Strategic Analysis of Whitbread and Premier Inn

This assignment focuses on a strategic analysis of two major players in the hospitality industry: Whitbread (owner of Costa Coffee and Premier Inn) and Premier Inn. Students are expected to apply various business and competitive analysis methods, both classic and contemporary, to evaluate these companies' strategies. The analysis should consider their competitive landscape, internal operations, and responses to market trends. The assignment utilizes a selection of academic resources and real-world examples from the industry, emphasizing the practical application of strategic management concepts.

Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
CORPORATE GOVERNANCE.....................................................................................................1
EXTERNAL ENVIRONMENT......................................................................................................4
COMPETITIVE ENVIRONMENT.................................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
In the modern era, there exist high competition and rivalry in the market due to which
company need to incorporate new set of strategies for sustaining longer in the environment. Due
to globalisation, company seeks expansion as one of the key growth opportunities and this
certainly helps in attaining objectives in a desired manner. However, expansion is required to be
executed by considering varied factors such as competition, availability of substitute product and
matching with external business environment (Grant, 2015). For the purpose of attaining in-
depth knowledge of business environment and other elements of market, present report has been
prepared. In this context, Whitbread PLC has been taken into account that needs to expand its
operations in emerging countries as market of UK leads towards saturation. The company
operates diversify business which ranges from accommodation to coffee shop. In this report,
South Asia (India, Pakistan, Sri Lanka, Bangladesh, etc.) has been analysed as a geographic
region for expanding the operation of the cited company. This has been selected because it
includes countries that have huge population and high market growth opportunities for the cited
business. Through this, Whitbread can gain high market opportunities. In this, above stated
region has been analysed along with current level of competition so that recommendation to
Whitbread can be offered with regards to the expansion.
CORPORATE GOVERNANCE
Corporate Governance is the framework created by establisher and board members in
which rules and code of conduct is laid down to ensure transparency and accountability to their
different stakeholders such as their customers, suppliers, employees, creditors and government
organisation. With the specified mechanism and process, corporations are controlled and directed
by the senior authorities and the management (Stacey, 2013). Each organisation possesses
different corporate governance method to comply with. It determines the ethical base of the
organisation and enables the outside people to get connected with the organisation. In order to
maintain the working of Whitbread with integrity and transparency, high standards of corporate
governance is followed in every aspect of businesses that influences each employee working in
the organisation (Hitt, Ireland and Hoskisson, 2012). Whitbread is committed to conduct their
business ethically and in compliance with the spirit of law. Corporate governance with certain set
of rules and practices, directs the employees to take their decisions and process their work
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ethically. In order to ensure the corporate governance in Whitbread there is the board of directors
of 10 members which includes chairman, chief executive, senior independent director along with
seven other members having their respective areas of dealing such as retail, legal, financial,
technology, marketing and other related (Yang, Hong and Modi, 2011). These members are
responsible for strategy, performance, risk and employees. There is the specific code of conduct
prescribed by the board that is followed by all the members associated with the organisation in
each business that is Costa coffee or Premier inn.
Business Integrity
 Dealing in the food and beverage industry, employees and supplier comply with the laws
laid down with reference to the safety and hygiene of product offered by Whitbread in
different businesses (Harmon, 2014).
 There is frequent auditing and monitoring of the business practices done through
inspection to keep a check on the code of conduct.
 There is the strict prohibition of any form of corruption, bribery, extortion and
embezzlement on the part of employees.
 Employees are supposed to maintain the confidentiality to safeguard the information of
Whitbread and ensuring the secrecy of Whit-bread's Data (Whitbread, 2016). As per the law of standards of business conduct, whistle-blower worker are protected and
retaliation in any form is prohibited.
Human Rights
 Whitbread complies all the laws mentioned in the United Nations Universal Declaration
of Human Rights.
 Workplace is promoted and maintained, free from discrimination and treating all
employees with dignity and respect (Hull, Hutchison and Strasser, 2011). Employees are allowed to work for the specified working hours and granted needed rest
days. Further, lawful wages and premium pay are provided by the Whitbread Plc.
