Terms of reference:
The main purpose of this report is to highlight the main problems which Diageo PLC is facing by using SWOT analysis which analyses strengths, weaknesses, opportunities and threats of the business. Introduction:
Diageo PLC is the leader of an alcoholic drinks in the world operating in 180 countries providing customers with wide range of premium drinks such as vodka, whisky, wine and beer. Furthermore the main problem that the company is facing is that they have been constantly targeted as the main contributors for health and social problems which lead to alcohol abuse. This problem is seen as important due to the fact that alcohol is a product that is over-consumed by people and using it on regular basis leads to numerous health issues and social problems in society that affect many people and can result is alcoholism. The main aims and objectives of this report are to examine SWOT analysis and explain the key issues that company is dealing with at the moment and provide useful recommendations how to tackle and solve these problems. http://www.corporatewatch.org.uk/?lid=1297 (2006) Methodology:
This report contains a use of secondary data which provided useful information regarding Diageo PLC. Numerous facts, diagrams and opinions of experts and internal employee were found. All the information was gathered using secondary data on the internet from varieties of different websites and online articles because internet research provides huge range of information, however some of it was out of date or irrelevant therefore it had to be chosen carefully to produce high-quality SWOT analysis. Furthermore the information on the internet supplies the user with massive amount of data, figures and government statistics that are available to be accessed at any time. In addition an interview with CEO of the firm was used as it provided an inside information of the business. This information was effective and up to date as the interview was published in 2009 and it emphasized important facts regarding the company as the CEO was able to share his wide knowledge about the firm.
Analysis and Discussion:
SWOT analysis is a method that is used to analyze Strenghts, Weaknesses, Opportunities and Threats of a business. In addition the main aim of using it is to recognize internal and external factors that have an effect on a firm whether they are positive or negative. http://www.quickmba.com/strategy/swot/ (2002)
First of all one of the strengths of Diageo PLC is that they are the 11th biggest firm in the United Kingdom and their profits after tax in 2004 were equal to £1.87 billion which means that the business has a huge potential and can use it to develop further in the future by merging or taking over other businesses to increase their growth which in the long run could allow them to move few places up in the UK’s top 10 rankings of the most profitable firms. In addition another strength that has to be considered is that Diageo PLC operates in 180 different countries which allows them to gain more market recognition, increase profits and become more popular among customers as their best sellers such as Smirnoff Vodka or Johnnie Walker are well known around the world. This allows the firm to raise an awareness and create brand loyalty to their customers which in the long run will have a positive effect on their revenue. A diagram below shows that company’s market share prices that have been increasing constantly until January 2008 and then suddenly decreased, although from February 2008 until November 2010 the share prices of the business kept rising. This is a strength for the business due to the fact that high share prices determine the business performance by the firm which in this case is high and allows shareholders to sell their shares for a high price if they decide to do so as the firm’s value is very high.
Moreover Diageo PLC has high levels of employee loyalty which means...