Diageo PLC - the Importance of the Positive Image - Essay Example

?Diageo PLC Introduction Company’s reputation is now a part of its success because, as the business world is developing, consumers and other stakeholders lay more and more responsibilities on businesses. Furthermore, being active members of hosting societies, businesses are expected to voluntarily help those societies or their environments (Cramer and Bergmans 2003, 2) in order to deserve consumers’ trust and loyalty. Company’s identity, as Cramer and Bergmans outline (2003, 2), is expected to be based on a balanced combination of working for all – people, planet and profit, and, furthermore, achieve sustainable development. Growing affluence, need for ecological sustainability, globalization and free flows of information have made the issue of corporate social responsibility (CSR) crucial for commercial organizations (Werther and Chandler 2010, 21) forcing them to invest much of the recourses into CSR programmes. Though such programmes themselves do not have a direct impact on company’s profits, companies believe that the positive image and good reputation they earn through CSR initiatives will make existing and potential clients more loyal to the company. Indeed, members of developed societies can afford to choose whether to purchase a particular brand or not. At the same time, some scholars argue that for many companies social responsiveness is just a way to hide more insidious activities of a company (Bansal 2009, 182). Since the very first responsibility of any company is to bring profits to its stakeholders, businesses simply use CSR to deflect criticism of other activities, which might not be as positive. It is especially true in relation to companies, the whole business of which is rather controversial – manufacturers of cars that damage the environment, tobacco industry businesses, owners of alcohol brands, and so on. Therefore, the goal of this paper is to analyse and critically analyse performance of one of such companies – Diageo PLC – in order to understand the impact and implications of the company’s actions in terms of CSR on society and stakeholders. Diageo PLC Diageo PLC is the company that stands behind such famous alcohol brands as Guinness, Johnnie Walker, Smirnoff, Baileys, Crown Royal, J&B and Windsor among others (About us 2011). While some of the brands the company owns have been in the market for decades, some, as the company’s website mentions, were developed later to match the new and different tastes of new generations of customers. The business operates in about 180 markets, has offices in 80 world countries, and employs more than 20,000 people (both office and manufacturing staff) worldwide. The CSR page of Diageo’s website is full of information on how the company invests into community development, and environmental protection through the use of renewable energy, water preservation, waste reduction and sustainable packaging (CSR 2011). However, for the purpose of this paper the ‘Alcohol in Society’ aspect of Diageo PLC will be analysed. The case for Diageo PLC ‘Alcohol in Society’ page of Diageo’s website states that one of the strategic goals of the company is to create a positive role for alcohol in the society (Alcohol in Society 2011). The company’s mission is to promote responsible drinking, because irresponsible drinking causes harm to people’s health. For this reason the company responsibly markets its brands only to adults and supports initiatives that are aimed at fighting misuse and excessive consumption of alcohol. Employees of the company are even offered a responsible drinking training. In an attempt to educate people on the dangers of excessive or irresponsible drinking Diageo launched a DRINKiQ.com website, with 18 national websites in 8 languages, which provides information on the effects of drinking alcohol, drinking patterns, resources for educators and parents, as well as other alcohol-related information (Drinkiq.com 2011). The major goals of the company in relation to people’s drinking are to market its products responsibly, to minimize alcohol misuse, and to “promote effective and targeted alcohol policies” (Alcohol in Society 2011). In its marketing and advertising efforts Diageo PLC is guided by Diageo Marketing Code, Digital Code of Practice, as well as the industry-set codes. These documents outline how research, development and marketing of Diageo’s brands should be conducted (Responsible marketing and consumer information 2011). In addition, the business participates in about 200 programmes that are aimed at fighting alcohol misuse through training, raising awareness, enforcement, and addressing attitudes (Programmes to address alcohol misuse 2011), as well as cooperates with governments supporting effective and targeted alcohol policies (Alcohol policy and stakeholder dialogue 2011). So, a brief overview of Diageo’s policies and activities in relation to alcohol in society shows that the