Greggs: Business Strategy and Financial Performance Report

This report provides a comprehensive analysis of Greggs' business strategy and financial performance, focusing on the application of financial fluency in decision-making. It begins with an introduction and an overview of Greggs' current business strategy, which is analyzed using the Ansoff matrix to evaluate its market penetration, market development, product development, and diversification strategies. The report then delves into Greggs' value chain, examining primary activities such as inbound logistics, operations, outbound logistics, marketing and sales, and service, as well as support activities. The analysis further extends to Greggs' supply chain management, including the effective management of logistics and suppliers. The report suggests aspects for improvement and their implementation, along with an exploration of the product life cycle model and target costing techniques in the context of Greggs' business operations. The report concludes with a summary of findings and recommendations for enhancing Greggs' financial performance and strategic decision-making processes.

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Contents
Introduction......................................................................................................................................2
Greggs' current business strategy.....................................................................................................3
Ansoff matrix...............................................................................................................................3
Market Penetration...................................................................................................................4
Market development................................................................................................................4
Product development...............................................................................................................4
Diversification.........................................................................................................................5
Greggs' value chain..........................................................................................................................5
Primary activities.........................................................................................................................6
Support activities.........................................................................................................................8
Greggs' supply chain........................................................................................................................9
Effective management of logistics...............................................................................................9
Managing suppliers....................................................................................................................11
Aspects that can improve and their implementation......................................................................12
Product life cycle model to Greggs...............................................................................................13
Target costing technique to Greggs...............................................................................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17

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Appendix........................................................................................................................................20
Introduction
The aim of the report is to explore the aspects related to the financial fluency, which is required
for the decision making of the company. The report is based on the detailed investigation of
Greggs and its current business strategy with the use of the strategic model. Further, it includes
the critical evaluation of the extent of Gregg’s value chain and supply chain that can influence
the performance of the company over the five years. The value and supply chain can influence
the financial and non-financial performance of the company. In addition to this, changes are
suggested to the company related to the value chain and supply chain that can help the company
in enhancing the competitiveness in the near future. Along with this, the Greggs importance of
product life cycle with the target costing is discussed with the support of its examples.

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Greggs' current business strategy
Greggs Company came into existence in the year 1939 on Tyneside and it has one of the success
stories in the early 21st Century. The company started out with the goal to deliver the fresh yeast
and eggs to the families of Newcastle. This has been found that presently the company is able to
manage its business operations in more than 1,850 stores in the UK (Greggs, 2018). The major
products that are provided by the company include bakes, sausage rolls, sandwiches and many
others.
Vision: - The vision of the company is to become the customer’s favourite for food-on-the-go.
Values: - Greggs commit to remain supportive and enthusiastic while performing the business
operations and ensures to treat every person fairly with respect (Greggs, 2018).
The business strategy of the company is one of the reason due to which they are able to expand
their business operations. The current strategy that is applied by the company is explained with
the help of the Ansoff matrix that is considered as one of the major strategic tools.
Ansoff matrix
Ansoff matrix is a strategic planning tool that offers a framework to support the executives,
senior managers, and marketers that devise the strategies for future growth (Baker, 2014). The
reason behind the selection of the Ansoff matrix is that it helps in evaluating the growth strategy
that is followed by Greggs. The strategic option offers four different growth strategies, which
include: -

