UMACTW-15-M Corporate Governance and Strategy Assessment Answer

Executive Summary

The report analyses the sustainability endeavours of Whitbread through its business operation and corporate governance. The report discusses several sustainable measures incorporated within the operation of Whitbread and the impact of the same on the overall business operation. Porter’s Value chain analysis model is also reflected upon to understand how it creates values in its operation followed by recommendation on how current gaps in operation is mitigated.

Introduction

The aim of the report is aimed at taking into account Whitbread Plc, a leading business of the hospitality industry aimed at making regular experience special for a large number of customers both overseas as well as in UK. It has turned out to be the largest hotel brand within UK with about the capacity of 72,000 rooms in 785 hotels. Earlier around the year 2019, Costa Coffee, a renowned coffee chain was owned by Whitbread Plc which was later sold off to the Coca Cola Company. The report would be mainly focused on discussing the sustainability activities to create shared value within its operating value chain. The social dimension of competitive context that Whitbread Plc is a part of would also be considered in the course of discussion. The following segment would be concerned undertaking an analysis of the competitive strategies that Whitbread has undertaken where identification of value proposition would be substantiated with value chain analysis followed by identifying the trade-off choices made by the company. The report would conclude with an explanation of recommendation derived from the analysis to assist the company in improving in strategic and sustainability performance.

Sustainability and Creating Shared Value

CSR Information of Whitbread Plc

“Our sustainability programme, ‘Force for Good’ aims to ensure we have a positive impact on all of our stakeholders, the communities we are part of and the world around us.” (cdn.whitbread.co.uk 2019). Quoting from the sustainability report it can be posited that Whitbread aims at making a balance between operating effectively while supporting the living of the people around them. The sustainability program of Whitbread has been divided into three domains of concern, namely Responsibility, Community and Opportunity. Out of its most stretching targets, Whitbread Plc aims at ‘eliminating unnecessary single-use plastic by 2025’ and ‘cutting food waste by 50% by 2030

Whitbread Plc understands that as a company being ‘Force for good’ becomes not only the need of the hour but also the right thing that the organization should do in order make the business work in future as well. With an understanding of the business operation the brand understand the impact of decision making so as to be able to create a positive impact on the future of the business and the guests across the world.

Driving Force Behind CSR Activities

As far its recent sustainability strategy is concerned Whitbread had aimed at undertaking robust materiality process so as to assist in shaping the sustainability strategy as well as ensuring that risks are focused at so as to be mitigate them on time. Along with that the concern is also towards undertaking opportunities which are contemporary and relevant through the changes in the economic and social fronts. Whitbread is aimed at gathering knowledge and understanding from the investors, customers, stakeholders as well as from the current trends in the sustainability endeavours. This is to ensure that the programs and targets of Whitbread suits the current business along with the ESG landscape on the wider front. Under ‘Opportunity” the brand is concerned at making a team where everyone can attain the potential as well as their ambition. “Community” focuses at making a meaningful contribution towards the communities and the customers that they serve. “Responsibility” encapsulates the ways in which Whitbread focuses on the needs of the planet and the people (Koberg and Longoni 2019).

Whitbred’s Accountability towards Sustainability Activities

The publication of the annual ESG (Environmental, Social and Governance report) explicates the extent of the achievements and programmes that the company has undertaken. Out of the aspects that are highlighted in the report, the primary concern of Whitbread is towards reporting on CSA or Corporate Sustainability Assessment, SASB or Sustainability Accounting Standards and Carbon disclosure Project (CDP). The report also traces the process of Whitbread plc in responding to the recommendations put forth by Taskforce on Climate Related Financial Disclosures (TCFD). The sustainability policies of Whitbread includes Whitbread Net Zero transition plan (2022/23), Environmental, social and Governance report, Green Bond allocation and impact and Sustainability accounting standards. As per the corporate governance is concerned the sponsorship at the Board level and the ownership of the executive is channelized within the three pillars of opportunity, community and responsibility (cdn.whitbread.co.uk 2019).

Being at the largest hotel business and as the top employer of the county the concern of sustainability for Whitbread places people at the centre of the concern. The brand seeks a positive ‘Force for Good’; in the lives of the people. The 2022/23 experienced a good progress against the targets which have been existing already and thereby new targets are set in the areas where opportunities to do more are being recognised. One example of such being water reduction (Sánchez-Flores et al., 2020).

Figure: Highlights of sustainability strategy for 2022/23

Source: (cdn.whitbread.co.uk 2019)

Whitbread also takes into account the essential aspects of all the sectors where SDG can be contributed to and the work has thereby dedicated to ensure that the brand is supported in whatever possible. Whitbreads has targeted at reducing the emission by 50% in the year 2035 and about 64% by the year 2050 (cdn.whitbread.co.uk 2019).

