There are three steps involved in the analysis and graphical representation of strategic groups.
1 Identify the important competitive dimensions in an industry, taking into account the information available. Competitive dimensions are the specific factors the firms are using to compete within the industry. The competitive dimensions might include factors such as quality (perceived or actual), price, geographical scope or typical customer types.
2 Construct two-dimensional plots of the competitive dimensions. 3 Analyse the firm’s position relative to competitors.
Competitor profiling
Strategic group analysis enables an organization to identify its key competitors. A useful further step is to profile these key competitors in order to gain a more detailed insight as to how and where the competitors might pose a threat or under what circumstances might collaboration be sought. Such an analysis might be carried out using the following headings:
Overview
Objectives
Resources
Past record of performance
Current products and services
Present strategies.
Competitor profiling – Whitbread plc
A hotel operator seeking to expand in the UK hotel industry would need to profile existing key competitors. One of these would certainly be Whitbread plc which holds the master franchise for Marriott hotels in the UK and has developed the leading brand of ‘Lodge’ hotels which offer ‘value for money’ accommodation with few ‘add-ons’.
Overview: The UK Company Whitbread plc was a major brewer founded in the
middle of the nineteenth century. The end of the twentieth century and the start of the twenty-first marked a watershed in the company’s history, as Whitbread sold its 192
breweries and then exited its pubs and bars business. After several decades of diversification, during which the beer and pubs giant branched out into new markets, Whitbread re-focused its business on the growth areas of hotels, restaurants and health and fitness clubs. The reinvention of Whitbread as a leading UK leisure business naturally coincided with the end of the brewing and pub-owning tradition which Samuel Whitbread had begun so many decades before.
Objectives: The priorities, on behalf of shareholders, are to grow the business and
to achieve annual improvements in the return on their capital. The business is focused on growth sectors of the UK leisure market – lodging, eating out and active leisure.
Resources: The company has a turnover of some £3.5 billion a year with profits
standing at over £300 million. Approximately 60 000 people are employed by the company, of which about 20 000 are employed by the hotel businesses.
Past record of performance: The company has consistently recorded adequate
levels of profitability but in recent years some variability in profits has been apparent. The repositioning of the company to move away from brewing and bars to focus on three core areas in which it possesses strong brands has started to show results. Between 1993 and 2001 Whitbread was Britain’s fastest growing hotel company, developing more hotels and more rooms than any other operator and the Whitbread Hotel Company accounts for approximately 59 per cent of the group’s profits.
Current products: In the hotel sector the company has a two-pronged assault, based
on consistent value for money budget hotels and internationally branded four-star hotels in the fast growing UK hotel market.
Present strategies: The company is trying to achieve its stated objectives
through:
Growing the profitability, scale and market share of the company’s leading brands.
Seeking new brands that have the potential to reach significant scale.
Managing the business so that economic value is added by each of the activities.
Ensuring that each of the brands is a leader in its field for customer service.
Becoming the employer of choice in the UK leisure industry.
Working to meet responsibilities to the wider stakeholders in the business, including commercial partners and the communities in which the company’s brands operate.
Adapted from: www.whitbread.co.uk
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