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Market Penetration: - In the Ansoff matrix, the firm is willing to achieve the growth with the
existing products in their current market segment with the motive to increase the market share.
Market development: - This growth strategy shows that the organisation seeks growth by
targeting its present or existing products to new market segments.
Product development: - The product development in the Ansoff matrix helps the organisation to
develop the new products that targeted to its existing market segments (Chernev, 2018).
Diversification: - The diversification in the Ansoff matrix is the growth strategy in which the
firm grows by diversifying into the new companies by developing new products for new
markets.
All these are the major strategies, which are followed considered by the company, and out of
these strategies, the company major focussed on the Diversification.
Diversification
Greggs has a new focus that is on-high street sites which shows its diversification while
providing the services (David, 2011). The major sites where the company provides the services
include hospitals, industrial estates, office parks and many others that demand the bakery
products. In addition to this, the changes in the tastes and preference of the customers motivate
the company to bring diversification in terms of products. The diversification strategy helps the
company to bring new product in the market. Thus, the current business strategy of Greggs is to
up its guide the profit and pledged to continue innovative. For instance, the company has
recently launch of its vegan sausage role caused a stir. This new product has brought an increase
in profit of 2018 that was at least £88 million, which shows slightly higher than the previous

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year. The new products effective contribute in performing the business strategy of
diversification. It has been found that that new product of Greggs contributes in improving the
diversification business strategy.
This diversification strategy of the company helps in developing the new target market for their
products because Greggs has adopted the strategy with the motive to meet the needs of the
different people. The new target market segment was achieved by the company by bringing their
first franchised bakery at Lymm truck stop in early 2012 (Greggs, 2018). The major motive of
the company was to provide the existing services and products to new segments. This has been
found that offering the products to the new target market helps the company to meet the needs
and to generate revenue. Further, the company make use of advertisement to promote their new
and diversified range of products. This has been found that the bakery group has invested more
than £1m in a new TV marketing campaign.
Greggs' value chain
Porter's value chain is one of the frameworks which is used majorly for developing an analytical
structure that follows the interdepend activities from the raw material. The porter’s value chain
majorly includes primary activities with the support activities that can affect the operations of the
company (Grant, 2016). The image given below reflects the primary as well as the support
activities: -

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(Source: Baker, 2014)
Primary activities
Inbound logistics: - The major operations that are included in the inbound logistics include
effective sourcing of raw material for bakes, sausage rolls, sandwiches and many others. Greggs
company ensures that they are able to manage the material in their warehouse for which there is
a need for an effective place where the products can be kept by the company. The major
influence that this activity can create is related to inventory management of raw material, as
Greggs need to manage the fresh produce that is difficult.
Operations: - The major operation that is performed by Greggs Company is to convert the raw
material into the finished goods. The raw material has been converted into the final product that
makes the food freshly prepared with the easy accessibility to all the people with different
income levels.

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Outbound logistics: - In this activity of value chain, operations are completed for delivering it to
the customers (Kotler, 2015). Greggs Company attains and protects the leading reputation for the
long-term established traditional bakery into the food-on-the-go, which helps in developing a
way to easy accessibility of products (Greggs, 2018). The process include which is performed
includes ordering for the products which make the company to take the order and to deliver the
food.
Marketing and sales: - marketing and sales activity include making the food easily available to
the customers. The company launches its first TV campaign in two years for which they have
invested more than £1m in a new marketing campaign (Fitzherbert, 2013). The investment by the
company affects the profit as the expenses of the company increase. This is clear with the
income statement of Greggs. (Refer Appendix1)
Service: - The term service is related to the customer service that is offered by the Greggs to
their customers present in the market. The company has developed a new reason due to which
the customers like to visit the places that include providing the quality and value in new growth
areas. These areas majorly include breakfast, hot drinks, balanced choice and hot food. The
customer service also comes with the flavour of products. For instance; Greggs offer products
with good value coffee and increase hot drinks menu choice with the introduction of the
flavoured lattes. These quality taste and value-added in the menu will help in attracting new
customers and helps them to compete in the market (Greggs, 2018). This value directly
influences positively to the financial and non-financial performance over the last five years. This
is clear from the revenue earned by the company in the last five years, which is increasing
continuously. In the year 2013, the profit of the company was 762,379 thousand which increased
to 960,005 thousand in the year 2017.

