Download - MGMT614: Corporate Strategy for Diageo
MBA Class of ’14 MGMT614: Corporate Strategy| Group C
MBA Class of ’14 MGMT614: Corporate Strategy| Group C
World's largest producer
of premium drinks (spirits)
Market capitalisation of £47B, 8th-largest company on
London Stock Exchange
Sold in over 180 countries,
80 offices globally
Diverse portfolio of brands,
heritage tracing back to 1608
PERFORMANCE
AMBITION
HOW
CAN DELIVER ITS
MBA Class of ’14 MGMT614: Corporate Strategy| Group C
AMBITION
North America
33% Latin America
& Caribbean
13%
Asia-Pacific
15%
Africa, Eastern
Europe & Turkey
20%
Western Europe
19%
to create the
best performing, most trusted,
most respected consumer goods company
in the world
TOTAL
NET
SALES (F13)
PREMIUM
APPEAL
CORPORATE
SOCIAL
RESPONSIBILITY
INNOVATION
Forbes World’s Most
Innovative Companies (#27)
Strong brand heritage
& equity
DrinkIQ, Plan W,
various charities
By leveraging on
Healthy Free Cash Flow levels
Higher-than-average Return on Assets: 9.91% in F13 vs 6.78% (industry)
INTERNAL
& EXTERNAL
ANALYSES
STRENGTHS WEAKNESSES
OPPORTUNITIES
Diverse portfolio - steady revenues
& mitigates seasonality in demand
Extensive geographical reach
Global associations & partnerships
Escalating operating costs, profit
margin attrition
Substantial debt service: Debt-to-
equity ratio of 2.39 (2009), now at
1.17 (2013)
Heavy reliance on mature markets
Strategic partnerships for improved
routes-to-consumer
Fast-growing luxury markets
Anticipated growth of wine market
Intense competition from industry
players
Governmental regulations &
structural economic conditions
Counterfeiting
SAFEGUARD IMRPOVE ON
SEIZE UP
THREATS
NEUTRALISE
BUYERS SUPPLIERS
ENTRANTS SUBSTITUTES
RIVALRY
ENTRANTS
Considerable barriers to entry
Governmental regulations & tariffs
Established players enjoy significant
economies of scope & scale
Limited scope for disruptive
innovations
LOW
SUBSTITUTES
MODERATE
Availability of lower-priced
alternatives, low switching costs
Major players also own certain
substitutes for distilled spirits, e.g.
beer, wine
Health concerns may ‘shrink the
pie’ – decrease consumption of all
alcoholic beverages
BUYERS
Buyers: wholesalers & end-consumers
May be price sensitive
Reliance on traditional distribution
channels (on & off-trade) for access
to substitutes
MODERATE
SUPPLIERS
Sensitive to commodity (raw
materials) price changes
Various sources for raw materials
High cost of forward integration (to
cut out buyers), making it unlikely
LOW
RIVALRY
High fixed costs (exit costs),
advertising expenses
Four-firm concentration ratio of
49.8% in North America (2004)
HIGH
KEY
STRATEGIC
ISSUES
REVENUES BRAND
EQUITY GROWTH
SUSTAINING
Regulatory & tax
challenges
Over-reliance on existing
mature markets
Stagnating market share
of strategic brands
RE-FOCUS
ON CORE
BRANDS
LEVERAGE
ON
STRENGTH
OF RESERVE
BRANDS
INNOVATE
COST-
CONSCIOUS
CULTURE
RIGHT PEOPLE, RIGHT CAPABILITIES
BLUEPRINT
FINE PRINT
THANK YOU