CORPORATE STRATEGY
Chairman, founded Greggs plc in the 1930’s as a family bakery business in
Tyneside. Ian Gregg gave up his plans for a legal career in 1964, when his
father suddenly died and took over the business. During that time their
business consisted of only one shop with a small bakery at the back. Under Ian
Greggs’ leadership, the chain expanded in the North East that established the
principle of centralising the services from a single store. With this strategy
they achieved efficiency, which could be, passed on to the consumer in
value-for-money pricing.
Business
expansion out of its North East heartland by acquiring and developing
established regional bakery chains based in
(1972), Leeds (1974) and
(1976). In 1984, it already has 261 shops when it joined the London Stock
Exchange. In the time they first started in the London Stock Exchange, the sale
to the public was more than 100 times oversubscribed. Over the next ten years,
the company grew continuously by acquisition and through sales. They also
established new regional operations in
(1984), South Wales (1985) and
(1986). In the middle of 1994, it already has 502 shops in seven regional
divisions. During that time, they were able to acquire Allied Bakeries Limited,
which added 424 shops and a new brand – Bakers Oven.
They decided to
develop and operate Bakers Oven as a separate premium brand. The format of
Bakers Oven complemented that of Greggs, since many of the shops had its own
bakeries that enabled it to operate efficiently in areas with lower population
density, where Greggs’ large central bakeries and satellite shops were
inappropriate. Also, Bakers Oven has seated catering facilities, which Greggs
shops did not offer. Other Bakers Oven shops, which seemed unsuitable for its
market positioning, were converted to the Greggs brand. Over 90 shops in the
west and south
and adjoining counties were converted and used to create a new division.
The
other nine of its division were formed by the acquisition of Birketts in 1996
(a family company in
replaced in 1999 the former regional trading names from the Greggs Yorkshire
and
Oven brands. They also improved their shop designs, Greggs new format for
improved access to takeaway food and speedier service, and Bakers Oven
enhancement of seated catering concept. They also made two major investments,
one in
Centre. Today, they are planning on further expansion to the parts of the
country where Greggs and Bakers Oven brands are currently unrepresented.
The
Group’s mission is to be
bakery-related retailer, achieving their ambitious growth targets by attaining
world-class standards in everything they do. Their purpose is the growth and
development of a thriving business for the benefit and enjoyment of employees,
customers and shareholders alike. Their values – Greggs is a customer-focused
business, seeking to provide excellent products and services that deliver
enjoyment and value-for-money. They are committed to people development, within
a considerate culture that combines autonomy and accountability, and maintains
a strong focus on profitability. In all their activities, they aim to achieve
excellence through continuous improvement.
The
founder John Gregg first started the bakery to be a family business. When he
died and his son Ian took over the shop, there were no plans for expansion,
since the company started in the 1930s and yet he did not expand the business.
But through his son expansion materialised. Since the time that John Gregg
died, there have been numerous expansion projects, which brought the company to
its current state. The mission of the company to be the finest in
Ian Gregg. Yes, the company may expand even if the chairman is not the son of
the founder, but the path may be questionable, since Ian Gregg has brought in
most of its current assets. And also, the next chairman may not have the same
visions for the company, which would make a big difference on the path that the
company will take on.
The
major stakeholders of the company are: the government, its employees and its
consumers. The most influential among the three are the consumers. This is
because it is the consumers that made the business what it is today. They make
the business successful and they are the ones that spend their money on the
products that the company offers. It is their money that gives the business its
capital and reason for growth. The changing need of consumers makes the company
strive for better quality and taste. The consumers also dictates on what
changes are needed to be done to improve how the company provides them service
and what presentations would appeal to them to make them buy a certain product.
The
employees are also major stakeholders of the company. The employees provide the
services that the owners of the company could no longer provide. They face the
consumers and in turn they are being paid for what they had provided. Without
these employees, the company will have no room for expansion. This is because
the owners cannot possibly run more than one thousand shops with them being the
service providers. Therefore, the company has to please or at least compromise
with its employees, so that in return the employees will give the company’s
consumers the service that want to be provided with.
The
government being a stakeholder depends on the taxes that companies such as
Greggs and Bakers Oven provide to have money to spend on its projects to
improve the welfare of its people. Without companies to pay their taxes, the
government will not be able to provide infrastructure that can help in the
progress of the country. Also, without these companies the government will have
no employment opportunities to offer its people.
