Business Strategy and Whitbread

Bibliography There are no sources in the current document. Carol Pickering Assignment 1 Business strategy EXECUTIVE SUMMARY Whitbread PLC founded in 1742 by Samuel Whitbread the first mass production brewing plant in Georgian London. Whitbread had always been known for brewing and running pubs. A complete change in direction in 2001 saw the selling off of both the brewing and the pubs and a new era of hotels restaurants and coffee shops began. 2011 see the core estate of premier inns several restaurant chains and costa coffee.

These are not confined to the UK but Whitbread now sees business as global.

Their vision is to build the best large scale hospitality brands in the world but still incorporating the values the Sam had in the 18th century. Whitbread have core values that are simple yet strong and three words, Genuine, Confident and Committed. These can be seen as to what the company aspires to and how they wish the business to conduct itself. As a global corporate business Whitbread can be seen to be creating value for money and creating a complete customer experience focusing on areas of the industry that are expanding value for money hotels and family restaurants as well as ever popular coffee shops.

In the financial report for 2010/11 there were as can be expected no financial objectives there were however several covering corporate responsibility from green issues such as energy saving to ethical objectives such as funding of schools for children in coffee growing regions. Also improving customer experiences stronger offers and expanding the business around the globe The vision strategy and core values for Whitbread are to the point focused and easily understood.

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The mission statement however is a little weak in that it does not contain and the necessary elements of a good mission statement.

It focuses on its brand market and its philosophy with no mentions of employees or its corporate responsibility which both hold strong focus in the annual report for 2010/11 Financially Whitbread has gone from strength to strength. Expanding the business across the globe opening hotels and coffee shops in foreign shores has led to increase in like for like sales and profits. Turnover in 2010/11 was up 11. 5%. Revenue in hotels and restaurants up 10. 6%. Growth in costa coffee saw a massive increase of 24. 7% and Costa saw an increase of 38. 4% in its operating profit for the financial year.

Operating profit grew from 3188m in 99/00 to ? 250m the year after the radical change in direction to ? 308. 8m in 10/11. Taking such a step in redirection was a gamble some would say. Having a solid strategy strong core values and a clear aim has lead Whitbread from strength to strength not nationally as was but globally as is. CONTENTS Introduction…………………………………….. page 1 History of Whitbread……………….. ………. …page 1 Whitbread Strategy……………………………. page 2 Mission Statement…………………………….. page 2 Vision……………………………………………page 3 Core Values……………………………………. age 4 Objectives………………………………………. page 5 Financial Analysis…………………………….. page 5 Conclusion…………………………………….. page 6 1. INTRODUCTION Whitbread PLC is a major player within the hospitality and leisure sector in the U. K. As a company in 2001 the company took a different direction altogether. The aim was then to concentrate on the growing markets in hotels and restaurants. This report aims to look at the business strategy of Whitbread through the annual report 20010/2011 looking key trends and ratios as well as the company’s mission statements visions and objectives.

HISTORY OF WHITBREAD Samuel Whitbread was born in 1720 his brewing apprenticeship was 1736 and he opened his first brewery in 1742. In 1750 he constructed the first purpose built mass production brewery in the UK this was Chiswell Street in Georgian London. Modern Whitbread in its current form started in 2001 when the brewing division was sold off and the company left the traditional bar and pub sector for good. Reincarnating itself into a hotel and restaurant company it still holds the values the Sam Whitbread in the founding days.

That is to genuinely focus on the customer and to strive to be the best and to recognise that progress comes from innovative thinking. In the annual report from 2000/01 which was the last that covered the original estate the consisted of 5915 units outside the brewing division ranging from pubs managed and leased to hotels and off-licences with a turnover of ? 2951. 4mil and a GP of ? 759. 4mil. In the last annual report 2010/11 the portfolio contains 44295 rooms 379 restaurants and 1217 UK coffee shops and 654 internationally. The 2. turnover for this period was ? 599. 6mil however the GP was 1362. 5mil. (www. whitbread. co. uk) WHITBREAD STRATEGY Using PESTEL (Political, Economic, Social, Technological Environmental and Legal) an organisation can influence its strategy and alter it as the factors change. Politics covers changes in government; economics are influenced by exchange rates and world growth. Social covers demographics and technological covers innovations such as the internet. Environmental covers green issues and legal covering legislation such as health and safety (Johnson. G, Scholes. K, Whittington.