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(Source: Morning Star, 2018)
Support activities
The infrastructure of the company is clear, as it has been changed from the traditional to food-
on-the-go that has brought the changes in the facilities. Greggs store allows the sitting areas to
their customers and easy accessibility of the food. In addition to this, the company make use of
the updated technology with the motive to enhance the value. Human resource management is
one of the major activities that support the primary activities. Employees of the company are
working effectively with the motive to generate the value for their customers. However, the
adoption of technology affects the employees working and influences their responsibility
(Henderson, 2018). The technology helps them in gathering the fresh and quality products that
are used by them for producing the products effectively. This requires additional investment
apart from the investment in the supply chain of the company. In addition to this, the technology

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is majorly used by the company for supporting the procurement strategy that is implemented. All
these activities help the company to maintain its competitive advantage over the Pret A Manger,
Food Genius, Grupo Bimbo and many others.
Greggs' supply chain
The supply chain is a system of people, organisation, activities, resources, and information that is
involved in moving the product or services from the suppliers to customers. The supply chain
management of the company direct influences the performance of the company, which can be in
financial, as well as in non-financial terms. Greggs work with the ambition to grow 2000 more
shops across the world and they take the ownership of the supply chain (Greggs, 2018). In
addition, they have a unique position that makes the customers good, fresh and ensures that
every day it tastes good. This allows the company to make the products accessible to everyone in
a competitive place.
Effective management of logistics
Greggs effective manage their logistics that is essential for smooth operations. For instance; this
has been found that, this year remain peak year of investment for company in supply chain as
they can invest more than £100 million in some of the major programmes with the motive to
create centres majorly for manufacturing and distribution and create the support system or shop
to conduct the expansion effective in UK (Greggs, 2018). This investment will influence the
financial as well as the non-financial performance of the company.
The investment will affect financial performance: - The effective logistic management is
possible with the investment in the programs. This investment will make the Greggs take the

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long-term debt and the rise in the long term liabilities will lead to high interest and affect the
profit of the company. This has been found that in the year 2017, the debt on the company was
6,471 thousand dollars. The debt is raised by the company with the motive to accumulate the
amount for the investment in logistics.

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(Source: Morning Star, 2018)
In addition to this, the retained earnings are also kept by the company with the motive to make a
large investment. This has been found that from the year 2013 to 2017, the amount of retained
earnings has been fluctuating which shows the adverse effect on the company.
The investment will change the work responsibilities of employees: - The supply chain
operations not only create an impact on financial activities but it also affects the non-financial
elements. The implementation of the new supply chain platform will deliver the improvements to
the quality of products, competitiveness and investment will transform the traditional bakery to
food-on-the-go. The overall expansion plans of the company will lead to thousands of new roles
majorly in retail and distribution operation (Sillitoe, 2018). Thus, this has been found that these
decisions create an impact on the working of Gregg’s people and will lead to resistance towards
the change.
Managing suppliers
Greggs ensures that they are able to manage their supplies effectively while conducting business
operations. The company work with the suppliers with the motive to monitor the performance
and make use of findings to support the long-term working arrangements. The company perform
their work with the external supplier that are present both overseas and the UK.
Technology improves the supply chain: - Greggs will implement Keytree’s Ariba solutions
software with the motive to manage more than 4,500 suppliers across its supply chain
management. This also reflects the key stage that is present in the transformation programme.
Greggs make use of the software that helps the company to handle the calls with the daily
interactions in an effective manner (Hugos, 2018). For example; Keytree solutions offer the

