Whitbread Plc: Analysis of Business Environment and Strategy

This report provides an analysis of Whitbread Plc's business environment, focusing on corporate governance, organization structure, and external factors. The report begins with an introduction to the business environment and an overview of Whitbread Plc's profile, including its Premier Inn and Costa Coffee brands. Task 1 examines Whitbread's corporate governance model, emphasizing its commitment to ethical business practices and stakeholder management, including a detailed look at the board of directors and its responsibilities. The organization structure, dividing the company into divisional and functional structures, is also discussed. Task 2 delves into the external environment using PEST analysis, considering political, economic, social, and technological factors, particularly in the context of potential expansion into South Asia. The report highlights the challenges and opportunities presented by these factors, such as political instability, economic fluctuations, and cultural considerations. Task 3 analyzes the competitive environment, focusing on the level of competitive rivalry and the strategies Whitbread uses to gain a competitive edge, including attracting customers and improving service quality. The conclusion summarizes the key findings and provides recommendations for Whitbread Plc to improve its performance and productivity.

BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1: CORPORATE GOVERRNANCE AND ORGANIZATION STRUCTURE.................1
TASK 2 EXTERNAL ENVIRONMENT........................................................................................3
TASK 3: COMPETITIVE ENVIRONMENT.................................................................................5
TASK 4 CONCLUSION AND RECOMMENDATIONS..............................................................6
REFERENCES................................................................................................................................7

EXECUTIVE SUMMARY
Business environment can be defined as sum total of all the internal and external factors
which can hamper the functioning of business organization. Further, there are several external
factors which are uncontrollable and ventures have to take relative steps to improve their
performance as well as productivity. This report emphasizes on understanding competitive
environment as it will give reader an idea regarding competition which organization faces within
the industry. PEST analysis also showcases different environmental factors which venture has to
consider for increasing their revenue and productivity when compared with their major
competitors. The organization undertaken for the present study is Whitbread plc which is a
multinational hotel; coffee as well as restaurant company have its headquarter in UK.

ORGANIZATION PROFILE
Whitbread Plc is a multinational hotel group, coffee shop and restaurant chain operated in
different countries. It is having its situated in Dunstable, UK. Company's largest division is
Premier Inn i.e. the largest hotel brand in UK and provides around 650 hotels and more than
50,000 rooms. Company also owns Costa Coffee chain that has 3,080 shops across 30 countries
and is the world second largest coffee shop chain.

