Whitbread plc: Assessing Market Opportunities and Challenges in India

This report provides a comprehensive analysis of the business environment for Whitbread plc as it considers expanding into the Indian market. It examines corporate governance and organizational structure within Whitbread, applying stakeholder and steward theories. A detailed PEST analysis assesses the political, economic, social, and technological factors influencing business operations in India, highlighting both positive and negative impacts. The report also explores the competitive environment and potential substitute products in the Indian market. Ultimately, the report offers recommendations for Whitbread plc to effectively establish and grow its business within India, considering the unique challenges and opportunities presented by the Indian market landscape. Students can find this and other solved assignments on Desklib.

BUSINESS
ENVIRONMENT
INTRODUCTION......................................................................................................................4
TASK.........................................................................................................................................4
1. Corporate governance and organizational structure...........................................................4
2. Conducting PEST Analysis................................................................................................6
3. Assessing the competitive environment.............................................................................9
CONCLUSION AND RECOMMENDATION.......................................................................11
Conclusion............................................................................................................................11
Recommendations................................................................................................................11
REFERENCES.........................................................................................................................12

Figure 1 PEST Analysis.............................................................................................................6

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 corporate govern.
Further, it is basically a technique by which organizations are directed and managed. Along
with that, as per the stakeholder’s desires; businesses are carried out. 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. 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 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. 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. In other words, a hierarchical arrangement of lines and
authority, communications, duties and rights of a firm is known as organizational structure
(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 depar5ment 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. Further, there is no
subordinate of every employee in fact they all are required to report to a single person. 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 company has to complex division
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.
Therefore, Whitbread plc follows matrix organizational structure because it is 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.

2. Conducting PEST Analysis
In order to establish or develop its business in new emerging markets of India, the
company is required to assess the external market of India so that its effect could be known
on the business performance of Whitbread plc. For this aspect, PEST analysis as a tool of
assessing the business environment has been applied. The PEST analysis of India is
enumerated as follows:
Figure 1 PEST Analysis
(Source: External Environment, 2016)
Factors Result
Political  The government in India is federal republic which
shows that this nation has biggest democracy in the
world.
 The political condition in the country is more or less
stable (Chavis, Klapper and Love, 2011).
 The taxation system of this country is well
developed and several taxes that are income tax,
service tax as well as sales tax are imposed by union
government.
 Privatization has been encouraged by the
government of India.
 The government has introduced the new scheme
program of Foreign Direct Investment.
Economical  The economic condition of India is highly stable.

However, the inflation rate is high in this nation.
 The GDP of nation is 5% which shows that India
possess great opportunities.
 The foreign exchange rate, employment rate and
many other economic growths indicates that country
has a good expansion opportunity (Klapper and
Love, 2010).
 Higher national income growth has boosted the
demand for products of company.
 Rate of recession is low in the country India which
is a positive impact on the industries.
Social  The social trends in India are highly changing on a
regular basis.
 Income inequality is high in the country which
impacts majorly on the business performance of the
companies.
 The lifestyle of the country is changing and this has
invited many foreign countries to this market.
 The population of the nation is very high which
shows that employment opportunity is very high and
this way company can get better and skilled
employees (Craig and Campbell, 2012).
 The part of society is still narrow minded which
does not welcome the new trends in the country.
 The age group of middle age is highest which is a
positive point for the companies entering in the
country.
Technological  The technological aspect of the country is less
advanced.
 The nation is increasing its base of technology and
has developed a complete IT sector.
 Country possesses one of the strongest IT sectors in
the world, promoting constant IT development,

software upgrades and other technological
advancements.
 Most of the time country requires to import
technology from powerful nation which increases
the cost of the product (Hamilton and Webster,
2015).
When the Whitbread plc would enter the country India then these factors would affect
in one or the other manner. There will be both positive as well as negative impact of these
externals factors on the organization and its working. Discussion has been made on the
impact of PEST factors on Whitbread plc has been done as follows:
Positive Impact
The government of India is encouraging the investment from foreign investor so this
impacts positively on Whitbread plc. It is because company can do its investment by opening
new venture in the country which will be highly supported by the government of this country.
Along with that, the taxation system of the country is also systematic which helps in
marinating good record of the tax paid. This way company can manage its cost when it will
establish its company in this nation (Wetherly and Otter, 2014). Moreover, government
encourages the new establishment so firm would face fewer issues while establishing the
company. On the other hand, economical factor will also impact lesser if the Whitbread plc
goes to India and establish its branch over there. It is because the taxation rate is low in this
country so firm is required to pay less taxes will help in generating more revenue so that
profits could be maximized. Further, the GDP rate of the company is also good so this firm
could find new opportunities in this nation because the market is emerging which will bring
new opportunities for the firm because company can increase its profitability and this way
more innovation can be brought up by the organization for various background customers.
This way company can acquire large market share (Cordes, Richerson and Schwesinger,
2010.).
Moreover, the socio-culture factor of India is highly diversified. This country has
numerous cultured people which create good opportunity for the company. The firm can
introduce unique and advanced services in this nation as per the culture of the country.
Furthermore, there are more people of age ranging from 15-45 which means that the

