Understanding The Business And Economic Environment Assignment Sample

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Introduction Of Diageo company which is very well reputed and famous for its wide range of premium liquors in the market. 

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UK standard industrial classification (SIC 2007) is basically used for classifying different business establishments and also the other units which are statistical on the basis of the indulgence of the business with any type of economic activity. Diageo is a company which is very well reputed and famous for its wide range of premium liquors in the market. The company was established in the year 1997 and since then the company has been able to expand to different other parts of the globe as well. The company is based out of the UK and has its headquarters in London. The company has been very much good with its products and that is the reason why the company is able to enjoy such good revenues even at such early stages of the company.

A good organisational structure can help the organsition can grow an also help it become a better and more productive one. It is very much important for any business organisation to have a good organisational structure in order to have a steady growth of the company in an economic way. The organisational structure of Diageo is hierarchical structure which means that there is a chief executive officer in the organisation and under his guidance are the senior managers or the senior associates of the company. The assistant managers are being guided by the senior managers and at the ground level the workers are being supervised by assistant mangers.

The business organisation Diageo is very much smooth with their work and also they have good management in the company because of the hierarchical structure of the company. The hierarchical model allows the maximum productivity of the employee as they are under the continuous guidance of any senior associate with the company.

Diageo brand

(Source: Diageo, 2022)

STEEPLE for Diageo

Social factor analysis

The social factors can have adverse effects in any organisation. When the company will do the things according to the social and cultural ways in which the market the company will be operating then it will help the business grow in those regions. Whenever a big brand like Diageo is going to sell their products in different market places then they should try to achieve the social and cultural factors of that region in mind and then plan their marketing strategy for any specific region. The social factors depends on some of the very important factors and one such important factor is demographics of the region that is the population, age group of people and many more comes under this criterion (Odeigah et al., 2021). With the demographic overview of the region the company can do many CSR activities which will help the company become a more valuable one. In addition also the level of skill of the individuals of the particular region that is UK matters a lot because it will help the company to engage work force from the locality of the region. It is also very much important to understand the entrepreneurial spirit among the individuals because there are societies which support entrepreneurship whereas others don’t and it should be understood to the company for the better execution of their business and it can effective for the business because it will help Diageo to grow and be creative at the same time.

 Social Factors

(Source: Social Factors, 2022)

Technological factor analysis

Technology is something which is very much dispurting in most of the business organsiation. It is very much essential for any company to cope up with the technologies that are being used in the businesses nowadays. The organisation Diageo is very much technologically advance and also backed with modern day technologies. It is essential for the brand Diageo to understand the technology that are being used by the competitors in the market and also have to implement those on their business as well (Tetreault, McCulligh and Lucio, 2021). The impact of advanced technology on the products offered by the brand Diageo should be evident to customers as well. There will also be some rate of diffusion of technology in the brand when advanced technologies are being used by the Diageo. When any product is infused with technology then the outcome becomes very much more effective and also worth the money for the individuals who are buying the product.

Technological Advancement

(Source: Stucky, 2022)

Environmental factor analysis

Environmental factors impacts various factors in the business of the Diageo organisation. The bad weather conditions can have many adverse effects on the business that is being operated by Diageo. The products that are being produced by the brand are mostly made up of the raw materials that are being procured from different parts of the globe or country. The weather of the environment plays an important role of the building up of the final product (Law et al., 2020). Also the climate change influences the business of the organisation because of the climate change there is a difficulty in proper production of the raw materials which can eventually hamper the preimmunises of the final product. Diageo is operational in a type of industry where environment plays a very vital role as most of the raw materials that are sourced that are being done by the company are mostly environment. Another important point is that the company is in the food and beverage industry so they need to take good care of pollution. The company should be very much concerned regarding the carbon footprint emission which are often been found in the factories or manufacturing plants. They have concern related to pollution of water and air as the business is in the food and beverage industry.

Political factor analysis

There are a lot of political factors associated with the brand and also for the growth of the brand. Political factors also plays an important role for the mainly the economic growth of the company. The company in this case have to face the Brexit, and according the companies have to pay an extra amount of tax to the government of UK for operating their business in the country. The company have to pay extra attention to the benefits of the employees which is mandatory. When the inflation increases in the country the company have to face a lot of issue regarding procuring the raw materials (Burrell and Hopkins, 2019). The company have to face extra consequences when they have to more money for procuring the raw materials as inflation has already increased. The company have to also take important care of the protection of intellectual property.

Legal factor analysis

Diageo have to take care of various other legal laws that are associated with the food and beverage industry. As the company into producing premium quality liquors and that is the reason why the company have to emphasize more on the legal laws of the country UK. The company also have to take laws such as the employment law very seriously (Alabrese et al., 2019). In the country UK there are some specific laws for the employees and all the companies have to abide by those laws of treating their employees in a good and respected way and many more laws are there in the employment law.

