1. Running Head: Diageo 1
The Strategic Analysis of an Organization
Tori Stevens and Bree Vereeke
Grand Valley State University

2. Diageo 2
Table of Contents
Executive Summary……………………………………………………………………………3
Organization Mission and Values………………………………………………….…………6
Analysis of External Environment…………………………………………………………….7
Competitive Analysis…………………………………………………………..………8
Environmental Analysis………………………………………………………….…...10
Five Forces Analysis…………………………………….....…………………………15
Analysis of Competitive Position………………………………………………………….…17
Stakeholder Analysis……………………………………………………………….…18
Organizations Capabilities and Competitive Position……………………………...22
Diageo’s Position in the Industry………………………………………………….…24
Recommendations…………………………………………………………………………….25
References…………………………………………………………………………..…………28
Appendices……………………………………………………………………………………..31

3. Diageo 3
Executive Summary
Diageo is a global leader in the beverage alcohol industry by volume, net sales
and operating profit, with over 200 production sites in over 30 countries and serving 21
different markets (About Us). Their name is derived from “dia”, which is Latin for day
and “geo”, which is Greek for world. The company takes this as “Every day, everywhere
people celebrate with our brands.” (About Us)
Diageo’s values show their true commitment and deep investment they have in
their people, consumers and community. They are passionate about their customers
and consumers and celebrate their freedom to succeed through continual learning and
improvement. They value each other as individuals and as a team, with a strong interest
in respect, trust and diversity. Diageo is proud of what they do and strive to be the best
in the industry. With this, they take it upon themselves to be socially responsible. Their
core values and goals involve the leadership of alcohol in society, building thriving
communities and reducing their environmental impact.
Diageo is in an attractive industry, with competition lying within the brands that
each distribution company is selling. Their strongest competitors include Brown-
Forman, Anheuser-Busch InBev, Heineken, Constellation Brands and Bacardi. Diageo
stands out against these companies with their large variety in brands and excellent
marketing strategies.
The environmental trends in the beverage industry play a key role in Diageo’s
success. With the United States making up 45 percent of the company’s operating
profit, the North American segment of the company holds a lot of weight on their overall
performance. The U.S. and Canada is continuing to change as the population grows
and becomes more diverse ethnically, culturally, linguistically and racially. Mexico is
also changing dramatically with their increase in medicine and growth in wealth and
education among its citizens. This population shift could result in a change in
consumption habits and trends in North America.
Millennials in North America have been another important aspect of
concentration for Diageo, as this large group is just entering the consumer market and
has created many different trends. These trends include interest in health, moderation in

4. Diageo 4
drinking, premiumisation and buying locally. In addition, technological advances also
play a role in the industry. Social marketing on Facebook, Twitter, Instagram and
LinkedIn have become popular, as well as the use of applications on smartphones and
tablets. Innovations in restaurants also have become prevalent, such as the use of
wine-on-tap.
The beverage industry is not only profitable, but growing. Diageo is in an
attractive market for success not only in North America, but worldwide. Diageo is
distributed through 21 diverse markets, with each market presenting different types of
trends and interests. With this, Diageo has tailored their marketing and production to
cater the wants and needs in each market. In addition to the global trends, the company
also must adapt to the laws and regulations presented in the beverage industry. From
advertising restrictions to modernizing alcohol laws, the industry is continuing to work
around obstacles in the U.S., as well as the rest of North America.
Diageo must constantly analyze the forces around their company and the level of
threat they have on the company’s success. Rivalry is a constant high threat for Diageo,
as there are many other large companies that have similar products and target the
same market. With this being said, there is a low threat of entrants, as the market and
the company are well-established. Substitutes hold a medium threat to Diageo, as craft
beer and buying locally have become popular trends in North America. Luckily for the
company, the power of suppliers and power of buyers are non-threatening forces due to
availability of raw materials, strong wants of the customers and name brand products
they have to offer.
The company is in the mature stage of the life cycle, but the products they sell
are continuing to change. Their spirits are mature, but then again are being transformed
routinely, and their beer and wine products are still developing. One of their biggest
competitors is Bacardi Limited, as their premium spirits are very similar to those of
Diageo’s. Although the majority of Diageo is in maturity for good, they still have growth
potential in sections such as the beer industry.
Diageo’s stakeholders include investors and shareholders, employees,
government regulators, local community organizations and NGOs, farmers, other
commercial partners and mostly importantly, their consumers. While the interests differ

5. Diageo 5
dramatically between each group, they share a common interest in the social and
environmental impact Diageo has on the world. With this, the company continues to
make progress with its Sustainability and Responsibility Strategy, which outline six
goals for Diageo to focus on.
This past October, Diageo made the decision to split from the Dutch brewing
company Heineken. This verdict allowed Diageo to focus on its own beer production,
growing it to its full potential. During this process, the company stayed true to its values
and did what was best for their company and their consumers. This action can have a
large impact of the stakeholder’s of Diageo as their potential growth in could have a
further impact on the community’s interests and their potential profits would interest their
investors and stakeholders.
Diageo has many capabilities including strong leadership, their efforts to reduce
unsafe alcohol use, world-class marketing strategies and Diageo Technology Ventures.
These abilities would difficult to imitate, giving Diageo a competitive advantage. After
analyzing the company’s portfolio planning matrices, it was found that there are many
products that are “stars” in their line-up due to the company’s standing in the premium
drinks segment of the beverage industry. Diageo needs to continue to pursue those
products to keep sales up, as well as make a decision on their focus on beer and wine
in order to become an even larger competitor in the beverage industry.
After analyzing Diageo’s company both internally and externally, there are many
recommendations for further improvement and success. It is recommended that the
company continues to strengthen its primary source of profit, its spirits. The company
should further adapt to the recent trends in the industry and build on its whiskey brands.
With this focus in mind, it is also recommended that Diageo pushes away from the
diverse wine industry by selling its remaining brands. Furthermore, the company should
also take advantage of its strength and pursue developments in their beer products.

