Running head: WHITBREAD PLC CASE ANALYSIS 1

Whitbread PLC case analysis

Name

Institution

Date
WHITBREAD PLC CASE ANALYSIS 2

David Thomas the Chief Executive officer (CEO) of Whitbread PLC is faced with
strategic challenges. Whitbread operates pubs and brewing and had been a top company until
when David Thomas was appointed the CEO. The company faced industrial, financial and
regulatory challenges. In terms of finances, the company has had a bad run with decrease in
turnover, decrease in profit, stock prices falling a record low since 1994. Whitbread faces
industrial competition and this has made the industry being unable to meets its operational goal.
In addition to that the government has imposed unfavorable regulations which make Whitbread
unable to expand.

The CEO is tasked with ensuring that the company revert to good performance just like
the olden days. The CEO wants to stop the brewing and pub business and venture the company
into restaurant, hotels and travel inn business. So as to stop the brewing business the company
needed to restructure in that the company had to dispose off some pub at a loss while acquiring
some hotels at a very high prices.

The major objective of David Thomas is to ensure that by 2004 when he is supposed to
retire, the company is performing well and is back to its ranking in the FTSE 100. Similarly, the
company is making profit and the stock prices have gone high.

Since Whitbread has been underperforming and required new strategies to ensure good
performance, the CEO hired strategic task force team (STF) to find out why they are
underperforming. The STF team had to interview all the managers so as to know the problems of
the organization. Some of the problem include; the managers have no clear understanding of the
business model of the company, brand management is difficult, the culture of the company is not
good and the leadership of the company is inappropriate. In this case we shall discuss the
problems and later give some recommendation to the company.

Since the company was started in 1742, the managers have no idea of the business model
of the company. They don’t understand whether the company can stick to brewing and pub
business or they can change to other business such as hotel, restaurant and travel inn business as
suggested by the CEO. The managers also looked at the possibility of business being run as
independent companies rather than being one. Supporting the claim, the managing directors of
different business for example David Lloyd (Health Club MD) and Allan Parker (hotel MD)
couldn’t work together therefore the company’s operation became a problem.
WHITBREAD PLC CASE ANALYSIS 3

The other problem is brand management. The managers were confused on how David
Thomas manages the brand. The CEO in the past has sold a brand at a low price and buys
another brand at a higher price hence causing a loss to the company. The managers were also
confused by the fact that new investment always requires personnel with skill to develop and
implement which is expensive.

In terms of culture, the employees in different business have underperformed. In that they
are performing activities of the company at a very slow pace which causes delay and loss of
customers. Similarly, the company used balanced score card in measuring and evaluating
performance of employees in some business such as Marriot and Pizza Hut while others were
not evaluated. This implies that the employees in other business did not know what organization
goal is. The company didn’t address external issues such as competitors instead it focused in
internal matters which are more problematic.

Leadership challenges is portrayed in the organization as other employees are not

evaluated on their performance and thus difficult in achieving group goals. Similarly, some
leaders don’t encourage employees to come up with new ideas as they say that they don’t do
something like that here. This makes the company stick to old-fashioned way of operation. Still
regarding employees, the leaders of other business don’t formulate work schedules for
employees as there is duplication of work for example in the restaurant business. There is no
consultation between the CEO and management as the CEO brain storm by himself and then
implement his own strategy. Also, the executives who have underperformed receive bonus which
is clearly disclosed in the financial statements of year end. There was no clear hierarchy as the
organization didn’t know who to report to incase of a problem some could go to the CEO
directly without passing to the managing director. Also, managing directors could implement
strategies concerning their businesses without consulting the CEO.

The strategic task force provided solution to this problems which include; restructuring,
personnel development and management of brands effectively. Restructuring involved change of
business operation so as to eliminate the unprofitable business and introduce the profitable
business. The CEO also ensured that the operations of the company in the profitable brands is
monitored by the managing director who reports to him on any issue that requires his attention.
WHITBREAD PLC CASE ANALYSIS 4

The CEO will ensure that the brand is managed effectively in that, it requires people with
the right mentality on leadership of the brand, right employees and right tools so as to make it
even more profitable. The MD of each brand will meet with the brand team weekly so that they
can strategize on making products that are attractive to the market. This helps in promoting
creativity, inventions and innovations among the employees.

The company is faced with leadership problems thus personnel development is essential.
This involves hiring of consultants who can train all the employees in key management position.
This involves setting benchmarks with other companies’ management which are ranked the best
hence imitate how they handle the leadership issues. Other solutions include; rewarding the best
employ who has performed exceptionally well, evaluate all the business of the company to
ensure that the goals and objectives of the group are met, creating work schedule to avoid
duplication of work and forming strong policies regarding receiving bonus by the key
management staff.

In addition to all the strategic solution, my recommendation to the CEO is to build an

integrated system which has super controls and can be able to monitor all the business of the
company and detect errors, fraud and irregularities performed by employees or managers.
Similarly, it is important as a CEO to formulate contingency plan.

In conclusion, it is important for the CEO to implement the above solutions. Strategic
implementation is not easy as it has its barrier such as overconfidence that the plan will work. It
is good for the CEO to avoid all sorts of barriers in implementation and come up with the most
effective and efficient way so as to implement the strategies and make the company perform
better just like the olden days.