Decision Making Of Diageo Alcohol Company Business Essay


Diageo is an outstanding alcohol company across the world. Its market includes 180 countries around the World. It produces a variety of alcohol including spirits, wine, and beer. It holds a handy number of alcohol brands. Among them, Johnnie Walker, Smirnoff, Guinness, Captain Morgan, Baileys, and J&B are the most familiar to us. Diageo is founded in 1997 with its headquarters located in London, United Kingdom.

In comparison to its alcohol brands, Diageo is still a young company. For example, Johnnie Walker has been introduced in the year 1865. In facts, Diageo could be considered as a newborn company from merging and acquisition of many alcohol companies. In short, Johnnie Walker joined Distiller Company in year 1925 and Distiller Company was acquired by Guinness in year 1986. Guinness then merged with Grand Metropolitan in the year 1997 and Diageo is officially formed. Diageo became an alcohol specialized company only since 2002 which is when it sold Pillsbury and Burger King. Since then, Diageo has no longer been making any products other than alcohol.

2. Pros of alcohol

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2.1 Medical benefit

Alcohol is a drug that is harmful to our body if consumed excessively, however an appropriate amount of consumption of alcohol is actually beneficial to our health. It is scientifically proven that an appropriate amount of alcohol can helps to improve our blood circulation just like when we exercise. In facts, there are some company that has promoted their alcohol products as a kind of nourishment.

2.2 Relieve stress and brings pressure

Alcohol has a chemical effect to momentarily bring pressure to our brain. It can be used to relieve some stress if it were used properly. Other than that, alcohol could be a perfect item in a celebration and party provided that it is consumed in a suitable amount.

2.3 Preserve body warm

Alcohol has long been used in various places as a body warmer during winter. Since drinking alcohol gives the effect of blood circulation, the body temperature of a person can be increased which gives rise to a better cold resistance.

3. Cons of alcohol

Despite the advantages above, alcohol gives a lot more disadvantages that it offset its advantages.

3.1 Risk of health

The consumption has been scientifically proven to have raised the risk of getting health problem. According to a rough estimation of experts, at least 33000 of death in UK are caused by alcohol. The negative effects of alcohol on health are becoming more obvious in younger people. Nowadays, it is reported that one third of the adults in UK has been abusing alcohol enough to cause a health problem. The alcohol consumers are exposed to a risk of experiencing hangover and various cancers.

In reference to a recent discovery, the damage of alcohol to female is higher that of male. It is because that a woman body are not capable of processing alcohol as well as a man do due to the physical differences.

Scientists have also proved that alcohol consumption can lead to mental illness like anxiety and depression. In the worst case, one might experience hallucination and delusion. One's memory could also be weakened due to alcohol consumption and it leads to decreased productivity.

3.2 Alcohol dependence

Drinking large portion of alcohol regularly can lead to alcohol dependence. When a person consumes alcohol too rapidly, he is of a high risk of getting addicted to alcohol. Alcohol dependence gives negative symptoms like anxiety, depression, and even suicidal feeling. Strong alcohol dependence not only affects one's health but his financial condition as well. There are cases where some alcohol addicted people eventually committed crime to get their hand on to alcohol.

3.3 Appearance

Excessive alcohol consumption also changes the appearance of a person. It can results in pale skin colour, black eye socket, and even growth of waistline. A bad appearance can affect one's confidence making him more unproductive.

3.4 Road accident

Due to irresponsible drinking of alcohol, the number of road accidents has shoot up. Drinking alcohol can reduce one's consciousness, thus one shall never drink alcohol prior to any activity that hold a risk. To reduce road accidents, millions of dollars has been spent by government and other NGO in holding various awareness campaign and activity.

4. Guidelines in making decision

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Diageo as an international level hard drinks company has been practicing a list of ethical codes. It includes code of business conduct, code of ethic, consumer information policy, Diageo marketing code, environment policy, human rights policy, occupational health and safety, privacy policy, quality policy, and supplier policy.

Now, we are going to focus on a few ethical code of Diageo which contribute to the welfare of its stakeholder.

