Takeovers and Mergers - the failed takeover behind Clinton Cards’ Collapse
The collapse of Clinton Cards has been widely predicted for some time as its new CEO (recruited from Starbucks UK) attempted to achieve a turnaround and restructuring in recent months. Clinton’s administration is one of the biggest UK retail failures wince Woolworths and much of the press analysis will focus on the competitive pressures that the retail chain faced from online operators like Moonpig and Funky Pigeon, as well as the effect of weak consumer confidence and spending.
Eagle-eyed A2 students, however, will also spot that a strategic mistake back in 2004 is at the root of many of Clinton Cards problems. The mistake - buying Birthdays Group in 2004.
read more...»Same product - different prices: Greggs sausage roll costs more in Hammersmith than Hull
The Daily Mail reports that a 66p sausage roll in Hull sells for 85p in Hammersmith – that’s almost 30% more. That finding won’t surprise you perhaps, although the size of some price differences is quite a shock.
read more...»Marketing analysis: the UK supermarket battleground
Once again the BBC have posted up a clip that clearly and concisely (in two and a half minutes) neatly sums up the marketing challenges faced by the main UK supermarket chains: store locations, types of store, products, promotions, target markets … and prices.
On that point, there’s also more detailed news published recently about Waitrose matching Tesco prices, getting marketing mileage out of the John Lewis ‘never knowingly undersold’ pledge.
read more...»Flaws in Tesco’s strategy
BUSS4 students can accumulate some useful evidence about changes in business strategy by examining the reasons for Tesco’s fall in UK profits, and their strategy to reverse the trend. There is an opportunity to do some ‘compare and contrast’ with the strategies of other businesses which are struggling to turnaround disappointing business results such as Nokia and others that have such as BA and Starbucks.
read more...»What’s going wrong at Superdry?
Bad news for Superdry, one of the most popular young fashion chains in the UK, which has suffered a huge knock. The firm’s owner, SuperGroup, saw its share price plunge 40% on Friday after a shock profit warning. And it’s not just investors who are losing faith. Fashionistas say the Superdry brand, which burst on to the scene in 2004 with its vintage Americana look topped off by Japanese script, is looking tired. This story combines accounting, finance, fashion, marketing and stock control.
read more...»Leadership - meet the new boss of Starbucks UK
Just catching up on some research on Starbucks and I came across this nice short interview with Kris Engskov who has recently taken over as Managing Director of Starbucks UK…
read more...»More on “up-selling” (adding value) the budget airline way
So you’re used to the idea of the ‘basic’ price being increased by additional ‘extras’ offered by retailers. Budget airlines are experts at this approach (spoofed brilliantly by David Walliams here), inviting us to pay more for drinks, snacks, priority boarding and the rest.
read more...»Walmart targets leadership of the online shopping market in China
It’s been a diffcult time in China for global retail giant Walmart recently, However, as the BBC’s Sharanjit Leyl reports in this short video, Walmart hopes to capitalise on the growing number of Chinese who do their shopping online, as the ‘bricks and mortar’ competition between foreign supermarket operators in Chinese cities becomes more intense.
read more...»ResearchBuster: Retrenchment
Most businesses aim to grow - but not all succeed - and many are forced to reduce the scale and scope of their business activities as a deliberate act of strategy. This is known as “retrenchment” and A2 students should have an understanding of some examples of retrenchment in action. Which firms / brands were involved? What happened? And why? Here are some suggestions that students could add to their notes:
read more...»Retailing booms: in railway stations
The recession has brought the troubled High Street onto the front pages of the business news over the last few years. There’s the very bleakest news stories: Shop vacancies rise to highest level in four years as retail sales plummet or Up to 40% of high street shops ‘could close over next five years’. Just last week Game came up in a blog. Another story without a happy ending.
But its not all doom and gloom, and there are fantastic retail opportunities for firms to cash in on. It might be something experimental like ‘pop up shops’ or another growing trend: railway retailing.