Environmental responsibility
Realising the need of protecting environment, Whitbread Plc manage, measure and
minimize the harmful impact of its operation on environment. It ensures the minimum emission
of carbon, reduction of waste and their proper disposal, using Eco-friendly raw materials and
many more effectual steps.
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Workplace
Whitbread caters to develop the resourceful and healthy environment for the employees
working there and similarly they are supposed to meet with the needs in the effective manner.
ORGANISATIONAL STRUCTURE
Organization structure is a base created on the basis of which tasks are allocated to the
employees; supervision for duties and responsibilities is extended by the senior authorities and
coordination among different organisational components at horizontal and vertical levels are
processed to achieve the organisational goals and targets (Christopher and Holweg, 2011). Each
company uses different types of structure as per their suitability and competency with the
objectives. Among the different business, Costa coffee with 3080 shops and Premier inn with
650 hotels around the globe is handling its global operations with rationalized structure. It
follows the divisional structure at global hierarchy and functional structure at individual unit. It
supports the autonomy and organisational flexibility.
Divisional Structure: In this type of structure, larger companies are segmented into smaller units
on the basis of their geographical locations or other classifications. It is serving countries such as
China, Dubai, Ireland, Russia and some countries of Europe. Having offices at different parts of
the world with this structure enables each geographical unit to operate many functions and cover
different markets (Griffin, 2013). With wide control, use of this structure makes the functioning
of Whitbread flexible and makes changes in its policies and strategies as per the requirement and
competency. Specialists Italian coffee shops Costa is UK's largest budget hotel Premier Inn with
their respective operations, are handled through divisional structure from its headquarter at
Dunstable, UK.
Functional structure: In this type of structure, organisations are grouped into several portions as
per their respective functionalities. Fundamental divisions are production, sales department, and
finance, marketing as well as human resource. In this type, efficient employees are recruited
from pool of different applicants and are placed at the departments according to their strengths
and functional backgrounds. Adopting this type of structure individually at units enables them to
function on the basis of departments (Kaufmann, Kraay and Mastruzzi, 2011). All departments
working separately make the functioning efficient and precise in nature.
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Whitbread processing both the structure undergo certain benefits and flaws hence it is
required by cited organisation to use them strategically addressing all its demerits in the well
manner. Due to larger degree of fragmentation, divisional structure is expensive for the company
(Tang and Musa, 2011). But despite of this, cost effective measures can be adopted such as
leadership development and other to make each geographical unit more efficient. Further, due to
independence of each department in functional structure, there is less coordination among
employees which restricts the team working. Addressing this will accrue significant benefits to
the mentioned company.
EXTERNAL ENVIRONMENT
External environment is key concern for the company to assess as it directly impact on
the operation and same cannot be controlled. It comprises different factors namely political,
economic, social and technological. In this sector, analysis of external environment of South
Asia has been done for assessing the market situation. Same has been enumerated below: Political Factor: South Asia is one of the regions of World that possesses huge growth
opportunities due to its political structure. It includes country like India, Pakistan and Sri
Lanka that offer political support to the foreign company for raising the economic
growth. However, there is corruption in these countries which can affect the financial
projection of Whitbread. Since, the firm is planning to open Premier Inn hotel and Costa
coffee shop in the mentioned region which will require huge land and support from
government (Budhwar and Debrah, 2013). It is even evident that cited organisation might
face problem due to slow processing of government work in the region due to which the
whole planning of entering into this market will be affected. Beside this, Pakistan has
poor relations with the surrounding countries and also due to regular terrorist activity,
cited company will face problem in entering Pakistan. Additionally, India too has many
complications such as political instability and also political structure is highly influenced
from politician’s interest and ideologies. Moreover, Whitbread is required to pay heavy
taxes to government of different country in the form of service tax, property, sales tax,
excise duty and several others which will essentially affect the profitability of the
company. Due to these taxes, overall price of Whitbread’s product increased which will
not be demanded by target customers due to less buying capacity (DeFusco And et.al,
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2015). This will affect the overall operation of the company and also making
sustainability question. However, these markets possess huge growth opportunities which
will help the company in boosting its profit margin and market share. Hence, required
strategies need to be developed by the company for meeting with political structure of
South Asia countries. Economic Environment: Economic environment refers to the condition of economy in
terms of certain economic determinants such as exchange rate value, inflation rate,
interest rates, wholesale price index and many their values. They form the crucial part of
the analysis with the vision to establish the market in any geographical region in order to
sustenance and earn profitability. Whitbread establishing its market in south Asian region
will face the favourable exchange rate in all the countries such as India, Pakistan, Sri
Lanka and Bangladesh (Fleisher and Bensoussan, 2015). The currency value in these
countries is not as high, which will benefit the cited organisation in generating revenue.
