Performance Measures of Diageo Business Paper Example

Introduction

In business, it is necessary to evaluate the progress of your firm. This evaluation helps in determining the state of the business. The review shows the direction, whether right or wrong, in which the company is moving. Economic experts suggest approaches that facilitate understanding the economic progress of a business. This paper illustrates the use of significant two-type performance indicators; financial and non-financial that Diageo company uses in self-evaluation.

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Financial Metrics

As the case shows, the firm employs some economic indicators including organic net sales, natural operating margin, and earnings per share (p. 8). The company keeps track of five-year records of all the four indicators to facilitate its performance analysis (p. 160). Comparing the current value of an index to its importance for the previous year's tells the Diageo management where to change their approach to trade with the aim of combating possible weaknesses.

Evaluating the organic net sale for the financial year ending June 2018, the company notes an improvement in the sales by up to 5 % (p. 8, 12, 23). After in-depth analysis, Diageo economist realizes that the company had good returns from the region, with both organic volumes and net sales contribution resulting in a positive impact. Increase in organic sells implies a healthy business. The data allows Diageo managers to continue with their sale approach.

The company also performs organic operating margin check. The analysis also indicates an improvement in the fixed margin for the June 2018 business year. From the data, the year recorded an increase of the margin by 78bps. The case also illustrates that Diageo's method of productivity and marketing spend the source of this growth (p. 8, 12, 22). Therefore, the management team chooses to press on with the system of management and marketing spending which proves helpful in the company's progress.

The company also utilizes the analysis of annual earnings from the shares. The 2018 report indicates a 9.3 % growth in earnings per share. The Diageo reviews their margin by analysing the effects of operating expenses. The case suggests an improvement of operating profits by 3.7% the year 2017 (p. 23). The benefits mean a good management system that the company decides.

Non-financial Indicators

The company uses several non-financial indicators including alcohol in society, health and safety, and innovation (p. 8). The company commits to the influence of alcohol, and periodically evaluate its impact on the generation (p. 4, 8). It emphasizes the concept of moderation by advising consumers on responsible alcohol consumption. This move makes it records the lowest number of complaints from the industry regulating bodies (p. 44).

Regarding this approach, Diageo also protects its reputation in society. The case illustrates how the company commits to maintaining social outlook in the nation. 'We know the misuse of alcohol can harm individuals and communities and we are committed to promoting moderation' (p. 14). This statement also reinforces its concept of a healthy and safe society.

The company also looks at the competitive aspect of its products. On page 17, the company acknowledges the success of one its brand, Chocolate Vodka, which is the company's leading vibrant, proving its popularity by winning a Silver Medal for Quality Recognition at the San Francisco World Spirits Competition in 2018. The case shows how the company evaluates the performance of its brands in the market. And also anticipate the new consumer occasions and develop next-days brands (p. 13). After analysis of brands performance, it embarks on improving the value of new products. Due to this, it can record a rise in the sale of Smirnoff in.

Conclusion

In conclusion, performance indicators only show the state of a business. The analysis of the Diageo company illustrates a group under good management. The management helps into adherence to internal and external policies.