...Introducción y antecedentes Diageo se formó en 1997 mediante la fusión de dos empresas de productos de consumo Grand Metropolitan plc plc y Guinness en la estrategia de reducción de costes a través de sinergias de comercialización, reduciendo los gastos generales y aumentar la producción y la compra de la eficiencia. La nueva fusión quería concentrarse exclusivamente en el negocio de bebidas alcohólicas, por lo que vendió sus alimentos envasados (Pillsbury) y comida rápida (Burger King) empresas. Si bien el mandato para la gestión de valor provino de los niveles más altos de Diageo, el equipo de tesorería se le dio la tarea de establecer el costo del capital para cada una de las diferentes áreas de la empresa opera. El equipo tuvo que crear un modelo de simulación que se deben considerar nuevos enfoques financieros, de tesorería para centrarse en, ¿qué huellas de la empresa de riesgo será, cómo calcular el costo del capital y, finalmente, cómo la estructura óptima de capital. ¿Cómo ha logrado Diageo su estructura de capital? Ambos Grand Metropolitan y Guinness tenía una deuda poco antes de la fusión, lo que les permitió beneficiarse de calificaciones relativamente alta sobre sus bonos (AA y A, respectivamente). Inmediatamente después de la fusión, la gestión de Diageo anunció que mantendría políticas similares a las adoptadas por las dos compañías anteriores. Esta decisión tomó la forma de una promesa implícita de no entrar en un nivel de deuda que llevaría a una reducción...
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...Case: Diageo Ple Analysis Fact Pattern This is a strategic options case regarding Diageo PLC. Diageo is a conglomerate focusing on premium alcoholic beverages. Diageo is a United Kingdom based consumer product company. Diageo was formed in November 1997 from the merger of Grand Metropolitan Plc. and Guinness Plc., two of the world’s leading consumer product companies. The company began with the mission to be the strongest premium alcoholic beverage producer worldwide. Diageo Plc. is the seventh largest food and drink company in the world with a market capitalization of nearly ￡24 billion and annual sales of over ￡13 billion to more than 140 countries. Although the largest and the fastest growing business was the Spirits and wine business, with sales growth of 8% for the year and 15% operating margins and growth in total operating profits of 15%. And the second largest division was Guinness Brewing, which produced and sold beer to markets around the world. And the Diageo was in the process of integrating the two business, which may result in cost reductions of ￡130 million annually. To that end, they have acquired a majority of premium brands in the spirits industry and a large portfolio of premium wines, while at the same time divesting itself of those companies not in line with its new goals. Diageo’s two remaining business were in packaged and fast foods. As a matter of fact, the stock price of the company was far low from the average stock price after 7/1/99. In 2000...
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...Case Study 3 “Diageo, Plc.” Introduction บริษัท Diageo ถูกก่อตั้งขึ้นในปี 1997 จากการควบรวมกิจการระหว่างบริษัท Grand Metropolitan plc. กับบริษัท Guinness จนกลายเป็นบริษัทอาหารและเครื่องดื่มที่ใหญ่เป็นอันดับ 7 ของโลก หลังจากการควบรวมกันเป็นบริษัท Diageo ต้องการจะเน้นไปที่เครื่องดื่มแอลกอฮอล์เพียงอย่างเดียว จึงตัดสินใจที่จะขายธุรกิจอาหารไป ได้แก่ Pillsbury โดยขายให้กับ General Mills และต้องการจะออกจากธุรกิจ fast food โดยการออกขายหุ้น IPO ของ Burger King นอกจากนี้ บริษัท Diageo ยังเข้าซื้อกิจการประเภทแอลกอฮอล์ ได้แก่ Seagrams ทำให้บริษัทขยายใหญ่ขึ้นและมีความแข็งแกร่งทางด้านธุรกิจแอลกอฮอล์ ก่อนที่จะมีการควบรวมกิจการนั้น Guinness กับ Grand Metropolitan มี rating อยู่ที่ AA และ A ตามลำดับ แต่พอหลังการควบรวมกิจการเป็นบริษัท Diageo ทำให้มีถูกลด rating เหลือเพียง BBB โดยRating Agencies ได้แก่ Standard and Poor’s และ Moody’s เนื่องจากเกิดความไม่แน่นอนของนโยบายทางการเงินของบริษัท บริษัท Diageo จึงต้องควบคุม Capital Structure ให้มีประสิทธิภาพ โดยการรักษาระดับของ interest cover ratio ไว้ 5-8 เท่า และคงระดับของ EBITDA/Total Debt ให้อยู่ที่ 30% - 35%ถ้าบริษัท Diageo ต้องการรักษา rating ให้อยู่ที่ระดับ A+ นอกจากนี้บริษัทจะต้องใช้นโยบาย Trade-off Theory ซึ่งเป็นการเลือกระหว่างความเสี่ยงและผลตอบแทน กล่าวคือบริษัท Diageo ต้องเลือกระหว่างต้นทุนความล้มเหลวทางเงิน (Financial Distress)และผลประโยชน์ทางภาษี (Tax Shield) โดยสามารถคำนวณจากผลประโยชน์ทางภาษีในแต่ละปีและการประเมินความน่าจะเป็นที่จะเกิดความล้มเหลวทางการเงิน บริษัทมีการใช้ Monte Carlo Analysis ซึ่งใช้การวิเคราะห์แก้ปัญหาที่ยากหรือไม่สามารถแก้ปัญหาได้...