4.1 Products code

In the ethical code regarding product, it is stated that the company will comply with any legal requirement or law in the country of sales. They also comply with the Quality Risk Management Standards that is applied to their product. In extension to this standard, the product ethical code also includes a clause that the company product must be safe even to the customers and employees. To promise a better standard, Diageo has been making regular check on its vendor and third party producer to make sure all of them works in accordance to the Diageo Quality Policy.

4.2 Marketing code

Diageo fully aware that while the liqueurs it produced bring pleasure and satisfaction to millions of customers, it is sometimes being misused by drunkards and brings up tons of problems contributing to the negative social cost to the others people around them. Thus, Diageo has come up with its marketing code to counter this negative impact on the society. This marketing code prohibits the company from targeting those underage people as its market. It also prevents the company from encouraging excessive and irresponsible consumption of alcohol. For example, Diageo do not make any advertisement depicting the consumption of its product under unsafe situation or on any violent themes. Another example is that Diageo never use its products' alcohol contents as a main selling point. Lastly, the marketing code of Diageo disallows Diageo from promoting the alcohol as medicine that gives any positive effects on an individual. This is to avoid the company from giving misleading information to the society.

4.3 Employment code

As one of the largest alcohol company in the world, Diageo has taken a proactive approach to enhance its employees' welfare. For the purpose of ensuring the health of its employees, Diageo Occupational Health and Safety Policy and Diageo Physical Security Policy is set and enforced. Under this policy, any accidents happened and discovery of any matter that give rise to a risk to health, safety and security must be promptly reported. The matter reported must be analyzed fully to come up with a best solution. Health and safety training must be conducted to the employees whenever needed. Lastly, the company is expected to ensure that its member knows what to do if an emergency is to be arisen in the work place.

Diageo employment code also takes into consideration of the matters regarding discrimination and harassment in the work place. It expects the employment to be conducted in a way free of biases where the employment of an individual is not based on race, religion, skin color or any such bases but his ability to do the job. To proactively prevent discrimination in employment, Diageo has been promoting workplace diversity. The employment code does not tolerate any harassment and abusive behavior in the workplace. Any person committed such behaviors shall be punished accordingly without fail.

4.4 Environment Policy

Diageo Environment Policy emphasizes on the reduction of damages to the environment. It aims to achieve a condition where the business of Diageo will neither lead to long-term depletion of natural resources nor harm to the any species and the balance of biodiversity. To achieve this goal, Diageo has dig into its logistics and business travel. By selecting the type of transportation with concern of its pollution and fuel efficiency as well as planning the route of transport, Diageo has actually been able to reduce its negative environmental impact.

Diageo has also invested into the research and development of environmentally friendly technologies in anticipation that the negative impact of its production to the environment could be minimized. The minimization of production waste is also an important key area that Diageo has focused on.

5. Corporate social responsibility

Corporate social responsibility committed by Diageo can be divided into 3 main parts which is responsibility on their alcohol product, community welfare, and environment. All this 3 parts ultimately brings benefits to all livings being in the world.

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5.1 Alcohol in society

Diageo has long been admitted that their alcohol products do bring some negative impact in the society. Although the main cause of those bad cases is ultimately the behavior of the consumer who has actually misuses alcohol, Diageo do not put the blame on others. Rather, it has borne the blame and actively trying to be socially responsible in handling this problem. To counter the problems created by alcohol to the society, Diageo has makes 3 approach in promoting the practice of responsible drinking to the consumer. The 3 approach includes hosting a variety of programs, partner with other bodies, and introducing new company practices.

5.1.1 Programs

In this respects, Diageo has supported programs that arise the awareness of responsible to the people and bring changes to their attitudes. One of the efforts of Diageo is DRINKiQ. It is a website that provides supports for programs aiming to reduce the misuse of alcohol. The programs mentioned could be those that are aiming on parents, educators, law enforcers, and even retailers. Information regarding experts' recommendation, how to practice responsible drinking, and some factual details of alcohol can be found in this website.

