Download - MGMT614: Corporate Strategy for Diageo
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MBA Class of ’14 MGMT614: Corporate Strategy| Group C
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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
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PERFORMANCE
AMBITION
HOW
CAN DELIVER ITS
MBA Class of ’14 MGMT614: Corporate Strategy| Group C
AMBITION
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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)
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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)
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INTERNAL
& EXTERNAL
ANALYSES
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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
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BUYERS SUPPLIERS
ENTRANTS SUBSTITUTES
RIVALRY
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ENTRANTS
Considerable barriers to entry
Governmental regulations & tariffs
Established players enjoy significant
economies of scope & scale
Limited scope for disruptive
innovations
LOW
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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
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BUYERS
Buyers: wholesalers & end-consumers
May be price sensitive
Reliance on traditional distribution
channels (on & off-trade) for access
to substitutes
MODERATE
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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
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RIVALRY
High fixed costs (exit costs),
advertising expenses
Four-firm concentration ratio of
49.8% in North America (2004)
HIGH
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KEY
STRATEGIC
ISSUES
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REVENUES BRAND
EQUITY GROWTH
SUSTAINING
Regulatory & tax
challenges
Over-reliance on existing
mature markets
Stagnating market share
of strategic brands
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RE-FOCUS
ON CORE
BRANDS
LEVERAGE
ON
STRENGTH
OF RESERVE
BRANDS
INNOVATE
COST-
CONSCIOUS
CULTURE
RIGHT PEOPLE, RIGHT CAPABILITIES
BLUEPRINT
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FINE PRINT
THANK YOU