Analyse and critically evaluate the company's current corporate strategy (3 parts questions)

Whitbread’s Corporate and Business Strategies Student Name University Course Professor Name Date Whitbread’s Corporate and Business Strategies Part 1: The Company’s Current Corporate Strategy Whitbread’s growth and success have resulted from the company’s various strategic choices over the years. The strategic choices have revolved around three main aspects of corporate strategy: product diversification, internationalisation, and vertical integration. Product diversification is manifested through the different products and services the businesses offer. Through acquisitions and mergers, Whitbread has provided various products and services, including food, accommodation, and beverages. This provision is reflected throughout the company’s history. For instance, Whitbread Samuel Whitbread built the first purpose-built mass-production brewery in the UK in 1750 (Whitbread, 2022d). In 1968, Whitbread started brewing Heineken under license. The company opened the first Beefeater in 4974 and the first Travel Inn in 1987. The 1990s was a period of acquisitions, in which the company purchased Marriot Hotels, David Lloyd Leisure, Pizza Hut, TGI Fridays, and Premier Lodge Hotels (Whitbread, 2022d). Whitbread also sold Costa to Coca Cola and made a partnership that was deemed highly attractive for British business (Financial Times, 2018). Even though some of these purchases were sold in the early2000s, the company remained highly diversified in terms of the products and services offered to clients. Product diversification is also apparent across the markets served by Whitbread. However, it can be observed that after selling many acquisitions, Whitbread currently concentrates on hotels offering accommodation, food, and beverages to travellers. Premier Inn is the company’s major brand and is associated with high occupancy levels despite the relatively low share of supply. Most rooms are sold to domestic travellers because they have a higher frequency of visits and a greater likelihood of staying beyond business meetings. The company has over 30 operational hotels in Germany and an open and committed pipeline comprising over 72 hotels. The main reasons the company chose product diversification were the opportunities for growth and lucrative market gaps. For example, the main reason for brewing Heineken under license in 1968 was that the company observed a growing thirst for lager in the UK in the 1960s (Whitbread, 2022d). Each acquisition was an opportunity for growth and financial prosperity. Additionally, the company sought to capitalise on its resources and capabilities. As a strong brand, especially in the UK, Whitbread was assured of replicating similar successes with other brands it purchased. The greatest advantage of product diversification was immense financial gains. However, the main detriment was that the resources were stretched, and there was a possibility that a poor-performing brand might affect the reputation of other brands. Another aspect of corporate strategy based on which Whitbread has made strategic choices is internationalisation. It is important to express that internationalisation and globalisation are often used differently. Internationalisation entails efforts to work across national borders, while globalisation entails how internationalisation increases global interconnectedness. Whitbread does not necessarily engage in globalisation because the focus is majorly on attracting international clients. Therefore, the company is keen to ensure the brand is recognised globally to attract clients to its facilities in the UK and Germany (Whitbread, 2022c). However, the fact that Whitbread has physical locations and facilities in the UK and Germany means that, to some extent, the company has pursued globalisation. Regarding internationalisation, one of the strategic choices the company has made over the years is the choice of location. Businesses must determine where to locate when they decide to expand into new nations. Germany is a country that receives heavy international travel traffic, making major cities an ideal location for Whitbread to locate hotels. Similar to the UK, the German market also attracts domestic travel. However, how much market share domestic travellers command still needs to be determined. Therefore, Whitbread’s Premier Inn can only build enough facilities to ensure commercial feasibility. The main feature of the German market is that it is significantly more fragmented and regionally dispersed. The fragmentation means that most hotels are independent, making up about 72% of the supply. It is also more domestic travel-oriented, which attracts more domestic travellers. Regional dispersion drives demand for short-stay travel. The main advantage of internationalisation is that it allows the company to have an international brand presence, which helps with brand marketing. Additionally, it can also exploit international markets for revenue growth. The main disadvantage is that as a hotel business, building hotels and related infrastructure can be expensive. Different rules and regulations, tax policies and systems, and other national differences may make competing with the host country’s well-established businesses difficult. Whitbread has also made some strategic choices based on the vertical integration aspect of corporate strategy. Whitbread’s strategic choice was full integration, which implies the scenario where a company has full ownership and control of the entire value system underlying its products and services. Whitbread boasts of operating a vertically integrated model where it owns all of the value chain. In this case, the value chain has a wide spectrum ranging from developing and constructing hotels to managing the brand, operations, and direct distribution. The main reason Whitbread chose full vertical integration was the desire to achieve structural growth and create value for the shareholders in the longer term. The mergers and acquisitions in the UK and Germany were all designed to ensure that Whitbread was in charge of the entire value chain. It means owning all the hotels and other facilities, including those in the pipeline. Whitbread does not engage in partnerships or mergers that delegate control to other firms. The main advantage of this strategic choice is that it allows centralised control, which helps align the entire value chain with the corporate strategy. The main drawback is the resource commitment required to sustain such control. Additionally, such commitment means reduced focus on the core business and costlier operations compared to when some operations are outsourced to cheaper third parties. Part 2: Potential Strategic Choices and Recommendations Based on Whitbread’s current corporate strategies and strategic choices, several potential strategic choices that can fuel further growth avail themselves. The first potential strategic choice falls within the product diversification aspect of the corporate strategy. After the sale of many previous acquisitions, it can be observed that Whitbread’s core businesses revolve around accommodation. Therefore, the company should seek further diversification based on current economic and sector trends. In this case, the recommended strategic choice is venturing into the sharing economy due to its growth potential and ability to steam a massive market share from traditional hotels. The main idea of a sharing economy is that people create a community in which they interact, rent, lend, and exchange goods and services (Lho et al., 2022). Like the broader economy comprising business-to-business and business-to-customer interactions, the sharing economy can also take various forms, such as business-to-business, peer-to-peer, business-to-peer, and crowd. Such arrangements are worth considering for a business in the hotel industry. The main reason for adopting the best practices in the sharing economy is that the sharing economy continues and is expected to continue registering phenomenal growth as more businesses emerge from this model. In the hotel business, the sharing economy has seen the rise of Airbnb, considered the...