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Greggs with the technology of SAP and applications to enhance the interaction centre with the
customers. Thus, this reflects that the supply chain creates a negative influence on the employees
which is one of the non-financial influence.
The decline in structural costs affect financial: - Greegs majorly focus on the supply chain as
this influence the operations of the company. Along with this, in the research, this has been
found that the company is expected to save the amount of around £6m in the annual saving after
accomplishing the restricting of the supply chain management over the five years. This has been
found that restructuring has brought the decline in the structural cost and has made the operations
simpler and efficient. In addition, this has been found that it consolidated its more than 79 in-
store bakeries into the network of regional areas which leads to the one-off redundancy costs
with the asset impairment charges that is equal to £8.2m in the year 2014 (Supply chain analysis,
2015). Thus, this has been found that a reduction in the structural cost will decrease the expenses
and leads to an increase in profit.
Aspects that can improve and their implementation
From the above analysis of value chain and supply chain, this has been found that the Greggs is
focused towards the operations due to which they ensure to offer valuable services with effective
supply chain activities of the company (Rothaermel, 2015). This has been found that company
need to bring the improvement to some aspects that effectively contribute in enhancing the
competitiveness that is given below -
 The arrangement of capital: - This has been found that debt taken by the company
remained fluctuating and there was a rise in debt in 2017 that affects the profit. This

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method of arranging the fund will increase the expenses, which shows that the company
should enhance its equity and should make use of retained earnings for raising the funds.
 Improving customer satisfaction and repeat: - It is suggested to Greggs to conduct the
survey with the customers related to the improvements in the value and services that they
are availing. This will help Greggs to avail the better understanding of the taste and
preference of the customers so that they can introduce the products accordingly (Mangan
& Lalwani, 2016).
 Motivation among employees for adopting changes: - This has been found that Greggs
value and supply chain is majorly depended on the technology that affects the employees
and their work. Greggs Company should motivate their employees for adapting the
changes in the business without any resistance. This will reduce the non-financial
influence that is majorly faced by the company while performing the business operations
and also leads to competitiveness.
Product life cycle model to Greggs
The product life cycle is referred to as the progress towards the sequence of stages initiating from
the introduction to growth, then to maturity and ends at a decline (David, 2011). These sequences
are known as the product life cycle and are linked to the changes that arise in the marketing
situation.

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(Source: David, 2011)
The product life cycle stage of Greggs product is at growth stage which is the second stage. This
is clear with the progress of the company for meeting the needs of customers present in the
market. Greggs product offer is differentiated by freshly prepare food every day in shops and by
offering the outstanding value for the money for effective quality and for great tasting food-on-
the-go. For instance, Breakfast, which is offered by Greggs, always considered as one of the
growing meal of the day. The company is leading in the breakfast meal, as it is able to offer
outstanding value in just £2 for a breakfast deal (Greggs, 2018). This example shows the way
through which the company is able to maintain outstanding value.
In addition, the research reflects that Greggs Company is able to manage the balanced choice
range that includes different choices of savouries, soups, porridge, fruit, wraps, yoghurt, drinks,
sandwiches and salads. Along with this, the changing needs of the customer’s shows that people
are becoming health conscious due to which they like to consume fewer calories food. Thus, the
company makes the development in the products that are offered by them. For example;
Balanced Choice range that is offered by company contains less than 400 calories and meet

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amber and green on traffic light system for salt, sugar, saturated fat and many others. This range
was introduced by the company in the year 2014 with the motive to increase the sales by £100m
(Greggs, 2018).
The company should be monitoring the life cycle of its related products to the maximum level
that is evident with the help of the developments that is brought by the company in their existing
products. This has been found the company has said that they have a strong pipeline of new
product developments that are planned in the coming years (Greggs, 2018). This strengthening
the existing products areas and continues to form a reputation in the new growth areas.
Target costing technique to Greggs
The targeting costing is one of the approaches to determine a product’s life cycle cost that is
sufficient to develop specified quality and functionality while ensuring its desired profit margin
majorly from the competitive market price. There are majorly two costing techniques: market-
driven target costing and product-level target costing. The company deals in the competitive
market where they face competition from different players present in the market due to which
they make use of the market-driven target costing strategy. In this strategy, the company analyse
the market conditions and determine the price of the company according to their profit margin
with the motive to determine the allowable cost of the product.
This has been found company provide the products at the affordable price due to which the
products are easily affordable by people with different income group. The average selling price
of the company products is £2.70 (Greggs, 2018). In addition, the company has succeeded more
by tempting high price savvy middle classes. This approach or technique provides the benefits to
Greggs as they can easily compete with the competitors present in the market. In addition to this,

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the price kept by the company helps to attain the maximum customer that leads to a rise in
revenue. Contrasting this, the company deals with the limitation by following this approach that
is; Greggs consider the need of customers and according to that, they manufacture the product
for which they should make use product-level target costing to earn a profit. However, the
company follows the market-driven target costing strategy and keep all the products at the same
pricing.

