Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

Make your likes visible on Facebook?

Connect your Facebook account to Prezi and let your likes appear on your timeline.
You can change this under Settings & Account at any time.

No, thanks

D I A G E O

Strategic Management 690 SFSU
by

Alma Vi'Dianna

on 15 October 2013

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of D I A G E O

Bargaining Power of Suppliers
Threat of Substitutes Product
One of the largest producers of alcohol.
There are many substitute products in the alcohol industry thats keeps this for low.
Diageo is the producer so they are not subject to their supplier trying to enter the market.
Diageo has a very differentiated line which weakens this force.
Substitute products is a high force in the alcohol industry.
Diageo is producing a premium product so it can charge a premium for its product despite so many substitute products.
Cider/Perry
2 Billion Liters
Heineken
20.8%
Bargaining Power of Customer
One of the world's largest producers of alcohol
Diageo can raise prices and earn a profit without worry that another company will try to enter at a better price.
Diageo is trying to achieve a superior quality in their production, and because they are the produce they are not subject to a buyer demanding higher quality
Questions???
Inside the International Empire
D i a g e o
WHO is Diageo?
DIAGEO FAMILY TREE
External Analysis:
Fin!
1759 Aurthur Guinness signed a 9,000 year lease on St. James's Gate brewery in Dublin
1971 MRMA changes its name to Grand Metropolitan ltd
1973 Grand Metropolitan enters the brewing industry by acquiring Truman, Hanbury & Buxton ltd and Watney Mann ltd of which International Distillers & Vintners ltd is a subsidiary
1986 Guinness acquired Distillers Company ltd
1987 United Distillers is formed from combining Distillers Company & Arthur Bell & Sons, both owned by Guinness
1997 Guinness & Grand Metropolitan MERGE
DIAGEO CREATED ! ! !
---------------------------------------------------
Company background
Snapshot of External & Internal Analysis
Business & Corporate Level Strategy
Global Strategy
Should you invest in DIAGEO??
----------------------------------------------------
R O A D M A P
Current News:
Diageo is actively expanding into new high growth markets.
They're seeing growth in sales and operating profit.
CEO Paul Walsh steps down after a decade + of leadership
By: Alma, Bruno, Jenna, Michael & Jessica
Competitive Rivalry within an Industry
Threats of New Entrants
Internal Analysis:
Alcoholic Beverages
Beer
Wine
Spirits
RTDs/High-Strength Premixes
Strengths:
+Geographical Diversity
+Wide Range of Spirit Brands
+Global Distribution Network
+Customer responsiveness


Weaknesses:
- Reliant on Mature Market
- Wine Brand is Weak Compared to Spirits

244 Billion Liters
Hard for newer smaller companies to enter and compete with the alcohol giants.
Brand loyalty created from superior productsis a barrier for entry.
Economies of scale is another barrier Diageo has over companies trying to enter.
189 Billion Liters
Handful of large alcohol companies competing.
High demand for alcoholic products
Diageo enjoys a cost advantage over other companies
DIAGEO'S
5 FORCES
17.8%
9.7%
28 Billion Liters
2.6%
20 Billion Liters
Diageo - 4.6%
4 Billion Liters
Diageo - 9.5%
Distinctive Competencies:
Recognition of global power
Focused on core brands: developed strategy to leverage brands globally
International markets account for 40% of net sales
Selective acquisition strategy
Reduce/eliminate competition and intensity of rivalry
Less competitors = Greater market share, higher profit
Strategic management of tangible & intangible resources
TANGIBLE Resources: distilleries, fields, bottling facilities
Vertically integrated to ensure quality
INTANGIBLE Resources: brand names
Skilled implementation of primary activities: MARKETING
Creates barriers to imitation for competitors
Competitive Advantage:
World's largest producer of spirits, major producer of beer & wine
Over decade- maintained above a 30% ROE in comparison to industry average of 15.78%

Dynamic Industry
Strategic Groups
Life-Cycle
Alcoholic Beverages Industry
Change
Micro-breweries
Growth
RTDs
5 Categories
Creation of SG
Premium
VS
Mass Production
Mature
Saturated Market
Oligopoly
Acquisitions
Horizontal Integrations
Acquisitions
Emerging Markets
BRICs
Categories to exploit

Government
Tax, Prohibition, Advertising, Trade
Consumers Health Concern
Economic Downturns
Price Wars
OPPORTUNITIES
THREATS
Production Facilities
Economies of Scale
Control to Local Manager
Strategic Acquisitions
Distilleries
Breweries
Wineries
Maturation
Packaging
Distribution
Million Dollar Question:

Growth in Net Sales of 5%
$7,825 million $8,235 million
Growth in operating profit of 9%.Free Cash Flow increase by $100 million to total $7 billion
Earning Per Share (EPS) increased 9%
Interim dividend increase of 9%

Will Diageo Unlock Potential to your $$$?

Lower Cost Production
Thank you!!!
Business Level Strategy
Trivia
Competitive Advantage
lead to
Reduces regional structures
Differentiation
(High Cost/
High Prices)
Cost Leadership
(Lower Cost/
Lower Prices)
Value Creation Frontier
What are 3 of DIAGEO's top selling brands?
Three reasons why you should invest in Diageo?
DIAGEO
What company did Diageo sell in 2002?
A) Gleneagles Hotel
B) Ben & Jerry's
C) Grand Metropolitan
D) Burger King

Quality as Excellence
Premium Prices
Brand Loyalty
Must Maintaitn Uniqueness
Unique Products
&
Barrier for new Entrants
&
Corporate Strategy
Diageo's Global Strategy
Multi-Business Model
2000
Single Industry Model
Gleneagles Hotel
Burger King
Pillsbury
Pillsbury - $10.5B
2002
Burger King - $1.5B
Long-Term profitability
Sustained Competitive Advantage
17 of 28 whiskey distilliries in Scotland
Prime Location for clients
Big Events - 2014 Ryder Cup
Horizontal Integration
Vertical Integration
Backward Vertical Integration
Protects Product Quality
Enhances Company Efficiency
Decreases risk of holdup within the Industry
28 Malt Whiskey Distilleries
Vineyards and Fields
Premium Price
Acquisitions and Mergers
Benefits
Merger - Guinness & Grand Metropolitan
Mey Icki - Turkish
Ypioca - Brazil
United Spirits - 53%
Lowers cost structure
Increases product differentiation
Reduces rivalry
Replicates business model to different market segments
Increases bargaing power
Pressures for Cost Reductions
High
High
Low
Pressures for Local Responsiveness
Global Standardization
Transnational
Localization
DIAGEO
International Strategy
Low Pressures for Cost Reduction
Low Pressure for Local Responsiveness
HOW?

Diageo Runs Global Production & Distribution Facilities
Includes:
maltings, distilleries, breweries, packaging plants, botteling facilities, maturation warehouses, cooperages, vineyards, wineries and distribution warehouses
Diageo is cost efficient by acquiring diverse range of companies
Our Product is Universal
Top two markets (US & EU) consume similar products:
Scotch, Beer & Vodka
+
Our Business Model
-

How we Deliver value to our Shareholders:
Full transcript