Corporate Analysis Report

Appendix II: SWOT Analysis

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Appendix II: SWOT Analysis

Strengths	Weaknesses
Core Competencies: Strength in marketing and promoting luxury brands through a strong global network. A strong, continually changing global market presence. Other Competencies: Predicting which companies have high growth potential and acquiring them before the competition. Obtaining celebrity endorsed products. Strategic Acquisitions in emerging markets.	No distinctive competencies. Legal Proceedings. Relies on continually maturing markets for a majority of annual sales. Most of our products are in the mature stage of their product cycle.
Opportunities	Threats
Growing Alcohol Market. Global increase in the demand for luxury products. Growing Demand in Asia/Pacific Region.	Rise in Raw Material Cost. Intense Market Competition. Strict Regulatory Environment. Especially in U.S.

Appendix III: Macro-Environmental Analysis

Macro-environment Sector	+ Effect	- Effect	Reason
Demographic 1. Global number of 15-34 year olds increasing. 2. India currently consumes roughly half of whisk(e)y sold worldwide. Expected to rise to 70% by 2017.	X X		- 15-34 year olds spend the most on alcohol and are key target market. -Diageo holds majority stake in India’s largest distiller, United Spirits LTD.
Social/Cultural 1. High end brands are growing in demand across the world. 2. Consumers have used beverage choices to signal individuality or sophistication.	X X		- Diageo is a premium brand carrier. - People want to identify with a premium/Ultra-Premium brand.
Political/Legal 1. Trade Tariffs. 2. Strict laws and regulations on alcohol advertising.		X X	- Can lead to difficulties importing into emerging markets. - Creates high costs in marketing department.
Global 1. Emerging Markets beginning to have a more disposable income. 2. India alcohol market has seen 30% growth for 3 consecutive years. 3. Slow economic growth and aging population in Europe.	X X	X	- Emerging markets become more westernized and having more disposable income may lead to higher alcohol sales. - Key drivers of growth were single malt Scotch whisky, brandy, fortified wine and domestic premium lager. - 28% of Diageo's net sales come from Europe.
Technological 1. The need for distilleries that can produce gluten free products is on the rise. 2. Online market for buying and selling alcohol related products.	X	X	- We have the resources and capital to create these products. - This causes more competition for Diageo’s products in retail stores.

Appendix IV: Porter’s Five Forces

	CI 1: Beer	CI 2: Vodka	CI 3: Whisk(e)y	PI 1: Clothing Line	PI 2: Ski Resorts	PI 3: Cruise Lines
Medium'>Intensity of Rivalry	Medium - High number of competitors - Product differentiation is high	Medium - High number of competitors - Industry is rapidly growing - Storage costs are low	High - High number of competitors -The industry is on the rise. – Low cost to switch to this product line	High - Fixed costs are low - Storage costs are low - Product differentiation is low	High - Moderate number of competitors in given proximity – Customer loyalty is high to specific resorts.	Medium - Number of competitors is high (53 cruise lines) - Industry is on the rise. – High exit barriers
Threat from Potential Competition	Low - High economies of scale - Brewing process(es) is constantly changing and evolving	Medium - Easy Access to materials (grains, water, potatoes) - High control of distribution channel - Capital requirements high (distillery)	Medium - High economies of scale. - Cost of liquor stores buying new product lines is high - Only a certain grain conglomerate can be used making not easy to access	High - Capital Requirements are low. - Economies of Scale are high - Incumbent's proprietary knowledge is low.	Low - Customer loyalty is high to specific resorts – High brand equity on resorts known world-wide - In U.S. currently cannot build new ski resorts	Low - Capital costs are in the hundreds of millions to billions - Industry Need high proprietary knowledge to start – High economies of scale
Bargaining Power of Customers	High - High number of liquor stores relative to breweries - Switching costs for liquor stores is low	Low - Importance of customer to supplier is low - Threat of backward integration is low - Importance of suppliers input to quality of buyers final product is high	Medium - Very expensive to create your own brand. – Supplier input has high effect on quality of final product. – High number of buyers in relation to suppliers	High - High concentration of buyers to suppliers. - Product differentiation from supplier is low - Threat of backward integration is low	Low - Price is not sensitive to buyers; demographic they are catering to willing to pay high prices - High differentiation between resorts	High - High number of buyers when compared to 53 suppliers – Medium differentiation between cruise lines. – Very low threat of backward integration
Bargaining Power of Suppliers	Low - Differentiation of raw materials is low - Threat of forward integration by supplier is low	Low - High quality of substitutes - Threat of forward integration is low - Concentration of buyers vs suppliers is high	Low - Many substitutes are available. – Forward integration is difficult and highly unlikely	Low - Threat of forward integration is low - Availability of substitute products is high. -Importance of customer to supplier is low	Medium - Very few substitutes available that offer similar services – Few number of suppliers of necessary equipment	Low - Customer is very important to supplier – High availability of substitute products (53 cruise lines) – Low threat of forward integration
Threat from Substitute Products	Medium - Product loyalty is high - Higher prices of substitute products have higher quality	Low - Differentiation of the substitute is low	Medium - Many different types of whisk(e)y, but not very different. – Higher prices also mean higher quality products	Medium - Differentiation of substitute product is low -Rate of improvement in price-performance relationship is high	High - High differentiation catered to what type of shredding you want – High prices mean higher quality ski resort	Medium -High product differentiation. – Higher price means higher performance by cruise line
Overall Attractiveness

= Low Attractiveness

= High Attractiveness

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