INTRODUCTION
Business environment can be defined as sum total of all internal and external forces
which impact performance as well as outcome of business enterprise. This environment also
includes factors like clients and suppliers; competitors and owners; improvement in technology,
etc (Sledge, 2011). In relation to the above scenario, the organization undertaken for the present
study is Whitbread plc which is a multinational hotel, coffee as well as restaurant company
having their headquarter in UK. Mentioned organization is having immense goodwill throughout
UK and cited hospitality is focusing on expanding their market share. This present report will
focus on studying corporate governance and organization structure of the mentioned business.
Further, this report also emphasize on conducting PEST analysis and also identifying those
factors which can impact their performance.
TASK 1: CORPORATE GOVERRNANCE AND ORGANIZATION
STRUCTURE
Corporate Governance:
Corporate governance is considered as a model which is created by the top executive or
board member of the cited business organization. Further, Whitbread is a hospitality venture;
therefore their main role is to satisfy needs and demands of their guests. Hotel is for the people
and different department focus on giving best results to achieve maximum satisfaction of their
customers. Moreover, mentioned hospitality firm has different stakeholders and it is the main
priority of top executives to give them comfort as well as fulfill their needs and wants.
Organization stakeholders are the employees, suppliers, customers, creditors, government and
others.
Further, with specified mechanism and processes, hospitality venture is directed by senior
authorities as well as the management. Apart from it, in order to maintain the working of cited
business venture, high standard of corporate governance is taken into consideration which can
impact performance of employees who are giving their productive services within the enterprise
(Kew and Stredwick, 2005). Moreover, cited organization is also committed to conduct their
business operations ethically and also in compliance with the spirit of law. Moreover, for
ensuring the corporate governance, there are 10 boards of directors who are respectively at
different positions namely chairman, chief executive, managing director and different other
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heads who are looking towards different departments like finance, marketing, production, legal,
retail, etc.
Business integrity
 Mentioned hospitality is dealing with food and beverage industry. Therefore, employees
and their suppliers have to follow different norms and laws relating to safety and hygiene
of products.
 There should be strict prohibition relating to any type of corruption, bribe, extortion and
other illegal activities. These all activities can hamper the performance of employees who
are working within the enterprise.
 HR department is responsible to maintain the confidentiality of data for their guests and
their system should secure all the relevant information.
Human Rights
 Mentioned business organization should follow all the acts relating to employee's
recruitment and should not discriminate candidate on the basis of cast, creed, religion and
other demographic. Workers are allowed to work for fix time period and should be entitled for specific
holidays for specific purpose as well (Manral, 2010). Moreover, cited firm should also
provide equal wages to employees who are working on the same designation.
Organization structure
Organization structure within Whitbread is developed on the basis of allocating tasks to
employees. Further, the organization structure differs from one venture to another. Further, the
hospitality's largest division is their premier inn hotel which has more than 700 hotels and more
than 50,000 rooms in UK itself. In relation to this, mentioned venture follows divisional structure
at the global level and functional structure at the individual level. These structures have been
discussed down under: Divisional structure- In this sort of structure, large business ventures are segmented into
smaller units on the basis of their geographical locations and other traits. Organization is
having their effective operations in China, Dubai and some other countries of Europe as
well. With this structure, cited firm is able to look towards their different operations and
focus on covering different markets
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 Functional structure- In this structure, business ventures are grouped on the basis of
several departmental functions. Whitbread major divisions are production, sales, finance
and human resource. In relation to operate these departments efficiently, cited firm
emphasize on recruiting best of the candidates who possess desired skills and knowledge.
Further, with these they will contribute their best to achieve individuals as well as
organization goals and objectives.
TASK 2 EXTERNAL ENVIRONMENT
It involves certain factors which could affect the decision making and strategies of firm.
However, sudden change in tax, imposition of laws and changes in political environment are the
key factors of macro environment (Whitbread. 2016). Thus, such factors could impact the
Whitbread Plc at the time when they choose to enter into international market expansion i.e.
South Asia.
 Political- It can be assessed that South Asia is one of the region that possesses huge
growth opportunities because of its political structure. It involves various countries within
it such as India, Pakistan and Sri Lanka etc. that provides effective political support to
international companies to raise the economic growth of the country (Hitt, Ireland and
Hoskisson, 2012). However, such international expansion of firms increases corruption in
the country that affects financial feasibility of Whitbread Plc. Thus, firm is planning to
start its venture Premier Inn hotel in the South Asian region which requires huge land and
support from the government. However, it can be identified that business face huge
problem because of slow processing of work by the government side and thus it affects
whole planning of organization (Hull, Hutchison and Strasser, 2011). Also, it is essential
for Whitbread to pay heavy tax duties such as sales tax, excise duty etc. which affects the
profitability of firm in the market. Hence, because of such taxes overall price of
Whitbread product is increased which will influence the demand of target audiences as
their purchasing capacity will decrease.
 Economic- It involves different economic factors such as exchange rate, inflation rate,
interest rate etc. Hence, Whitbread is establishing its business into South Asian region
which will face issue of exchange rate within different countries such as India, Sri Lanka
and Pakistan (Kaufmann, Kraay and Mastruzzi, 2011). As the currency value of such
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countries is not high therefore, it will benefit Whitbread in earning high revenue and
profits. Moreover, if business wants to expand their operations in such countries it is
essential for the government to introduce liberal exchange rates along with providing
relaxation in tax rates so that more number of investors can be attracted to invest money
in Whitbread international expansion.
 Social- It involves the taste and preferences of different customers as per their needs and
wants. Therefore, it is essential for Whitbread to determine the needs of consumers
before entering into international business. Thus, selecting South Asian region helps the
hospitality company to serve diverse population. Also, management of hotel is required
to analyze the trends and lifestyle of people within such geographical region so that sales
and profitability can be enhanced (Kim and Ko, 2012). However, within India there is a
strict prohibition of beef, pork and some other items therefore, Whitbread management