The Co-operative model - a retail format that should thrive in a recession?
An excellent video here - part of Al Jazeera’s recent series on co-operatives, Sonia Gallego reports on a grassroots movement in the north of England, that provides an alternative to the dominant grocery supermarket and convenience store chains. Its goal: to provide fairness for both buyer and supplier, since it opened 15 years ago, this co-operative store has turned out profits and fair business practices as well.
read more...»Garden Centre Takeover - Can Hands Get the Growth?
Students researching AQA BUSS4 M&A for 2012 may well come across the private equity firm Terra Firma run by Guy Hands. They were the investors who got their fingers burned when investing £3bn in EMI, only to have to sell it for about half that price a few years later. Well. Terra Firma are back in the market - they have just completed the takeover of the Garden Centre Group, owners of brands like Wyevale and Blooms.
read more...»Starbucks acquisition provides the base for entry into the juice bar market
A great example to use here which combines takeovers/mergers and also Ansoff’s Matrix. Starbucks has used a recent takeover as the platform for the launch of a new store concept which it hopes will generate sales and profit growth outside of the core coffee market.
read more...»Game Over?
Sometimes the decline of a business enters a spiral. Conditions in the marketplace change. New competitors emerge. Poor trading conditions lead to disappointing revenues. Cash flow dries up. Suppliers become reluctant to supply. Shareholders begin to pull out, and it gets progressively harder to raise finance to reverse the decline. That seems to be a fair summary of the current woes of Game Group, which is looking increasingly like the latest casualty on the troubled UK High Street.
read more...»Starbucks chooses strategic alliance in bid to enter the Indian market
A significant example here of strategic choice when it comes to evaluating the options for growth. Starbucks has opted to enter into a strategic alliance with Tata Group as it attempts to establish a position in the Indian market.
read more...»Practice your skills as a retailer: entrepreneurs experiment with ‘pop up’ shops
The problems on the high street, and our changing shopping habits have been much discussed recently. But “bricks and mortar” retailing isn’t dead yet. Combine landlords with vacant shop sites (often in desirable locations), entrepreneurs (perhaps active online, but not used to face-to-face contact with customers) and an appetite for experimentation - and you get the phenomenon of the ‘pop up shop’.
read more...»Lesson video : Franchising for beginners
A wonderful topical video clip here from the BBC which introduces pupils to the pros and cons of setting up a Franchise. Four minutes long, the video is perfect as a lesson starter for just about every business course that requires students to develop their understanding of business startups.
read more...»Froth on the beer versus froth on the coffee?
A short BBC video on Whitbread’s huge strategic shift from brewing to retailing coffee and budget hotels.
Whitbread abandoned beer brewing and pub retailing and off licence sales, an industry in which had been a significant presence since 1742. By 2001, the sector had low profits growth and declining sales. Capital has been diverted into areas with higher growth coffee shops and budget hotels. Whitbread’s main brands include Costa Coffee, Premier Inns.
read more...»Which is better? Aldi or Lidl? Compare and contrast these (and others) using ‘Store Wars’
I’ve only just stumbled on this excellent resource which pits Aldi against Lidl - and takes a snapshot of the differences in customers’ opinions. In this example, Lidl won 60/40. This is a fun few minutes suitable for a starter activity, with over twenty other examples to choose from.
read more...»Starbucks growth - three out of four ain’t bad!
I think the song goes something like that….Starbucks has been very popular in this blog lately with a number of posts across different topics. It seems to be all good news at the moment as they pursue a number of different strategies for achieving growth. And I used this video clip to get my students to identify three out of the four main ways of growing a business.
read more...»Schultz on Leadership, Love and the Competitive Advantage of Culture
We know that the BUSS4 is a big fan of the Apple and Steve Jobs - and with good reason. As our BUSS4 Topic Tracker indicates, a previous essay question (Jan 2010) used the example of Steve Jobs to ask students to evaluate how easy it is for a Chief Executive to change a struggling business into a more successful one.