company seems to be taking all the possible measures for fighting alcohol misuse and irresponsible drinking. The business is trying to educate its consumers on the process and consequences of drinking. Diageo also provides resources for educators and parents to help them teach others on how to drink responsibly. Indeed, that information may help someone to persuade another one to drink less. However, while countries and governments are fighting alcoholism (Spurgeon 2005; Lally 2011), Diageo is not reducing production – the company’s responsibility to stakeholders is to make profit, and Diageo is not encouraging people to quit drinking – the company has to sell its product. The case agaist Diageo PLC Morgan (1988) argues that the whole problem of alcoholism is partially caused, and even supported, by the alcohol beverage industry, a part of which Diageo PLC is (Morgan 1988, 177). Industry self-regulation and corporate consolidation of alcohol beverage companies have lead to a situation when alcoholism is presented as a personal psychological problem of an individual, not that of the manufacturer. Similarly, irresponsible drinking is presented as individual’s, not company’s or government’s, irresponsibility. Furthermore, the industry has become so powerful, that its interests have come above those of the society – government relinquished constitutional control of alcohol production (ibid). Together with other alcohol beverage companies Diageo PLC strives for the absence of public policies that have a direct influence on drinking behaviour. Instead, as Diageo’s website proves, the interest groups aim only at “informing and persuading the drinker (and future drinker) to behave in a certain way” (Casswell 1997, 252). Diageo's Code of Marketing does outline that scopes of advertising should be limited – the company should not promote drinking. At the same time, the very same code states that any limitations on the scope of advertising should not have influence sales negatively (Corporate Watch UK 2005). As a result, the marketing campaign is encouraging drinking through portraying it as a relaxing, enjoyable and desirable activity. Furthermore, while the company claims it is not advertising to underage drinkers, in 2003 several US federal district courts and one state court blamed Diageo “deliberate, reckless, and illegal targeting of underage consumers” (Class Action Reporter 2003). In 2004 St. Patrick's Day beer advertisement of Diageo was criticized by the Marin Institute for appealing to children, because it used a metaphor of Christmas – the holiday that is traditionally focused on kids (Join Together Staff 2004). In such a way the company violated even its own marketing code. However, it looks like past mistakes do not stope the company – recently Diageo PLC has been accused of paying more than $2.7 million in bribes to officials in South Korea, India and Thailand in order to win sales and receive tax benefits. The profit of the ‘bribing campaign’ made $11 million (Flannery 2011). Therefore, it can be clearly seen that the major goal of Diageo is not to be a responsible company, but to make profit. The CSR initiatives, about which the company’s website is screaming is, therefore, a comfortable way to deflect criticism of less attractive activities. Concluding remarks Diageo PLC does understand the importance of the positive image of the company. For that reason the company has developed its Marketing Code and Digital Code of Practice. For the same reason the business is cooperating with governments and social institutions in attempts to educate consumers on the dangers of drinking alcohol. The SCR initiatives of the company are aimed at educating people and protecting the environment. Nevertheless, the fact is that Diageo, in many cases, does not follow own codes. While the whole nature of Diageo’s business is rather controversial, the company continues damaging its reputation via unethical marketing and advertising, as well as unethical business practices. It, thus, becomes obvious that Diageo’s CSR initiatives are used only for showcasing how positive the company is, while in reality the only interest of the business is to make profit. Surely, the company is fulfilling its economic responsibility. However, its legal and ethical obligations are not, in many cases, met. The company is not actually fulfilling its social contract. Diageo PLC is not investing into such needed by the society and directly related to Diageo’s business things as alcoholism research and treatment. On the contrary – the company’s marketing and advertising campaigns present drinking as a wanted by the target audience lifestyle – relaxing, enjoyable and desired. Furthermore, as it was stated above, marketing campaigns of Diageo are targeted at both adults, who are current consumers, and youth, who are future drinkers, thus bringing up the next generations of clients. References About us. 2011. 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