Analysis of Business Environment of Whitbread plc

BUSINESS ENVIRONMENT
ID: 415336/1554830
Word Count:
INTRODUCTION......................................................................................................................3
TASK 1......................................................................................................................................3
Corporate governance and organizational structure...................................................................3
2. Conducting PEST Analysis................................................................................................5
3. Assessing the competitive environment.............................................................................9
CONCLUSION AND RECOMMENDATION.......................................................................11
Conclusion............................................................................................................................11
Recommendations................................................................................................................11
REFERENCES.........................................................................................................................13
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INTRODUCTION
Business environment is one which encompasses complete environment
which is prevailing outside the business organization. Further, this environment
affect the company’s working in one or the other manner. It is highly important to
assess the business environment of any business especially when it plans to expand
so that its impact could be known in advance (Cherunilam, 2010). This report is
primarily focused on the analysis of business environment of Whitbread plc. which is
one of the UK’s leading FT 500 companies. This corporate has diversified portfolio of
business ranging from food to accommodation to coffee. This company has largest
coffee chain in UK that is Costa Coffee and Premium Inn is the largest budgeted
hotel in UK. This company wants to expand its business in the emerging markets of
India for which business environment has been assessed. Furthermore, discussion
has been made on the competitive rivalry and substitute product in Indian market. At
last, recommendations have been made in order to establish its existing business in
Indian market.
TASK 1
CORPORATE GOVERNANCE AND ORGANIZATIONAL STRUCTURE
Corporate governance refers to as the measure through which corporations
govern. Further, it is basically a technique by which organizations are directed and
managed. A There are various theories associated with the concept of corporate
governance. The famous theory is of stakeholder theory (Klapper, Lewin and
Delgado, 2011). In Whitbread plc, stakeholder theory of corporate governance has
been used (Vitale, Giglierano and Pfoertsch, 2010). The basic motive of the business
is to maximize the profit but this theory states that a firm owes a responsibility to a
wider group which impact the business performance of Whitbread plc known as
stakeholders. Stakeholders include employees, customers, suppliers, creditors,
government, society etc. The organization works according to the wish and will of
stakeholders. They involves their employees in a decision making process so that
they can satisfy and motivate their workforce. Furthermore, they also take regular
feedback from their customers who help in providing product and services as per
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their needs and preferences. Stakeholder theory also assists in performing
Corporate Social Responsibility which is a major activity being carried out by the
corporate so that they can generate maximum profits by doing welfare for the society
at large as well (Hazlina Ahmad and et.al., 2010). Along with this theory, Whitbread
plc is also governed by one more theory of that is steward theory (Chow and et.al,
2011). In this, manager of the company is a good steward and they work diligently in
order to attain goals of the firm. They want to maximize the profit and shareholder’s
value. Manager of this organization work in an effective manner to achieve the aims
and objectives of the company. They manage the working of Costa Coffee as well as
Premium Inn. Through this the company can governed themselves and manage to
earn maximum profit.
Furthermore, organizational structure of any firm can be described as how
activities of a company that is task allocation, coordination and supervision can be
directed in order to achieve the aims of organization (Xue, Shen and Ren, 2010).
This structure helps in determining the roles and responsibilities which should be
assigned to employees along with control mechanism and coordination. There are
mainly three types of organizational structure out of which any one is followed by all
the organization as per their nature and size. Moreover, the first kind of structure is
hierarchical structure in which hierarchy has been made where every line is superior
to another. In this, every subordinate is supervised with a supervisor and they are
required to report them. Thus span of control is done in this structure.
The hierarchical structure is followed in mainly large organizations where
many departments exist and they have large number of hierarchies. Second type of
organizational structure is flat structure. In this, no hierarchy is maintained and every
employee work in a single line. This way unity of command is followed. Small and
medium size organization follow this structure because of the small size they do not
have much departments and few employees (Chow and et.al, 2011). Third is matrix
organization structure where the company has complex divisions and one person
requires reporting to more than one supervisor. Furthermore, these are mainly
followed in those corporate which are highly diversified and work internationally.
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Therefore, Whitbread plc follows matrix organizational structure because it is a highly
diversified company and carries out its working in several countries. Along with that,
the company is also large in size (Botha, Kourie and Snyman, 2014). In this
organization, employees are required to report to more than one supervisor and they
can communicate with each other using free flow pattern.
(Source: Matrix Organization Structure, 2016)
2. Conducting PEST Analysis
In order to establish or develop its business in new emerging markets of India
or Pakistan, the company is required to assess the external market of both countries
so that its effect could be known on the business performance of Whitbread plc. For
this aspect, PEST analysis is a tool of assessing the business environment. The
PEST analysis of India and Pakistan has been tabled below:
Figure 1 PEST Analysis
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Illustration 1: Matrix Organizational Culture