Strategic and Managerial Decision Making

As per the business strategy and stakeholders involvement in the process of sustainability is concerned Whitbreads have been looking for projects which affects several areas within the concern of sustainability. One such example of the project being 3eel which had been focused at the indirect consumption of Soya within the supply chain. Of about 340m tonnes of soya that are being produced in 2019/20 globally out of which about 75% is utilised for animal feed. Resultant outcome is that an average European counts for 60.6k consumption per year (cdn.whitbread.co.uk 2019).

In order to cater to this issue, Whitbread closely works with the suppliers in order to understand the importance of sustainable sourcing among the animal feed while calculating the currency position as well as putting a strategy in order to increase this. It is expected that with this project in place, Whitbread can have a considerable impact on deforestation as well as scope 3 emission (Saeed and Kersten 2019).

The unique business ownership model has been aimed at providing competitive advantage in the core market and thereby has allowed Whitbread in becoming the top hotel in UK. It has also allowed Whitbread in expanding their presence in Germany. As per the business strategy Whitbread undertakes vertically integrated model which combines property ownership, operations of hotel, distribution of inventory, brand and thereby has allowed the company to grow at a higher pace as opposed to the competitors. The brand’s strategy also involved providing customer experience while generating a strong return on the investment for the past 15 years. The operating model comprised of the drives competitive advantage which has enabled the delivery of the unique customer proposition likely to have an appeal to the customers both during the post pandemic and current environments (Wang and Dai 2018).

Whitbread is differentiated from many of its competitors. In alignment with the execution of the business strategy, which companies in order to deliver a strong growth both in Germany and in UK. The market of Germany has been providing a superior and consistent customer experience. The resultant outcome is high record on the capital for all the shareholders as well as ascribed additional benefits for the key stakeholders.

Competitive Strategy

The competitive strategy of Whitbread incorporates vertical integration model which allowed the brand in combining the ownership of the property along the operations of the hotels, distribution of the inventories and brands. Such a strategy has allowed a faster growth of the company as opposed to its competitors. Associated outcome of such a strategy undertaken by the brand is reflected in lifted customer experience along with a strong return on the capital for the shareholders as well as added advantages for the primary ones (Saberi et al., 2019).

Value Proposition

Customers Served

The vertical integration of the business model allows Whitbread Plc in ensuring consistent and high quality customer experience.

Needs Made

The organization feels the need for undertaking fast decision making process keeping in mind “force for good” at the centre of concern. The planet and people remains at the centre of decision making aiming at positive impact in future. The decision making or business strategy of Whiteboard Plc where the strategy has been split into opportunity, community and responsibility (cdn.whitbread.co.uk 2019).

Relative Price

As far the pricing strategy is concerned it has been reflected that Whitbread Plc has been undertaking a cost leadership strategy where budget accommodation is offered to the customers without the quality being compromised. Through integrated business model Whitbread has been successful in achieving this and thus also allowed them to offer an unrivalled combination of value and quality.

Value Chain Analysis

The specialist sustainability function at Whitbread has been aligned along with the sustainable program to the overarching business strategy. Specialist support is directed towards solving the challenges faced in bringing about sustainability challenges. The focus of the brand is dedicated towards being the Force for Goods. The experience of Whitbreads for about 280 years has allowed them in making the business. The positive impact of the business along with the guests, world and teams.

Whitbread is aimed at bringing to the customers the brands that they desire. The vision of the brand can be elucidated as follows “We will grow brands that customers love by building a strong Customer Heartbeat and innovating to stay ahead. Our Winning Teams delight customers so they come back time and again which, along with our focus on Everyday Efficiency, drives Profitable Growth. We are passionate about being a Force for Good in our communities, helping everyone to live and work well.” (Esmaeilian et al., 2020)

Several measures are being adopted by Whitbreads so as to measure the financial performance. The measures involve statutory measures like the ones of total revenue as well as profits earned before the tax. APM or affirmative performance measure like the ones of sales and return which had been consistent with the ways in which internally the business performance is measured.

With the use of balanced scorecard Whitbread measure the progress along the dimensions of winning teams, customer heartbeat, profitable growth, everyday efficiency and force for good.

Future Prospect. The customers are served through Premier Inn and Costa Coffee however later Costa Coffee had been sold off to Coca Cola. The unique business strategy has made Premier Inn the leading hotel business. The brand also incorporates the unique joint site model through which maximum hotels of the group are placed alongside the brands of restaurant of the company. Across 785 hotels in UK, the brand has about 72,466 rooms.