6. Diageo 6
Organization Mission and Values
Diageo is the top premium drinks business in the world. They produce and distribute a
wide range of alcoholic brands throughout spirits, beer and wine (Diageo.com). The
official Diageo name was created in 1997 with the merger of Grand Metropolitan Public
Limited Company and Guinness PLC which at that point in their history, they were in
both food and beverage industry (Diageo).
Between the years of 2000 and 2002 they decided to opt out of the food industry
and shift their focus on only premium beverage alcohol (Diageo). During this transition,
in 2001, they acquired more spirits and wine from Seagram (Diageo). They are
constantly looking for new adventure to take and new ways to grow their business.
Diageo prides themselves on a few key values to keep them going in the right
direction. One is that they are very passionate about both their customers and their
consumers (Diageo.com). This is what continues to make the company grow; they know
that without their stakeholders they wouldn’t be as successful as they are today. The
second value is that they “give ourselves and each other the freedom to succeed”
(Diageo.com).
Diageo wants everyone to trust each other so they can share ideas, challenge
one another and to stick together as a team. Diageo values the fact that they strive to
be the best they can possibly be (Diageo.com). Everyone involved in the organization is
encouraged to keep learning and keep improving in order to celebrate their success.
Finally, they value each other and are proud of what they do together as a team
(Diageo.com). Diversity is what sets them apart and drives the creative aspects of the
business; they want everyone to feel respected, loved and appreciated. Because those
values are so important to Diageo as a whole, they have an annual survey distributed
out to the employees to make sure they are fulfilling each and every one of the values
they cherish (Diageo.com). Diageo’s biggest goal or what the organization calls their
performance ambition “is to create one of the best performing, most trusted and
respected consumer products companies in the world (Diageo.com)”. With the values
listed above they can work together to accomplish this purpose.
A company’s culture relates to the values they possess. Since they want to
encourage creativity and respect one another they have a very diverse workforce with a

7. Diageo 7
variety of personalities, experiences and perspectives (Diageo.com). With having over
21 different markets around the world, they can’t avoid diversity. The different
backgrounds and ways of growing up give the company deeper insights to what the
consumer needs are and enhance the relationships between the organization and the
stakeholders.
Diageo includes social responsibility into their core values within the organization
and actively works to meet their goals within the community. Diageo’s Annual Report of
2015 indicates that the company has three main goals based on sustainability and
responsibility. The first is based on the leadership in alcohol in society. Diageo aims for
creating a positive image of alcohol in society and continues to support programs to
prevent harmful drinking. The second goal is to build thriving communities. They take it
upon themselves to partner with local farmers and agricultural communities to find a
more sustainable supply of materials for their products. The third mission is to reduce
their environmental impact. This pertains to the use of water and carbon emissions and
how to eliminate their footprint. (Diageo Annual Report, 2015)
Analysis of the External Environment
Diageo is in the Beverage Distribution Industry. They are a premium drink
company who not only distributes beer, wine and spirits but also produces, brews,
bottles, packages and markets (O’Regan, 2010). They are all aspects wrapped in one.
There are only a small number of companies who compete in this industry and Diageo
happens to be one of the top distributors. This industry is definitely an attractive one.
There are about 2 billion people across the world who consumes alcohol on a regular
basis (Global, n.d.) They are in a position where there isn’t a large amount of
companies to compete with, enough to keep them working hard, but not enough to
make them go out of business. The competition lies within the brands that each
distribution company is selling. This aspect is largely competitive. The number of brands
of alcoholic beverages and the number of different flavors each brand has is endless.
And since Diageo is a global company that helps them stays on top of their game.
“Geographical diversity bestows the company with a wide customer base, strong brand
presence and growth opportunities across emerging markets. Diageo operates in more

8. Diageo 8
than 180 markets in North America, Europe, Latin America, Africa, the Middle East and
Asia Pacific”(Diageo, 2014). Major competitors for Diageo, as specified in Appendix 1,
are Bacardi, Heineken, Anheuser Busch, Brown-Forman and Constellation Brands.
The buying and making local beer, wine and spirits will definitely lead to more
competition and rivalry because it’s getting easier for someone to start a local business
that produces alcohol, especially on a small scale (Fox, 2013). Competition in this
industry will always be up and down.
Competitive Analysis
The main competitors for Diageo in the Beverage Distribution Industry are
Brown-Forman, Anheuser-Busch InBev, Heineken, Constellation Brands and Bacardi.
Unfortunately, when it comes to the Beverage Distribution Industry, not every company
competes directly. They are competing in different product categories and different
markets all across the world. “Diageo enjoys a strong market position in the global
alcoholic beverage industry, which gives it a competitive advantage while launching new
products and venturing into new markets. The company sells its products in more than
180 markets on five continents” (Diageo, 2014). Some companies are only in a few
countries and others are all over the globe. Organizations also may only distribute beer,
only spirits or only wine. Lucky for Diageo, they do it all.
When looking at the data given, it becomes apparent that the distribution
companies compete through the brands they produce. For example Diageo produces
and distributes Captain Morgan, Smirnoff and Guinness and Bacardi produces and
distributes Dewards Whiskey, Bombay Sapphire Gin and Greygoose Vodka (Our
Brands, 2015). Those brands are directly competing against each other which therefore
leads to the distribution companies competing. Each organization has their own group
of brands that they are trying to make the most popular. Some brands are going to be a
lot more popular than other because of the name, not because of the distribution
company they come from.
Diageo is “the leading premium spirits business in the world by volume, by net
sales, and by operating profit” (O’Regan, 2010). The information in Appendix 1 shows
that Diageo is leading in Net Sales as well with an amount of $22.9 billion (Annual

9. Diageo 9
Report, 2015). Even though Diageo deals with beer, wine and spirits, its top seller is
their spirits. When Paul Walsh, the Chief Executive at Diageo (until the end of 2014),
was interviewed he was asked what the distinctive capabilities and source of
competitive advantage for their organization were (O’Regan, 2010). He responded that
their strengths were “in-depth customer and consumer understanding, highly effective
routes to market, world class marketing capability, outstanding collections of brands,
focused execution and its ability to develop leader today for tomorrow” (O’Regan, 2010).
He’s right, those strengths and advantages will lead a company to be the top spirits
distributor in the world.
Another aspect that sets them apart from their competition is their ability to
market their products and how much they care about how they market. Diageo as a
company sees their products as their children and Diageo as the parents (O’Regan,
2010). “So we are marketers – we are very proud of our brands and parenting of them is
constantly on our mind. You know, we nurture them, we look after them. We also do
things that are quite bold such as embracing digital marketing. Guinness advertising has
always been iconic and customers expect every Guinness advertising campaign to be
iconic. That means we always got to make it better. Our expenditure on Guinness
advertising is significant.” (O’Regan, 2010) Since they are a global company they need
to think about each country and region as a different child; each of them needs to be
handled differently and will most likely want something different than the rest of them.
One of Diageo’s biggest competitors in the beer department is Heineken, not far
behind with $20 billion in net sales (Annual Report, 2015). Even though they are a big
competitor, Diageo and Heineken are also business partners. “Diageo formed a new
venture with Heineken, one of its competitors in the beer market, and Namibia
Breweries Limited for their combined beer, cider and ready to drink businesses in South
Africa, called DHN Drinks” (O’Regan, 2010). Not long after that deal was done, Diageo
went into another business deal with Heineken. The brewery was called Sedibeng
Brewery Limited. “Heineken owns 75 per cent and Diageo owns 25 per cent of
Sedibeng Brewery” (O’Regan, 2010). They may directly compete when selling their own
brands but when it comes to this company they have a similar goal.