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...link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/6c92feaa-fc0f-11e0-b1d8-00144feab49a.html#ixzz2Cu5c99bj Case study: Diageo By Abby Ghobadian The story: After a series of mergers, demergers and acquisitions, the management of Diageo, the conglomerate formed by the 1997 merger of Guinness and Grand Met, made a strategic decision to focus on premium alcohol drinks. Diageo was in charge of an expanding and wide-ranging collection of brands, some of which had broad appeal across many countries while others had more regional appeal, sometimes limited to just a few markets. The challenge: After both organic growth and acquisitions, three key dilemmas emerged by 2002. First, how to manage brands with significantly different appeal, such as Guinness, a brand with strong Irish roots but huge global appeal, or Buchanan’s, the leading Scotch whisky in Latin America. Second, how to rejuvenate tired brands and third, how to improve the market share of the most successful brands, such as Captain Morgan, J & B, Smirnoff and Johnnie Walker. The initial strategy: To help managers maintain focus and allocate resources, Diageo developed three brand classifications: global priority, local priority and category. The global priority brands were the big sellers that were popular across a number of important markets and received the lion’s share of promotional resources...
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...is a Mexican alcoholic beverage company that is owned by the famous Beckmann family (Lorenzetti, 2014). The family’s global reputation is secured on the important role it has played over the years in popularizing the commercialization of tequila production. Jose Cuervo’s flagship product is its eponymous tequila brand, Jose Cuervo, which is by far the best-selling and most popular brand of tequila in the world (Evans, 2014). The company mostly collaborates with other alcoholic beverage corporations such as Diageo Plc and Proximo Spirits...
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...differently, in order that they can survive the recession and avoid going down the costly route of redundancies.' Shorter working weeks Companies offering shorter working weeks include KPMG who told staff in January that they could save their jobs by volunteering to work a four-day week. At the time KPMG's associate partner David Knight warned that: 'A redundancy programme can lead to problems when the upturn eventually arrives.' And 2,500 JCB workers of a work force of over 8,000 agreed to work a four-day week for 13 weeks to help the manufacturing firm. Sabbaticals The 11,000 workforce of KPMG was also offered a sabbatical, which would require them to take between one and three months off on 30 per cent pay. Gleneagles, owned by Diageo Plc, sent letters to 700 employees in January asking them to...
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...CASO PRÁCTICO: DIVIDEND POLICY AT LINEAR TECHNOLOGY Conceptualización del problema En el 1981 Linear Technology fue fundada por Rober Sawson en California, esta compañía se dedica a diseñar, fabricar y comercializar circuitos integrados. Por capitalización de mercado Linear ocupa el séptimo lugar dentro de su segmento. En 1986 Linear empezó a cotizar en NASDAQ y desde ahí ha dividido sus acciones cuatro veces. Dentro de los datos financieros del año fiscal se destaca el crecimiento sostenido que presenta Linear entre 1992 y 2001, siendo este ultimo año donde se alcanza un nivel muy alto en ventas logrando así unas cifras imposibles de repetir. Dentro de su política de dividendos, Linear paga dividendos y hace la recompra de acciones. La primera la utiliza cada trimestre desde el 13 de octubre de 1992 cuando anuncio el pago de $0,05 por acción. Para el año 2002 la gerencia y la junta directiva de Linear determinaron realizar un aumento en los dividendos, cosa que busco señalar al mercado que Linear era una compañía rentable y que además de esto contaba con un flujo de caja positivo. Todo esto a razón de que la ventas para ese año bajaron un poco mas del 50% en comparación con el año inmediatamente anterior. Reseña del histórico de los dividendos Análisis de los requerimientos de recursos y su disponibilidad en la firma Linear gracias a su estructura de costos variables pudo afontar la caída de ventas que tuvo VER CUADRO Costos y beneficios de la retención...
