ally the company was engaged in many businesses but with passage of time, it concentrated on the beverage business and divested other business like Pillsbury and Burger King. At present the company’s portfolio consist of mainly alcohol based beverages.
Presently the company is operating many major strategic business units (SBUs) like spirits, Beer and Wine. Among them the most extended one is the spirit SBU because it comprises of many sub units like Scotch whisky, Vodka, Ready to drink, Liqueurs, Whiskey, Rum, Gin and Tequila. To understand why spirit SBU is so vital for the company, its last year’s sales break up has to be undertaken.
As per the Diageo’s annual report 2007-08, the company’s is to focus on its premium drinks as these are the major source of income. In the last few years, the company’s revenue has increased marginally, but operating expense has also gone high. Thus Diageo has made a strategy to enhance its operating profit along with growth in organic sales. From the very beginning, the company has followed an aggressive acquisition strategy. At present the company has its operation in different part of the world, where they have strategic partnership with many other players of this industry. When a company plans for enhancing the profitability, its main motto remains increasing the shareholders value.
In the last year certain changes has came in the consumption patter in alcoholic beverages in different part of the world, hence the company will target the growing market of alcoholic beverages in BRIC countries. Undertaking all these facts and figures, the company has planned to continue its cost cutting strategy. Diageo will continue to operate under four business areas, it will develop its local brands and to overcome the growing pressure from governments, it will come forward and will promote responsible drinking of alcohol, also participate in reducing the misuses of alcohol (Diageo-b, 2005).
To analyse how successful were the