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Greggs' Management Analysis

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Executive Summary

This report gives a general overview of about the largest retail bakery chain in United Kingdom business which is Greggs PLC. It analyzes the company’s latest performance in defying the economic downturn achieving a very successful term. It considers, using SWOT and PESTEL to analyze the company’s plans for international expansion. It will also discuss Greggs’ Chief executive, Ken McMeikan in managing the company activities and dealing with the company’ stakeholder.

I. Introduction
Greggs, which is also owns Bakers Oven, is the leading bakery retailer in the UK, with some 1,400 retail outlets throughout the country. It was founded by John Gregg in the 1930s, when he opened a small bakery store in Newcastle. Now, the company is managed by Ken McMeikan, who took charge of the business following Ian Gregg. The company has 1,400 shops around the UK with 19,000 employees and 6 million customers and plans to add 600 new shops in the next few years. This report will analyze Greggs’ situation and its performance as well as their strategy in defining the external environment which has led the company to achieve its success.
II. Company’ performance and management style
1. Greggs’ Latest performance
Based on its interim results for the 26 weeks ended 27 June 2009 (www.greggs.co.uk), during the economic decline their sales went up to 4.4 per cent to £312 million and the operating profits up to 8.9 per cent to £16.3 million. These figures prove that Greggs are able to survive and make a profit even in the current climate (www.greggs.co.uk). In doing so, the company is adjusting their prices according to the situation, while it keeps on producing quality products such as its sandwiches for 99 pence in order to appeal to customers with tighter budgets. The company chose to stay with their commitment to low prices even if this means generating less profit. After taking control of the cost of production, it also simplified and centralized its operations which will make its plan for further expansion simpler. What is more, according to Walsh (2010), the expanding chain of Greggs reported a 3.1 per cent increase in total sales during Christmas week, with like-for-like sales up 1.1 per cent. This is means that the sales during the term were particularly strong with Greggs’s total sales increased by 5 per cent or 0.8 per cent from last term (www.greggs.co.uk).

2. Kennedy McMeikan
Ken McMeikan was appointed as Chief Executive of the Company on 1st August 2008 (www.greggs.co.uk). Before he began his career in Greggs, he was Retail Director of J Sainsbury plc in 2005 and Chief Executive of Tesco in Japan where he was in charge into the Tesco Express format which gave her a wide thought about managing a company and what kind of actions that he needs to take in various situations. Besides gaining experience in food and retailing, McMeikan started his career in the Royal Navy when he was 16 and the job was influenced his management style in order to know the importance of teamwork, preparation, planning and how to move large numbers of people and get them in the right place at the right time.

According to Mintzberg (1973), management roles are divided into three categories which are informational, interpersonal decisional. McMeikan, in managing the business, implements three roles which are monitor, Leader, and Entrepreneur. In doing so, he visits a shop frequently and has a chat with employees about their performance and how the business is doing. While carrying out a conversation, he is trying to give directions about the new area business changes or developments and motivates the employees so they can perform well in serving their best performance to the customers.

3. Type of environment
In its operations, Greggs is influenced by external environmental factors. PESTEL is a useful tool for the company to identify and list the political, economic, social, technological, environmental and legal factors in the general environment which are essential to define their influence (Boddy, 2008).
Political and Legal affect the Greggs operation process by the taxation policy, health and safety guidelines, and environmental legislation. The company has to make sure that it operates in this range of area. For example, Greggs already removed all added hydrogenated and transfats from the products and plans to discard artificial colors and flavor by the end of 2010.
Economic is also an essential factor in forcing a business to take actions. The factors which influence Greggs’ performance are they are in a business where the market is growing, low set up costs, a slow business cycle circumstance, and fluctuating interest and inflation rates when Greggs did a great job during the economic downturn in 2008.
Social-cultural aspects can be considered as the most crucial factors for Greggs since they must provide products based on customers’ demands. For example, with the current situation where consumers becomes more selective in choosing their food, Greggs put more attention in serving healthier food and produces more products from its customers’ feedback which is automatically suitable with their taste and preference. In addition, according to Kent (2009) Greggs also did market segmentation strategy to attract its customers. The company focuses on low income customers who are ideal with its marketing concepts consider from its brand image in society.
Technology works as supporting factor that helps the company to produce more effectively and efficiently. Having an advanced technology system has made Greggs able to compete with its rivals in creating new products, low cost production, and also enjoy the economics of scale advantages.
Environmental issues such as climate change and lack of water and energy resources future prediction also make some contributions to Greggs’ performance in maintaining its raw materials in production for the future, on the other word is company continuity.

