Diageo and Mey Icki: Turkish Delight or Turkish Hangover? SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Global Business
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of Diageo and Mey Icki: Turkish Delight or Turkish Hangover?
In September 2013, two years after its $2.1 billion acquisition of Mey Icki Sanayi ve Ticaret AS (Mey Icki), the principal spirits company in Turkey specializing in the local beverage, raki, Diageo, the world's leading premium drinks company, was concerned about new legislation approved by the Turkish parliament prohibiting marketing and restricting the places and times at which alcoholic beverages could be sold. Diageo's Mey Icki investment in 2011 was the company's biggest acquisition in more than a decade. Having been caught off guard by the 2013 legislative changes, the Diageo management found itself needing to justify its $2.1 billion valuation, given that Diageo had acquired Mey Icki in 2011 from TPG for three times TPG's purchase price in 2006. Investors as well as analysts were questioning the over seven times value increase in Mey Icki since its privatization in 2003. Menezes, new to the CEO post, found himself increasingly overwhelmed by these issues. Had Diageo underestimated the uncertainties in the Turkish market? Would Diageo, with its broad range of brands, geographical spread, and significant financial resources be able to adapt to the changing environment and recoup its vast investment in Turkey? The case describes the forces that affect investment circumstances in emerging markets, raising the issue of how to best manage and prepare for risks. The case provides the context for the students to identify the potential elements that companies could face when investing in emerging markets where rules, legislation, and taxation can change and thus affect investment outcomes. The case challenges the students to ponder how companies should think about when investing in volatile markets and what it takes for them to succeed under uncertain and shifting circumstances.
Swot Analysis of "Diageo and Mey Icki: Turkish Delight or Turkish Hangover?" written by Dante Roscini, Gamze Yucaoglu includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Icki Mey facing as an external strategic factors. Some of the topics covered in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? case study are - Strategic Management Strategies, Financial analysis, Policy, Risk management and Global Business.
Some of the macro environment factors that can be used to understand the Diageo and Mey Icki: Turkish Delight or Turkish Hangover? casestudy better are - – challanges to central banks by blockchain based private currencies, increasing transportation and logistics costs, increasing commodity prices, increasing household debt because of falling income levels, talent flight as more people leaving formal jobs, wage bills are increasing, customer relationship management is fast transforming because of increasing concerns over data privacy,
increasing inequality as vast percentage of new income is going to the top 1%, digital marketing is dominated by two big players Facebook and Google, etc
Introduction to SWOT Analysis of Diageo and Mey Icki: Turkish Delight or Turkish Hangover?
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Icki Mey, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Icki Mey operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Diageo and Mey Icki: Turkish Delight or Turkish Hangover? can be done for the following purposes –
1. Strategic planning using facts provided in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? case study
2. Improving business portfolio management of Icki Mey
3. Assessing feasibility of the new initiative in Global Business field.
4. Making a Global Business topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Icki Mey
Strengths Diageo and Mey Icki: Turkish Delight or Turkish Hangover? | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Icki Mey in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? Harvard Business Review case study are -
Ability to lead change in Global Business field
– Icki Mey is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Icki Mey in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Innovation driven organization
– Icki Mey is one of the most innovative firm in sector. Manager in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the Diageo and Mey Icki: Turkish Delight or Turkish Hangover? Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
High switching costs
– The high switching costs that Icki Mey has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Digital Transformation in Global Business segment
- digital transformation varies from industry to industry. For Icki Mey digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Icki Mey has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Ability to recruit top talent
– Icki Mey is one of the leading recruiters in the industry. Managers in the Diageo and Mey Icki: Turkish Delight or Turkish Hangover? are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Sustainable margins compare to other players in Global Business industry
– Diageo and Mey Icki: Turkish Delight or Turkish Hangover? firm has clearly differentiated products in the market place. This has enabled Icki Mey to fetch slight price premium compare to the competitors in the Global Business industry. The sustainable margins have also helped Icki Mey to invest into research and development (R&D) and innovation.
