The Strategic Process of Greene King - Essay Example

The Strategic Process of Greene King 1. The strategic process of Greene King A study of strategic process begins with the understanding of the company vision, and then followed by designing of objectives to support the vision. This is then translated into a strategy and then to tactics for implementation. Greene King has a vision that states “ to be the best pub and beer business in Britain”. Green King has a target objective of attaining this vision within a period of three to five years thru retail expansion and brand investment strategy. Strategies of retail expansion will be financing through internal funds, remaining rights issue proceeds and the accelerated tenanted disposal program. (Green King Annual Report 2010) Greene King has proposed the following strategies to be done for the next three to five years: To expand its retail brand by targeting an acquisition and internal tenancy transfers of 1,100 outlets. This will be an addition to the present company base of 888 pubs. To improve the quality and reduce the size of tenanted estate. Green King has a current base of 1,584 outlets and it is proposed to be reduced to 1,200 outlets through a combination of disposals and transfers to retails To increase the investment to its core beer brand. Greene King will push additional investment to its leading ale and beer brands Source: (Green King Annual Report 2010) 2. The SWOT analysis A situation analysis provides us with a lot of information and to keep it manageable and easily understood; the internal factors of the firm are classified as its strengths and weaknesses while the external factors are the opportunities and threat (NetMBA). Together, it is sorted as a SWOT ANALYSIS. The SWOT analysis of Greene King Strengths: Greene King is a leader in the field. It has been brewing beers and operating pubs for over 200 years. The company serves around 3,000 free trade pubs, hotels and restaurants as well as its own pub companies. It also operates under a Pub partners and tenanted estates agreements with over 1,300 outlets across England. Greene King also manages over 800 owned pubs that employ 15,000 employees. The company is reported to be the third-fastest growing managed pub houses in UK. (UKSP Resources). Profitability. In terms of profitability, Greene King showed an upward trend in revenue consecutively for the periods 2006 to 2010. Its revenue in 2010 is £984.1m as against £954.6m in 2009. Its net assets have grown to £912.9m in 2010 from £634.4m in 2009. Cash flow statements show that it has enough funds generated from operations to support acquisitions of pub houses (Greene King Annual Report 2010). Weaknesses: Inefficiency in managing customer accounts, pub managements, distribution and customer service. Information system is lacking, customer contact is fragmented; the leased pubs has no integrated platform for management of properties and relationship with business partners-leases. Less adaptation to technology. Opportunities: Market opportunities in segment expansion. As the consumer behavior in beer consumption changes from pub houses to home environment, a new target market opens up for Greene King. This means that while pub houses are closing, the tastes of consumers for beer did not dry up, and a new market arises. Mark Hastings, Director of BBPA commented, "Our drinking patterns are certainly changing, though the numbers show a fall in total consumption on the previous year. It is the increase in drink bought for consumption at home that tells the real story of the nation's changing drinking habits” (BBPA, 2006) Threat: Decline of profitability due to continuous pub closures. According to a news report, pub closures in UK is now running at 30 pubs a week as of 2009, and a total of 2,359 pubs were closed in 2009. Towards pub closures, BBPA(2010) reported the total number of pubs operating in Britain has gown down to 52,500 in 2009 from 58,500 pubs operating in 2005, and a total of 24,000 jobs were lost due to this closure. Greene Pub partners went down to 1,372 in 2010 as against 1,445 in 2009 showing a -5.1% change. The overall eating out market remained subdued and on-trade beer volumes again fell (2010 annual Report) Layers of taxes imposed by the government increases the price of beer and ales, and it is no surprise that this is the cause for pub closures and consumer consumption. 3. Conclusions and recommendation. From the data gathered, it has been established that there is a decline in sales, closure of pub houses and trimming down of free houses. It is also noted that the change of tastes of consumers for beer did not change or diminish, but it is only their changing behavior that has changed pattern. Greene King has displayed its strength because of its continuous profitability despite of threat of economic downturns, pub closures and changing customers buying pattern. It has remained to be firm and seem unaffected by the external environment of economics and social factors. The company has shown its weakness towards adoption of technology for information processing so that it has fragmented customer information and does not have centralized data system for easy retrieval of information needed by management for decision. We see an opportunity for a new market for Greene King because now consumers prefer home entertainment and perhaps a quiet atmosphere to spend their leisure hours. This new market requires a new market strategy wherein proper demographic study and profile will be needed. It will not be hard to reach these customers because Greene King is a popular brewer and their brand of ales and beers have been the favorite of the customers at one time or another. Greene King should respond to the pub closures with utmost care and will have to make a re-thinking of its prior strategy for expansion. At the rate of the closures of pub houses in UK, UK has to move to a strategy of creating quality pub houses. This will be an ideal strategy to create a new atmosphere of pub houses to attract once again customers to its pub houses. To sum it up, a change of strategy is needed by Greene King to face the challenges of the declining sales of ales and beers in pub houses as well as in the continuous closure of pub houses which is the main distribution center of the company. References: British Beer Pub Association. 16 October, 2006. New stats handbook shows the latest trends in UK drinks' industry Viewed 15May 2011 http://www.beerandpub.com/newsList_detail.aspx?newsId=123 British Beer Pub Association. 02 April, 2010 Pubs still closings, but at a lower rate. Viewed 15 May 2011 Greene King Annual Report 2010. Viewed 15 May 2011 NetMBA. The Strategic Planning Process. Viewed 15 May 2011 UKSP Resources 2011. Greene King Plc. Business Profile. Viewed 15 May 2011 Read More