10. Diageo 10
Environmental Analysis
Demographic Trends. North America has been experiencing drastic population
changes over the last few decades. The United States makes up 45% of Diageo’s
operating profits (Heneghan, 2016). After rewriting their immigration policy nearly 59
million immigrants moved to the United States (Pew, 2015). This pushes the country’s
foreign-born portion of its population to a near record of 14%. “For the past half-century,
these modern-era immigrants and their descendants have accounted for just over half
the nation’s population growth and have reshaped its racial and ethnic composition.”
(Pew, 2015) The Pew Research Center has projected that between 2015 and 2065,
future immigrants and their descendants will account for 88% of the population
increase, as the nation will grow to 441 million people. (Pew, 2015)
With the large arrival of immigrants coming into the United States, the nation’s
median age, (where half of the population is younger and have is older), has slightly
reduced (Pew, 2015). In 1965, the median was 28 years, rose to 38 by 2015, and is
predicted to become 42 years in 2065. These ages would be higher without
immigration, as the median age would be 41 years in 2015 and by 2065, it would be
projected to be 45 years (Pew, 2015).
The top part of North America, Canada, has also had similar trends within their
population and growth. Like the United States, there is a significant difference between
the size of the generations as a result of the ‘baby-boom’ and ‘babybust’ after WWII. As
a result of this and the life cycle effect, the average age in Canada has continued to rise
- from 27.5 years in the 1940s to nearly 40 years today. (Cornell, 2012)
In addition to the age of the population, the population is becoming “more diverse
ethnically, culturally, linguistically and racially.” (Cornell, 2012) Part of this change is due
to the difference among fertility rates within each segment of their society, including new
immigrants. (Cornell, 2012)
Mexico is also experiencing a significant demographic transition that is changing
both the numbers and the age distribution of the population. Changes such as advances
in the medical field have created longer life expectancies, as well as lower mortality
rates (Cornell, 2012). With this, pregnancy rates have been reduced, as there is less of
a need for large families due to the increasing assurance that children will live into

11. Diageo 11
adulthood. (Cornell, 2012) These dramatic changes have created rapid urbanization as
the wealth, social security and education continues to rise in the country. (Cornell, 2012)
North America has continued to increase in popularity over that last several
decades. The United States and Canada both are becoming more populated and
diverse, while Mexico has a population that is becoming healthier and wealthier. With
these statistics, Diageo North America will have a larger population for potential
consumers. In addition, it will have a more diverse group of people, which could change
the alcohol preferences and trends in North America.
Sociocultural Trends. There are many social trends within the beverage
industry in North America that have had significant impacts on Diageo. These trends
include the concentration toward millennials as important consumers, increasing interest
in health, moderation in drinking, premiumisation, and buying local and craft products.
Millennials have become the main focus of alcohol companies in North America,
as they are new consumers of beverage industry. They have recently turned of age in
the United State for alcohol consumption and open to new brands and flavors. (Cooper,
2016) With this, all marketing strategies and innovations have been aimed toward to
desire to please these young adults.
With the release of new government alcohol consumption guidelines, warning of
the risk of cancer with any level of alcohol (Cooper, 2016), health concerns have once
again become prevalent in the industry. The millennials have continued to indicate that
health is an important factor into their product choices. The consumers are more
capricious and have a desire to know the credentials and nutritional information behind
the product they are consuming. They pay close attention to not only eating and
drinking healthier, but to physical fitness and a desire to maintain a healthy lifestyle.
Health concerns have not only changed what consumer are drinking, but has
been the catalyst for the increasing trend of moderation. The Emerging Drinks Industry
Trends report states ‘Moderation is a growing trend amongst consumers, particularly
younger drinkers entering the market for the first time.’ (Cooper, 2016) In a study
commissioned by one of Diageo’s beer competitors, Heineken, beer drinkers across the
United States, United Kingdom, Netherlands, Brazil and Mexico, discovered that 75

12. Diageo 12
percent of this young population limits their alcohol consumption ‘on the majority of their
nights out.” (Cooper, 2016)
Premiumisation has also become more popular throughout North America and
remains a key driver influencing all the main spirits categories. A “drink less, but drink
better” concept has become a constant theme throughout the beverage industry and its
consumers in the recent decades. (Cooper, 2016) Millennials are more demanding
in terms of the “cues and credentials” they expect from higher priced offerings. (Cooper,
2016) They are more attracted to the quality of the beverage, rather than the social
aspect.
Another social trend increasing in popularity is the message behind the product.
The Emerging Drinks Industry Trends report signifies the importance of the origin of the
company and having a story to tell. (Cooper, 2016) This is often prevalent in small, local
companies. Consumers not only enjoy the company and their mission, but the unique
and different products they serve. This not only includes the local companies, but the
booming craft beer industry.
Technological Trends. Today, technology in the beverage industry is primarily
concentrated on digital marketing on the internet (Zekaria, 2016). A recent Pew
Research Center survey indicated that 50 percent of the U.S. population and 22 percent
of population of Mexico participates in social marketing (Cornell, 2012), which has
become a popular marketing location. Many companies work with companies such as
Google, Facebook and Twitter to advertise their image and products (Zekaria, 2016)
and grab the attention of the large online population of consumers.
Diageo, along with other companies, is looking for new ways to use technology to
boost business. One of the newest trends in the industry that the company is focusing
on is the use of applications on smartphones and tablets. As this a new, somewhat
untapped innovation, Diageo is launching ‘a startup accelerator, Diageo Technology
Ventures, [that] invites entrepreneurs to offer technology solutions to some of the key
issues affecting the drinks business, including irresponsible drinking and retail theft.
(Zekaria, 2016) One idea suggests being able to check your liquor consumption through
an app on a smartwatch that talks to a chip embedded in a bottle of scotch. (Zekaria,

13. Diageo 13
2016) ‘‘We are looking to use this as a source of competitive advantage in the long
term,’ said John O’Keeffe, Diageo’s global head of innovation.” (Zekaria, 2016) Diageo
already has an app developed for its best-selling stout brand Guinness features a map
of over 6,500 pubs in the Republic of Ireland and Northern Ireland, providing its users
with hot spots to visit. (Zekaria, 2016)
In addition to smartphone applications, the beverage industry has continued to
expand its technology to digital designs. Pernod Ricard has tested a “washable, digital
T-shirt that can personalize messages for night clubbers.” This idea, again, focuses on
the popularity of the millennial consumers. (Zekaria, 2016)
Outside of the use of digital technology, the beverage industry has also begun
innovations within restaurants with the use of wine-on-tap. The wine is connected to tap
so that it can be poured without the remaining wine being exposed to oxygen. In
Vancouver, many locations started using this technology in an effort to reduce costs,
improve the freshness of the wine and boost the environmental sustainability.
(Korstrom, 2016) “We’re closing in on having eliminated 100,000 wine bottles in all three
of our restaurants,’ said Tap & Barrel sommelier David Stansfield” (Korstrom, 2016),
who recently began putting their wine on tap. Stansfield estimates that annual sales for
wine within their restaurant has increased a dramatic 35 percent within this past year, a
15 percent increase on the same-store basis. (Korstrom, 2016)
Global Trends. The beverage industry is not only profitable, but growing, and is
an attractive market for success worldwide (Diageo Annual Report, 2015). “Margins are
significantly higher than for the overall consumer goods market, while, over the medium
term, the industry is expected to grow in both volume and value,” (Diageo Annual
Report, 2015). Every market presents different types of consumer dynamics and
outlooks based on the region and population. Each market must be approached with
different missions and objectives based on the needs of each. Diageo has distributed
itself through 21 markets, which are all adjusted based on the location they are in for
better success. (Diageo Annual Report, 2015)

