20130425 do s 2

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όραση INTERNATIONAL CONSULTING
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    24-Jun-2015
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Strategy assignment. Using the alcohol industry and its competitors to draw out dynamics of strategy formulation

Transcript of 20130425 do s 2

  • 1. INTERNATIONAL CONSULTING

2. DIAGEODIAGEO 3. DIAGEO Worlds leading premium drinks business 80 countries 25,000 peopleNorth America3,556mEurope2,949mDIAGEOAfrica1,447mLatin America& Caribbean1,239mAsia Pacific1,501mFounded in 1997Grand MetropolitanUnited Distillers and Vintners2000Focus on Premium DrinksSells Burger King and Pillsbury 4. Introduction - VMOSTThe MissionVisionObjectivesAs custodian of our brands, we will nurture them and optimize their value bydriving brand equity, volume and market share in order to enhance our long termposition in the market place. To be Faster recognized organic as net the sales industry growth: leader 6% CAGR for the in distribution the medium of termdeluxe winespirits Organic and champagne operating margin in the improvement: world market.200bpts by year ending 30 June 2014 Eps growth: Double digit growth in core* eps* excluding exceptional items and the exchange impact on operating profit 5. Agenda External Analysis Alcoholic Beverage Industry PEST Porters Five Forces Industry Life Cycle Key Success Factors Customer Analysis Competitor Analysis Degree Of Turbulence Internal Analysis - Diageo Gap Analysis Strategic Direction 6. External Analysis - PESTPoliticalSocialTechnologicalEconomicUnemployment Rate inEuropePrice of Raw MaterialsAutomation technology indistilleriesLaws to limit AlcoholConsumptionRegulation of bottle labellingLicenses Trademarks andPatentsIncreased lobbying againstalcohol consumption: alcoholawarenessIT Technologyimprove efficiency ofEnvironmental Import Supply and chainExcise IssuesDutiesImprove businessIncrease Intelligencein number of femaleconsumersSocial Media and internetmarketing 7. Porters Five ForcesBargaining Threat Rivalry Bargaining Threat of Among Substitute of Power Power New Existing of Entrants of Products Suppliers Buyers Competitors(Low)(High)((LowLow)but growing)(High)Switching Many High capital Supplier Cost requirementfor Optionsbuyers is lowIndirect substitutes are present:Soft DrinksCoffeeWaterJuicesOpen competition for highest marketshareMany brand options are available tothe consumerExit Major barriers Competitors are high: buy difficult in Bulkto sellassetsLong High Fixed term contracts Costwith Supplierscontrol price fluctutationsConcentration of buyers is highGovernment Policy: tariffs and importduties, High Level distribution of AdvertisingchannelsCost Disadvantage for new entrant22434 8. Development Growth ShakeoutMaturityDeclineExternal Analysis - Industry Life Cycle Analysis Overallunattractiveness Excess capacity High Price competition 9. External Analysis - Key Success Factors Ohmaes 3Cs 10. External Analysis Customer Analysis 11. Competitor AnalysisBrown Pernod BacardiFormanRicardMain Primary Strengthen focus focus on existing on Rumwhiskey, brands especially through marketing its top brand: across Jack the DanielsboardCouples Limited Premiumization Diversification its product of with their in knowledge Vodka, brands Tequila to of attractcocktails and Wineand mixesFocus on operational efficiency and agility 12. External Analysis Degree of TurbulenceComplexity NationalEconomicRegionaltechnologicalGlobal SociopoliticalFamiliarityof EventsFamiliar Extrapolable DiscontinuousFamiliarDiscontinuousNovelRapidity ofChangeSlower thanResponseComparableto ResponseFaster thanresponseVisibility ofFutureRecurring Forecastable Predictable PartiallyPredictableUnpredictableSurprisesTurbulenceLevel1 2 3 4 5Degree of Turbulence: (4.7+4.6+3.8+4 )/4= 4.34.74.63.84.0Predictability and Changeability 13. External Analysis Alcoholic beverage industry Internal Analysis - DiageoResource AuditValue ChainVRIOBCG MatrixMc Kinsey 7SCore CompetenciesDistinctive CapabilitiesPortfolio AnalysisGeneric