R 2008). Whitbread’s strategy is focused on creating value for money and the customer experience creating a link to a set of objectives and an incentive scheme for managers that depending on the brand can be up to 100% of the basic salary. (www. whitbread. co. uk/benefits). Rewarding individuals motivates a team, the interest levels increase in those areas of focus and the strategy becomes the employee’s everyday focus and it is understood. The team are motivated to perform to the best of their ability (Kaplan. R, Norton. D, 2004). Whitbread Strategy Appendix i

MISSON STATEMENT Whitbread mission statement Appendix ii “A mission statements aim is to provide stakeholders with clarity about the overall purpose and raison d’etre of the organisation. ” (Johnson, Scholes, Whittington 2008). 3. By early 21st century mission statement were widely used by organisations, Barkus regarded them as weak and varying ( Barkus. B, Glassman. M, McAfee. B, 2000). However Rarrek Vitton and Bart Baetz found a positive influence on returns for those organisations with an effective mission statement. (Bart,C. , Baetz,M. 998) found a positive influence on returns for those organisations with an effective mission statement. Mission statements should contain some or all or nine components (Appendix iii) The Whitbread statement does not contain all nine of these components. It touches on its brand “hospitality brand” Market “the world”. Its philosophy could be interpreted as “outstanding value”. There is however no mention of the employees or public image both of which hold focus in the last annual report with regard to employee qualifications and corporate responsibility (www. hitbread/annualreport. co. uk ) VISION Whitbread vision statement (appendix iv) A vision statement gives an insight into direction the organisation wants to take. It gives direction to the stakeholders and why and how to support the organisation (Kaplan. R, Norton,D. 2004). Profit alone will not motivate employees an organisation they see profit as money the management use and pay-out to shareholders (Quigley. J, 1994). A combination of a vision for employees to work towards and the generation of profit are needed for the success of an organisation.

Whitbread in their vision statement give a clear and concise direction for the company using phrases “best large scale hospitality brands in the world” and “most 4. customer focused organisation there is”. The stakeholders know the direction the organisation is going and how it will achieve this. CORE VALUES To instil a set of core values within an organisation and will define the way in which the organisation is run. These values will tend towards values in which the organisation wishes to reach or aspire rather than what it is. These values are usually linked to corporate responsibility and are variable and misleading (Johnson.

G, Scholes. K, and Wittington. R 2008). Arguably these core values are the basis on which an organisation work and conduct themselves. Whereas strategies will change according to outside influences the core values will not change (www. nps. gov ) Whitbread has three core values 1. Genuine – really caring about customers 2. Confident – striving to be the best at what we do 3. Committed – working hard for each other These values would not need to change even if the business did. PESTEL influences do not affect the 3 values for Whitbread. These can remain the focus for the company in challenging times. 5.

OBJECTIVES Whitbread objectives (appendix v) “Clear and explicit and the basis upon which options are evaluated” (Johnson. G, Scholes. K, Whittington. R, 2008 p31) Objectives are formulated in relation to sales profits and aimed at both unit and corporate level. There are market based objectives that are linked to service repeat business and market share these are more commonly called targets. Both objectives and targets need to be measured (Ansoff. I, 1968). These measured and times objectives can focus on areas within a business that are in need of attention (Johnson. G, Scholes. K, and Wittington.

R 2008). While within the Whitbread report there were no clear financial objectives those that were laid out are environmental (Appendix v) and called targets rather than objectives. When using the SMART criteria for creating objectives, Specific Measurable Attainable Realistic and Times all the targets meet this criteria. (Kerry 2002). FINANCIAL ANALYSIS Whitbread turnover 2010/11 was ? 1599. 6m up from ? 1435m 2009/10 a growth of 11. 5%. gross profit 2010/11 was ? 1362. 5m against ? 1221. 5m 2009/10 an increase of 0. 75%. Whitbread is split into 2 divisions hotels/restaurants and Costa Coffee.

