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Microeconomics of Competitiveness:
Submission of Assignment
: Mas Wigrantoro Roes Setiyadi
: 8605210299
: S3 – Ilmu Manajemen – Pasca FEUI
Date of Submission
: November 15th, 2005

CASES: The California Wine Cluster, HBS Case: 9-799-124
1. Why has California emerged as one of the leading wine – producing regions in the

It was Californian first vintners in California who began cultivating grapes for use in
sacramental wines in the mid-to-late 1700s. In the 1830s and 1840s the first
commercial vineyards were established. Vintners survived by making grape juice and
sacramental or medicinal wines.

2. How was California able to upgrade from producing low – quality wines to a
dominant focus on premium wines over the last two decades?

In early 1900s the University of California at Davis shifted its research to fruit
growing and renamed its viticulture department to be the “Department of Fruit
Studies”. The wine Institute, a trade association of 48 California wineries, was
founded in 1934 in San Francisco to help re-invigorate the lobbying at the state and
federal levels. As prohibition came to an end, the Depression hit the U.S. economy
winemaking did not regain steam until the Second World War when the U.S. was
largely cut off from European sources. Demand for low quality sweet and fortified
wines such as Thunderbird fueled California production throughout the 1940s and


3. What is California’s competitive position versus France, Italy, and Chile?

a. California’s competitive position versus France:

California’s competitive position versus France is in wine prices and production
cost. The competitiveness is varied by region and by quality. Labor costs in France
were generally thought to exceed California’s. France had long-established
apprenticeship programs at individual vineyards and winemaking establishment.
The French had an aversion to what they viewed as the...

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