Environmental AnalysisContemporary Leadership and Management IssuesIntroduction"Diageo PLC is a British multinational spirits company, selling alcohol in 180 countries, with a substantial presence in 30 countries. The company was created in 1997 from the merger of Guinness PLC with Grand Metropolitan PLC (GrandMet)" (diageo.com). At that time it was a large multinational with interests in both the food and beverage sectors. Today the company has abandoned most of its food interests to focus on alcohol, acquiring new alcohol brands. Diageo is engaged in the production and distribution of spirits, wines and beer worldwide. With a collection of exceptional brands, Diageo is the world leader in premium drinks. The company produces its products under the names Smirnoff vodka, Johnnie Walker Scotch whisky, Guinness stout, Baileys Original Irish Cream liqueur, J&B Scotch whisky, Captain Morgan rum and Tanqueray gin. “Diageo PLC operates in more than 180 markets worldwide with over 20,000 employees, a market capitalization of 1.5 billion and revenues of 8 billion” (diageo.com). Diageo projects an image of itself as a clean, friendly and ethically oriented company with a commitment to corporate social responsibility. This includes both a stated concern about the harm alcohol can cause, and statements about the great service the company is providing by producing such beloved brands. We selected Diageo to conduct an environmental scan of the industry and remote environments to identify potential opportunities and threats that may arise in the near term. We will describe and evaluate our findings and provide recommendations to address the problems and opportunities we found in environmental scanning. Our assessment includes the following: Availability of substitute products and threats of new entrants and competition Diageo has long been the leader in the premium drinks industry. Its brands include Guinness, Smirnoff, Bailey's, Johnnie Walker and Cuervo, accompanied by a wide range of local and specialty brands from around the world. In 2002, Diageo had a 15% market share (United States-Spirits, 2002) and was by far the largest alcohol producer in the United States, followed by Pernod and Fortune Brands, Inc. The market is expected to reach 9.8% (Huddleston, 2005) growth over the next three to four years, so new entrants may find it difficult to operate unless they have capital to support themselves. The ready-to-drink (RTD) market is an industry sector that has good growth potential and room for competition because it has not been saturated with products.