14. Diageo 14
Political Trends. There are many strict laws and legislation wrapped around the
beverage industry that companies must take into consideration when trying to sell their
products. From advertising restrictions to modernizing alcohol laws, the industry is
continuing to work around many barriers in the laws within the United States and the
rest of North America.
The Federal Alcohol Administration Act has set forth many standards to regulate
the labeling and advertising of wines, spirits and malt beverages (TTB.gov). While the
TTB does not require prior approval of advertisements, they do offer a free service to
screen advertisements for clearance. The TTB continues to monitor all advertising of
alcohol through referrals, complaints, requests from members and selections of
advertisements to review internally and noncompliance is reprimanded. (TTB.gov)
While the guidelines are detailed and lengthy, the basic concepts that are
prohibited include false statements, statements that are not consistent with the product
labels, misleading statements that are disparaging of a competitor’s product, untrue
health-related statements and misleading guarantees (TTB.gov) While it may seem
easy to be in compliance with, the lines begin to blur for many companies that want to
give consumers what they desire on the labeling. In addition to these statement
regulations, the TTB also regulates organic labels, major food allergen labeling, labeling
approval and labeling claims to ensure the customer is provided accurate information
before the consumption of a product.
Another potential change in legislation in the beverage industry is the request to
‘modernize’ alcohol laws by Governor, Andrew Cuomo (Lothrop, 2016). The New York
Governor urges lawmakers to put forth legislation that would ‘modernize and simplify
the Alcoholic Beverage Control Law’ (Lothrop, 2016) to allow beverage makers to sell
directly to their consumers. With this, there would be new tax cuts for cider makers and
craft brewers producing less than 60 million gallons, or 19 thousand barrels a year and
will be exempt from taxation of free samples given to consumers. If finalized, this can
have both a positive and negative impact on the beverage industry. The benefits to
implementation are clear for the small beverage companies. But as these companies
begin to grow and have easier access to distributing their products, consumers may

15. Diageo 15
start to push away from larger companies, such as Diageo, and change their alcohol
consumption preferences - a trend the industry is already facing today.
Five Forces Analysis
Rivalry: High Threat. The beverage industry is highly competitive within its
companies. While Diageo is a global leader in beverage alcohol with brands in spirits,
beer and wine, it continues to have steady competition. Brown-Forman is one of
Diageo’s largest competitions of spirits in North America, but does not compete as
much on a global scale. In addition, Anheuser-Busch InBev is a threat to Diageo’s beer
brands, as it is the leading global brewer and continues to grow. Other competitors,
such as Heineken, Constellation Brands and Bacardi are continuing to innovate and
develop new strategies to improve their already successful companies.
Diageo reported a decline of 2 percent in sales in net sales in North America
from the past six months of operation, ending December 31, 2015, contributed to the
company’s operating profits falling 3 percent (Chaudhuri, 2016). The disappointing
performance of Smirnoff is particularly hurting the company, as it is a large portion of
their portfolio. Diageo is being to fall behind its competitors, such as Brown-Forman and
Beam Suntory, as they have adapted to new and popular trends in whiskey and darker
spirits. This being said, the success of Crown Royal Regal Apple and its other whiskey
brands could be key to Diageo’s comeback in North America this year. (Heneghan,
2016)
Threats of Entrants: Low Threat. With a market capitalization of $71 billion and
sales of $16.84 billion (Forbes, 2015), it is no surprise that Diageo North America holds
a large portion, 25 percent, of the market share of spirits in the region. In addition to
North America, they operate 21 geographically based markets worldwide, employs
33,000 people and has a presence in over 180 different countries. (Diageo Annual
Report, 2015) With this, it is safe to say Diageo has a strong standing in the beverage
industry.
Although sales for Diageo North America have been in decline recently, the
company is still very successful and it would be nearly impossible for a starting

16. Diageo 16
company to compete with. A company would need a high amount of capital, strong
distribution network throughout North America, and hold a hefty percentage of market
shares.
Diageo’s earliest ancestor company, Justerini & Brooks, was created in 1749 and
grew throughout many decades until the merger of Guinness PLC and Grand
Metropolitan Public Limited Company, which created Diageo in 1997 (Diageo.com).
With this rich history, along with the process of the company over the last 19 years,
entrants would fall short in development of their own organizations in comparison. In
addition, the beverage market life cycle is in maturity. This means the growth phase of
the companies and concepts have begun to wind down, marginal growth rates are
beginning to decline and a shakeout of competitors have begun to occur (Harris and
Lenox, 2013). As it steadies, marginally competitive firms are beginning to exit the
market entirely and the dominant companies stand strong.
Substitutes: Medium Threat. Besides firms that directly compete with Diageo,
there also other companies that can affect the industry dynamics by providing
functionally similar products that act as substitutes for the originals. In the beverage
industry, this could be the emerging craft beer and buying the popularity of buying local.
While these are not direct competitors to a multi-billion dollar company, they continue to
pull consumers out of the large company brands. This part of the industry has smaller
production sizes, typically higher cost of beverages and less accessibility in general
stores, but have continued to grow rapidly. People are drawn to the story behind the
organization and the desire to help strengthen small companies and local economies.
(Cooper, 2016)
Power of Suppliers: Low Threat. The beverage industry suppliers use a
plethora of easily accessible raw materials, such as barley, corn, rye, and wheat
(Diageo.com), which makes it difficult for them to have much leverage on the alcohol
companies. In addition, suppliers are reliant on high volumes, which give them less
bargaining power - if they were to push the company too much, the producer could
easily threaten to cut volumes and hurt their profits. (Harris and Lenox, 2013) Lastly,