Highly skilled collaborators
– Icki Mey has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Learning organization
- Icki Mey is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Icki Mey is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Strong track record of project management
– Icki Mey is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Organizational Resilience of Icki Mey
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Icki Mey does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Superior customer experience
– The customer experience strategy of Icki Mey in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Weaknesses Diageo and Mey Icki: Turkish Delight or Turkish Hangover? | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Diageo and Mey Icki: Turkish Delight or Turkish Hangover? are -
High bargaining power of channel partners
– Because of the regulatory requirements, Dante Roscini, Gamze Yucaoglu suggests that, Icki Mey is facing high bargaining power of the channel partners. So far it has not able to streamline the operations to reduce the bargaining power of the value chain partners in the industry.
Products dominated business model
– Even though Icki Mey has some of the most successful products in the industry, this business model has made each new product launch extremely critical for continuous financial growth of the organization. firm in the HBR case study - Diageo and Mey Icki: Turkish Delight or Turkish Hangover? should strive to include more intangible value offerings along with its core products and services.
Need for greater diversity
– Icki Mey has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Diageo and Mey Icki: Turkish Delight or Turkish Hangover? HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Icki Mey has relatively successful track record of launching new products.
Low market penetration in new markets
– Outside its home market of Icki Mey, firm in the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover?, is just above the industry average. Icki Mey needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Ability to respond to the competition
– As the decision making is very deliberative, highlighted in the case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover?, in the dynamic environment Icki Mey has struggled to respond to the nimble upstart competition. Icki Mey has reasonably good record with similar level competitors but it has struggled with new entrants taking away niches of its business.
Capital Spending Reduction
– Even during the low interest decade, Icki Mey has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Skills based hiring
– The stress on hiring functional specialists at Icki Mey has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
No frontier risks strategy
– After analyzing the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover?, it seems that company is thinking about the frontier risks that can impact Global Business strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Icki Mey 's lucrative customers.
Opportunities Diageo and Mey Icki: Turkish Delight or Turkish Hangover? | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? are -
Using analytics as competitive advantage
– Icki Mey has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Icki Mey to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Buying journey improvements
– Icki Mey can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Diageo and Mey Icki: Turkish Delight or Turkish Hangover? suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Global Business industry, but it has also influenced the consumer preferences. Icki Mey can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Manufacturing automation
– Icki Mey can use the latest technology developments to improve its manufacturing and designing process in Global Business segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Icki Mey can use these opportunities to build new business models that can help the communities that Icki Mey operates in. Secondly it can use opportunities from government spending in Global Business sector.
Loyalty marketing
– Icki Mey has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Global Business industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Icki Mey can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Icki Mey can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Low interest rates
– Even though inflation is raising its head in most developed economies, Icki Mey can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Icki Mey to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Use of Bitcoin and other crypto currencies for transactions
– The popularity of Bitcoin and other crypto currencies as asset class and medium of transaction has opened new opportunities for Icki Mey in the consumer business. Now Icki Mey can target international markets with far fewer capital restrictions requirements than the existing system.
Developing new processes and practices
– Icki Mey can develop new processes and procedures in Global Business industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Icki Mey can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Icki Mey can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Diageo and Mey Icki: Turkish Delight or Turkish Hangover?, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Threats Diageo and Mey Icki: Turkish Delight or Turkish Hangover? External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? are -
Stagnating economy with rate increase
– Icki Mey can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Icki Mey can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? .
Shortening product life cycle
– it is one of the major threat that Icki Mey is facing in Global Business sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
Consumer confidence and its impact on Icki Mey demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Icki Mey.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Icki Mey in the Global Business industry. The Global Business industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Easy access to finance
– Easy access to finance in Global Business field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Icki Mey can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Environmental challenges
– Icki Mey needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Icki Mey can take advantage of this fund but it will also bring new competitors in the Global Business industry.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Icki Mey with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
High dependence on third party suppliers
– Icki Mey high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Technology acceleration in Forth Industrial Revolution
– Icki Mey has witnessed rapid integration of technology during Covid-19 in the Global Business industry. As one of the leading players in the industry, Icki Mey needs to keep up with the evolution of technology in the Global Business sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Icki Mey needs to understand the core reasons impacting the Global Business industry. This will help it in building a better workplace.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Icki Mey in the Global Business sector and impact the bottomline of the organization.
Weighted SWOT Analysis of Diageo and Mey Icki: Turkish Delight or Turkish Hangover? Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Diageo and Mey Icki: Turkish Delight or Turkish Hangover? is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Icki Mey needs to make to build a sustainable competitive advantage.
