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 - – talent flight as more people leaving formal jobs, increasing commodity prices, geopolitical disruptions, supply chains are disrupted by pandemic , there is backlash against globalization, increasing household debt because of falling income levels, technology disruption,
cloud computing is disrupting traditional business models, central banks are concerned over increasing inflation, 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 -
Successful track record of launching new products
– Icki Mey has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Icki Mey has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
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.
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.
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.
Cross disciplinary teams
– Horizontal connected teams at the Icki Mey are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Effective Research and Development (R&D)
– Icki Mey has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
High brand equity
– Icki Mey has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Icki Mey to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
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.
Low bargaining power of suppliers
– Suppliers of Icki Mey in the sector have low bargaining power. Diageo and Mey Icki: Turkish Delight or Turkish Hangover? has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Icki Mey to manage not only supply disruptions but also source products at highly competitive prices.
Training and development
– Icki Mey has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Diverse revenue streams
– Icki Mey is present in almost all the verticals within the industry. This has provided firm in Diageo and Mey Icki: Turkish Delight or Turkish Hangover? case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
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 -
Aligning sales with marketing
– It come across in the case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Diageo and Mey Icki: Turkish Delight or Turkish Hangover? can leverage the sales team experience to cultivate customer relationships as Icki Mey is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Icki Mey is dominated by functional specialists. It is not different from other players in the Global Business segment. Icki Mey needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Icki Mey to focus more on services rather than just following the product oriented approach.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Icki Mey is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover? can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
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.
Interest costs
– Compare to the competition, Icki Mey has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
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.
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.
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.
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.
Slow decision making process
– As mentioned earlier in the report, Icki Mey has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Icki Mey even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover?, it seems that the employees of Icki Mey don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
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 -
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.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Icki Mey can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Icki Mey in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Global Business segment, and it will provide faster access to the consumers.
Creating value in data economy
– The success of analytics program of Icki Mey has opened avenues for new revenue streams for the organization in the industry. This can help Icki Mey to build a more holistic ecosystem as suggested in the Diageo and Mey Icki: Turkish Delight or Turkish Hangover? case study. Icki Mey can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
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.
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.
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.
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.
Better consumer reach
– The expansion of the 5G network will help Icki Mey to increase its market reach. Icki Mey will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Leveraging digital technologies
– Icki Mey can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
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.
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.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Icki Mey is facing challenges because of the dominance of functional experts in the organization. Diageo and Mey Icki: Turkish Delight or Turkish Hangover? case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
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 -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
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.
Regulatory challenges
– Icki Mey needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Global Business industry regulations.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Diageo and Mey Icki: Turkish Delight or Turkish Hangover?, Icki Mey may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Global Business .
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.
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.
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.
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.
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.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Icki Mey business can come under increasing regulations regarding data privacy, data security, 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.
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.