Trade off Choices made by Whitbred Plc

Whitbreads focus its concern towards delivering efficient services to the customers and also develop real job opportunities. The focus is to deliver high standards for the customers achieved through efficient engagement of the employees (Hong et al., 2018). The brand is also committed towards conducting sustainable and responsible business. “Our Force for Good programme has three pillars: Opportunity; Community; and Responsibility. We are delivering tangible improvements in each of these areas against our existing targets, whilst also setting ambitious new targets.” (cdn.whitbread.co.uk 2019) Maintenance of high standards involves the corporate governance at Whitbreads which is vital in supporting the performance on the financial grounds. The brand undertakes informed decision in order to strengthen the capacity of the company. The director of Whitbread claims “Premier Inn and Costa are both fantastic brands, with market-leading positions in the UK and long-term structural opportunities to grow internationally. Over the next two years, the focus of the Board will be to ensure both businesses are structured in the best manner to deliver on the exciting opportunities available to them.” (cdn.whitbread.co.uk 2019)

Figure: Brand Performance and Brand Expansion

Source: (cdn.whitbread.co.uk 2019)

Recommendation and Future Prosopect

Adequacy of Current Sustainability Performance

The brand has made continued investment towards developing the members of team. The brand has been successful in maintaining higher level of engagement across the team. The local managers are focused at working towards making Whitbread in making the place a better one to work.

Scope of Change

The brand require to undertake strategies to motivate the members and also enable the people with the usage of technology and also make the place a great one to work. The leadership is divided highly towards male leaders as opposed to the female leaders. The enablement and engagement of the teams are focused upon. The investment is targeted effectively while support centre environment is taken into account.

The incorporation of technology to meet their sustainable goals also come under the concern of Whitbreads. The brand should also work hard towards meeting the targets of sourcing coffee, meat, fish, soy, sugar, palm oil and meat. The brand has been continuing in recycling the waste streams across several estates of the brand so as to backhaul the waste solutions so as to include the additional streams of waste to reach the recycling needs.

References

Bruijl, D.G.H.T., 2018. The relevance of Porter's five forces in today's innovative and changing business environment. Available at SSRN 3192207.

cdn.whitbread.co.uk , (2023). https://cdn.whitbread.co.uk/media/2023/05/Whitbread_ESG_Report_FY22_23-1.pdf

cdn.whitbread.co.uk , 2019. Delivering on our strategy. https://cdn.whitbread.co.uk/media/2021/02/03114257/2018-annual-report-and-accounts.pdf

cdn.whitbread.co.uk , 2023. https://cdn.whitbread.co.uk/media/2023/04/23928-Whitbread-Green-Bond-2022_23.pdf

Esmaeilian, B., Sarkis, J., Lewis, K. and Behdad, S., 2020. Blockchain for the future of sustainable supply chain management in Industry 4.0. 

Hong, J., Zhang, Y. and Ding, M., 2018. Sustainable supply chain management practices, supply chain dynamic capabilities, and enterprise performance. Journal of cleaner production, 172, pp.3508-3519.

Isabelle, D., Horak, K., McKinnon, S. and Palumbo, C., 2020. Is Porter's Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).

Jia, F., Zuluaga-Cardona, L., Bailey, A. and Rueda, X., 2018. Sustainable supply chain management in developing countries: An analysis of the literature. Journal of cleaner production, 189, pp.263-278.

Khan, S.A.R., Yu, Z., Golpira, H., Sharif, A. and Mardani, A., 2021. A state-of-the-art review and meta-analysis on sustainable supply chain management: Future research directions. Journal of Cleaner Production, 278, p.123357.

Koberg, E. and Longoni, A., 2019. A systematic review of sustainable supply chain management in global supply chains. Journal of cleaner production, 207, pp.1084-1098.

Kot, S., 2018. Sustainable supply chain management in small and medium enterprises. Sustainability, 10(4), p.1143.

Saberi, S., Kouhizadeh, M., Sarkis, J. and Shen, L., 2019. Blockchain technology and its relationships to sustainable supply chain management. International journal of production research, 57(7), pp.2117-2135.

Saeed, M.A. and Kersten, W., 2019. Drivers of sustainable supply chain management: Identification and classification. Sustainability, 11(4), p.1137.

Sánchez-Flores, R.B., Cruz-Sotelo, S.E., Ojeda-Benitez, S. and Ramírez-Barreto, M.E., 2020. Sustainable supply chain management—A literature review on emerging economies. Sustainability, 12(17), p.6972.

Wang, J. and Dai, J., 2018. Sustainable supply chain management practices and performance. Industrial Management & Data Systems, 118(1), pp.2-21.

whitbread.co.uk, 2022. Our strategy and targets. https://www.whitbread.co.uk/sustainability/our-strategy-targets/

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