Steve Jobs shares much in common with another well-known entrepreneur and CEO - Howard Schultz (Starbucks). Both men founded, left and then returned to lead a turnaround of their respective businesses. Both have taken on the challenge of taking a business idea through rapid growth and then also manage a global brand in a much more uncertain external environment.
Might Howard Schultz feature in a future AQA BUSS4 essay choice? Its certainly possible and this article from Ernst & Young ought to be essential reading for any A2 business student who wants to build their understanding of Schultz and his leadership style and business strategy for Starbucks.
read more...»Growth strategy - Starbucks eyes the franchise model
As of 1 January 2012 there are 17,244 Starbucks outlets around the world. Not one of them is operated as a franchise - until now. Starbucks has announced that it is looking to the franchise model as part of its organic growth strategy, with the first franchise store likely to be opened in London later in 2012.
read more...»More perspectives on our changing shopping habits
There have been plenty of recent blogs on the problems faced by struggling firms on the UK “High Street”. You’re all encouraged to think through these problems, perhaps using a framework like PEST analysis.
This blog adds a couple more perspectives, from recent articles in The Guardian and The Economist that paint a pretty grim future for the High Street - at least in its current form. All is not well for the out-of-town grocery chains either.
read more...»Strategy Lessons from the Tesco Downfall
A highlight for me and many business teachers was the superb presentation given at the Business Teacher National Conference 2011 by Sir Terry Leahy who, just weeks earlier, had retired as CEO of Tesco leaving behind a stunning record of profitable growth.
Who would have thought that less than a year later, the shares of Tesco would fall by 16% in just one day (nicknamed “Tesco Thursday”) wiping £5bn off the value of Tesco shares. The sudden downturn in Tesco’s fortunes will be a rich source of business lesson material for months, perhaps years to come.
read more...»Tesco’s Big Price Drop - on the Stock Market, or, Porter and Ansoff in action
Such is the importance of Tesco’s and their dominance of the retail market that the effect of a 2.3% drop in their like-for-like sales knocked almost 16% off their share price yesterday. Perhaps not so much a reflection of the figures themselves - although they compare poorly with Morrison’s and Sainsbury’s both of whom managed to increase their sales over the same period - as the admission by the new CEO Philip Clarke that Tesco’s got their strategy wrong, both in the short and the long term.
read more...»Tesco takes it ‘easy’, controlling costs in its US operations
You may already know about Tesco’s overseas expansion strategy, and its Fresh & Easy venture in the States. The US expansion is taking place in challenging economic conditions and according to The Guardian, the business is ‘mothballing’ a second wave of Fresh & Easy stores, suggesting that the supermarket group’s loss-making US start-up has hit another bump in the road.
read more...»Business winners and losers from Christmas 2011
So results are trickling in from the major High Street retailers, with figures for their performance over this crucial trading period.
read more...»Revision Presentation - Business Location
This new revision presentation provides an overview of the factors that a business considers in choosing its business location. The presentation also considers issues such as multi-site location, industrial inertia and locating a business overseas (offshoring).
read more...»Technology and Consumer Media - A Neat Research Resource
Lots has been written already on this blog about the decline in demand for audio and visual material on physical media such as CD and DVDs. The associated decline in the financial performance of retailers such as Woolworths, HMV and publishers like EMI is also well documented.
This feature in the Independent is worth adding to students research notes, mainly because it provides some useful summary data on the absolute changes in demand for various music products and also the shift in market share enjoyed by digital media.
read more...»Warehouse woes - Superdry’s operations hit the finances
At the recent BUSS3 workshops we considered how a seemingly insignificant change in operations could have a potentially significant effect on the financial performance of a retail business if that change went wrong. We used the example of retailer Superdry to help make the point. And now the full cost suffered by Superdry as a result of their warehouse problems has been disclosed in the latest financial results from its parent company Supergroup.
read more...»