Revenue from the hotel/restaurants 20010/11 was ? 698. 6m an increase of 10. 6%. like for like sales were up 8. 2% against a negative of 4. 3% 2009/10. Restaurants had positive LFL sales of 3. 3% and the operating profit was up 14. 7% to ? 283. 4m. Costa 6. Coffee revenue 20010/11 was ? 425m an increase of 24. 7% like for like sales of 7. 8% and an operating profit of ? 50. 1m an increase of 38. 4% (www. whitbread. co. uk) CONCLUSION Whitbread has a clear defined strategy vision and strong core values. Each is easy for stakeholders to understand and form a strong base for the brand across the globe.

The mission statement is however missing several of the key components including employee and corporate responsibility. This has not however hampered the continuing success of the company with sales and profits up again at the end of the last financial year. BIBLIOGRAPHY Ansoff,C. Baetz,M. (1998) The Relationship between Mission Statements and Firm Performance: an explority study. Journal of management studies. 35. Bartlaus,B. Glassman,M. McAfee,B. (2000) Mission Statements: are they smoke and Mirrors. Business horizons. 23. David,F. (2010). Strategic Management. Prentice Hall.

USA Kaplan,R. Norton,D. (2004) The Strategy- focused Organisation. Harvard business School Press. Boston Mass. USA Kerry,T. (2002) Effective Learning Objectives task setting and differentiation. Nelson Thomas. UK. Quigley,J. (1994). Vision: how leaders develop it share it and sustain it:39 WEB SITES www. whitbread. co. uk www. nps. gov APPENDICES Whitbread Strategy “Our strategy is to create value for our shareholders by focusing our investment and growth in the expanding areas of the hospitality industry with particular focus on value for money hotels and costa coffee shops.

This is how we manage to deliver outstanding performance across all of our business” www. whitbread. co. uk ————————————————- Appendix i Whitbread Mission statement “Our aim is to build the best large scale hospitality brands in the world by becoming the most customer focused organisation there is. Anywhere. We’ll do this by providing outstanding value and making every day experiences feel special so that our customers come back time and time again” www. whitbread. co. uk ————————————————-

Appendix ii Components for a mission statement 1. Customers- who are the firm’s customers? 2. Products or services- what are the major products or services? 3. Markets- geographically where does the firm compete? 4. Technology- is the firm technically current? 5. Concern for survival growth and profitability-is the company committed to growth and financial soundness? 6. Philosophy- what are the basic beliefs values aspirations and ethical priorities of the firm? 7. Self-concept- what is the firm’s distinctive competence or major competitive advantage? . Concern for public image- is the firm responsive to social community and environmental concerns? 9. Concern for employees- are employees a valuable asset of the firm? ————————————————- Chapter 2 the business vision and mission ————————————————- Appendix iii VISION STATEMENT “Our ambitious vision is to build the best large scale hospitality brands in the world by becoming the most customer focused organisation there is, anywhere” ww. whitbread. co. uk ————————————————- Appendix iv OBJECTIVES * Improving our insight to deliver a better customer experience * Stronger value led offers * Innovating across our brand propositions making our brands more accessible through increased distribution channels * Reduce our relative operational carbon emissions by 26% v a 2009/10 baseline by 2020 * Achieve 80% of waste diverted from landfill from Whitbread hotels and restaurant sites by Feb. 012 * Achieve a relative 20% reduction in water consumption in our hotels and restaurants portfolio against 2009/10 base line by 2020 * Raise ? 1m for water aid * Achieve 3000 qualifications from Whitbread hotels and restaurants apprenticeship scheme. 400 costa learners trained by 2011 * To raise funds and build Costa foundation schools sufficient to educate 15,000 children in coffee growing communities by 2012