Whitbread plc can acquire larger market share as their segmentation is mainly of this age
group (Vitale, R. P., Giglierano and Pfoertsch, 2010). Along with that, the lifestyle of people
of India is changing and they have become more advanced and shifted the paradigm from
traditional to being modern or more westernised. Due to highest population, employment
opportunity is largest in this country which will help the company to hire more talented and
skilled people in the firm. On the other hand, technological factor can also put positive
impact on the working of Whitbread plc. It is because; company can acquire advance
technology using the major IT sector in this nation. Further, India is emerging more in
technological aspect thus; this will impact positively to the company because they will not
require importing technologies from other countries (Cherunilam, 2010).
Negative Impact
The political factor of the country India is less stable and it is having the federal
republic system that is democratic government. For these aspects, company has to fulfil
several formalities which comply with the current government. If the government get change
then firm has to change its policies as per the new governmental policies. This creates great
confusion and a state of conflicts. Further, this leads to the incurment of heavy cost for
establishing new venture in the country (Klapper, Lewin and Delgado, 2011). This imposes
negative impact on the company so this way it can face losses in the country. Secondly, the
economical factor can also put a negative impact on the firm. It is because, the inflation of the
country is too high and for this aspects company cannot keep the high pricing for its products
and services. Therefore, company can face failure if they introduce the services at lower
prices. Furthermore, company can also face the issues like fluctuating foreign exchange rate
while importing any materials from other countries.
In a similar manner, company also get affected by social factor. The income
distribution in this country is highly unequal which may create issue for the company to
target its market. The ratio of poor people is more and thus the people are less educated
which will be difficult for the company to create awareness and to acquire major market
share in the nation (Chow and et.al., 2011). Furthermore, the company may also get impacted
with the technological factor. The nation has little advancement in the technological sector as
compared to other nations of the world like UK and USA. Thus, Whitbread plc has to import
the latest equipments form other countries which will add extra cost to the company which
wail eventually reduce its overall profitability and growth of the organization. Further, the

technologies have not emerged completely and it will take good amount of time to emerge in
the Indian markets. Till then firm has to use older version of the technologies which may
lower down the company’s image.
3. Assessing the competitive environment
In order to expand one of the businesses of Costa Coffee in the Indian market,
Whitbread plc is required to assess the level of competition and the threat of substitute
product so that strategies could be designed accordingly. From the model of Porter’s 5
Forces, 2 forces should be analyzed that are competitive rivalry and threat from substitute
product. For this aspect, it is necessary to understand the meaning of both the terms.
Generally, competitive rivalry refers to as the intensity of rivalry among the existing
competitors of the industry or it deals with the firms which are competing within a given
industry and the extent to which competitors put pressure on each other (Klapper and Love,
2010). However, this pressure limits the profit potential of all the firms within the industry.
The high rivalry shows that companies put efforts to the gain the most profit and high market
share from each other. In a similar manner, the competitive rivalry in coffee shop industry in
India is relatively high. It is because; there are already existing competitors in India which
has acquired great market in the country. The largest coffee shop chain in India is Cafe
Coffee Day which has captured most of the share in the market. Barista cafe followed by
CCD has the big share from the market. Other then these, every restaurant and hotel have
separate coffee menu which shows that India has very fierce competition in this industry.
Further, the coffee consumption in the country is limited and every firm is trying to generate
the demand for coffee in the potential customers (Craig and Campbell, 2012). Other than
these branded coffee chains, there are numerous local coffee shops which are also a part of
this competition. Each firm try to steal the profit and market share from each other. Further,
the middle income group people are more in this country and they want best coffee at lower
prices. Therefore, the coffee shops aim to provide coffee at lower prices so that more market
could be acquired by them. Along with that, most of the college going students who are non-
earners also aim to hangout with the friends and have coffee at minimal price. Therefore,
every local firm are succeeded in this. Furthermore, the changing lifestyle of people of India
has opened the gate for the branded coffee shop chains to open up their outlets in several part
of the country. Many international brands have also entered the Indian market and they also
became the part of this fierce competition. Therefore, there is a cut throat competition in this
emerging market of the world and hence, if Costa Coffee entered this market then they are

require to lower down its prices of they wants to acquire large market share in India
(Hamilton and Webster, 2015).
On the other hand, threat of substitute product means that the availability if those
products which a consumer can buy instead of a given industry product. Further, the
substitute products are those products of different industry but it gives similar benefits to the
customers (Wetherly and Otter, 2014). In India, the major substitute product of coffee is tea.
After that many other products that is milk, soft drink, soda and liquor. However, it can be
assessed that there is a highest threat of substitute in Indian market. There are still large
market which prefers tea over the coffee. Furthermore, tea could be found available at
numerous local vendors which sell it at lowest prices. Thus, it can be said that there is a high
consumption of tea by Indian people. This shows that Costa Coffee has a biggest threat of
substitute in Indian Market (Cordes, Richerson and Schwesinger, 2010).
CONCLUSION AND RECOMMENDATION
Conclusion
After preparing the report on the business environment of Whitbread plc who wants to
expand themselves in the emerging market of India, it has been concluded that the company
has a good governance system which helps the firm to carry out its business in a smooth
manner. Further, the PEST analysis of India reveals that not all factors are in favour of the
firm. The political environment is relatively unfavourable because every opposition
government put pressure on the current government due to which policies get change in less
period of time. Further, the technologies in not advance which is also not a positive point for
the firm. Moreover, the company has to face multicultural facet in this market while
establishing the outlet. Lastly the competitive rivalry is high in India because of numerous
local and branded coffee shops. Along with that, threat of substitute product that is tea is also
high because large market in India still prefers tea over the coffee.
Recommendations
After the complete analysis, it can be recommended that Whitbread plc must expand
themselves in the Indian market as there is a high potential for the Costa Coffee in this
market. For this aspect, company must carry out the deep research on this market and then
make the strategies as to where to locate themselves. Further, the company must comply
themselves with the culture of India and bring changes in their menu so as to survive in this

market. Along with that, skilled and talented personnel should be appointed in order to
influence the people of India towards the consumption of coffee. Furthermore, the
organization must include tea products in their menu so as to attract more and more
customers towards their firm. The penetration pricing strategy should be adopted in an
effective manner which will help in reaching ahead from the competitors. This is ho company
can get success in the Indian Market.
.