Diageo enjoys a greater market in the African region due to the huge growth potential in the region and that includes raw materials and even talented labor force. The African market especially in East Africa and some parts of West Africa where it recorded very high net sales growth provides a wider market share. The company also employs almost 6500 employees in Africa and creating more other jobs indirectly through the use its production and distribution networks. Diageo enjoys a good brand reputation since its first Guinness export to Sierra Leone which still remains the heart of its business and is brewed in almost 20 countries before exported to several other countries (Wehring 2012, np).
Africa is such an important region for Diageo due to the rich prospects that are found in Africa such as presence of mineral resources and its improvements in governance. Secondly, Africa provides diversity which matches Diageo’s needs. The global and financial and economic situation which has greatly affected Europe has made the company to invest in the developing countries due to the increased prospects of driving growth. The company plans to invest in additional capacities to fuel growth in the continent such as adding more plants and equipments for brewing and differentiating their brands. Innovation is also considered by the company as a very good avenue for growth as well as having the right people who are motivated and interested in improving and fuelling growth in Diageo. Additionally, the company is committed to acquisitions and entrance into new markets as part of the strategies of facilitating its growth in the continent (Wehring 2012, np).
The company enjoys a distinct brand in its employment practices which promotes its ability to attract high caliber talents that are vital to its growth. The company further grows and develops talents as well as creating value chain in production and distribution process which highly contributes to their growth. Diageo are further involved in social economic development such as engaging in water projects and other agricultural projects which is integral in their business growth. Diageo has put unique strategy of growing the African talents in the continent to run its business by developing the current talents locally and bringing other Africans outside the continent.
The company has embarked on a full year program to identify prospective African leaders who can take on senior positions in the company. The company is committed in its growth plan to develop a strategy that is capable of filling the gap between the talent required for growth and the current existing talents as well as attracting both the external talent and developing the internal talent. The company also ensures that they have dedicated talents that would add value to its operations as well as maintaining an effective and efficient operation (Wehring 2012, np).
SWOT AND PESTLE ANALYSIS
Diageo is the world leader in alcohol that comprises of beer, spirits and wine and enjoys a worldwide presence. The company, with its sound financial base, is capable of ruling the market by investing in R&D and acquiring other firms thus enjoying wider market share. The company usually manufactures the best brands and normally ensures best brands in its African market such as Scotch whisky. The company enjoys a wider market in Africa especially the rapid growth of 300m-consumers who due to the increase in the middle income earners in Africa. Diageo largely depend on the raw materials especially in Ethiopia and Kenya which is very vital for their growth in east Africa as well as wider market in that region of Africa.
The company however, is faced with a number of challenges in some regions in Africa such as the unstable governments and lack of highly qualified expertise that they can depend on. There are also competitions from the local companies within the African region especially in Kenya and Tanzania that offer very low priced alcohol hence imposing a little threat to the company. The other competitors are the Pernod Ricard of South Africa which enjoys almost half of the spirit market. Diageo faces a number of challenges in Africa such as poor infrastructure such as ports, cost in working capital and the high cost of power in most of the African countries.
The company has also very good understanding of the laws such as foreign Corrupt Practices Act which make them operate in Africa successfully without even being involved in bribe or any other unlawful transactions. The governments’ campaigns against drunken driving reduce alcohol consumption and the changes in taxation, tariffs and other barriers affect their African markets. The fuel price hike and currency devaluation also affects the company’s growth negatively. The changing and practicing of healthy lifestyle and increased health awareness campaigns greatly affects the firm’s profitability.
SABMiller expands its facilities in different African countries such as Namibia and further increases other African beer brands such as Eagle in Ghana which is consumer friendly. The company has a well elaborate strategy of manufacturing high quality beer that is cheap as well as creating opportunities for small scale farmers. The Heineken Company is planning to develop on its already existing market especially in Kenya and creating customers loyalty in the region.
Wehring, Olly, 2012, “The Wehring Interview – Diageo Africa President, Nick Blazquez – Part II,” Just Drinks, Retrieved 16 April 2013, <http://www.just-drinks.com/interview/the-wehring-interview-diageo-africa-president-nick-blazquez-part-ii_id106073.aspx>.
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