17. Diageo 17
there is high competition among suppliers for partnership with large corporations like
Diageo.
Power of Buyers: Low Threat. Diageo is known to have “name brand” products
that are well established within the North American population and based in their profits,
sell very well. Buyers, such as distributors, retailers and other intermediaries (Harris and
Lenox, 2013) bring little threat to the company, as Diageo’s products are popular among
consumers in the region and in demand. In fact, the company began the process of
shifting away from shipping large quantities of new products all at once in order to bring
a more demand-led model forward (Chaudhuri, 2016). The buyers do not have much
leverage on the producers with the larger number of customers demanding the product
and Diageo systematically limiting the supply.
Competitive Life Cycle Analysis
Diageo as a company is in the Mature Stage of the Life Cycle but the products
they serve are always changing. As far as their spirits go, they are mature because they
have been around for a while but are being tweaked all the time. Beer and wine are a
little different for Diageo because those parts aren’t as big as the spirits. Part of them
could still be growing.
With Diageo having more than 200 production site in over 30 countries, they are
pretty well established (About Us, 2015). They have merged a few times in the past. For
examples with Heineken and the mutual stakes they have in a few breweries (O’Regan,
2010). And in 2001, Diageo was able to acquire the Seagram's spirits and wine
business (History, 2015). Those big mergers and acquisitions happened a little while in
the past and those events occurred in the growth stage of Diageo.
They are the global leader in spirits which can be frightening to think that they
don’t have much more ways to grow in that aspect. Luckily, they are involved in both
wine and beer so they can still grow and work their way to being the leader in those
industries as well.

18. Diageo 18
One of the biggest competitors is Bacardi Limited. They are selling very similar
products including Bacardi, Bombay Sapphire and Dewar’s. They are premium spirits
just like what Diageo is selling. Bacardi has been around since 1862 and also serves in
16 countries (Our Brand, 2015). In 2013, they were following Diageo and ranked the
third spirit producer in the world (The top, 2013). They’re numbers keep increasing and
could be a potential threat to Diageo in the future.
When looking at the wine aspect of Diageo company, that’s the section that is
still in the Emergent phase of the life cycle. Wine only accounted for 4% of the Net
Sales in 2015 (annual report, 2015). This is one of Diageo’s greatest areas for
improvement and growth. One big trend that is going on around the world is to tap
everything including wines, spirits, cocktails, and more (Strenk, 2014). The trend is
being fueled by “operational speed and efficiency, lower carbon footprint, increased
consumer interest and acceptance, and improved quality and availability of systems and
product (Strenk, 2014). This aspect could not only boost Diageo's sales in wine and
spirits but could also cut costs.
Even though the majority of Diageo is in the maturity stage and will continue to
be there, they can still grow in sections like the wine industry. They have become so
successful with their spirits they can continue to dominate by improving all parts of the
organization.
Analysis of Competitive Position
Stakeholder Analysis
The Stakeholders. Diageo has many important stakeholders within their
organization. The stakeholders include investors and shareholders, employees,
consumers, government regulators, local community organizations and NGOs, farmers
and other commercial partners.
Today, the most important stakeholders for Diageo are the people that buy the
products for their own consumption - the consumers. The consumers have the power to
grow the company, the products and their profits, or send them out of powerful standing
within the beverage industry. Since their industry is at maturity in the life cycle, their role
is crucial. The employees, investors and shareholders, community and suppliers all

19. Diageo 19
depend on the products being purchased. The consumers of Diageo have persuaded
the company to follow their recent trends in taste, quality and sustainability.
Stakeholder Interest. As seen in Appendix 5, the stakeholders’ interests differ
dramatically among each group. The employees’ basic interests include their salaries,
benefits, time off, share options, job satisfaction, safety and rights as human beings.
The consumers value the quality of the products, availability and customer service,
while the government the legality behind Diageo’s operations and local impact. The
community around the company is interested in the jobs created, the services Diageo
will do for them and its sustainability for the environment. Suppliers continue to be
interested in growth in production and their relationship with the company, which could
mean long-term contracts, while investors, shareholders and other commercial partners
are primarily interested in their profits. While all of the stakeholders have different
interests to benefit themselves, they all share interest in the social and environmental
impact Diageo has on the world.
Diageo believes that being a global leader in the beverage industry comes with
social and environmental responsibilities. There are certain activities that are of
particular importance. With this, they look analytically at their activities and, after a
discussion with a wide group of stakeholders, found focus on the most material issues
to their business. (Diageo.com) The core of their interests thus far has been on creating
a positive role for alcohol within society, which is a critical expectation stakeholders
have today. In additional, stakeholders also have concerns involving minimizing the
company’s impact and having a more positive role within the industry as a whole.
Overall Diageo wants to keep openness and transparency of the company to its
stakeholders, which includes having clear and accurate reporting’s. With this, Diageo
began their Sustainability and Responsibility Strategy to prioritize ongoing efforts to
improve their company and satisfy the wants and needs of their stakeholders.
There are six priorities highlighted in Diageo’s Sustainability & Responsibility
Strategy. The first of the priorities is, of course, alcohol use in society. The company
wants to contribute to the World Health Organization’s goal to reduce harm from alcohol
by 10% and tackle misuse effectively through programs. (Diageo.com) The second

20. Diageo 20
priority involves water use and the environment. Diageo strives to protect the water in
the world by reducing its use and returning it back into the environment when it is
appropriate. They also want to change their impact on the environment to not only
remove negative impacts, but improve it.
The third priority emphasized in the report is community empowerment. This
involves giving power to the people within their value network, such as farmers that
grow the natural resources to the bartenders who help sell their products (Diageo.com).
In addition, Diageo has set a goal to have sustainable supply chains. With this, they
want suppliers to be partners in “providing locally and sustainably sourced materials
which have a positive impact on the communities and environment in which [they]
operate.” (Diageo.com)
Another goal is to focus on their people. This means connecting their employees
with the company’s values and strategies, but more importantly, protecting their safety
and respecting their human rights (Diageo.com). Lastly, Diageo wants to continue to be
as ethical leader in society, earning the trust and respect of their stakeholders.
Strategic Action. Until this past October of 2015, Diageo and Heineken were
partners. They both had stakes in brewing companies called Desnoes & Geddes Ltd
and GAPL Pte. In October, they announced that there would be “an exchange of
emerging-market brewing assets” between the two companies (Ballard, 2015).
According to The Wall Street Journal, “Diageo is selling its stakes in brewing joint
ventures in Jamaica and Southeast Asia to Heineken and buying the Dutch firm’s stake
in a Ghanaian drinks company (Ballard, 2015). Each of the companies agreed that
these trades in markets will help to focus their beer businesses (Ballard, 2015).
The deal consists of three parts and stakes being swapped. To sum it all up, at
the end of the deal “Diageo will own 72.42 percent of Guinness Ghana Breweries;”
“Heineken will hold a 73.32 percent stake in Desnoes & Geddes” and Heineken will
“acquire the licensing and distribution rights to Red Stripe and Dragon in Britain,
Canada and the United States” (Bray, 2015). Also, “Diageo will receive a cash
consideration of $780.5 million” (Bray, 2015). These trades in the market will help each
company to focus their brands in certain markets.