should keep this in mind and restrict their services by offering menu card system to
consumers. Moreover, companies are producing food and beverages to consumers and
thus attract high class people who possess high disposable income and attain success
within firm. Therefore, business should also focus on different customer groups so that
quality products can be delivered to them to offer the best products at reasonable prices.
Hence, it involves immense growth potential for Whitbread Plc to expand its business in
South Asian region (Brinkman, Navarro and Harper, 2014). Technological- Technology advancement assists the company to serve every group of
customers effectively and efficiently. However, it does impact the food and beverage
industry and thus Whitbread uses high and innovative tools and techniques within
production, marketing, finance and supply chain so that they can work effectively in the
marketplace. Whitbread management uses updated technology within their hotel for
serving their clients base and attaining satisfaction (Yang, Hong and Modi, 2011). It also
helps in creating competitive edge for rivals. However, with the help of data management
software, company can contact their regular customers whenever they want and offer
them attractive prices. Hence, it benefits firm and also encourages them to enhance their
sales and profitability.
Through analyzing the PEST analysis applied within Whitbread Plc that aims firm to
attain high growth prospects to establish and expand the operations of firm in South Asian
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region. However, it can be assessed that that the firm is witnessing both issues as well as benefits
in the form of profitability and growth. In regard of political factors, Whitbread Company faces
issues regarding instability in South Asian region as it involves high political pressure on the
business entity (Craig and Campbell, 2012). They need to provide various taxes such as excise
duty, sales tax to carry out the business in the international marketplace. But above all, it
possesses immense growth opportunities as company can enhance its market share by serving
high class customers who possess high disposable income and raise the profitability of hotel. At
the end, technological change helps the company to enter into international market such as India
and attract consumers to enhance sales and profitability of the firm in marketplace (Lee, 2011).
TASK 3: COMPETITIVE ENVIRONMENT
For understanding the competitive environment for cited hospitality firm, hotel business
is taken into consideration. Under this, Whitbread will focus on attracting more of their
customers with effective policies which will significantly help them in increasing their revenue
and productivity. Moreover, cited organization also looks towards their competitor’s analysis and
frame their policies by considering the same (Zhang and Huang, 2012). The organization’s major
motive is to increase their revenue and productivity which improve their brand image as well as
give them competitive edge over their major competitors who are working within the same
industry.
Moreover, business organization also knows that the environment in which they operate
is quite dynamic and they have to upgrade themselves with the passage of time. Moreover,
hospitality firm is a customer based industry and Whitbread has to perform significantly well to
improve their product quality as well as service standards.
Level of competitive rivalry:
Level of competitive rivalry is high as there are various hospitality firms giving their best
to improve their service quality and standards. Moreover, the competition is also quite intense
and mentioned business organization is trying their best to make a chain of the loyal customer
base. Further, different tactics and promotional method is used by the cited business firm to
improve their goodwill as well as revenue and productivity.
Threat from substitute products:
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Mentioned organization gives unique services to their customers and this is the only
reason that why it attracts large number of travelers from around the globe. Further, the rate of
their premier inn rooms is also affordable which attracts large travelers who come to visit UK
towards it. Their main aim is to give best of the services at the lowest price to the customers.
This motto is helping the firm to increase their revenue as well as productivity (Yang, Hong and
Modi, 2011). Further, Whitbread is having immense brand image and therefore their substitute is
unable to provide the same level of comfort and services which cited firm provides.
TASK 4 CONCLUSION AND RECOMMENDATIONS
It can be concluded from the study that Whitbread Plc operates into a dynamic culture
and bring frequent change in the demand and supply of enterprise. It also changes the structure
followed by business and thus they can comply with the external environment of firm to meet the
changing needs in the internal environment of firm. However, Whitbread is a leading hospitality
industry that possesses diverse businesses such as coffee shop and hotel service provider such as
Premier Inn.
Further, PEST analysis has been carried out which assesses the factors that affect the
expansion of business in South Asian region. Also, it can be analyzed that through adopting
innovative technology, firm can improve its range of services and products delivery to customers
so that sales and profitability can be enhanced. Moreover, it is recommended for the organization
to enter into international expansion in South Asian region as there are high growth opportunities
to enhance sales and revenue. Also, business should develop its working environment so that
they can give tough competition to other hospitality businesses and attain competitive edge over
rivals.
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REFERENCES
Journals and Books
Brinkman, J., Navarro, I. and Harper, D., 2014. Unlocking the Business Environment. Routledge.
Craig, T. and Campbell, D., 2012. Organisations and the Business Environment. Routledge.
Hitt, M., Ireland, R. D. and Hoskisson, R., 2012. Strategic management cases: competitiveness
and globalization. Cengage Learning.
Hull, G. P., Hutchison, T. W. and Strasser, R., 2011. The Music business and recording industry:
Delivering music in the 21st century. Taylor & Francis.
Kaufmann, D., Kraay, A. and Mastruzzi, M., 2011. The worldwide governance indicators:
methodology and analytical issues. Hague Journal on the Rule of Law. 3(02). pp.220-246.
Kew, J. and Stredwick, J., 2005. Business Environment: Managing in a Strategic Context. CIPD
Publishing.
Kim, A. J. and Ko, E., 2012. Do social media marketing activities enhance customer equity? An
empirical study of luxury fashion brand. Journal of Business Research. 65(10). pp.1480-
1486.
Lee, K. H., 2011. Integrating carbon footprint into supply chain management: the case of
Hyundai Motor Company (HMC) in the automobile industry.Journal of Cleaner
Production. 19(11). pp.1216-1223.
Manral, L., 2010. Towards a theory of endogenous market structure in strategy: Exploring the
endogeneity of demand-side determinants of firm investment strategy and market structure.
Journal of Strategy and Management. 3(4). pp.352–373.
Sledge, S., 2011. Dynamic competition: a look at firms in the FortuneGlobal 500.
Competitiveness Review. 21(5). pp.428–440.
Yang, M.G.M., Hong, P. and Modi, S.B., 2011. Impact of lean manufacturing and environmental
management on business performance: An empirical study of manufacturing firms.
International Journal of Production Economics. 129(2). pp.251-261.
Zhang, A. and Huang, Q. G., 2012. Impacts of business environment changes on global
manufacturing outsourcing in China. Supply Chain Management: An International
Journal.17(2). pp.138 – 151.
Online
Whitbread. 2016. [Online]. Available through:
<http://www.whitbread.co.uk/about-us/index.html>. [Accessed on 5th April, 2016].
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