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...Jamie Varnhagen FIN 5270 Diageo, plc. Role: Current equity holders in Diageo * Largest business segment is the spirits and wine business * Largest profit margin of all the segments, with 15% operating margins and growth in total operating profits of 15% * Second largest division is Guinness Brewing * All of Diageo’s businesses, including the beverage alcohol business, which it plans to keep, have relatively stable cash flows. This has allowed Diageo to take on a higher level of debt than other companies. * Diageo’s operating cash flow or return on assets (EBIT/assets) is driven by the fluctuations in sales and exchange rates * Depreciation and amortization in this industry relatively low, so EBIT and EBITDA similar * Interest coverage ratio critical variable that determined credit rating (EBITDA/interest payments) * Increasing debt will cause credit rating to fall * 20% reduction in the value of the firm imposed a distress condition on the firm * Integrating them, cost reductions of 130 million annually * Since 1997 lagging stock price performance * Plan: Sell Pillsbury, IPO of Burger King to exit fast food industry * Acquire Seagrams and Pernod Ricard would cost 3-5 billion, growth of beverage segment * Historically high debt rating, relatively low amount of debt * Analysis model included regular dividend payments, which would be cut if cash flow after interest and tax payments were not large enough Increasing...
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...Diageo Plc Case: Diageo Plc Analysis Fact Pattern This is a strategic options case regarding Diageo PLC. Diageo is a conglomerate focusing on premium alcoholic beverages. Diageo is a United Kingdom based consumer product company. Diageo was formed in November 1997 from the merger of Grand Metropolitan Plc. and Guinness Plc., two of the world’s leading consumer product companies. The company began with the mission to be the strongest premium alcoholic beverage producer worldwide. Diageo Plc. is the seventh largest food and drink company in the world with a market capitalization of nearly ￡24 billion and annual sales of over ￡13 billion to more than 140 countries. Although the largest and the fastest growing business was the Spirits and wine business, with sales growth of 8% for the year and 15% operating margins and growth in total operating profits of 15%. And the second largest division was Guinness Brewing, which produced and sold beer to markets around the world. And the Diageo was in the process of integrating the two business, which may result in cost reductions of ￡130 million annually. To that end, they have acquired a majority of premium brands in the spirits industry and a large portfolio of premium wines, while at the same time divesting itself of those companies not in line with its new goals. Diageo’s two remaining business were in packaged and fast foods. As a matter of fact, the stock price of the company was far low from the average stock price after 7/1/99...
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...High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email ftsales.support@ft.com to buy additional rights. http://www.ft.com/cms/s/0/439afd42-1b96-11e3-b678-00144feab7de.html#ixzz3aguLbOXp When hundreds of thousands of protesters chanted Vem pra rua, vem! (“Come to the street, come!”) across Brazilian cities in June, executives at Fiat probably could not believe their ears. The slogan had been the centrepiece of the Italian carmaker’s advertising campaign, launched only the month before, part of its most expensive marketing project in the Latin American country this year. More ON THIS STORY Recognition of Latin America increases A love affair with luxury Luxury goods: Designer labels follow rise in wealth Cementos Argos bets on US Colombia: Loyalty is biggest barrier to new entrants ON THIS TOPIC Brazil politics broken, says former leader Hopes & Fears: Cláudia Vassallo Real buffeted by US rates speculation EM Squared Brazil slowdown hits ‘fallen angels’ IN LATIN AMERICAN BRANDS Mexico to unveil revamped global image Start-ups find growth in young Brazil Nike scores from the sidelines with ambush marketing Peru’s ‘improbable’ drink wins out over Coke Sign up now firstFT FirstFT is our new essential daily email briefing of the best stories from across the web While the phrase itself has been used during political...
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...Bringing the Balanced Scorecard to Life: The Microsoft Balanced Scorecard Framework White Paper By: Charles Bloomfield Insightformation, Inc. Published: May 2002 For the latest information, please see http://www.microsoft.com/business/bi/ Abstract This paper describes the Microsoft® approach to developing and implementing a Balanced Scorecard for enterprise performance management. It presents basic information on the Balanced Scorecard performance management methodology, and identifies key business issues that must be addressed in developing and deploying a balanced scorecard. The paper then presents the Microsoft Balanced Scorecard Framework (BSCF)—a comprehensive set of techniques, tools, and best practices to speed scorecard implementation using toolsets with which organizations are familiar. An extensive body of research and literature describing the Balanced Scorecard exists. That body of knowledge is constantly being expanded by The Balanced Scorecard Collaborative, Balanced Scorecard Institute, various consulting organizations, software companies, and client organizations. This paper cannot comprehensively cover such a complex topic or reflect accurately many of the nuances of scorecard development and implementation. Instead, it presents a basic conceptual overview of the Balanced Scorecard. Interested readers are encouraged to use the bibliography presented at the end of this paper as a guide to more detailed information. ...