StrategiesSWOT Gap Analysis Strategic DirectionAgenda 14. Internal Analysis Resource Audit (Grants Model) 15. Internal Analysis Resource Audit (Grants Model) 16. Internal Analysis Resource Audit (Grants Model) 17. Internal Analysis Value ChainInfrastructureHuman Resource ManagementTechnology DevelopmentProcurementInboundLogisticsOperationsOutboundLogisticsMarketing andSalesServiceMarginMarginSecondaryActivitiesPrimaryActivities 18. Internal Analysis Value Chain (Primary Activities) 19. Internal Analysis Value Chain (Secondary Activities) 20. VRIO FrameworkA sequential decision making approach by questioning each resource and asking if itis valuable (Lynch, pg 156)VRIOFrameworkVALUABLE RARE DIFFICULT TOIMITATEEXPLOITED BY THEORGANIZATIONCompetitiveImplicationsBrand Equity(Tacit knowledge)Yes Yes Yes Yes SustainedAdvantageEffectiveDistributionNetwork(synergy)Yes Yes Yes Yes SustainedAdvantageLeadership andinnovative abilityYes No No Yes CompetitiveParityPlant Facilities Yes No No Yes CompetitiveParityMarketing Yes No No Yes CompetitiveParity 21. BCG Matrix 22. MCKINSEY SEVEN S MODELStrategy Top line growth To make selective acquisitions of companies with both strong localroutes to market and brands that appeal to the growing number ofmiddle class consumers in the emerging markets. Develop a holistic world-class brand asset management system.Structure Operational functions executed by geographic regionalmanagement, each responsible for meeting diageo strategicobjectives thereby responding to regional market analysis andresponsibilities.System Internal control and risk management system in relation to thecompany financial reporting process Automated systems for manufacturing Waste disposal system 23. MCKINSEY SEVEN S MODELStyle Participative leadership in some regards:Employees have the freedom to train themselves through eLearningcourses.Co-operative team dynamicStaff Over 25,000 employees. Staff required for operation of automated systems Annual training Internships for graduate Rewards systems in placeSkills Diageos Academy: home for global learning and developmentresources. Ranges from:Classroom training eventsE-learning coursesSelf development materialsVirtual classesResearch and DevelopmentShared values Customer and consumer oriented, team oriented, proud of what wedo, strive to be the best, create mutual relationships andpartnerships. 24. Core CompetenciesKey success Factor Core CompetenciesCustomer - BrandAppealOwnership of high end brandsCater for both genders: example in beer, they use snappVariety of Brands across price rangeCompetition -CompetitivePricingEconomies of ScaleEfficient productionSupplier RelationshipsCorporation Skilled personnelDiverse and Talented and peopleCorporation HighQuality ProductHighly automated & mechanized.Quality control proceduresCorporation EfficientDistributionEfficient supply chainPartnerships with distributors in different markets 25. Distinctive Capabilities John Kays FrameworkArchitecture Employees: Developing World Class Talent: Career developmentprocess.Excellent relationship with supplier.InnovationOwnership of brand with heritage, tradition and unique tacitknowledge.Reputation Developed a reputation for ultra-premium blended scotch:Johnnie WalkerStrategic Assets Patents of technology to protect their rights:-process technology, bottle marking technology. 26. Wine 6% of sales Spirits Beer 21% of salesUltra Moet and ShadonChaloneJohnnie WalkerBlueCiroc 63%Super Dom perignon BaileysCaptain Morgan 9%Premium Blossom HillJusteriniSterlin VineyardsJose Cuervo(5%)Smirnoff 5%Johnnie WalkerBlackGuiness 3%Popular JNB (5%)Black and WhiteHarp LagerRed Stripe LagerBell LagerPortfolio Analysis 27. Porters Generic StrategyNarrow BroadDifferentiation in two dimensions: price differnces, productdifferentiation: wine, beer and spirits (vodka, gin scotch and rum)Use of premium brandsCost Differentiation 28. Agenda External Analysis Alcoholic Beverage Industry Internal Analysis - Diageo Gap Analysis Strategic Direction 29. Gap Analysis - EVR 30. Gap Analysis - EVR 31. Gap Analysis - EVR