5.1.2 Partnership

In term of partnership, Diageo has became partner of civic and government bodies and even media to promote the importance of responsible drinking. One of the examples can be seen in Diageo's commitment to the Drinkaware Trust organization which helps explain the negative effect of abusive consumption of alcohol.

5.1.3 Company practices

Different practices have been introduced to reduce the negative impact of Diageo alcohol products to the society. Marketing policy of Diageo is one of them. An example of the contribution of the marketing policy can be seen from its prohibition on the company from treating the underage as a sale market. This helps to prevent the underage consumption of alcohol which is the major reason of alcohol related accidents.

5.2 Enhancing of community welfare

To extent its social responsibility, Diageo has involved itself in various activity that help enhancing the overall welfare of its entire stakeholder and even to the whole community. According to the financial report of Diageo at the year end of 2009, Diageo has invested 1% of its company operating profit which amounts to 23.4 million dollar in the effort of enhancing the community welfare. The contribution of Diageo to the community can be categorised into 4 projects with different focus area. They are Skills of Life, Water of Life, Disaster Relief, and Employee Volunteering.

5.2.1 Skill of Life

Skill of Life is a project of Diageo that focus on helping the unemployed person or the disabled to get a job or to start their own business. Skill of life actually contributed indirectly in the economy of the nation by reducing the unemployment rate. The main course that Diageo apply to help these people is by providing training and other learning courses.

5.2.2 Water of life

This project focuses on the supply of clean and drinkable water source in some third world country with inefficient technology to sustain a better quality of life. In this project, Diageo has spent half of its 1% of operating profit allocated for enhancing the community welfare in the providing water access to one million people from year 2007 until 2015.

5.2.3 Disaster Relief

This project's focus is helping the victim of any disaster worldwide as its name propose. The helps provided include emergency relief which is the rescuing of the victim of disaster, long-term rehabilitation projects which help the victim in getting a new living environment, and employees' fundraising program which raise funds from the company member for donation to those victims. One of the recent operations is the disaster relief for Haiti earthquake's victim.

5.2.4 Employee Volunteering

This project supports Diageo's members to voluntarily helping those in needs. A website called Giving for Good is established in the year 2008 for the employees of Diageo to raise funds to those in needs. It provides a chance for its company to donate and make contributions to the community.

5.3 Environment

Diageo also contributed in preserving the environment. It realise the seriousness of global warming and various sign of natural resources depletion and has take active steps and measures reducing their pollution to the environment and wastage of resources. Diageo has put its efforts into 3 activities which is reduction of carbon emission, efficient use of water, and other wastage.

6. Recommendation

After getting a deeper understanding of the ethical efforts made by Diageo Company, our group has come up with a few recommendations.

6.1 Tightening the enforcement of company policies and codes

Diageo has been doing very well in establishing a complete set of ethical codes and policies that have take into consideration the welfare of every stakeholders. However, it wouldn't be taking any effects if they are not being enforced. Thus, we recommend Diageo Company to appoint some enforcer to ensure that all the ethical codes and policies are strictly followed by each member of the company.

6.2 Includes a guides on appropriate alcohol consumption

We also recommend Diageo to include a guide in the packaging of their products as to what amount of consumption per day is appropriate. This information is crucial to the consumer. Many consumers have abuse the use of alcohol because they do not know of what amount of alcohol consumption would be harmful to their health. Since each type of alcohols have different characteristics, a general guide would not be useful. It would be the best if Diageo as a producers of such alcohols to make a guide for each of its products.

7. Conclusion

After completing this assignment, our group has get a deep understanding on the way Diageo applied in handling ethical issues. Overall, the Diageo Company has done very well that it complies with the ethical standards. It has take into consideration the welfare of its entire stakeholders by establishing ethical codes to protect the right of its stakeholders and getting proactive in taking up its social responsibility.

In this study, we found that all the decision and action taken by Diageo is actually ethical and correct in both the view of Deontological and Teleological as those decision and actions taken are the most suitable under the circumstances and brings up a positive consequence to its stakeholder.

This assignment has total words of 2495 words exclusive of this statement.