21. Diageo 21
There are no hard feelings between the two organizations; they are just doing
what is best for each of their businesses. In fact, Heineken's Chief Executive said “our
close collaboration with Diageo has been very productive over the year and I would like
to thank them for their valued partnership” (Ballard, 2015). It’s just time for both of them
to move on and continue to grow.
Diageo did demonstrate the ability to stay true to their values. According to their
website, they want to be aligned with their consumers and find a way to create a
business that is close to those consumers (About Us). When swapping assets and
markets with Heineken they were able to do just that. Now they can focus on the
Guinness market, consumers and grow that brand to its full potential. Diageo’s Chief
Executive Ivan Menezes said “It provides a strong route to consumer for Guinness
which will grow the brand in these markets, I am pleased that this transaction meets the
clear strategic objectives of both Heineken and Diageo” (Bray, 2015). Diageo is a large
company and there can be a lot of ethical problems within companies that are so large
and spread out across the world. But the way they show how much they care about
Heineken and are thankful for the time they could be partners, shows how strong
Diageo’s values are to them. They want to be supportive in big deals like this.
“The transaction we have announced today continues our proactive approach to
our portfolio, enhancing our focus on the core to achieve Diageo’s performance
ambition” (Bray, 2015). They are a big company already but they want to continue to
grow. They have sold and bought many companies over the years but each one they do
for a reason. The last five year Diageo has made a lot of acquisitions in brand and local
actions but has doubled the size of their luxury business (About Us). It is thought that
this decision will play out to be very successful in the growth of Diageo.
Impact of Strategic Actions. This action can have a large impact on the
stakeholder’s of Diageo, as seen in Appendix 5. While the employees, government and
consumers may not see a dramatic change in the strategic action of splitting with
Heineken, others may see one. This split allows Diageo to focus on their own beer
business, including the people that directly work within its product line. In addition, this
could give Diageo that potential for growth. This could mean a larger impact on the

22. Diageo 22
communities’ interests, as well as the investors and stakeholders. as their interest is in
the profits the company produces.
Organizations Capabilities and Competitive Position
When looking at Diageo’s capabilities, there was a desire to direct them at some
of the unique capabilities that they have; the aspects that give them a higher
competitive advantage. The four capabilities in discussion are their strong leadership,
their efforts to reduce unsafe alcohol use in society, their world-class marketing and
Diageo Technology Ventures.
Starting with Diageo’s strong leadership, one of their strongest capabilities, we
watched a YouTube video that interviewed the employees on Diageo’s leadership style
to get a better idea of what it was about (YouTube, 2012). The employee’s featured in
this video said that “Diageo believes in you, invests in you and cares about you”
(YouTube, 2012). They were also very adamant about how strongly Diageo trusts their
employees (YouTube, 2012). They want to empower them to make their own decisions
so they can build confidence in their own abilities (YouTube, 2012). Their leaders are
very approachable and the structure at Diageo is non-hierarchical (YouTube, 2012).
They want people to feel like they have a purpose in the company (YouTube, 2012).
Diageo even has a structured leadership program within to encourage their employees
(YouTube, 2012).
According to the Diageo Careers website, they have an academy that they house
all of their learning and development resources (Diageo Careers, 2016). The Academy
offers classroom training events, e-learning courses and virtual classes (Diageo
Careers, 2016. Examples of the classes are People Manager Development, Change
and Project Management Framework and others on Facilitating and Presentations
(Diageo Careers, 2016). This sounds like a great place to work and grow. This
technique might not be too hard to imitate but it would take a lot of time, effort and
money to get it up and running smoothly and effectively.
Next, is Diageo efforts to reduce the amount of irresponsible alcohol use in
society. In a stakeholder's point of view, this is one of the strongest capabilities Diageo
has. It shows that they care about the people outside of the company and they care

23. Diageo 23
about the community the company is in. “Our programs and initiatives are varied,
because we recognize that alcohol misuse and related harm is a complex social issue,
and that different cultures and societies require different approaches” (Leadership,
2016).These unique programs for each society is what helps Diageo stand out, giving
them a greater competitive position.
On the website, it states that Diageo has supported almost 300 programs in more
than 50 states (Leadership, 2016). That’s a great contribution and they are striving for
more in the future. An example of one of their campaigns is to reduce the drinking and
driving in Taiwan (Leadership, 2016). It’s a simpler one but it still gets the job done.
They put up 10’s of thousands of posters and billboards around the country and
followed that up with a number of commercials on TV and radio (Leadership, 2016).
Even though people aren’t going to listen to this campaign all the time, it’s still very
helpful to get the idea out there. When they have a repetitive message coming into their
brain, they are more likely to follow it sometime in the future, or at least think about what
they are going to be doing more often.
Finally, we wanted to focus on Diageo’s Technology Ventures. This capability of
the company focuses on up and coming entrepreneurs and emerging technology
companies (Diageo Tech, 2016). There is an opportunity where Diageo Technology
Ventures will review applicants who have effective ideas and give them the possibility to
work with Diageo to solve some of their problems or help with their advancements
(Diageo Tech, 2016). The process starts at the beginning of the year where Diageo
publishes innovation briefs on their website, each one has an opportunity or challenge
and people apply with their solution to problem (Diageo Tech, 2016). Each person is
allowed up to $100,000 budget when planning the solution, but they get the money once
the idea has been approved (Diageo Tech, 2016). The solutions are reviewed and the
best ones are invited to pitch their ideas to a team (Diageo Tech, 2016). If the funding
has been approved, the applicant will work with Diageo to finalize the plan and begin
work together to successful get rid of the problem (Diageo Tech, 2016). This strategy
goes right along with the leadership style at Diageo. They want their employees to
succeed, both in the business and in their personal lives. It’s great to see how much this
company cares about the people they are surrounded by.