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Conclusion
In the end, this can be concluded that Gregg’s company business strategy is evaluated with the
help of the strategic model that is the Ansoff matrix. This model is used by the manager of
another well-known business to understand the business strategy that is followed by Greggs. The
value and supply chain of the company is evaluated with the supporting examples. In addition,
the discussion for the product life cycle and targeting costing technique that is followed by
Greggs has been discussed.

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References
Baker, M. J. (2014). Marketing strategy and management. London: Palgrave Macmillan.
Chernev, A. (2018). Strategic marketing management. Chicago:Cerebellum Press.
David, F.R. (2011). Strategic management: Concepts and cases. India: Pearson/Prentice Hall.
Fitzherbert, T. (2013). Greggs launches first TV campaign in two years. Retrieved from:
https://www.campaignlive.co.uk/article/greggs-launches-first-tv-campaign-two-years/
1166750
Grant, R.M. (2016). Contemporary strategy analysis: Text and cases edition. New Jersey: John
Wiley & Sons.
Greggs. (2018). Annual Report. Retrieved from:
https://corporate.greggs.co.uk/sites/default/files/GREGGS_26280_AR2016.pdf
Greggs. (2018). Business Model. Retrieved from:
https://corporate.greggs.co.uk/strategy/business-model
Greggs. (2018). Progress. Retrieved from:
https://corporate.greggs.co.uk/sites/default/files/GREGGS
%2021488%20AR2014%20Web.pdf
Greggs. (2018). Responsible Sourcing. Retrieved from: https://corporate.greggs.co.uk/social-
responsibility/responsible-sourcing

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Greggs. (2018). Strategy in Action. Retrieved from:
https://corporate.greggs.co.uk/strategy/strategy-in-action
Greggs. (2018). Strategy. Retrieved from: https://corporate.greggs.co.uk/strategy
Greggs. (2018). Vision and Values. Retrieved from:
https://corporate.greggs.co.uk/at-a-glance/vision-and-values
Greggs. (2018). What We Do. Retrieved from: https://corporate.greggs.co.uk/at-a-glance/what-
we-do
Henderson, J. (2018). Investment in Greeg’s supply chain transformation likely to peak in 2018,
says chief exec. Retrieved from: https://www.supplychaindigital.com/scm/investment-
greggs-supply-chain-transformation-likely-peak-2018-says-chief-exec
Hugos, M. H. (2018). Essentials of supply chain management. New Jersey: John Wiley & Sons.
Kotler, P. (2015). Framework for marketing management. India: Pearson Education.
Mangan, J. & Lalwani, C. (2016). Global logistics and supply chain management. 3 rd ed.
Hoboken: John Wiley & Sons.
Morning Star. (2018). Greggs PLC. Retrieved from:
https://www.morningstar.com/stocks/XLON/GRG/quote.html
Rothaermel, F.T. (2015). Strategic management. UK: McGraw-Hill Education.
Sillitoe, B. (2018). Greggs' supply chain transformation strategy rolls on. Retrieved from:
https://www.essentialretail.com/news/greggs-supply-chain-transformation/

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Supply chain analysis. (2015). Greggs’ new supply chain management solution. Retrieved from:
https://supplychainanalysis.igd.com/news/news-article/t/greggs-new-supply-chain-
management-solution/i/14513

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Appendix
Income statement of Greggs
(Source: Morning Star, 2018)