This is a strategic options case regarding Diageo, PLC. Diageo is a conglomerate focusing on premium alcoholic beverages. The firm originated in 1997 with the merger of Guinness and GrandMet. The company began with the mission to be the strongest premium alcoholic beverage producer worldwide. To that end, they have acquired a majority of premium brands in the spirits industry and a large portfolio of premium wines, while at the same time divesting itself of those companies not in line with its new goals. The major satellites in the food industry were Burger King and Pillsbury, which Diageo managed to sell in 2002 and 2001 respectively. Today they are the controlling producer of spirits in the US and UK, and …show more content…
III. Key Factors for Successfully Competing in the Firm's Industry
a. High quality vineyards and distilleries are required to create the best wines and spirits.
b. Strong supply chain management is needed to connect the producers, the wholesalers and local retail businesses. It is also important in order to take advantage of economies of scale present in consolidating most of the premium spirit brands.
c. A solid marketing division is needed to get the best use out of all the acquired brands of spirits, as well as to establish a name in the premium wines sector.
d. With so many producers, differentiation is an absolute necessity.
IV. Corporate Strategy of the Firm
Diageo is employing a Multi-Domestic Growth strategy focusing on premium wines and spirits.
a. Nature of diversification: Related constrained diversification. Diageo has acquired a number of wine and distilled brands, including 9 of the top 20 premium distilled brands4.
b. Scope of market operations: Diageo is focused on the premium spirit and wine markets.
c. Acquisitions: Recent acquisitions include much of Seagram's portfolio of rum and wine assets.
d. Divestures: Diageo sold Pillsbury to General Mills in 20014, and more recently sold Burger King as well3. It is now almost completely out of the food and restaurant business.
V. Business Strategy of the Firm
a. Focused differentiation
VI. Functional strategies