24. Diageo 24
This capability would be one of the hardest to imitate. If competitors would want
to do something like this they will have to be willing to put their problems up for the
public to see along with be willing to invest a lot of money into each potential solution
with the risk of it be unsuccessful. This is a huge gamble for some companies that they
aren’t willing to take.
Adding all these capabilities up, it gives Diageo a competitive advantage. Not
everyone is going to think that a company who invest so much in their stakeholders is
attractive, but there are more that will. People want to be respected, people want help,
and people want someone to believe in them. That’s just what Diageo does with these
three capabilities. It shows how much they want to see everyone reach their full
potential.
According to Appendix 8, Diageo has quite a few products that are stars in their
lineup. When it comes to attractiveness, Diageo is very strong in the Premium Drinks
Industry; they are number one when looking at sales in this category. That is an aspect
that they have put a lot of work into and cherish greatly. Vodka is becoming a little less
favored as far as alcoholic beverages go. Whiskey and Rum are still going strong. With
this trend, Diageo needs to keep pursuing those markets in order to keep sales up. The
beer and wine industries are growing rapidly. Those are not in their strong suits when it
comes to sales and range of products they produce and sell. Those are the two areas
that Diageo should focus on to become even a bigger competitor in the beverage
industry. As long as they keep looking into new mergers and products, and getting rid of
the ones that aren’t giving them any benefit, Diageo will continue to grow and sustain
their position as the top leader in the Premium drinks department.
Diageo’s Position in the Industry
The firm’s capabilities are a good fit to the insights revealed in the five force
analysis previously presented. With the changing business environment and Diageo
being in the maturity phase of their life cycle, it is important for the company to continue
to adapt new and innovative strategies to stay ahead of the competition, which is one of
the highest threats for their company. Diageo’s advances in marketing and technology,

25. Diageo 25
specifically, will help increase the gap between the positions between competitors,
potentially keeping Diageo on top.
Diageo’s capabilities in leadership, efforts to reduce unsafe alcohol use,
marketing and technology will also continue to strengthen their customer population,
which will help lessen the threats of buying from small, local companies and breweries.
As trends continue to change and competition becomes aggressive, sustainability is an
on-going effort for the company. This being said, Diageo overall is in an attractive
position within the industry.
Recommendations
The beverage industry in the North American market is constantly changing,
driving dramatic transformations in Diageo’s products. The competitive prices by new
distillers has changed the prices and marketing strategies for the organization, while the
shift in taste and preferences among consumers have highlighted some of the strengths
and weaknesses among Diageo’s brands.
Diageo has a premium brand positioning worldwide, with the U.S. being the
largest market for the company. The company is leading this market with its spirits
accounting for roughly 19% of the volume share (Diageo Company Overview, 2015)
and it is safe to say that spirits should be a priority for the company.
Diageo’s strong brand standing is mainly due to its dominance in the vodka and
whiskey category. With this, it’s important that the company follows closely to the
popular trends of the market. Currently, the U.S. is moving away from vodka and
towards whiskey. The consumers not only are focused on whiskey, but away from
Scotch whiskey and moving towards American whiskey. With these new trends, Diageo
must adapt.
The recent popularity of whiskey in the U.S. has changed, and should continue to
change Diageo’s production. Despite the iconic Johnnie Walker brand, the company
has not prioritized whiskey in their portfolio and has had little presence in the American
whiskey trend. After a decline in sales, Diageo’s performance improved with innovations
such as Crown Royal Regal Apple and Bulleit, which were more similar to consumer
preferences. It is suggested that Diageo should continue to build on its whiskey brands

26. Diageo 26
in order to keep up with consumer trends and capture the potentially large profit that
comes with satisfying the wants of their buyers.
The wine industry is a fragmented and competitive business, with brand loyalty
much lower than that of spirits. In Diageo, wine sales account for only 4% of annual
sales of the company and 1.5% of operating profits (Smyth, 2015). With sales growth
difficult to obtain in the large U.S. market, Diageo has had trouble in the market they
have invested a great deal in. From this, it is suggested that the company cuts wine out
of its portfolio.
Diageo has already started to change its wine investments for the better.
Towards the end of 2015, the company agreed to sell a majority of its wine business to
Treasury Wine Estates for $552 million (Trefis Team). This transaction will have a minor
impact on the company’s wide economic force, but will bring Diageo’s focus on its more
important assets, their spirits, and growing assets, their beer. It is recommended that
the company continues to sell off their remaining wine brands and give more attention to
their successful brands such as Johnnie Walker scotch, Guinness, Cîroc and Smirnoff.
Diageo’s other strong suit is their beer market. Beer accounts for 18% of net
sales in 2015 (Diageo Annual Report, 2015). Although not as strong as the spirits
industry, it’s a market that they should continue to grow and invest in. If they were to sell
the remaining wine investments, they would be able to shift their focus towards beer
and grow in two industries instead of trying to reach goals in all three; wine; spirits and
beer.
The recent switch of assets between Diageo and Heineken shows that Diageo is
going in that direction. The acquisition of Heineken’s percentage of Guinness Ghana will
help to strengthen Diageo’s brand within this area (Bray, 2015). This switch of assets
will help Diageo to concentrate on markets that they already have a footprint in and
improve their route to consumers (Bray, 2015).
Guinness accounts for about 12% of beer sales at Diageo (Reigniting growth on
Guinness). If they continue to concentrate on expanding the market of Guinness,
stakeholders will become more brand loyal and try new things that Diageo invests in.
Diageo’s biggest contributors to beer market sales are Europe with 28.9% and Africa
with 46.6% in 2015 (Reigniting growth on Guinness, 2013). When starting their mission

27. Diageo 27
to increase sales, start close to the markets that are already buying the product then
broaden out as it becomes more popular.
Another way to expand Diageo’s beer industry is to focus on the next generation
of beer drinkers. Trends are always changing, generation by generation as well, and
they need to be researched. Staying on top of what the new drinkers are going to be
indulging in will out Diageo ahead of the game. As stated earlier as one of the
technological trends that have come about, social media can be used to advance
Diageo’s competitive advantage and increase sales. Those social media sites give
Diageo easy access to all of their current stakeholders and potential stakeholders in one
location.
Diageo is a wonderful company that has worked extremely hard to get where
they are today. They have bought and traded assets and markets in order to advance to
a position they are happy with. Their hard work never ends and for Diageo to keep and
improve their competitive advantage, they will have to continue to find new and
innovated ways to fuller develop their company. After considering all of the trends that
are going on in industry, what other companies are doing, and what is best for Diageo
themselves, they have many directions they could go to grow and succeed in the
beverage industry.

28. Diageo 28
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31. Diageo 31
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APPENDIX 1: Competitor Analysis
Net
Sales
Gross
Profit
Net
Income
Competitive position
Diageo $22.9B $9B 4.2B Biggest Distributor in the world
Brown-
Forman
$4.10B $2.1B $684M Big competitor in the US, not as much
globally, competes for spirits
AB In Bev $21.5B $12.8B $6.6B Leading global brewer
Heineken $20B $1.6B $1.6B High competition in beer brewing and
distribution, especially in Europe
Constellation
Brands
$6.02B $1.5B $839.3
M
Strong competitor in North and South
America
Bacardi
(Private)
N/A N/A N/A Family advantage, global competitor in
spirits
At Diageo, the competition more comes from the products and brands it
produces than the distribution of those items. People look at brands when they are
purchasing their favorite wine, beer or spirit. The above chart shows the top competitors
for both beer and spirits. For Diageo, they specialize in spirits. Those spirits have the
biggest competition with Bacardi and Brown-Forman. Unfortunately, we cannot see how
Bacardi competes because of the fact that their company is private. In the beer section
Anhauser Bush InBev is Diageo’s biggest competitor. Beer is their specialty and it’s
hard to beat that.

