Best,
Luca