In order to ake the best decision, a combination of PESTEL analysis and degree of dynamism and complexity according to Duncan (1972) will be the best approach. Degree of change
Degree of complexity Low (Stable) High (Dynamic)
1 3
2 4
Low (Simple)
High (Complex)

In its business, Greggs is facing conditions where the degree of dynamism is very high because in this kind of business area, the frequency of change in PESTEL factor s is very reactive especially in economic, social-cultural and technology development factor. For example, the taste and preference of customers varies and keeps changing. From the degree of complexity, it is considered that Greggs is in the simple range owning to the level of certainty which is slightly predictable base on its past and current conditions. For instance, the company has predicted the sales during the Christmas which has risen the company’ profit to 1.1 per cent in four weeks (www.bbc.news, 2010).

4. International Expansion
Greggs began its international expansion in early 2003 when the company opened two stored in Antwerp and Leuven, Belgium. As two experiment programs, the sales was slow at first and began to perform well by mid-2003 (Gorman, 2002). As mentioned in Greggs’ Preliminary Results 2009 (www.greggs.co.uk), the company is going to withdraw its ten shops in Belgium since they have making loss over the past five year which according to Murray-West (2004), is caused by the shops are not well presented and adopted takeaway concept which is not suitable with its market culture. Marketing approach is very essential in this particular issue instead of product orientated.
Future expansion remains possible and profitable as long as the company is able to analysis their strengths, weaknesses, opportunities and threats (SWOT) and match it with its external factors namely PESTEL.
STREGTHS WEAKNESSES
• Low price which is difficult for its rivals to compete.
• Worthy quality of products with affordable price.
• Strong brand name.
• In a growing market situation. • Every community has their own taste and preference.
• Less variation of its products.
OPPORTUNITIES THREATS
• Expansion via franchising and direct expansion. • Many rivals in the market such as Sayers, Costa, Starbuck, and Subway.
• Health concern issues.

According to Begg and Ward (2007), International expansion will bring many advantages to a business. For example, increased market share, longer product’ lifecycle, location benefits, and able to achieve economies of scale welfare. Because all of these advantages, McMeikan made a consideration about international expansion for his company.

5. Greggs’ main stakeholder. One of important jobs for a CEO is to make sure all the stakeholders in the company are satisfied. According to Eden and Ackerman (1998), a stakeholder mapping system is essential to analyze the level of their power and interest to a company.

Because of their power and influence, Customers and employees become the main stakeholders for Greggs PLC. McMeikan keeps them satisfied by particular means. The company tries to serve its customers with delicious, fresh bakery food, with great value and friendly service and developing a research programme which is designed to ensure that the company understands and is responsive to their changing needs. On the employee side, the company creates secure conditions where its employees can enjoy their work under health and safety controls, provide training and development. They are treated well so they will feel rewarded and valued, as a result of which customer service is improved. Then, this leads to shareholder satisfaction from increased sales (www.greggs.co.uk).

III. Conclusion

Greggs was successful in defying the economic downturn due to its management style which suitable for the current situation. As CEO, Ken McMeikan plays a key role in managing the company’s operations and planning for its further expansion. In addition, he also prioritizes and satisfies the company’s stakeholder and achieves a maximum profit.

References

Begg, D. and Ward, D. (2007). Economics for Business. 2nd ed. London: McGraw-Hill. p146-152.
Boddy, D. (2008) ‘Organisation cultures and contexts’, Management: An Introduction 4th edition. Harlow, England: Prentice Hall, pp 93- 104.
Gorman, B. (2002). Belgium gets taste of Greggs. Available: http://business.scotsman.com/6983/Belgium-gets-taste-of-Greggs.2348769.jp. Last accessed 26 February 2010.
Greggs bakery sees rise in sales, http://bbc.co.uk/, 17 January 2010, (accessed 24 Feb 2010).
Greggs PLC, http://www.greggs.co.uk/ (accessed 10 Feb 2010).
Kent, T. (2009), ‘How did Greggs conquer the high street?’, BBC news, 9 Nov, http://news.bbc.co.uk/1/hi/magazine/8330573.stm (accessed 15 Feb 2010).
Mintzberg, H. (2008). ‘Managing in Organisations’. In: Boddy, D Management an Indtroduction. 4th ed. Harlow: Prentice Hall, pp 14-15.
Murray-West, R. (2004). Greggs loses its appetite for sandwiches. Available: http://www.telegraph.co.uk/finance/2879136/Greggs-loses-its-appetite-for-sandwiches.html. Last accessed 26 February 2010.
Walsh, D. (2010). Greggs boosted by Christmas mince pie sales. Available: http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article6985862.ece. Last accessed 21 February 2010.

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