Diageo Business Internal and External Analysis

We analyze business environment through swot analysis and as we saw over the last couple slides, Diageo has massive global scope of operations which is one of their biggest strength because it hedges against specific market risk. Besides, Diageo acquired some of brands strategically such as Guinness to compete the bear market. And another important strength is that Diageo is one of the most sustainable companies in the world and they have very strong socially conscious to all of global markets. For example, they promote responsible drinking like tackling drink driving, underage drinking and heavy episodic drinking. In Africa, they focus on local sourcing and they have sustainable agriculture strategy to make sure the environmental sustainability going well.

However, most products are in the mature stage which brings challenges to the company. Our performance is insufficient in both craft and vodka category.

There are some threats we need to face: such as the increase of material costs, internationally emerging markets and the boom of craft alcohol

But we could catch some opportunities through the emerging markets, and to take action on working capital and continued innovation

When we look at the industry entirely, the competition is medium to high because industry grow stalely with large industry size but numerous competitors involve. The bargaining power of buyers is moderate because we do have low switching cost and large purchasing volume to make our power strong but we also require special customization that weaken the power. The bargaining power of suppliers is low mainly because Diageo has largest scale in the industry and a great amount of choices of substitute inputs. New entrants bring moderate threat to the industry for two key reasons, first, the threat of craft and local brands. Second, distribution network, capital investment, and economies of scale are highly required. The substitute threat is medium because of product loyalty and low differentiation.