Also, there exist the high scope of development and growth for the hotel companies and
coffee shop due to immense opportunities available and market. In order to expand
hospitality industry in these regions, liberal interest rates along with some relaxation are
provided to the investors hence, in terms of registration and finances, the conditions are
favourable to Whitbread. Whitbread is operating in the food and beverage industry whose
prices are decided through the indexes such as wholesale prices Index and cost of living
index. Fluctuation in the indices values plays vital role in determining the prices and
charges offered by the Whitbread plc for its products in different ranges. Social Factor: It refers to the choices and preferences of different customers as per their
needs and preferences (Morecroft, 2015). It is the crucial determinant for the
establishment of any business. South Asian region is the area with huge and diverse
population. Launching products with vast range will satiate the needs of different
customers with varied choices. Further, analysing the trend, people living in these regions
are very particular for their choices in certain areas such as with respect to the
ingredients. There is the strict prohibition of pork, beef and some other items hence,
Whitbread are supposed to take care about this by inhibiting them from their menu cards.
It also accounts the demographic division of people on the grounds of age, income,
gender and occupation. Analysing on that factor, there is he existence of significant
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amount of demographic dividend in south Asian region which is more inclined towards
coffee shops and hotels. In that respect it creates the considerable amount of market for
the cited organisation (Bowersox, 2013). Further, food and beverages are the luxury
goods which are more attracted by the people belonging to the slab of high disposable
income to seek benefits. Further along with elite customers, due to quality products at
affordable prices are beneficial for the organisation to widen its customer base and offer
its products to the maximum number of people. There in immense growth potential for
the mentioned organisation to get its establishment in the region.
 Technological factors: Advancement of technology has changed the business scenario of
every industry (Brooks and Dunn, 2011). Food and beverage industry is also not remain
unaffected. Whitbread with the use of high tech tools and techniques in every
departments such as production, marketing, supply chain, finance and data management
has enabled the working effective and lucrative in nature. Whitbread using advanced
equipment at coffee shops and hotels for the production of offerings, created the
competitive edge over its competitors. Further, developed telecommunication industry in
countries such as India and Sri Lanka will benefit the organisation Whitbread to remain
connected with all the shops and hotels around the region. It also encourages the effective
coordination among different units.
Analysing the PEST model applied on the Whitbread PLC which aim to figure out the
projected growth prospects for its establishment in the South Asian region certain conclusions
can be inferred. It has been articulated that it is beneficial on certain grounds whereas in some
areas lacks possibility of growth (Loshin, 201). With respect to the political factors, Whitbread
will face instability in south Asian region due to the existence of turbulence in political sceneries.
But is has immense growth possibility identified with the existence of favourable social factors.
There is the prevalence of market opportunities and profit prospects. Further, technologically
proficient countries like India also favour the operations of the cited organisation Whitbread to
have its establishment in the selected region.
