DIAGEO Invest in Northern Ireland

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DIAGEO ---Invest in Northern Ireland
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Executive summary

• Who is Diageo
• Industry environment analysis
• Diageo competitive analysis Strategy Compass
• Investment in NI Diamond model
• Diageo in NI
• Summary

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Diageo is

• Formed in 1997, the merger with Guinness and
  GrandMet
• Traded under many names
• Worlds largest premium drinks company
• Operate in over 180 countries
• UKs 11th biggest firm, 25 bn Market Cap
• Head offices in London, Dublin, Edinburgh

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Diageo is

• Invest in people and brands
• Focus on premium drinks
• Benefits on global reach
• Delivering sustainable growth
• Committed in corporate responsibility

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TSR ranking

• TSR Total shareholder return

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Industry analysis-premium alcohol beverage
High Profitable Competitive!
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SWOT analysis
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Vision and goal

• Diageos Vision.
• Celebrating life, every day, everywhere.
• Latin-Day
• Diageo
• Greek-World.
• Goal.
• Every adult adores at least
• one of our brands

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Strategy
Strategy

• Focused Differentiation
• -- Difficulties of imitation imperfect
  mobility

• Organic growth development

Product
Existing
New
Existing
Market
New
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Competitive position
Competitive position
High
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Beer
Premium Spirit
Wine
MGR
0
RMS
-10
Low
1
10
0
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Asset utilization

• Value Added per Employee 80,452

• Investment Intensity
• 2002-28.2
• 2003-36.9

• Assets Utilization 0.62

• Vertical Integration - tighter

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Market Addressed
Source SP Survey, January 2003
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Leadership

• Vision Well defined
• Power Decentralisation
• Communication Open and continuous dialogue
• Commitment Obsessive
• Diagnostic Incisive
• Change Embraced

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Strategy compass
Competitive Position RMSVery High
QualityHigh InnovationHigh
Asset Utilisation CapacityVery High
IntegrationVertical ProductivityHigh
Markets Addressed Growth RateLow
- ConcentrationHigh Customer PowerLow
Leadership VisionClear IntegrityCommunication

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Invest in NI
"The establishment of a 41.4 million
state-of-the-art drinks manufacturing facility in
Mallusk is tangible evidence of international
investors confidence in Northern Ireland."
Sir Reg Empey MLA, Minister for
Enterprise, Trade and Investment "Diageo's
significant investment is a further endorsement
of Northern Ireland as a world class business
location by a company with a global reputation
for excellence."
Paul Murphy Secretary of State for Northern
Ireland 15 September 2003
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Diamond model
Chance
Firm Strategy Structure and Rivalry
Demand Conditions
Factor Conditions
Related and Supporting Industries
Government
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Factor conditions-primary

• Natural resource
• Raw materials - best region of water, milk,
  wheat supply in EU
• Labour - young, highly educated and skilled
  English speaking labour
• Capital - providing funding for projects ranging
  from 5,000 to 1.5million
• Property - as little as 12.50 per square foot
  in the greater Belfast area.

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Factor conditions -advanced

• Infrastructure
• Advanced communication telecom, broadband
• Excellent transportation- road, air, and sea

• Technology Skilled labour
• World advanced brewing, distilling technology
• Specialised qualification programmes- e.g.WEST
  (the Wine spirits Education Trust )
• Well qualified labour

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Factor conditions -advanced

• Speed of innovation
• Faster, supported by government policy and
  local institutions

• Speed of upgrade
• Significant in telecommunication

• Degree of specification
• Biotechnology and information technology-
  projects growing from 23 - 83 (1994-2003)

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Demand condition

• Growth Rate
• Beer soar
• Spirits flattened and expected decline
• Market segment
• Enjoying strong growth in West European
  countries
• Increasing consumption of wine - young women

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Demand condition

• Market condition
• Market size big, increase stable
• Market concentration high - Top 10
  brewers worldwide account for more than half beer
  
• Buyers needs
• Prefer fashionable and suited to cocktails
  spirit
• Prefer beer

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Related supporting industries

• Upstreams
• Irish dairy industry 200 million litres
  liquid milk consumption for Irish cream
  supply, best EU standard
• Irish whiskey industry Unique, one of the
  best in the world
• Technology support IT companies to support
  end to end, web demand management

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Related supporting industries

• Downstreams
• Transportation link road, railway, shipping,
  and air lines
• Food and drink Intermediaries wholesalers and
  retailers, on- trade and off-trade outlets
• Other link tourism industry

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Strategy, structure, rivalry

• Strategy
• Focus on specialisation

• Structure
• Decentralisation and entrepreneurship

• Rivalry
• Based on different segment drink

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The role of government

• Has an agency of Invest Northern Ireland
• Offers package of financial incentives,
  recruitment and training, RD support
• Gives tax incentives, corporate tax rate lower
  than most European countries

• Has an Wine Spirit association of GB
  and NI regulation and development
  support

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Chance

• Premium drinks demand surge
• Accessible to Europe
• Fresh talents and skills in abundance
• Competitive operating costs
• The local universities research-industry

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Diageo ROI NI

• Guinness Ready to Drink supply In ROI
• Diageo Bailey's global supply in NI
• Serves the world-wide demand
• Commitment to support the top-line growth of the
  brand
• World class operation, logistics team for the
  demand planning and the physical distribution
  service

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Added value in NI
11.3
Firm Infrastructure
HRM

MARGIN
RD

Procurement


Service
Marketing
Operations
Inbound
Outbound
MARGIN




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The value system
Supplier value chain
Channel value chain
Customer value chain
Diary
Local
On-trade Off-trade
Government policy
Diageos value chain
Global
Irish whiskey
Wholesaler
Infrastructure
Global
IT
Tourism
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summary
To deliver the right product, at the right
economic cost, at the right time to in-market
companies around the world.
Diageo global supply in NI
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Thank you very much!
Prepared and presented by Gong Jiating
(10455903) Sun Jianguo
(10445103) Tian Wei (10438903)
Wang Yue (10441903) Wu Chunguang (10437003)
Yu Huajing (11476703)