32. Diageo 32
APPENDIX 2: Environmental Analysis
Industry U.S. Widgets circa 2010
Demographic Trends
Increase in immigration in the United States and Canada;
Diversification of population; increase in health and wealth
Sociocultural Trends
Focus on Millennials- Moderation in drinking; drink better
quality (premiumisation);Buying local products and craft beer
change the corporate industry
Technological Trends
Smartphone applications introduced into the beverage
industry; Wine on tap brings freshness and environmental
sustainability to restaurants
Global Trends Growing market worldwide
Political-Legal
Trends
Strict regulation on labeling and advertising alcohol; future in
modernizing alcohol laws will allow small companies to sell to
their consumers directly
The beverage industry could change dramatically with the changes to the
demography of the United States, Canada and Mexico. With the increase in population and
wealth brought into the countries, there is potential for an increase of potential customers
for Diageo North America. The sociocultural trends focus on the millennials- who have been
drinking less, but drinking better. In addition, the trend of buying locally has shifted the
consumers’ attention to smaller companies. As technology becomes more prevalent
amongst the population, new technology has emerged in the industry. From the use of
smartphone applications to different ways to serve wine, the newest technology trends have
given many in the industry a competitive advantage. In terms of the industry worldwide, the
market is still continuing to grow and develop. It is an attractive market to be in. This being
said, the regulations on advertising and labeling has limited many companies. In addition,
new developments in laws focused on small companies, could make it easier to their
products to get into the hands our consumers – which could continue to fuel the trend of
supporting locally, resulting in a decrease in sales of the larger companies, such as Diageo.

33. Diageo 33
APPENIX 3: Five Forces Analysis
Threat of Entry = Low
Threat
Rich history and success
High investment requirement
Supplier Power = Low
Threat
Rivalry = High Threat Buyer Power = Low Threat
Demand for product is high Steady competition with
others
Name brand recognition
Easily accessible raw
materials
Decline in recent sales High consumer demand
Substitutes = Medium
Threat
Growing local trends
Growth of breweries
There is a high threat of rivalry for Diageo with their recent sales decline, as well
as the adaptations of recent trends amongst the other companies. With this being said,
there is a low threat to emerging companies, as the industry is in the maturity phase of
the life cycle. While spirits are well established in the market, substitutes such as
beverages from breweries, are increasing in popularity. Nevertheless, Diageo faces a
low threat with both the power of their suppliers and buyers. The raw materials used in
production are plentiful and suppliers require high volumes for profit. In addition, there is
high demand for Diageo’s brand names, preventing distributors and suppliers from
creating leverage against the company.

34. Diageo 34
APPENDIX 4: Competitive Life Cycle Analysis
Diageo is primarily in the spirit part of the industry, which is well established and
in the mature phase of the market. The company has a strong standing against its
competitors in spirits and there is little threat from emerging companies, as Diageo is
very large and successful.
APPENDIX 5: Stakeholder Analysis

35. Diageo 35
Stakeholder Stakeholder Interests Assessment of
Impact
Potential Strategies
Employees Salary; benefits; time off; share
options; job satisfaction; safety
and human rights
Customers Reliable quality; value of money;
product availability; customer
service
Government/
Regulators
Operate legally; tax receipts;
local impact
Community/NGOs Local jobs; Community
service/donations; local impact;
sustainability
Suppliers (Farmers) Long-term contracts; prompt
payment; growth of purchasing
Investors and
Shareholders
Profit growth; share price
growth; dividends
Profits grow with
growth in beer
Other Commercial
Partners
Profit growth Profits grow with
growth in beer
Diageo’s stakeholders have a variety of personal interests and there can be a
dramatic impact on them with the recent split from one of their partners, Heineken.
Diageo’s plan is to focus their efforts on their own beer products, potentially having a
more narrow aim on the community, suppliers and the opportunity for growth in the beer
industry.
APPENDIX 6: Capabilities Analysis
Capabilities Strong Leadership Efforts to reduce
unsafe alcohol use in
society
Diageo Technology
Ventures
Company pursues
strengths and stays
reliable
Legal process; minimal
direct impact
Focus on current
communities and jobs
More focus on direct
suppliers of their
products
Diageo continues to
support its employees
Employees satisfied –
focus on sustainability
Pursuit to beer industry
in products/ trends
Continual use of legal
operations
Sustainability &
Responsibility Strategy
Sustainability &
Responsibility Strategy
Focus on beer industry
and recent trends
Focus on beer industry
and recent trends

36. Diageo 36
Processes Build confidence
and empower their
employees;
develop themselves
professionally and
personally
Programs to support
drinking safely and
responsibly
People submit their new
technology and business
ideas to Diageo
People/Skills Leaders are
approachable;
non-hierarchical
All societies and the
people who support
Diageo’s efforts
Any up and coming
entrepreneur
Systems/Tech Have a program
within to train
employees to be
leaders
(development
programs)
Different
programs/initiatives/cla
sses depending on the
culture
Looking for new
advances
Alignment Internally Internally and externally Internally and externally
Sustainability Semi-easy to
imitate; take a lot of
time to implement;
need everyone to
agree
Semi-easy to imitate,
need the support of all
stakeholders to get
involved
Not easy to imitate, need
funding
Diageo’s capabilities include strong leadership, efforts to reduce unsafe alcohol
use and technology. These strategies require ongoing effort, as sustainability can be
difficult with the strength of their competition. Nevertheless, their capabilities are a good
fit for the firm’s competition and responsibility within society.
APPENDIX 7: Strategy Maps

37. Diageo 37
Diageo (number of employees) Brown-Forman
Pernod Ricard Bacardi
Diageo is the largest company in comparison to its competitors in terms of the
number of countries it represents and the number of brands the company carries. The
second largest in the competition is Pernod Ricard.
APPENDIX 8: Portfolio Planning Matrices
0
50
100
150
200
250
0 5 10 15 20 25 30 35 40 45
NumberofCountries
Number of Brands
Strategy Map

38. Diageo 38
Question Marks
/Beer products/brands
Tanqueray
Stars
Premium Drinks
Captain Morgan
Baileys
Cîroc
Dogs
Wine products/brands
Bell’s Whisky
Cash Cows
Smirnoff/Vodka Brands
Johnny Walker
/
The cash cows are established and stable, with low growth. These products
could move either way on the scale of profitability. The dogs are products also with low
growth, as well as low potential and are in need of elimination. Luckily for Diageo, they
have very few. Diageo has many products within its “stars”, meaning there a large
potential for those brands and profits could grow. Lastly, there are a few products that
are question marks. These have potential to become stars and growth is dramatic.