Ethical factor analysis

It is very important for any company to have ethics in the workplace for any organisation. The ethic of any company plays a very important role in the growth of the company. The company which have good ethics maintained in their workplace will also have their productivity increased in a very rapid way. When there will be ethics in Diageo then they eh employees in the company The code of conduct is mandatory for any company to maintain and also its the duty of the employee to follow. A good code of conduct in Diageo can help in being the employees a more responsible and productive one. This will result in the increased productivity of the employee as they will be more focused towards their job rather than anything else.

Economical factor analysis

Demand Curve

 Demand Curve

(Source: PhD in Economics at the University of Portsmouth on energy, 2022)

When price of goods increases the demand of the goods will decrease. In the above graph it is clearly visible that when the price is p3D the quantity of demand is q3D, when the price is p2D the quantity of the demand is q2D, similarly when the price is p1D the quantity of demand is q1D. It is very much evident from the graph that when the price of goods are higher then the demand of the goods will decrease (Newman and Ferrario, 2020). The company Diageo also faces some difficulties regarding the increase of price of goods and decrease of the demand of goods when operating their business in different market places.

Supply Curve

 Supply curve

(Source: Supply Curve, 2022)

When the price and quantity of goods is less then the supply of the goods will also be less. When the price is $2 and the quantity is 4 then the supply will be less. On the other consequence when the price and quantity of goods will rise then the supply will also be increased (Gilroy et al., 2018). The company also faces the same issues regarding any particular product from their wide range of products. When price and also the quantity of any particular product of Diageo company goes low then the company also lowers the production of these products.

Discussion on the competitiveness of the UK market and its impacts on the future of the busines

The country UK is often referred as the trade hub of the globe as this country acts as the main hub where businesses happen and UK is one of such countries which allows traders from other parts of the world to do their business in the country. The market of UK is very much growing now and there is a lot of scope for emergence of new businesses and also their scope for early startups as well (Lux and Pfluger, 2020). This the reason why in UK there is emergence of new business and that is the reason why there is competitiveness in the UK. There are many several brands in the UK market who sells the same type of product and it can impact the company in adverse ways such as the sales of the company might go down because of the competitive nature of the market. The economy of the country was decreased at the time of pandemic but after the pandemic was over the GDP of UK has again boosted and the per capita income of individuals in UK have also increased which is good sign for new businesses. The company Diageo even though being a very old company and having a strong position in the market still have to work on their strategies so that they can maintain the position.

Some examples of ‘random shocks’ that could undermine the UK government’s fiscal policy and discuss if there is any fiscal policy could have an impact on the UK’s economy and the business of your chosen company.

Economic shocks are often referred to as random shocks. The events that are not predictable and have an immense effects on the economy of any country or region and most importantly it is cause by some external economic consequences. The random shock which can undermine the UK governments fiscal policy is the impacts of covid-19 on the economy of the country and it was also very much unpredictable but created a lot of difficulties in the economy of the country. Another example of the random shock is Russia-Ukraine war which has created a lot of economic disturbances in the UK and it was also very much unpredictable whereas it has created some bad impacts on the country. According to the fiscal policy of UK the net investment of public sector should be below 3% on GDP over a forecasting period. Hence, Diageo should be concerned to maintain their net investment below 3%. It will ensure more growth and profitability of the business.

 Net investment of PLC in UK

(Source: Net investment, 2022)

Research and discuss the business problems and challenges of Diageo

The business organisation Diageo faces some challenges regarding various factors such as the marketing, acquiring a proper position in the market. The company have been facing a lot of challenges regarding some external factors related to the company. It is from the very beginning that the company have been facing some recruitment issues in the organisation. The company have also been facing some problems while integrating the new employees with the work. The company also faces some problems based on the geographical aspect of different other locations where the brand is operational. This geographical weakness is very much evident as the brand Diageo is spread over different other countries of the globe. Another important problem which the company have been facing is the underperformance of various brands which are not able to provide the consumers with the best quality product. 


In this study it has been discussed about the business and also about the economic environment of the company. The company that has been chosen is Diageo which is a famous brand and is mainly based out of UK and is established in the year 1997. The company has a very good revenue figures and also the company is growing at a very steady and rapid rate. In this study a complete overview of the company have been provided and also an analysis have been done to find out the important factors which are affecting the company. The social, technological, environmental, political, legal and ethical factors of the company have been discussed. In addition to it the economic factors have been analysed which can affect the company’s growth.


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Tetreault, D., McCulligh, C. and Lucio, C., 2021. Distilling agro?extractivism: Agave and tequila production in Mexico. Journal of Agrarian Change, 21(2), pp.219-241.


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