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Diageo's Corporate-Level Strategy Diageo is the worlds leading premium drinks business with the most recognized collection of premium spirits, wine and beer brands. It is a global and multinational company trading in 200 markets around the world generating some $ 19 billion in revenue and employing 26, 000 people worldwide. With a turnover of 1 billion and profits in the region of 215 million Diageo Ireland is a major contributor to the Group and to the Irish economy. Surprisingly, however, Diageo is a relatively new company. It was formed in December 1997 following the merger between two of the worlds leading food and drinks companies, Guinness and Grand Metropolitan. There are many different growth strategies that a company may adopt and implement.
Managers can grow the business organically or through diversifying into new businesses or alternatively through mergers and acquisitions of other companies. An Organic growth strategy simply means that the business achieves growth through expanding the market share of its current products or services. This may be achieved by: Encouraging new users to try a product Encouraging existing customers to consume more of the product Winning over competitors customers Diageo Ireland is focused on investment in marketing and innovation as a key to driving its business. Growth can also be achieved through a diversification strategy whereby the company moves into new markets.
This is a more risky strategy as the company may enter unfamiliar markets. In the past Guinness diversified into fish farming, electronics and tourism! However, fish farming is completely different from brewing and Guinness subsequently exited from this industry, although its support of fisheries has resulted in a major research facility in County Mayo. Another strategy for growth is through mergers and acquisitions.
A merger usually takes place when two companies decide that they each have some complimentary skill or resource to offer the other. By joining forces they can create a synergistic effect i. e. together they become a much stronger force than operating as separate businesses. Guinness has been the market leader in the stout and beer markets for many years with its flagship brand, Guinness, in production since 1759. Grand Metropolitan was also a key player in the spirits market with its UDV division, which owned Gilbert and Baileys in Ireland.
The spirits portfolio of Grand Metropolitan was complimentary to the Guinness beer brands and there were major synergies and cost savings to accrue from integrating the companies. The merger of these two leading companies led to the establishment of a leading player in the global drinks market. The newly integrated organization had wider geographic breadth than either company on its own. They also possessed the broadest and most recognized collection of premium drinks brands across the world. As part of the integration, an incredible amount of change had to be undertaken and managed. Some of the critical activities of the merger involved: Creating a new Corporate brand Identity for the newly merged company namely Diageo Managing the repertoire of brands through the merger Establishing and defining the new organizational culture Defining Diageo's role as a responsible corporate citizen The newly merged company needed a single corporate identity that would embody the culture and the ethos of all parts of the business.
The name Diageo was chosen to fulfill this objective. The word Diageo comes from the Latin word for day and the Greek word for world. This truly international word is taken to mean every day, everywhere, i. e. every day, everywhere around the world Diageo brands offer consumers a way to celebrate occasions responsibly.
At the time of the merger Diageo was a broad-based consumer goods company, with food and drink at its core. By 2000 it had sold off its food divisions, the Pillsbury food-company and the Burger King Corporation, to focus on its drinks business. Diageo is now one business, with one name and one focused corporate strategy. Marketing brands in todays environment requires that companies pay attention to the responsibilities to their various stakeholders and to society in general.
Societal marketing is about delivering customer satisfaction at a profit while at the same time respecting and protecting society. The marketing, sale and consumption of alcohol raise some important public issues and for this reason there are strict legal and regulatory rules into place. Diageo believes that these rules are in the interest of the industry, the consumer and society, as they promote the need to understand sensible drinking. Voluntarily, Diageo has recently strengthened the Diageo Marketing Code laying down very strict principles on the marketing, packaging, naming and promotion of its brands.
Diageo is committed, through its ongoing education programs and through its support of other initiatives, to tackling alcohol misuse and promoting sensible drinking. It is a member of a number of industry-funded groups around the world that work full-time to educate consumers about responsible drinking and to develop initiatives which tackle alcohol abuse. It works with governments, teachers, the public health community, licensing authorities and other relevant bodies on initiatives aimed at promoting sensible drinking. Bibliography: web
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Research essay sample on Diageo Corporate Level Strategy