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...Diageo plc A Harvard Business School Case Study Part I 1) Diageo plc is a conglomerate formed in 1997 through the merger of Grand Metropolitan plc and Guinness plc, two consumer product companies. Their goal was to become an industry leader by achieving cost savings through marketing synergies, cutting overhead expenses, and developing production and purchasing efficiencies. Although diversified within the packaged food, beverage alcohol, and fast food industries, Diageo sought to focus exclusively in beverage alcohol by selling their packaged food (Pillsbury) and fast food (Burger King) enterprises. This would create more investment dollars to purchase other leading beverage alcohol companies without taking on excessive debt, thereby realizing Diageo’s goal of becoming a market leader in the industry. The company’s capital structure strategy was crucially important in terms of credit rating and predicting financial distress, and the company intended to maintain the highest rating possible to keep debt maintenance costs down. Ultimately, the company conducted a Monte Carlo Analysis to analyze the trade-off of restructuring the company’s capital structure. 2) Corporations routinely face decisions regarding new investments and must determine the best way to finance those investments. The method by which this financing occurs can have a significant impact on the overall value of the firm, therefore financing decisions must be made very carefully. Corporations finance new...
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...In 1869, after working in his uncle's hardware supply company in Minneapolis, Charles A. Pillsbury, 27 years old, bought one-third of a local flour mill for $10,000 and began what would become the Pillsbury Company. Pillsbury and their competition, the Washburn Crosby Company, formed the Minneapolis Millers Association that same year. Pillsbury's improved in milling machinery included the early incorporation of modern equipment for milling the very hard local wheat. These improvements and the purchase of two additional mills allowed him to produce 2,000 barrels of flour a day by 1872. That year, he reorganized the company as C.A. Pillsbury and Company, making his father and uncle partners. During the 1880s, Pillsbury added six more mills, including...
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...Diageo – Marketing to Remember Introduction The case is about Diageo, a drinks company and a leader in corporate social responsibility issues. The company is running a CSR program from within the marketing function. In 2007 they launched the ‘Choices campaign’, aiming at 18-to-24 age group. The campaign ended with the sentence: ‘A night to remember? Or one to forget? The choice is your’. With this they showed that responsibility is at the heart of all their marketing, with the aim to change the attitude towards alcohol. Ethical strengths - Raising awareness - Closeness to consumer provides something that public health agencies lack - Product safety - They have in-depth knowledge of consumers, the ability to get under their skin and understand what makes them behave in the way they do. - Organization succeeds by outperforming their competitors in providing superior value to their customers, in order to create a positive change in people’s attitudes to alcohol. - They do not mislead their customers - They try to ensure that consumers properly understand the risks involved in consuming their product - Brand names are not dominantly present in the advertisement, focus is on responsibility message Ethical weaknesses - Fitness for purpose - Creation of artificial wants - Reinforcing stereotypes - Targeting vulnerable consumers Issues in Product Policy i) To what lengths should the producers of goods and services...
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...Macro-Environment The British premium drinks company ‘Diageo’ founded in 1997, is the largest multinational company in terms of alcoholic beverages. Therefore, it is inevitable that Diageo has had to, and will continue to find ways to adapt to various factors that are external and overwhelming. These factors are known as the macro-environment, and will be discussed further. The activities of Diageo’s direct competitors, such as the Carlsberg Group, will affect how Diageo prices some of its products. For example, if Carlsberg decide to lower the price of their beer, Diageo will have to react, as beer is a price elastic product. Therefore, Diageo will have to either lower their price, or further market their product to illustrate to customers why they charge a more premium price through a more premium service. Although beer is a huge revenue generator for Diageo, it is under constant pressure from the government’s pint duty tax which is currently at 52 pence a pint. This was reduced from 2014's duty tax by 1%. With many pub landlords struggling to keep their businesses a float during these tough economic recovery times, this led to many pubs shutting down as they were not being profitable. This would have a devastating effect on major beer brands that Diageo owns such as Guinness, as they will lose the income streams they once had from many pubs. Another uncontrollable factor is that some cultures and religions do not consume alcoholic beverages. For example, in the Middle-East...
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