COMPETITIVE ENVIRONMENT
In order to make the competitive environment analysis of one of the businesses of the
Whitbread with the rival company, its hotel group Premier inn is taken into account. Premier inn
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is the largest budget hotel group of UK with the prominent establishment in the market in the
host country and also in the global market. Its comparison is made with its right rival and second
largest hotel group of UK Travelodge (Dowling and Moran, 2012). Comparison between both
the organisations is done on certain parameters to identify the competency.
Product features: Both the organisation is operating in the hospitality industry with number of
hotels around the country. Premier is has wide coverage of its hotels with around 700 whereas
significantly less Tavelodge is having 450 hotels. Due to the existence in many regions, premier
inn has large customer base and hold over the people. But in terms of quality, both the
organisation has equal grading by the global analysts. With respect to the infrastructure provided
by both the hotel groups, customers are satisfied equally.
Prices: In terms of prices premier inn is enjoying the cost leadership. It has well managed the
prices of its services with comparison to the products and services offered at their places. It is
recognized as the best budget hotel in the country (Kim and Ko, 2012). It is providing the quality
along with the affordable prices. On the other hand Travelodge is struggling with keeping the
balance between the prices and customer base. There is less rational strategy used by the
Travelodge to manage profit and customer hold in its product.
Customer service: In terms of customer services premier inn is lagging behind the quality
offered by the Travelodge at their places. Travelodge has the prime focus on enhancing the
quality of customer services as per the need and requirement pf the market. In that respect
frequent training programs and development sessions are organised by management to comply
with the needs. On the other hand premier inn is required to fit in the professional standards and
adopt pragmatic approach to retain its dominance.
Variability of products and services: In order to satiate the needs of large number of customers,
premier inn is offering array of services such as accommodation in different types of places such
as cottages, villas and others, different international cuisines are available at each unit,
entertainment and leisure activities are offered at places such as spa, recreational shows and
events are organised (Lee, 2011). In contrast, with it Travelodge is confined to the certain set of
offerings in the accommodations, food service operations and entertainment options.
User engagement: The crucial demand of the volatile market is the high degree of engagement
with the customers through different means and methods. Premier inn is using different ways to
interact with their customers and remain in connectivity with them. Such as direct campaigning
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method enables the customer service to contact their existing and potential customers to seek
their opinions and needs in different perspectives. It is also utilizing virtual platform to reach
large number of people. In that its products and offerings are posted on websites and other places
such as social media websites and others to communicate about their products and services.
Along with this it is utilizing the effectual tool such as digital marketing to increase its visibility
to its websites and other places (Premier Inn, 2016). On the other hand, Travelodge is confined
to the use of conventional methods with some latest methods. It uses direct campaigning and
referral means to get connected to the customers.
From the above competitive environment analysis it is inferred that, Premier inn is having
competitive edge over its rival in some areas such as variation in products and services, user
engagement, prices whereas it still has to cope up in certain areas of operations such as customer
services and product features.
CONCLUSION
Food and beverage and hospitality industry is dynamic in nature with the frequent change
in sceneries of demand and supply. This also fluctuates the structure followed by the
organisations operating in it to comply with the external environment and meet the needs
changing in the internal environment. Cited organisation Whitbread is the leading organisation
having diverse businesses, among those two Costa coffee shop and Premier inn is taken into
account. Analysis is made about the factors affecting its establishment in the south Asian region.
From the PEST analysis made it can be articulated that it will be beneficial for the organisation
to have its establishment in the region due to favourable social, technological and economic
conditions. Further, Whitbread can comply with political conditions as well by abiding all the
laws and regulations. Its competitive environment comparison is made with Travelogue, Whit-
bread's rival. From that it can be inferred that it has competitive edge over it due competency in
some factors such as products and user engagement.
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Online
Whitbread. 2016. [Online]. Available
through:<http://www.whitbread.co.uk/about-us/index.html>. [Accessed on 3rd March
2016].
Premier Inn. 2016. [Online]. Available
through:<http://www.premierinn.com/gb/en/home.htmll>. [Accessed on 3rd March 2016].
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