Being
the market leader, the company has to be a role model for other small companies
that wishes to be like them. And they are fulfilling that by continuously
finding ways of improving what they are presently offering the market. It is
the responsibility of the company to help improve the welfare of the country it
is doing business in. An example of this is the Children’s Cancer Run. It is a
charity project founded by Colin Gregg, a member of the Greggs bakery family.
The charity project has been running for 21 years and is aimed in helping
provide for the medical needs that children with cancer needs. The money raised
from the runs is donated to Children Cancer Charities in the areas where the
run has taken place. At first, it was only done in
and growth, there are plans to have the runs at different areas around the
country. And at the same time, the project seeks to inform people that the run
is not just about the money that it raises, but also the problem that it is
helping to cure. Together with this charity project, Greggs plc can provide
graduates with training in their 18-24 month development programs that are
offered for both on-the-job training and external courses. The program aims to
provide breadth of skills and experience that will prepare trainees for
managerial positions. Social responsibility should not be taken for granted by
any company, because it shows customers their importance to the company. Even
though a company will seem to lose money doing charities, the impression that
they will leave in the minds of its consumers is enough advertisement than what
the company needs.
Every
business is a risky one. The capitalist can never guess what the consumers will
think about their business. Every aspect should be looked into before letting
out money for a business that has no guarantee. For the Greggs and Bakers Oven
brand the PESTEL Analysis and Porters 5 force model has been done. This was
done to evaluate what is the company’s effect on its environment.
PESTEL ANALYSIS
Political -
-
Increased legislation on food
hygiene
-
EU laws, regulations and
political changes
-
Increased environmental
pressure
-
Major events (war and
terrorism)
Economic -
-
High interest rates and
inflation
-
Disposable incomes and
unemployment levels
-
Weak consumer expenditure
Social-cultural - Changing
consumer needs and expectations
-
Increasing time cautious
society
-
Communication barriers between
staff and customers
-
Social responsibility
-
Increase in health and hygiene
Technological - (EPOS)
Electronic Point of Sale
-
Advanced cooking and catering
equipment
-
More complex market research
tools
-
Marketing (website and video
displays)
-
Wider circle and future
developments
Environmental - High
waste disposable
-
Pollution (mainly rubbish)
-
Building controls
-
Environmentally friendly
ingredients and products
-
Recycling facilities
Legal -
-
Employment law (minimum wage
and part time workers rights)
-
Food hygiene and product safety
-
Consumer rights
-
Building controls
PORTER FIVE FORCES
Potential Entrants Bargaining Power of
Suppliers
- initial
cost of capital -
- product
differentiation -
- economics
of sale -
Competitive Rivalry
of Buyers
- diversification
- similar
companies -
- non-perishable
products -
Threats of Substitutes
- canteens
- fast
food companies
- supermarkets
The
SWOT Analysis of the company is made to show the companies potential against
new entrants and its advantages over them.
SWOT ANALYSIS
Strength
-
-
-
-
-
-
growth
-
-
Companies to work for in 2003
-
meet sales
-
-
Weakness
-
staff retention
-
seasonal downturns (summer)
-
high product wastage
-
poor peak time control
-
decline in traditional staples
such as bread and rolls
-
low skilled and trained staff
-
lack of in-house design and
development
-
weak information transfer
between front line staff and management
-
inadequate training facilities
for staff
-
late delivery / arrival times
-
lack of store managers
-
can be seen as minimal
rewarding job
Opportunities
-
entry into European market (
-
diversification (selling brand
foods in supermarkets)
-
plans to add 45 more shops in
-
plans to sell ice cream
products
-
increasing adoption of market
research
-
future outlook to include
seating
-
possibility to extend to
pre-order foods
-
plans for EPOS (electronic
point of sale)
-
new refurbishment plans for
2004
Threats
-
competitors
-
hot weather
-
increasing health cautious
society
-
entry of supermarkets selling
ready made sandwiches and similar products
-
increasing cost of ingredients
-
bad media coverage of food
industry
-
increased concern for hygiene
-
takeaway ready made foods (now
it is possible to eat spaghetti Bolognese in less than 10 minutes)
-
increased government
regulations in relation to food hygiene and contents of ingredients
The objectives
that Greggs plc are implementing are:
in sandwiches, savouries and other bakery related product.
plc through business activities nationwide.
a new generation of unique bakery products.
bakery related retailer.
Building on
these objectives, the company applies the following strategies to achieve its
objectives:
promoting culture that encourages personal development, leadership qualities
and creativity.
Enjoyable
Experience -
offering great tasting food at unbeatable value and to the highest standards of
food safety.
Business
Excellence -
improvement in their areas of responsibility enabling them to make a real and
lasting contribution to the objectives of the company.
Challenging
Targets -
billion by 2010 through continued core growth and the acquisition of new units,
taking to over 1,700 shops.
Caring for the
community - To place emphasis on social responsibility to encourage an
even greater involvement in local charity activities and social projects.
Their current
strategies if implemented with caution can lead them to their objectives. For
example, their target of achieving a turnover of £1 billion by 2010 can lead
them to achieve their second objective, which is to strengthen and enhance the
profitability of Greggs through nationwide business activities. An example of
their strategy that will have subtle effect on their objectives is giving
emphasis on social responsibility. This will have subtle effect because the
consumers will not be directly affected by the company’s work for charity, but
the consumers will remember the good deeds that the company is showing. Not
that it involves it self in charity to gain anything from their consumers but
that could not be helped especially since even without the charity, Greggs plc still
has that part in their market’s heart.
As an
alternative, the following strategic options are being suggested: for the first
objective it is suggested that the company opt for product development. For the
second objective, which is to enhance profitability of the company, it is
suggested that the company to an extensive market penetration. For the third
and fourth objectives, differentiation and market development are what this
paper would like to suggest as an alternative to what the company is currently
implementing.
It is suggested
that the company opt for product development. By doing so, they will be able to
cater to all sorts of taste that people may be looking for in other products
and this way they will also be able to cater all generations. To enhance
profitability of the company, it is suggested that the company do an extensive
market penetration. It was mentioned earlier that the company is planning to
open more shops and place them in areas that has no company representation. The
problem with this is that most of the time, they acquire their representation
by acquisition of existing business establishments. If the locales of the area
are conservative, it is likely that they would open up to the new owners longer
than what the company may be expecting.
Differentiation
and market development are what this paper would like to suggest as an
alternative to what the company is currently implementing that relates to the
third and fourth objective. In order for the company to be the finest bakery
related retailer in
up their reputation first. Differentiation will offer their customers
variations in what they will purchase next time. Also, they will keep customers
a little bit excited as to what the company may offer them next. Their market
development strategy should involve updating their processes and incorporating
in it new technological advanced that they think would be suitable for their
growing market. This does not suggest that they fully-automate their processes,
just making it easier for employees to perform their work but not sacrificing
the quality of products that the company id known for.
These strategies
are suitable and can be easily accepted, but only to a certain degree. An
example would be as what was stated earlier that market penetration through
acquisition may only work for certain areas because not all areas are as
liberal as the others. For the market development, it is very much feasible
that the company incorporate current technological advancements to aid in the
processing of their products as this would speed up their production and
increase their output. The acceptability and suitability of the suggested
strategic options rely mostly on how the company will execute its plans. They
should choose carefully where, when and how they will execute their plans for
each region to assure them of its success.
There may
experience difficulties in implementing the suggestion for market development
and differentiation. In differentiation, the company may encounter problems in
making their customers try their new products. This is because most people does
not like to have that much variety in what they are used to have. For this
specific problem they should try marketing their new products in new ways that
will encourage consumers to try what they never had before. In market
development, if new technologies are going to replace people, then they may
encounter problems with their employees. Also the skill needed to operate new
machines may need special trainings for their employees.
The writer of
this paper would do what it suggested as solutions to problems that may be
encountered in using what the writer suggested as an alternative strategic
option. In facing the problem that relates to technological advancement. The
writer will provide trainings to the employees of the company; it will be
treated as skill development in the part of the employees and a way to provide
better products in the part of the company. For the problem in market
penetration, the writer thinks that it would be better if acquisition will only
be done in areas that want change and variety in their community. For areas
that this cannot be applied to, it would be better if the company will open
it’s own shop or that the company’s products be made available through locale
bakeshops through concessions.
REFERENCES:
Johnson, G. and
Scholes, K. (2002). Exploring Corporate Strategy
Prentice Hall.
Thompson, J.
(1997). Strategic Management
Thompson Business Press.
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January 2003].
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[Accessed 13th January 2003].
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